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Who Owns Bolivia's Oil and Gas?

Joseph StiglitzJoseph E Stiglitz, a Nobel laureate in economics, is Professor of Economics at Columbia University and was Chairman of the Council of Economic Advisers to President Clinton and Chief Economist and Senior Vice President at the World Bank.

by Joseph E Stiglitz

A few months ago, Evo Morales became Bolivia‘s first democratically elected indigenous head of state. Indigenous groups constitute 62% of Bolivia’s population, and those with mixed blood another 30%, but for 500 years Bolivians had been ruled by colonial powers and their descendants. Well into the twentieth century, indigenous groups were effectively deprived of a vote and a voice. Aymara and Quechua, their languages, were not even recognized for conducting public business. So Morales’ election was historic, and the excitement in Bolivia is palpable.

But Morales’ nationalization of Bolivia’s oil and gas fields sent shock waves through the international community. During his campaign, Morales made clear his intention to increase state control over national gas and oil. But he had made it equally clear that he did not intend to expropriate the property of energy firms – he wanted foreign investors to stay. (Nationalization does not, of course, necessarily mean expropriation without appropriate compensation.) Perhaps surprising for modern politicians, Morales took his words seriously. Genuinely concerned about raising the incomes of his desperately poor people, he recognized that Bolivia needs foreigners’ expertise to achieve growth, and that this entails paying fairly for their services. But are foreign owners getting more than a fair rate of return?

Morales’ actions are widely supported by Bolivians, who see the so-called privatizations (or “capitalizations”) under former President Gonzalo “Goni” Sanchez de Lozada as a rip-off: Bolivia received only 18% of the proceeds! Bolivians wonder why investments of some $3 billion should entitle foreign investors to 82% of the country’s vast gas reserves, now estimated to be worth $250 billion. While there has not yet been full disclosure of returns, or an audit of the true value of investments, it appears that investors would, at the old terms, have recouped all their money within just four years.

Bolivians also ask why foreigners reap all the benefits of today’s high prices for oil and gas? It costs no more to extract oil or gas today than it did when prices were one-third of their current level. Yet, the foreign oil companies get 82% of the increase – in the case of oil, this would amount to a windfall for them of $32 a barrel or more. No wonder that Bolivians thought they were being cheated and demanded a new deal. On May 2, Morales simply reversed the percentages, pending renegotiation of the contracts: the companies operating in the two largest fields would get 18% of the production for themselves. As part of this new deal, Bolivia should also get a larger share when prices increase. (Bolivia may, of course, not want to bear the risk of a fall in the price, so it may strike a deal to transfer some of the downside risk to foreign companies, giving them in exchange more of the upside potential.)

To most Bolivians, what is at stake is a matter of fairness: Should foreign oil and gas companies get a fair return on their capital, or a supernormal return? Should Bolivia be paid a fair value for its resources? And should Bolivia, or foreign companies, reap most of the windfall gains from increases in energy prices?

Moreover, many deals were apparently done in secret by previous governments – and apparently without the approval of Congress. Indeed, because Bolivia’s Constitution requires the approval of Congress for such sales, it isn’t clear that Morales is nationalizing anything: the assets were never properly sold. When a country is robbed of a national art treasure, we don’t call its return “re-nationalization,” because it belonged to the country all along.

As with many privatizations elsewhere, there are questions as to whether the foreign investors have kept their side of the bargain. Bolivia contributed to these joint enterprises not only with resources, but also with previous investments. The foreign companies’ contribution was supposed to be further investment. But did they fully live up to their commitments? Are accounting gimmicks being used to overstate the true value of foreign capital contributions? Bolivia’s government has, so far, simply raised questions, and set in motion a process for ascertaining the answer.

The problem in Bolivia is a lack of transparency, both when contracts are signed and afterwards. Without transparency, it is easy for citizens to feel that they are being cheated – and they often are. When foreign companies get a deal that is too good to be true, there is often something underhanded going on. Around the world, oil and gas companies have themselves to blame: too often, they have resisted calls for greater transparency. In the future, companies and countries should agree on a simple principle: there should be, to paraphrase President Woodrow Wilson’s memorable words, “open contracts, openly and transparently arrived at.”

If the Bolivians do not get fair value for their country’s natural wealth, their prospects are bleak. Even if they do, they will need assistance, not only to extract their resources, but also to improve the health and education of all Bolivians – to ensure long-term economic growth and social welfare.

For now, the world should celebrate the fact that Bolivia has a democratically elected leader attempting to represent the interests of the poor people of his country. It is a historic moment.

Joseph E. Stiglitz, a Nobel laureate in economics, is Professor of Economics at Columbia University and was Chairman of the Council of Economic Advisers to President Clinton and Chief Economist and Senior Vice President at the World Bank.

Copyright: Project Syndicate, 2006.
www.project-syndicate.org

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From the oil age to the hydrogen age?

Stuart McCarthy, I must say I appreciate your focus on objective discussion.

Re “you can’t have read too much of the information that I provided earlier, because every one of the points you raised has been covered there extensively.” This is a little unfair, sure I haven’t read ‘Powerdown’ or ‘Half-gone’ and I wasn’t encouraged by internet reviews of these books, nor what I saw from a cursory glance at ‘Powerdown’. The ASPO site appears to focus mostly on declining oil production, which I’ve already acknowledged is inevitable (never said rapid, might be gradual). Although a subsequent review has turned some interesting information. It directed me to Amory Lovins and the ‘Oil End Game’ which outlines in great detail how the world could switch to non-oil sources of power and propulsion by as early as 2025 (the best possible outcome). Amory even believes the switch could be done without any significant financial or economic pain. The study takes a while to read (took me a few days), but is very thorough (332 pages). I cross checked some of his stuff and he appears well respected.

Re “Your reference to Adam Smith suggests that you have a background in economics” Not really, more of a banking and bean-counting background.

Re “Unfortunately there is no other energy source with which these can be replaced in the foreseeable future.” There doesn’t need to be just one in the ‘foreseeable future’, a combination of many will suffice. Bio-fuel (ethanol, methanol etc), Hydrogen fuel cells, natural gas, nuclear, solar and others will fill the gap between the ‘oil age’ and the ‘hydrogen age’.

Re “Even if such a source existed it would take decades, massive investment, huge amounts of energy and political will to develop the necessary infrastructure.” Maybe so, doesn’t mean it won’t happen.

