Shareholders of the Earth

Karl FitzgeraldCommentary, MultimediaLeave a Comment

Renegade Economists Show #273

As broadcast on 3CR, Wed Jan 30, 2013

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Following on from George Monbiot’s article supporting Land Tax last week, the show features a BBC interview with UK Green MP Caroline Lucas on her legislative bill to the House of Commons asking Treasury to model the effects of Land Value Tax.

Karl discusses Mike Whitney’s quote on the role of property speculation in the US housing bounce then moves to discuss who really benefits when a major resource find is discovered like the $20 trillion Coober Pedy shale oil and gas find.

Thom Hartmann finishes the show with his excellent piece on the commons asking – why aren’t we all shareholders of the earth?

Much of the content discussed by Thom can be found in the work of Peter Barnes – here is the link to Capitalsm 3.0 (scroll down for the creative commons PDF).

Coober Pedy Oil & Gas Rush

Karl FitzgeraldCommentary1 Comment

Paydirt

Linc Energy’s $20 trillion shale oil and gas find could re-shape Australia’s economic and energy based future.

The lives of the average Australian could be helped by this bounty we have all been gifted. Even if this unproven find is worth 1/4 of the headline value, the finding must raise questions for Australians about who should profit from this resource windfall.

The 2011-12 year saw the Federal government of Australia receive just $1.5 billion from its resources. Just two of our highly profitable mining companies in Woodside and Santos earnt some $5 billion (EBITDAX) in that year. As many will know, BHP and Rio Tinto earnt closer to $20 billion each over that period.

According to Goldman digs up some resource tax reality:

.. the average global royalty rate is 3.9 per cent. The average rate in Australia is 5.6 per cent.

This is held up as a disincentive for Australian investment by the mining lobby. However, these are minimal returns to the public. Citizen’s of the world must become more aware how much money is being made and what we can do to receive a fair return.

Last year’s BHP’s 2012 annual report boasted about its willingness to pay $54 billion to its shareholders over the last ten years. A yearly dividend average of $5.4 billion is considerable. Investors deserve a return on capital. The money lent is used to invest in machinery that depreciates. Taking this principle at face value, the Australian people deserve a greater return than shareholders because these are finite natural resources. This is magnified in the knowledge that iron ore appreciated by 900% over the last decade. This uplift was through no effort of the mining company.

Alex Martell, a commenter on the Goldman Business Spectator article above sums it:

When it comes to extraction of national mineral/petro resources, any profits above a fair rate of return for the miner belong to the country in question (Goldman digs up some resource tax reality, January 24).

Hi rates of capture of these profits indicate government efficiency in standing up for its citizens and collecting these profits (e.g. as Norway does as noted by Maurice Munsie above).

The Australian government I’m afraid has been inefficient in this respect and super profits continue to go to a handful of players with significant influence and ability to protect their economic rents at the expense of current and future generations of Australians.

24 Jan 2013 4:43 PM

The environmental impact of digging up costly shale oil and gas could well spell then end of life as we know it on planet earth. With the climate shift well and truly underway, we cannot give these resources away for a song as the wealth gap increases and uncertainty abounds.

The public further loses out with locals in the Coober Pedy community set to face an enormous property bubble as property ‘investors’ snoop in to play the ponzi game, passing the parcel from one to the other for quick, easy, barely taxed profits. As the Australian Property Investor reported yesterday on a local real estate agent:

“I’ve had so many calls, you wouldn’t believe it,” she says. “My brain is about to explode.”

Who benefits? Locals will suffer from rising rents that are then passed on in higher retail prices. The average miner will have to sacrifice much of their earnings in high rents to guarantee a place to live in the sweltering heat. In some communities the only alternative they face is to live in a shipping container in 45 degree heat. No wonder rents are already going up $10 per week in Coober Pedy! Will houses like this still be $85,000 in a year to come?

coober house

The Alaska Permanent Fund is one way the entire public could benefit from what was once understood as the common-wealth. A yearly Citizen’s Dividend is paid of some $1000 – $2,000. How would that help your family? Another alternative to handing miners the trillions is to follow resource blessed Saudi Arabia, where locals pay zero income tax.

One thing is certain, there’s a sure profit for those who already have money to enter the land game at any level. Read more on resource rents.

Real Estate 4 Ransom recognition

Karl FitzgeraldFeatures, MultimediaLeave a Comment

One of the world’s leading online film portals, Films for Action, has adjudged Real Estate 4 Ransom at #2 for documentaries in 2012. This ranked above Just Do It and 97% Owned. They say:

Tapping into independent media and the independent films below, though, and it’s clear that we’re living during the beginnings of what many believe is the greatest renaissance of world systems we’ve ever known.

Here then, is Films For Action’s top 20 social change inspiring documentaries of 2012, most of which have been generously made available to watch free online by the film-makers.

Over 54,000 people have seen the film in its 9 months online. In terms of inspiring change, the film re-kindles the people’s understanding that those who own the earth have an unnatural advantage over anyone running a business or earning a wage. If haven’t yet seen the 40 minute film, set yourself for a fast ride.

Governing on the Downslope of Collapse

Karl FitzgeraldTrue Cost EconomicsLeave a Comment

Paul Meleng

In the era that is now past, the Lucky country of Oz and the amazing USA grew on the back of free (or stolen) land and resources and a booming supply of energy. There was always something new for governments to give away or announce. “New” land and frontiers gave the brave an alternative to low wage slavery.

