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I haven’t made a proper, well thought out post here for a while. I probably won’t do so again for at least another few weeks, after finals are done. This shan’t be a long post, for I am incredibly tired. I haven’t slept well this last week and both yesterday and tonight have been the worst in a long time. I’ve tried all my usual tricks to get myself to sleep (including two large sips of rum) and it hasn’t worked. I had to skip class today I was so tired… attempting to make it up tomorrow will hurt if  I can’t sleep soon.

But there’s so much interesting stuff happening and that has happened. So here’s a brief summary of posts  I wanted to write.

Dawkins and Hitchins suing the Pope for international crimes against humanity. I disagree on the law, and on the politics. My long-standing belief is that international law is not law, and though crimes of universal jurisdiction should exist, they should be construed narrowly. To say that the Pope is deserving of an international crime, a la Pinochet, is effectively to say that he is a head of state. To deny him head of state immunity in the same breath is seems somewhat wrong in law. Besides, the action would almost certainly fail before the courts, despite stronger sympathies for human rights in UK courts compared to Australian courts. The thing is a stunt and will probably hurt the atheist cause by entrenching stereotypes than promoting good.

Obama nominating General Kagan to the SCOTUS. Kagan is good and competent and worthy of the court. She would not have been my pick. I would have much preferred Wood, or Sullivan. I would not oppose her nomination, if I were a Senator, but it does seem suspicious that she managed to avoid all hints of what her views on constitutional law are considering she is a most eminent constitutional academic. How do you manage to teach a constitutional law class without stating your views on any of the hot button issues? How do you write articles without causing controversy? Even the one article on executive power she wrote doesn’t truly reflect her own views, from what I’ve seen.

The Budget and the super profits tax. The super profits tax is pure evil. It’s not a tax on super profits – its a tax on ordinary profits.

Look at the calculation:

super-profits tax= 40% x (profits – expenses – 3-6% govt bond rate)

company tax = 30% x (profits – most expenses)

Claiming that getting a return higher than the “long term government bond rate” is a “super-profit” shows wilful ignorance of the most basi concepts in financial economics. The government bond rate is treated as the risk-free rate of return – in other words, the very lowest acceptable profit if you have absolutely no risk. But mining projects aresome of the riskier real investments one can make (real, in the sense of non-financial).

The super-profits tax is tantamount to whacking a 70% companies tax on the mining companies. Try and tell me that won’t stop investment dead in its tracks in Australia. Yes, of course, existing mines will stay open. But why bother expanding those mines if almost all your profits will be taken away. With the risk of mine collapses, of deposits being smaller than expected, of strikes, of unexpected price decreases, of dealing with all the regulation it’s not at all worth it for mining companies to invest new money into Australia, as opposed to say Canada or Brazil.

That said, I would normally have liked the idea of a resources tax. Too many countries whose economies have centred around exploitation of finite resources have collapsed after those resources have disappeared or become valueless. Those which have survived and prospered are those who managed to capture the benefits and redirected them to creating a new economy to replace the resource driven economy. Norway is oft mentioned. Additionally, the resource tax will act as a nice slowing mechanism for the resources sector. It will help alleviate the two tier economy problem.

But there is no guarantee this money will be used for building a new economy. It will go into general revenue, where it will no doubt be frittered away on porkbarrelling or subsidies or both. Or it will be spent on hospitals or roadsigns or the like. That is necessary infrastructure… it is productive in that we get more utility from it than the money we put in. But it does not increase productivity in the economy. We need to invest in roads and the like which will increase productivity. The money should have been put into a general infrastructure fund.

And there is a difference between slowing down the two track economy and halting it in its tracks. It will slow it in the short run, but stop it in the long run. We all know the mining boom will not last forever. We need to exploit resources whilst we can – and there is absolutely no incentive to survey for new deposits of iron ore whilst this “super” profits tax is here.


One Trackback/Pingback

  1. By How to End a Life « The Jackal’s Codex on 26 Jun 2010 at 7:39 pm

    […] Here’s a post I made on these last two topics a few months back. Please note the time stamp on that post and the title. It may not be the most coherent post ever. […]

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