Re “the ‘the invisible hand of the market’ so revered by neo-classical economists will not respond quickly enough to make anything other than a small dent in the problem before the economy has crashed.” How do you know this? Said market is already responding, most of the world’s motor vehicle producers have already developed vehicles powered by fuel cells. Government is responding too, California already has the Hydrogen Highway project.

Re “Do you seriously believe in the viability of replacing the world’s 27,500 billion tonne-mile shipping fleet with sail or alternative-energy ships?” Yes, gradually. “If so, how quickly do you think this could occur” it would take a few decades “and how much do you think it would cost?” A gradual process of replacing obsolete ships with new renewable energy powered ships may actually result in a long-term net financial gain for shipping lines and transport firms.

Re” Multi-national banks rely on international trade and general wealth.” As long as folks continue to borrow to buy homes, open businesses, use their credit cards, insure property and save for retirement, multi-national banks will do just fine.

Re “Brand naming is a recent invention that also relies on international trade, general wealth and mass marketing. Without rampant consumerism, and with increasing localisation and levels of self-sufficiency, most people simply won’t need to use major banks any more.” I think believing in the end of brands is verging on fantasyland stuff. As long as TV, radio and the internet are around, there will be an audience for global brands. Stuart, are you suggesting the end of TV and the internet? For example how could the demise of Google, Fox, Disney, Yahoo, Apple, Microsoft etc occur while TV and the internet survive?

Finally, re “But I ask you this – in a world where industrialised agriculture, transport and manufacturing and economic globalisation are in rapid decline, or have even collapsed, how else will people eat, work, and live?” My view is that future changes in the source of electrical power and transport propulsion will not have any significant long-term effect on global agriculture, manufacturing and trade. I believe there will no long-term decline in these areas, let alone any collapse. Hence why I claim that in my lifetime (Deathclock says this is another 60 years) I will never ‘rely on’ a walk/ride to work, ‘rely on’ food grown/sourced nearby or ‘rely on’ bartering for any goods or services.

Peak Oil continued ...

Gareth Eastwood, you can’t have read too much of the information that I provided earlier, because every one of the points you raised has been covered there extensively. This is old ground, but I will persevere nonetheless.

Your reference to Adam Smith suggests that you have a background in economics. I am very familiar with Smith’s work, indeed from the very historical perspective that you suggest. Unfortunately what most economists forget to do when they read and recite The Wealth of Nations is to consider the historical context in which it was written, to question whether the un-stated assumptions that underpin his work remain valid, and to consider the consequences in the contemporary setting of these assumptions being invalidated. If neo-classical economics was a field of study rather than an ideology, its proponents would have recognised the invalidity of these assumptions long ago.

In Smith’s day the world’s population was but a fraction of what it is today and was able to be sustained adequately by the earth’s natural resources, which were understood to be limitless. While it was acknowledged that industrialisation, was damaging to the environment, it was not understood that the damage would eventually become so significant that it would impair the earth’s ability to sustain human life. These basic assumptions, among many others, are now commonly understood to be invalid. Unfortunately they have not been acknowledged to be so by neo-classical, or ‘mainstream’ economics. Were this to be so then our societies would be taking active steps to address peak oil and its associated problems rather than leaving it to the mystical powers of Smith’s ‘invisible hand of the market’.

A further assumption of neo-classical economics, although this does not come directly from Smith, is the belief that technology, will respond to ‘market stimuli’ and spontaneously solve any and every problem confronted by mankind. This is purely and simply an article of faith, because it has absolutely no factual, scientific or historical basis. On the contrary, history shows us that entire societies have collapsed when they have pursued technological development to such an extent that they destroyed the ability of the environments that sustained them from continuing to do so, while science lessons given to 14-year-olds (specifically, Newtonian physics and the laws of thermodynamics) teach us that humans cannot create energy but must rely on sources of energy available to them in the environment. Economics, along with every other field of human endeavour, will always be constrained by the laws of physics. ‘Market forces’ might describe transactions between humans (in a very limited way) however they cannot overcome the laws of thermodynamics.

You need to bear in mind that non-renewable fossil fuels, which you have acknowledged are being rapidly depleted, are a readily transportable form of highly concentrated energy. Unfortunately there is no other energy source with which these can be replaced in the foreseeable future. Even if such a source existed it would take decades, massive investment, huge amounts of energy and political will to develop the necessary infrastructure. The irony is that the ‘the invisible hand of the market’ so revered by neo-classical economists will not respond quickly enough to make anything other than a small dent in the problem before the economy has crashed.

Now let me address the specifics of your post:

I don’t agree [that “Economic globalisation is totally underpinned by the availability of cheap, abundant fossil fuels, namely oil, gas and coal.”], I think improvements in technology and communications are by far the biggest factor. Global trade grew before the combustion engine and even the steam engine. Why would it stop when future transport is based on a different source of power?

Yes, global trade did grow before the internal combustion engine, but not to the extent that literally billions of people rely on imported food, resources and luxury goods from the other side of the world for their livelihoods and their survival, as is the case in the globalised economy. Communications technology may or may not have been the ‘biggest factor’ in the rise of globalisation, but you must remember that communications technology is used to buy and sell things that are grown, manufactured and transported around the world using cheap oil. This is why globalisation is underpinned by oil. I am certainly not arguing that global trade will stop. Clearly it will continue, but it will shrink to down to a level able to be sustained by transport that relies on renewable energy, i.e. it will consist mainly of luxury goods that cannot be produced locally, as was the case prior to the widespread availability of cheap oil.

… motor vehicles already have alternative sources of power other than oil. What about ethanol and hydrogen? Ethanol is already being tested as an aviation fuel. Stuart, I had a flick through ‘Powerdown’, I could not find one mention of ethanol, did I miss this section?

Ethanol and hydrogen both highlight the problems we face in finding replacements for oil. Ethanol certainly can be used as aviation fuel, but you should read your sources more carefully. The Shauck and Zanin article, if you care to read it, explains that methanol can indeed be used to power piston-engine aeroplanes, however even the most optimistic assessment is that the turbine engines that power airliners cannot use a methanol:avtur ratio exceeding 25%:75%, i.e. at least 75% of general aviation fuel will continue to be produced from oil. The reason for this is that only oil-based fuels have sufficient concentrations of energy. Even if the world’s aviation fleet was replaced by piston engine aircraft the aviation industry would shrink to a tiny fraction of its current size in economic terms. Further, the same articles state that the research was motivated by environmental considerations rather than economics; hence they did not examine the economic viability or the scientific validity of large-scale ethanol production.