We might call the politics of that past era “Governing on the Upslope”. 

We are now overpopulated (for our lifestyle) and many natural resources such as water and fish are depleted or seriously threatened. Government PR and vote buying is no longer a matter of doling out water licenses from the rivers, fishing licenses, new land releases, etc. For a long time into the future, it will be a task of taking much of the previous largesse back to protect systems from total collapse. Despite the fact that this (hopefully) will be based on clear scientific evidence and urgency, there will be many howls of anger and frustration. Few friends are made but many enemies. The same situation will have to be faced across most finite biological resources.
  
Energy costs from traditional sources are going up not down. The natural wealth of “The lucky country” no longer provides affordable education and health care to the level or numbers it once provided. 

Desperate pipe dreams of farming the wild north are once again raised, (touted as a food bowl but actually growing sugar and adding to the global diabetes epidemic) whilst ignoring the lessons of the large collections of rusting pipes and machines that sit as mute warnings across that landscape. And even if successful, few jobs will result compared to the steady loss of thousands of southern city jobs as they are whittled away by stiff competition from lower cost countries. For example, an increasing number of accounting and back office clerical jobs are now done in Asia by Australian trained high level graduates, on a third of Australian salary rates. Good for companies. Bad for local workers. These are unstoppable mega trends and we live and play politics in denial of the facts.

The reason we are increasingly frustrated with politics is that we are trying to find and elect a government of people who can do the job we want them to do within a system that is now past the sustainable tipping point: Government is on the downslope and doomed to fail under the current arrangements. We try to preserve the status quo and extract more from it and we are mentally and emotionally opposed or afraid of the change that is necessary now to avoid collapse, which is why there will be so much angst displaced onto any official. 

So the scenario we face is governments changing in an endless loop of taking turns to take the blame for failing to do the impossible. People will serve their time and qualify for their super and line up corporate jobs with those they have favoured but with little hope or vision for the future of the country. Their election campaigns are funded by the vested interests of the carbon and consumer economy clinging desperately and savagely to old privileges – they are fighting over lifeboat allocation on a sinking ship. Governing on the Downslope.

We are trying to work with a million page tax act that punishes labour and real enterprise and privileges passive asset ownership and land and we are trying to do that with collapsing natural resources.

We need to KISS and change the system.

We need sustainability not growth.
We need quality not quantity.

We need Permaculture not Agriculture.

We need taxes on land value and resource use, not labour and enterprise.

We need to end 50% tax breaks for passive asset speculation.

We need to end massive private windfall gains from re-zoning or development approval and all the inevitable corruption that goes with it and is in fact created by it. Instead, collect a “betterment tax” for sharing the new value created or collect it as land tax on the higher value over time.

We need to end the old colonial game of land and development largesse for the in crowd. The old “land rush” mentality.  Instead, treat the Common Wealth as such and not as a cake to be cut for the friends and backers of politicians.  The “cake cutting” is the primary source of all corruption and poor decisions.

We need to re-set the incentives right across the whole system of government of OUR country to reward real productivity, sweat, brilliance and enterprise and environmental frugality and preservation.

Make it so that the winners in the system are those who produce the most added value, benefits and services and real wealth from the smallest environmental footprint. Welcome in anyone who can do that. Make the care of our common country and adoption of the new Upslope the real test of citizenship for old and new.

We need to be the truly clever country. Wise rather than smart.

When a system is failing it is time to face the fact and then completely re-vision and re-organise. This is what the highest paid corporate chiefs are paid multi-million dollar salaries and bonuses for. They come in for 3 to 6 years and they engineer significant change to move a company into the new mode for a new situation. No one pays them to just shout at people and say try harder.

Trying harder in the wrong way and the wrong direction has no future, and the young people of Australia already know that. The more educated they are, the more they know we are on the wrong path, living for the old status quo and not for the world that they must have and bring about for our grandchildren.

We all know now, from examples like South Africa, or even just from changes to our own superannuation system, that change can be brought about while still respecting the prior rights of people who made decisions under the old system. Major financial commitments can be “grandfathered” with the new rules applying to the new deals. Not all pain can be removed for those most affected, but change can be introduced thoughtfully rather than by resorting to the Guillotine.

An American ambassador and thinker George Cabot Lodge once wrote: “The biggest management task is to induce the maximum social change from the minimum social catastrophe.” That sounds like a good guideline.

Complaining about the standard of politics today will achieve nothing. That failing system that is trying to govern on the Downslope will only attract hopeless ego maniacs who are still too focused on the old game to realise that is what it is.
We bemoan the drug problem and the youth suicide problem etc without asking the deeper question. What are the goals and hopes of the young other than to survive and have some fun in a failing system with a depleting environment and a future of worsening climate and opportunity, run by a bunch of people with their heads in the sand ?

Take note of the ancient wisdom, Bible, Proverbs 29:18 “Where there is no vision, the people perish (or the people cast off restraint) ; but he that keeps the law, happy is he.

It is not so much a mental health or a drug problem as it is a vision problem.

We need a new Upslope towards a more inspiring sustainable objective for all. One with real hope and honour and logic and one that inspires the young to participate.