Think Right

The Editor
The Australian

Dear Sir

The last time a mining tax was imposed, the infamous ‘Utah tax’, a $6 per tonne levy on every tonne of coking coal loaded on a ship by that company, a ransom on top of all the other taxes which had to be paid before any ship left the wharf, development of new mines by that company was stopped in its tracks for 3 years. Japan commenced investing in new mines in Canada, South Africa and South America. The equally infamous Fringe Benefits tax stopped the construction of mining towns in favour of Fly-in, Fly-out arrangements.

Surely it’s time to replace the tax happy chappies in Canberra with people who have at least some idea of the consequences of destructive tax policies.

Can I suggest they catch up on their holiday reading with an excellent tome ‘For good and evil, the impact of taxes on the course of civilisation’ by Charles Adams.

Regards
John McRobert
Indooroopilly

The victories which Lenin, Mussolini, and Hitler won were not defeats of capitalism but the inescapable consequences of interventionist policy.

Lenin defeated the interventionism of Kerensky. Mussolini won his victory over the syndicalism of the Italian trade unions which culminated in the seizure of factories.

Hitler triumphed over the interventionism of the Weimar Republic. Franco won his victory over the syndicalist anarchy in Spain and Catalonia.

In France the system of the front populaire collapsed and the dictatorship of Pétain followed. Once interventionism was embarked upon, this was the logical sequence of events. Interventionism will always lead to the same result.

If there is anything history could teach us it would be that no nation has ever created a higher civilization without private ownership of the means of production and that democracy has only been found where private ownership of the means of production has existed.

Should our civilization perish, it will not be because it is doomed, but because people refused to learn from theory or from history.

It is not fate that determines the future of human society, but man himself.

The decay of Western civilization is not an act of God, something which cannot be averted. If it comes, it will be the result of a policy which still can be abandoned and replaced by a better policy.

So wrote Ludwig von Mises in the conclusion of his “Interventionism: An Economic Analysis.”

See: http://mises.org/etexts/mises/interventionism/section8.asp

Ronald Kitching
Frenchville QLD

Writing about the German Inflation of 1923, Otto Friedrich, Time Magazine editor, wrote in his book titled Before The Deluge:

“The fundamental quality of the disaster was a complete loss of faith in the functioning of society.

“Money is important not just as a medium of exchange, after all, but as a standard by which society judges our work, and thus ourselves. If all money becomes worthless, then so does all government, and all society, and all standards.

“In the madness of 1923, a workman’s work was worthless, a widow’s savings were worthless, everything was worthless.”

English historian, Alan Bullock, wrote in his book titled Hitler: A Study in Tyranny:

“The collapse of the currency not only meant the end of trade, bankrupt businesses, food shortage in the big cities and unemployment: it had the effect, which is the unique quality of economic catastrophe, of reaching down to and touching every single member of the community in a way which no political event can.

“The savings of the middle classes and the working classes were wiped out at a single blow with a ruthlessness which no revolution could ever equal.

“The result of the inflation was to undermine the foundations of German society in a way which neither the war nor the revolution of November 1918, nor the Treaty of Versailles had ever done.

“The real revolution in Germany was the inflation, for it destroyed not only property and money, but faith in property and the meaning of money.”

Ronald Kitching
Frenchville QLD 4701

It is refreshing to see that that the WA Government are talking about abolishing payroll tax for a year. If they do, they ought to abolish it for ever.

Payroll Tax really is a tax from Marxland. If ever a tax should be immediately abolished without any equivocation whatsoever, it is payroll tax. It is inconceivable that people or companies employing workers should be taxed as though employing people was a crime, a heavy penalty for creating real jobs providing goods and or services for which people scramble.

The payroll tax is a huge impediment to employment, it prohibits some people from even starting businesses. And as far as exporters go, it is a huge additional cost and so helps to render Australian goods uncompetitive. The late Professor Colin Clark has pointed out that the long-run effect of payroll tax is to lower the remuneration received by labour.

With the advent of the GST, it should have been the first tax to go. To his credit Sir Joh Bjelke Petersen not only abolished death duties, he planned to also abolish payroll tax. However, he was threatened with retaliatory action against Queensland by the then federal government if he did so.

The tax on employment is both criminal and stupid.

Ronald Kitching

United States’s SBS News commentators Shields and Brooks are in a quandary as to the trillion dollar “stimulation” package.

Shields: We are spending billions on getting out of this but nothing is happening.

Brooks: Confidence is the child of optimism.

Shields: Americans rebuilt devastated Germany after WW2. Americans rebuilt devastated Japan after WW2. We can surely rebuild America.