On the production side of the equation, ethanol proponents have examined only its economic viability without acknowledging the assumptions that I described above. Ethanol as a fuel is an energy sink, in that it takes more energy to produce than it yields; and this energy is currently provided by oil-based fertilisers, pesticides and engine-driven machinery. Without cheap, abundant oil Furthermore, the amount of agricultural land required to grow sufficient crops to produce enough energy to replace oil-based liquid fuels would completely displace the agricultural industry that currently provides our food. For these reasons, Cornell University’s David Pimentel describes ethanol production as “unsustainable, subsidised food-burning.”

Hydrogen, too, is not an energy source but an energy carrier, and it must be produced using vast amounts of electrical energy. The necessary energy could only realistically be provided by coal-fired power stations into the medium term, and only if we wanted to expedite catastrophic climate change by ignoring the research that totally dispels the CO2 sequestration fantasy. Even if there was a solution to all this, it would take several decades and billions of dollars to develop the necessary infrastructure. How much time do you think the peak oil ‘market stimulus’ might give us? Several decades?

There’s more than one way to power a ship or an aircraft. Ships have already been powered by oars, wind, coal, oil and nuclear sources, do you seriously think we’re out of ideas?

I absolutely agree and I certainly don’t think that we’re ‘out of ideas’. The issue is one of scale. Any economist would be aware that literally billions of people and their economies rely on food, resources and manufactured goods that are transported in vast quantities over vast distances, by oil-powered ships. In 2004 alone world seaborne trade was estimated at 27,500 billion tonne-miles. You should bear in mind that this aspect of economic globalisation has been brought about by a combination of the thermodynamic efficiency of oil-powered ships (in the case of agricultural goods and other resources), the availability of cheap oil (to power the ships, operate machinery used in primary industries such as mining, and provide the massive amounts of fertilisers and pesticides that sustain industrialised agriculture) and increasing labour costs (i.e. wages) in developed countries (in the case of manufactured goods). Do you seriously believe in the viability of replacing the world’s 27,500 billion tonne-mile shipping fleet with sail or alternative-energy ships? If so, how quickly do you think this could occur and how much do you think it would cost?

Why would a local co-operative in the banking industry thrive, while a multi-national bank fails just because there is a reduction in the supply of oil? Why would brand names disappear, just because there is less oil available? This makes no sense whatsoever.

Multi-national banks rely on international trade and general wealth. Brand naming is a recent invention that also relies on international trade, general wealth and mass marketing. Without rampant consumerism, and with increasing localisation and levels of self-sufficiency, most people simply won’t need to use major banks any more.

Now Stuart I don’t know how dearly you hold this view, but I wouldn’t get too attached to this outcome. I personally would consider the chance of this happening as zero. I think we’re all more likely to be exterminated by an asteroid than live in a world where we all grow our own food, all walk/ride to work and only barter for goods & services.

As this is an objective view rather than an ideological one, I certainly don’t ‘hold it dearly’. On the contrary I love cars, power-boats and other toys and I prefer to buy my food from a supermarket rather than grow it. But I ask you this – in a world where industrialised agriculture, transport and manufacturing and economic globalisation are in rapid decline, or have even collapsed, how else will people eat, work, and live?

David R: meanwhile, my prediction of an $80 barrel in January looks a bit late, with March 07 futures hitting $78 overnight ...

Oh, really?

Rather than discussing Greg Moylan's 'Reality Based Response in Who Owns Bolivia's Oil and Gas?' opinions which seem to have far more to do with the current govt's 'pushed paradigm' than any 'Who Owns' what reality; perhaps we ort'a just stick to thread-related themes. Hmmm?

In this discussion (AFAIK), I have neither misrepresented nor confused anything. There is a saying: "To know the price of everything, and the value of nothing." We have found that the price demanded (or offered) has more to do with market power than any competition concept; the price is generally 'what the market will bear,' as opposed to any fair price, i.e. cost plus modest comfort. In a single word: rapacious.

From Moylan himself: [the market price] "bears no relation to the cost of production of the commodity." Q: Why not? A: Market power. Q: Supply/demand? A: Sometimes; more often speculation, collusion or outright monopoly, etc. Q: Whadda 'bout oil? A: In Aus, we hand over pricing to external events; we have WPP = world parity price. It means oil produced in Aus can be 'marketed' in Aus at an externally set price - as opposed to 'what it's worth' say, or to what 'supply and demand' might otherwise dictate. But all that is 'relatively' OK; it's 'the system'. I'm not suggesting any sort'a 'price-control' (yet).

What still concerns me is - Ta ra! - the 'bit in the middle', aka resource-rent, the 'super-profit', the (big!) bit between what the mining entity could work for - with a tidy profit, thanks - and what it wants to work for - which is (as close as possible to) the lot. Q: Why? A: Utter greed. I have intimated, that if a mining entity 'harvests' a super-profit then 'investors' will flock in - and inflate the share-price until the yield is once more 'competitive'. This 'dilutes' any super-profit to the level that no-one in particular benefits. (Except possibly the 'fat-cats' actually in the mining entity who may gorge themselves like pigs.) The conclusion here is that it's not much use letting the mining entities gorge themselves as they gouge huge holes out'a our (non-renewable) resources; we the people ort'a get some benefit. Like a friendly, fair but firm resource-rent tax on all non-renewables which would be hypothecated to improving our (we the people's) infrastructure - Oh, say: a 4-lane Australia Highway, or wind-farms anyone?

Hey! Wait a sec! What was that about price-control not yet? Hmmm. Q: What do you get if you cross a Kangaroo with an Elephant? A: Holes all over Australia. If we let (mostly foreign owned?) mining entities rip all our non-renewables off without proper recompense, that may be all we'll have left - empty holes all over Australia, and nothing to show for it. As well as a fair resource-rent tax, we might like to specify a minimum price below which well, we just won't sell.

Freedom! - We won't!

-=*=-

PS to Gareth Eastwood: If the NSW - or any other government - is subsequently found to have given up its sovereignty over any (people's) resource (don'cha just wonder why?) - kindly don't blame me.

Glass houses and their rubbish

Phil Kendall, two things. Are minerals and natural resources the same thing? I could have included forestry companies, water utilities etc.

Second point, am I to assume that the NSW Department of Primary industries is also full of said ‘rubbish’. What am I to make of this section on ‘mining for privately owned minerals?’ From the website:

Before you can mine or explore for minerals prescribed under the regulations to the Mining Act 1992, you must hold a mining lease, a mineral claim or an exploration licence.”

"An exception to this rule is where the owner of privately owned minerals may in certain circumstances, mine or prospect for those minerals by virtue of that ownership, or permit someone else to mine or prospect for those minerals.”

Seems that minerals can be privately owned and mined?

With crown resources, the owner of a mining/exploration licence obtains ownership of the mineral or petroleum resource as soon as it leaves the ground. That sounds like ownership to me. BHP, Rio Tinto and Woodside are of course large Australian producers and sellers of mineral/petroleum resources, if they never owned said resources, did they steal them?

Phil you need to be careful before accusing someone of posting rubbish, in future you might want to confirm the accuracy of your own post first.

Are we heading back to the Iron age?

Stuart McCarthy, there are a few aspects of your previous post that I agree with. I personally agree that we face an inevitable decline in world oil production. I also accept the significant role oil currently plays in producing and transporting resource and agricultural goods. However, our views on the likely outcome from these two points are on different planets.

Re “Economic globalisation is totally underpinned by the availability of cheap, abundant fossil fuels, namely oil, gas and coal.” I don’t agree, I think improvements in technology and communications are by far the biggest factor. Global trade grew before the combustion engine and even the steam engine. Why would it stop when future transport is based on a different source of power?

Re “Suburbia is totally reliant upon motor vehicles” well maybe some suburbs. But motor vehicles already have alternative sources of power other than oil. What about ethanol and hydrogen? Ethanol is already being tested as an aviation fuel, see here. Stuart, I had a flick through ‘Powerdown’, I could not find one mention of ethanol, did I miss this section? May I suggest an alternative publication for a historical view on globalisation, ‘The Wealth of Nations’ by Adam Smith, written before the combustion engine was even invented.  

Re “People will start to grow their own food and buy what they can't grow from local producers rather than driving to shopping centres. Commuters will initially rely on public transport, but eventually they will live within walking or riding distance from work.” And “They will rely on bartering, exchange and cooperatives rather than central banks.” Now Stuart I don’t know how dearly you hold this view, but I wouldn’t get to attached to this outcome. I personally would consider the chance of this happening as zero. I think we’re all more likely to be exterminated by an asteroid than live in a world where we all grow our own food, all walk/ride to work and only barter for goods & services. Humankind passed this stage in medieval times, well before oil was used as a basis of transport.

Re “Manufactured goods, agricultural products and raw materials will no longer be able to be transported cheaply around the world in vast quantities. Travel will be unaffordable for all but the very wealthy.” All because of a decline in the production of oil? There’s more than one way to power a ship or an aircraft. Ships have already been powered by oars, wind, coal, oil and nuclear sources, do you seriously think we’re out of ideas?

Re “Centralised service industries and brand-name franchises will all but cease to exist. The marketing industry will pretty much disappear. Major banks and finance companies will be supplanted by local cooperatives.” I fail to see how this has any connection to a reduction in the supply of oil? Could you please explain the link? Why would a local co-operative in the banking industry thrive, while a multi-national bank fails just because there is a reduction in the supply of oil? Why would brand names dis-appear, just because there is less oil available? This makes no sense whatsoever.

Stuart, you claim this will all unfold in the next couple of decades. I’ll guess we’ll see who’s got their predictions right in that time.

Who 'should' benefit

Phil Kendall, re “why did it have to take you so long?” like I mentioned before, you attributed the concepts of ‘fair’ profit and ‘fair’ price to what is essentially a tax on resource production. I responded to a specific post of yours using these terms. If not reading all posts and associated links on a particular topic prior to posting myself is breach of netiquette, then I am guilty as charged.

In respect to “Who really owns Australia's natural resources” this is a broad question of fact is it not? The answer would be very long and include federal & state governments, Rio Tinto, BHP Billiton, Woodside and numerous private individuals.

I think your second point is the heart of this particular topic “who should benefit from the dough raised by digging 'em up'n flogging 'em off?” I reckon the folks that should benefit the most (at least financially) include those that found and ‘dug-up’ said resources. The actual legal owners of the land and associated resources (would have to approve of the whole process in the first place) are next in line and should be entitled to a pre-agreed cut of the takings. State and federal governments are of course entitled to their usual cut of profits (company tax) and activity (GST, payroll tax etc) though less than the previous beneficiaries. Company employees, towns and industries directly associated with the resource production process should benefit in due course anyway. The broader interests of the states and national governments and their respective electorates/taxpayers/ordinary people deserve no more than their share of the governments cut. That’s how I see it Phil.

In relation to Bolivia, the owner of their gas resources is apparently going to be the federal government (the legality, fairness and sense involved in how they obtained these resources is debatable). They’re still going to need to hire and pay someone to extract, transport and distribute this gas. We’ll find out in due course who actually benefited from this whole process.

not even close; and certainly no cigar

Well sorry Gareth Eastwood, but your "The answer would be very long and include federal & state governments, Rio Tinto, BHP Billiton, Woodside and numerous private individuals." is contradicted - and not 'just a little' - by this:
"2 OWNERSHIP OF MINERALS
Crown ownership of minerals - which forms the basis of the regime under which minerals are exploited in Australia - is rarely questioned."

[Industry Commission Inquiry Report]

Here's more:
"2.1 The Australian system: public ownership
In Australia ownership of mineral resources generally lies with the Crown (in practice State/Territory and Commonwealth governments), regardless of who owns the land on the surface.
This seems to reflect a widely held belief that mineral deposits are a fortuitous `gift of nature' and that any net benefits flowing from their exploitation should accrue to the community as a whole rather than to whoever happens to own the surface rights."

[ibid.]

Conclusion: Gareth's "federal & state governments" was correct (a lucky guess?) but the rest was - err - shall we (charitably) say: 'a wild stab in the dark' - or just 'rubbish?'