Shields is quite wrong on both of those points. It was the wise economic decisions of Finance Minister Ludwig Erhard that rebuilt West Germany. He eschewed money printing, reduced taxation and the recovery was so dramatic, that unemployment went from 50% to zero in 10 years.

And five million new workers had to be imported from Greece, Turkey, Italy Spain and France.

In Japan’s case, it was Japan’s Minister of Trade and Industry, Tanzan Ishibashi who dictated Japan’s economic policies. He abolished the tax on the interest of savings. He cut tax on dividends from 11% to 7% and cut personal rates by 10%. Corporate tax rates were dropped from 42% to 40%.

Curiously tax revenues rose by 15% and voluntary savings rose by an astonishing 31.5%.

Taiwan, Hong Kong, Singapore and South Korea also copied West Germany’s recipes and made astonishing gains in ten years.

Our illustrious leaders and Opposition ought to study these policies and apply the nation building recipes here.

Ronald Kitching

The United Kingdom, already financially moribund after 12 years of socialist rule is yet another a sad example of monetary madness, as they prepare to emulate Mr. Mugabe’s example of “stimulation” by money printing on a grand scale.

Who would have thought that this once great nation which was the modern founder of sound money, could descend to such relative penury.

President Obama and Prime Minister Rudd are too embarking on the Mugabe recipe.

It was Sir Isaac Newton when he was made Master of The Mint in 1717, who declared: “If this nation is ever to prosper, it must have honest money. That is, we must have a standard by which money can be measured. In order to calculate, you must define the unit. Therefore, from this day forward, every guinea will be worth 129.4 grains of gold. Thereby, we intend this currency to hold its value.”

So seriously did he take his views that counterfeiters were hanged. It is a great pity it isn’t still a hanging offence, we would get rid of the Central Bank and a raft of corrupt senior politicians all in one hit.

Ronald Kitching

The PM assures us that he is concerned about jobs. If he and his advisers knew anything about how real jobs are created and maintained he would not now be acting out the most incredibly destructive fiasco in Australian history.

A short letter cannot possibly do justice to the subject. But the following book does so.

Murray N. Rothbard’s book titled America’s Great Depression is a staple of modern economic literature and crucial for understanding a pivotal event in American and world history. Applied Austrian economics doesn’t get better than this.

Since it first appeared in 1963, it has been the definitive treatment of the causes of the depression. The book remains canonical today because the debate is still very alive.

The Great Depression was not a crisis for capitalism but merely an example of the downturn part of the business cycle, which in turn was generated by dishonest government generated money and government intervention in the economy.

Its appearance in 1963 meant that free-market advocates had their first full-scale treatment of this crucial subject. The damage to the intellectual world inflicted by Keynesian- and socialist-style treatments are illustrated and demolished.

The Great Depression was a failure not of capitalism but of the hyperactive state.

It is available in hard copy and on line at: www.mises.org/rothbard/agd.pdf [PDF, 956KB].

Ronald Kitching

The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.

So wrote the greatest of Roman lawyers, statesmen and orators Cicero in 55 B.C.

Forthright in every sense, his statements found the ever power hungry men of his time uncomfortable, as he exposed their corruption. Finally he was murdered by Mark Anthony who had his head and hands cut off and his head was set on a spike in the Forum and a nail driven through his tongue.

A warning to others to be more careful with their words.

Dissidents here speak out against the inflation, the unnecessary, unjust and destructive EMS tax, the sacrifice of productive farms and other atrocities.

Newspaper essays on proposed reprisals indicate that such protesters may soon suffer a similar fate to that of Cicero as the anti-industrial environmental movement flexes its poisonous influence.

Ronald Kitching

The Government caused the boom by increasing the money supply. They increase the money supply to pay their bills rather than tax the public directly. Nevertheless it is a hidden tax. Their excesses of monetary expansion cause a so called boom.

The boom induces entrepreneurs to initiate investments which, if the money was reduced to its original stable value would show losses, not profits.

And in any case if this exercise did reveal profits, they would be illusory, as in fact, reduced to its original stable worth, capital consumption would be seen to be occurring.

Now that the bust has occurred, the government is endeavouring to stimulate the economy with more of the same policy that caused the problem in the first place.

Many writers and commentators are complimenting the Government on its “wise” move. Some eminent commentators saying that it is not enough, and much more is needed. In so doing, they are exhibiting their abysmal ignorance of monetary theory.

Some wise local and international investors who have had the wisdom and the capacity to do so, have been and are buying gold. So much so, that the Perth Mint, working 24 hours a day seven days a week has had to close its doors to the public, until it catches up with back orders. They announced that buyers have made purchases from one ounce to 33,000 ounces.

Some interviewed investors say that, they are not really interested in profits, but capital protection. Wise people indeed.

Ronald Kitching