-=*=-

Yes, it's a 'social-justice' issue.

I've said before: "the Stiglitz article gives us some 'scale': 82% of $250 billion to the mining entities, 'for free!' This illustrates just one way the fat-to-the-point-of-obscene-cats, the rich-getting-ever-filthy-richer operate - to our direct disadvantage."

I've also talked about the fabled 'fair-price' of $US1 to produce a barrel of Iraqi crude vs. the current 'market-price' of $US73+, giving a potential resource-rent of $US72+. Royalties, or some sort'a tax will be/should be payable, but with the brutal US boot firmly on all Iraqi necks, the rate of any such 'impost' will be small, y'c'n bet on that.

We've seen that some Aussie govt was aware of the 'problem' and set the referred-to PRRT (on some oil) to 40%.

Sooo, the next question(s) in the 'steppa by steppa' are:

(remembering: "that any net benefits flowing from their exploitation should accrue to the community as a whole")

a) should there be a resource-rent tax on all minerals (I say indubitably), and if so

b) how high should it be set? Less or more than 50%; how much more or less and why? Yeah, what's in it for us, we the people?

If there is no general resource-rent tax, or if it's insufficient to guarantee 'net benefits ... accruing to the community' then why (the BH) not, and what are the implications for our so-called 'representatives?'

Resource tax?

Phil Kendall, excellent! Why didn’t you explain that said ‘fair’/’normal’ profit is merely an arbitrary basis for calculating a tax on oil (or resource) production. It’s all in this paragraph from your link.

“The PRRT is generally assessed on a project basis. The tax base is net cash flows after recovery of eligible exploration expenditure, operating costs, and capital expenditure. Any excess of expenditure over receipts can be compounded forward (at the long-term bond rate plus 15 percentage points for exploration and the long-term bond rate plus five percentage points for other expenditures provided they are incurred less than five years before the production licence commenced) for deduction against future receipts from the project.”

You’ve misrepresented your own links, Phil (unless this is actually how you would calculate a ‘fair’ profit). This mechanism is deliberately designed to have no impact on the market price and thus will not achieve your desired ‘fair’ price; this is where you first lost me Phil. Can I now assume that you’re merely advocating a similar tax on all resources, is that where you were heading in the first place? Can we dump the idea that we’re actually talking about ‘fair’ anything here?

I personally have concerns about the idea of a tax on economic or resource rent because it discourages investment in whatever it is you’re taxing, no one was crying for the oil companies when the world oil price fell below $10 a barrel in the nineties. I think a simple tax on company profits works better overall

Phil, I think I’m entitled to get a little haughty in response to posts repeatedly alluding to a lack of intelligence on my part. A post still has to make sense before the reader can understand it.

a breakthrough! now, steppa by steppa...

Glad we got the PRRT straightened out at last, Gareth Eastwood; hopefully, you now appreciate the terms ‘fair’/‘normal’/‘super’ profit and resource-rent - we'll see. But IMHO, Gareth, I've misrepresented nothing; and furthermore, I have to ask: why did it have to take you so long? I did, after all, cite the PRRT reference on June 27, about 6 days before you finally 'got it'. It is (again IMHO), a gross breach of netiquette not to read (let alone appreciate) the linked-to material, which, as we can now see by your reaction, was critical to your comprehension - hmmm? Also, there's nothing 'arbitrary' about the calculation, it's meant to be both reality-based and acceptable to the to-be-taxed entity. If you did get lost, Gareth, it's possibly because you hared off after some phantasm you conjured up, not because I misrepresented anything.

But a breakthrough, nevertheless. So now, we don't wanna 'confuse' anybody anymore by making it just that bit too complex; we'll take it just the one, single step at a time. The thread is 'Who Owns Bolivia's Oil and Gas?' which I claim can be validly generalised to 'Who Owns Xx's Yy and Zz?'

In particular, Q: Who really owns Australia's natural resources (or Bolivia's; the functioning aspect is 'the sovereign people of') and the concomitant 2nd question: who should benefit from the dough raised by digging 'em up'n flogging 'em off?

Please let's try to stay 'reality-based' (I like to say WYSIWYG), and kindly try to stick to the (above) question(s), and definitely not to confuse things by dragging in straw-men or any other airy-fairy ideological phantasies. Over to you, Gareth.

WYSIWYG: A Reality Based Response

Phil Kendall, in your arguments you confuse two things; the price of a commodity and the profit from it. If Bolivia's gas reserves are worth $250 billion then that is because that is what consumers will pay for them when the gas in the reserves gets to them for consumption, and not before. Sitting in the ground in Bolivia the reserves are worthless. The value of the reserves to the consumer is determined by working out how much it would cost to get the same commodity from an alternative supplier, such as Australia, which also has immense natural gas reserves, or from North Africa, or from Alaska, etc. That is how a market price is set. It bears no relation to the cost of production of the commodity save that the production cost, including transport costs, must be below the market price, otherwise it is not worth selling and the producer will withdraw from the market rather than incur a loss.

Production costs will vary according to the circumstances of each producer. The estimated cost of producing a barrel of oil for Saudi Arabia is US$1. For Norway, where the oil has to be recovered off-shore the production cost is no doubt higher, and so on for oil from Alaska, where it may be $20 per barrel. It is not economically sensible to say, however, that as the Saudis produce their oil at $19 per barrel less cost than Alaskan oil they should sell it for $19 per barrel less.

The difference between the market price and the production cost is, in simple terms, the producer's profits. For the Saudis the profit is, at a market price of $73 per barrel, $72 per barrel, and for Alaskan oil $53 per barrel. The issue then arises as to what happens to the producer's profit. Simply put it goes to those who have an interest in the commodity produced. They will be the State from which the commodity is produced, the companies that undertake the development and production of the resource and those people who lent the money so that the resource could be developed, exploited and sent to market for sale.

The resources of a country belong to the State. Its government decides how to allocate them. Hence, for example, under Australian law all land title is held as being derived from the Sovereign, and if the State decides to compulsorily acquire land which it has sold or given to a private entity, eg the land that your house is on then it "resumes" the land.

The same applies to the natural resources of a country. The State can dispose of them on whatever terms it sees fit, including giving them away if it wants to. That is the legal position. Whether it is fair or not is a very different question and here we need to look at economics. The natural resources of a country are worthless to it unless they are developed and exploited. To develop them can be very expensive. First of all there is the expense of actually going out to find them then, once found, to work out their extent in order to work out whether it is worth developing them. Then there is the cost of building the infrastructure for their exploitation; the mine or gas or oil rigs and, of course the infrastructure to get them to market, the pipelines, the roads and the ports, and in the case of natural gas, which is Bolivia's principle resource, the LNG conversion plant if any of the gas is to be shipped to overseas markets.

A country as poor as Bolivia does not have the capital to develop its resources. However without their development it will remain poor. It has two choices; borrow the money to develop the resources, which it would have to do on world capital markets, incurring crushing debts which it would have to service out of its paltry revenue base until the gas came on line, thus wrecking its economy, or allowing  someone else to develop the resources on terms it finds acceptable. On what the State finds acceptable is going to be a balance between its interest to get the resource developed and to market so that it can make any money at all and its interest in maximizing its profit. It can, as Gareth has pointed out, do this by taxing the profits of the companies exploiting the resource. It can also take an equity position in the companies ie be a direct shareholder in the companies and benefit from their dividends. It could charge a tax on the resource being exploited by volume, for example a charge of $X per cubic metre of gas being recovered. It could also apply a "super-profit" tax where the price of the gas exceeds some benchmark. Each of these approaches has its attractions and its downsides. For example a "super-profit" tax could be a disincentive for the gas company to sell any gas, or to further invest in developing the resource,  if the tax takes away too much of its profit. The next issue is what the government does with the money it receives from the sale of the gas, however that money is gained, ie whether through taxes or dividends. There are many options available.

In Australia the government has used its increased tax receipts from the current resources boom to eliminate the Commonwealth's debt. This is desirable as it helps to keep interest rates low which is a benefit to all borrowers, including other businesses not directly involved in the mining industry, (thus increasing economic activity and employment), as well as, of course, mortgage holders.  The government has also used some of the higher tax receipts to reduce levels of personal income tax, which most people think is a good thing, and also use sthe money  to improve social (schools, hospitals etc) and physical (roads, bridges etc) infrastructure etc over time.

I don't know much about Bolivia so I will make a few general observations:

1. Stiglitz's estimate on the value of Bolivia's gas reserves at US$250 billion is, no doubt, based upon current world prices. Gas prices have doubled in the past few years, although if the figure were $125 billion that would still be impressive. Still, if the payment to Bolivia is a fixed amount then at $125 billion it would mean that it would be getting 36% rather than 18% of the revenue.

2. The $250 billion is a market price, ie for gas the price the consumer pays on receipt. Since Bolivia's gas is mainly being sent to the industrial south east of Brazil and to Argentina by pipeline over immense distances I am sceptical that as little as $3 billion has been spent on developing and exploiting Bolivia's gas reserves. Maybe that is the amount that has been spent in Bolivia but as Bolivia is a landlocked country that needs to pipe the gas to, or through, other countries to get it to market. The cost of doing that is huge and that cost has to be paid for. Otherwise the gas stays in Bolivia where it is, effectively, worthless.

3. In any event the $250 billion refers to Bolivia's reserves, which have only been fairly recently discovered. It is doubtful that the infrastructure has, as yet, been built to recover more than a small proportion of it. It's just the same as with Australia's bauxite or iron ore reserves. Australia has massive reserves of both but they are effectively worthless until someone build the mines and the roads and the railways and the ports necessary to exploit them and to take them to market. I suspect that the cost of exploiting the whole of Bolivia's gas reserves, including capital and operating costs, spent both inside and outside Bolivia, will be vastly more than the $3 billion Stiglitz quotes and all of those costs have to be paid for before Bolivia or the gas companies get to see a profit.

4. Even if the figure of $3 billion is correct then it requires further consideration. If an oil company spends $3 billion to develop an asset it has to borrow the money at commercial interest rates, which in Bolivia's case, considering the sovereign and other risks, would be hefty. The debt will compound over the years until it is drawn down through repayments from the profits derived from selling the resource, often starting many years after the debt was incurred. Thus a $3 billion debt incurred in 2000 could have ballooned into a $10 billion, or more, debt in 2006 and will continue to grow until profits paid in repayment draw it down. You may consider that unfair, but the lenders would point out that there are plenty of other people to whom they can lend their money to make their profits if you don't like their terms.

5. Nevertheless I agree with much of the rest of what Stiglitz has written. A lack of transparency will just about guarantee rent-seeking behaviour and all sorts of diversion of money that should go to the Bolivian people. Morales is therefore right to demand transparency.

Also, as Stiglitz points out, Bolivia has been run as an oligarchy by the descendants of the Spanish conquistadors and settlers for the last five hundred years, with scant regard for the needs and interests of the native majority. Even if the Bolivian government were to get $45 billion (18% of $250 billion) from its gas I do not doubt that those oligarchs would do as much as possible to keep it to themselves and give as little as possible to improve the lot of the natives, if they could get awy with it. From their point of view better a new SUV in their driveway than a new school or health clinic in some remote Indian village.

Sportsmen and Pollies get funds not from salaries but from...

Gareth Eastwood, points upon points. Interesting comment about the ACCC. Seems to have changed direction with new management though, eh?

Well, that is an interesting point, also about salaries. One might ask of course, is $20 million a correct salary to pay a pen pushing luncher who really is just a glorified manager making some decisions?

Perhaps the PM salary cap is the correct one for such managers anyway. This was the general thought when the libs came to power and just exactly what has happened to make such a growth in salary justified in the corporatesuperfundedlgamouremultidirectorships world. Suuuure, the good ones would be pinched by US, see ya later ... no-one gone? But is it more to allow overseas executives to be pegged here on our boards. There are local benefits as golden boys like Lowy can pay himself and his boys exorbitant salaries just for sitting on boards - $13 million plus a year is not justified. Fact. It is the worst form of pyramid fleecing of all the many tiny shareholders from our super schemes. That is the scam. AND HIH, Adler, AMP show that incompetence and corruption are still paid in bonuses, with only a few fall guys paying others' due. Ziggy is now rewarded by chairing a stooge committee for millions no doubt. The new Telstra chairman is not playing the game too it seems, instead aiming for what is best for the company rather than gov PR. Ouch. Maybe it is time to buy shares in Telstra.

So, peg executives at the PM’s salary. After all, it was the libs that forced the loophole to remain(with Labor support) that prevented shareholders from holding board members properly to account for their salaries only last year. The Greens, bless 'em and their altruistic woolly socks and straight spines, spoke at length about this in Senate committee (which is why such are to be silenced, no doubt) but to no avail. I cannot remember whether Labor supported them but it would be worthwhile checking, watching out for corporate stooge habits.

Well, let’s debate it, are salaries too high? What is the equivalent in responsibility, training, selection, competition, community benefit and who, yes, who decides what salary is paid and to whom are they accountable to?

How about comparing a neurosurgeon or a brain specialist's salary? Anyone have the facts? Or should corporate board members and managers earn more or less than such? I wonder whether, if those who pay the salaries had more control over the amount and condition, there would be such a multimillion dollar feast on the boards as there is.

I have a friend who won a scholarship to Harvard, worked his way along and thought all was rosy, only to be retrenched with a corporate takeover and replaced by lackeys without his skill but doers of deeds. And those deeds sank the company.

It is TIME, before it is too late for all, the directors now and the shareholders, that the present scam situation and closed door world of our big public corporations is cleaned up before more incompetence and corruption collects more jobs in all levels and a big scoop of our pensions. We need a real ACCC with teeth and plenty of funds and new leadership. Boards caught out should be liable fully for losses, they have the insurance and should have the diligence to prevent it.

And cut their salaries to what share holders are happy with and they can justify. Bonuses in delayed share offerings only.

Methinks pollies are a bit like sportspeople. The actual sport pays a pittance but it is the endorsements and later contracts that pay the big bucks. For them and their families. Let us not be naive in this circle of life, round it comes and it will illuminate the dark groves that families make so worthwhile to protect.

Cheers

PS M.Mcathy's prediction suggests great suffering all round and famine. Join the dots. Time to get real about what is oil depleted world going to do about food.

More on profits, 'fair' or otherwise

Roger, it sounds like your beef is with a few specific bank fees/charges not bank profits.

Phil, due to your inability to explain to me what a ‘fair’, ‘normal’ or ‘super’ profit is, does this mean I can assume that you don’t actually know? If you can’t define these terms, why do you use them?

Phil we do get something out of resource company profits, it’s called company tax. At 30% it’s a much bigger chunk than your 12% example.

Cause And Effect

Gareth, you can't have exorbitant profits without exorbitant charges. They are two sides of the the same coin, n'est ce pas.

The banks are not the only one to indulge in national gouging. Look at what we pay for steel, aluminium, petrol, food etc at the retail level. From the initial producer to the wholesale level an enormous jump in price takes place. From the wholesale to the retail level another enormous jump take place again. There is nothing resembling an element of fair profit in any of the steps that bring the goods and services we need in the modern world.

The profits, every step of the way, that involves large companies, are multiplied many fold to support a bloated, corrupt and inefficient corporate structure.

say it till the cows come home (and get a patience test)

Gareth Eastwood, writing at me: "due to your inability to explain to me what a ‘fair’, ‘normal’ or ‘super’ profit is, does this mean I can assume that you don’t actually know? If you can’t define these terms, why do you use them?"

Dear Gareth, I've already given my definition of how the 'production cost' of a good may be calculated, including my understanding of what might be considered by some to be a 'fair' profit, then the excess we see over-and-above that fair profit which is known as 'resource-rent', and how both may be calculated. See a previous post from me here:

"In a nutshell, resource-rent is the difference between the cost of digging something up (yep, including all costs, like exploration and then adding a 'normal' profit - costs, like a tax-free allowance for compound 'interest' on all 'up-front' expenditures, at an agreed-to 'fictitious' internal interest rate of Oh - 15% - 20%, say? Whatever accounting chicanery the market will bear!) - so, the difference between the (however 'creatively' inflated) production costs and the price actually achieved 'at market'."

I'll try a short summary: A mining entity has costs. These costs, plus a 'fair' mark-up equate to a 'cost plus' (fair) price. If the good can be 'marketed' at a higher price, then the difference between the higher price and the cost-plus price is - Ta ra! 'super profit', aka resource-rent. Get it yet?

Now, for an alternate - one could hazard 'official' way, look to my reference that I gave here:

"How does the PRRT work?

The Petroleum Resource Rent Tax Assessment Act 1987 provides for the assessment and collection of the PRRT. The PRRT is generally assessed on a project basis. The tax base is net cash flows after recovery of eligible exploration expenditure, operating costs, and capital expenditure. Any excess of expenditure over receipts can be compounded forward (at the long-term bond rate plus 15 percentage points for exploration and the long-term bond rate plus five percentage points for other expenditures provided they are incurred less than five years before the production licence commenced) for deduction against future receipts from the project."

The above is addressed to Aussie Federal parliamentarians. Can they understand it? Can Gareth? If not, why not?

And, I've said Gareth's state of incomprehension is not my fault. Gareth, kindly study both definitions, then explain just what it is you've failed to understand. (One can lead a horse to water...)

Gareth Eastwood: "in my view the market price in a truly competitive market (i.e. minimal tax/regulation, no monopoly etc) is the same thing as the ‘fair’ price."

My comment: this is wishful-thinking(!) theory.

Imagine one wishes to buy a widget. There are two contenders for the purchase; both have borrowed the dough to set up widget factories, both have employees on AWAs forced to accept the lowest, mean & demeaning wages. The factories both shop around for 'economic' inputs, and their prices are set by the necessity of paying the miserable wages (but not benefits; thanks Libs) and the mortgage. Clearly, if the price goes below what's required to cover costs, the factory will go broke. But with all bills paid, the bank manager happy and the boss has enough to feed his hungry horde of littlies an' still have a bit left over for the odd overseas splurge (Disneyland) - and a nice nightie every so often for the comely wife, everything is 'jake'.

Note that the fewer widgets sold, the higher the unit price must be; the factories seek 'economies of scale'. To sell more, they need to advertise, adding another cost but (hopefully) increasing the sales by (more than) enough. They buy TV ads to further bamboozle the sheople.

Let's note one point: Gareth's "truly competitive market" would mean competition between the factories would force the prices down to the liveable minimum; the factory owners would drive each other towards penury. With a bit of a 'comfort buffer' (see above from aph.gov.au/library: 15% or 5% plus the long-term bond rate?), that would be the fair price. How often do we see this happen? (Cue Costello: "Haw, haw, haw! - Let us prey.") The most likely outcome would be and too often is collusion; the 'comfort buffer' level would be set to a mutually agreeable level. WYSIWYG!

Then - horrors! - One (or both) factory owners have a 'brainwave'. They send a buyer or two to C***a who find that they can get as many widgets 'on the cheap' as both factories could ever flog. The factories are closed, the workers get 3 weeks wages and the big push, all without notice. Both factory owners move to the Electoral Division of McPherson and cause massive new McMansions to be built (with obscenely-sized pools, despite the wardah shortages) then they concentrate on their golf. All they need now is their buyers and a few flacks, their input costs have gone down 'through the floor'. The price of widgits doesn't fall much, if at all. I'd say the widget profits had been moved into the 'rent' (hit#2: Abnormal profit) class, wouldn't you?

As for Gareth's apparent arrogance (my 'inability to explain'(!?)), well - too bad, but definitely 'last-chance time', matey... causing me to do ever more iterations may be reducing the audience not to mention my patience - or is that your exact intention?

Powerdown and Re-localisation

Hi Gareth. You wrote:

Personally Stuart I don’t think we’ll ever see the end of large multi-national corporations. Their names will change, their locations will too and their sources of revenue will adjust with the times, but generally they're here to stay.

Out of interest Stuart, what do you mean by the economy becoming re-localised?

Economic globalisation is totally underpinned by the availability of cheap, abundant fossil fuels, namely oil, gas and coal. The average food item travels something like 2000km in a truck before it reaches your table after being produced using oil-based machinery, fertilisers and pesticides. All other primary industries, transport, manufacturing and construction are totally reliant, either directly or indirectly, upon cheap oil. Suburbia is totally reliant upon motor vehicles. Tourism and the other service industries are reliant on a combination of cheap transport and the 'disposable income' of people employed in the other industries. The finance sector is based on continuing economic growth in these industries. There is hardly any field of economic activity that is not totally reliant upon oil.

The imminent peak and subsequent decline in world oil production (the phenomenon called 'peak oil') will bring about a radical reversal of economic globalisation. The timing of the oil peak and the severity of it's consequences are debatable, however it is indisputable that over the next several decades the economy will power down and re-localise. The only real question is whether we are willing to act of our own volition or wait for an economic melt-down to provide a 'market signal' first.

'Power-down' refers to decreasing reliance on energy and a shift towards genuine renewable energy, principally solar power. There are no quick-fixes to the peak oil problem. Hydrogen, bio-fuels and other liquid fuels are decades away and cannot realistically replace the energy currently provided by oil. Shifting to coal-fired electrical power on a large scale would also take decades and would be catastrophic for the environment. Nuclear energy poses similar problems.

Re-localisation will be a major part of the power-down process. People will start to grow their own food and buy what they can't grow from local producers rather than driving to shopping centres. Commuters will initially rely on public transport, but eventually they will live within walking or riding distance from work. They will rely on localised networks of renewable energy rather than centralised power grids, and local water catchments rather than centralised water utilities. They will rely on bartering, exchange and cooperatives rather than central banks.

I agree that multi-national corporations are here to stay, but nothing like in their current form. Manufactured goods, agricultural products and raw materials will no longer be able to be transported cheaply around the world in vast quantities. Travel will be unaffordable for all but the very wealthy. Centralised service industries and brand-name franchises will all but cease to exist. The marketing industry will pretty much disappear. Major banks and finance companies will be supplanted by local cooperatives. The list goes on ...

There is a wealth of reading on the internet and there are dozens of books on the subject. One of the better ones is Jeremy Legget's Half Gone, which you can find on the shelves of most bookshops. Another is Richard Heinberg's Powerdown. If you are genuinely interested, Heinberg will soon be conducting a speaking tour in Australia with David Holmgren of Permaculture fame. Australian peak oil related websites include ASPO Australia, Sydney Peak Oil and Eclipse Now.

right royal resource-rent rip-off stuff-up

Grüezi Roger Fedyk, G'day Gareth Eastwood.

1. Sorry, Gareth. You'll have to get 'up to speed' on your own. I've tried to explain 'resource-rent' to you perhaps once too often; I do not think it's my problem. Ask yourself this: in Bolivia; $3bio 'invested'; 82% of $250bio 'profit'? Or in Iraq; $US1 per barrel production cost, $US73+ 'market' price; is that 'fair?' What about the actual owners, they/we the people? Just how much should they/we, the (sovereign!) owners get? Whadda 'bout our resources, here? Our Coal, our Iron-ore,our Oil, our Uranium?

And if you think it's just 'out in the boonies', try this: "But when the oil companies take our oil -- a nonrenewable resource -- they aren't charged a penny. When they pump oil out of federal waters, 12 miles off the California coast, they pay 12 percent to the federal government. But when they do it 11 miles offshore, in California's waters, they pay nothing. Zero. Zip."

And Gareth, when/if you've finally comprehended, wha'd'you think of 12%? 0%? Going to you, as a (previous, now ripped-off) owner? In other words, Q: What's in it for us? (A: Any piddling 'trickle-down' not acceptable.)

2. Thanks for the Mitschaffe, Roger - isch guet gsi! Doch jetz gats gradus witer... [For the otherwise clue-less, and especially for those who might be tempted to think 'gobbledegook', you could check here.

OK; as in the words of a previous 'leader': "Life wasn't meant to be easy." Now, as we all know (long story short): companies, shares, price bid up, dividends (yields) watered down; rip-off dissipated? In other words, Q: What's in it for them?

Corporations and business

Mark Ross, re “international corporations, who can't be pinned down to one jurisdiction, can tend to be a bit cavalier towards local laws.” I agree Mark, but local laws need to be enforced. Domestic regulators are usually playing catch-up with global firms.

Regarding your link, I’m not sure why the iron ore market operates as it does in practice. I don’t think the Asian steel mills are in any position to complain about cartel behaviour.

Roger Fedyk,  re “No PM can afford to do anything or say anything that would drive down the profits of banks (exorbitant, to be sure), large manufacturers and resource sector industries.” So does this mean I can assume that Kim Beazley (if Labour wins the next federal election) will cave into business pressure and not eliminate AWA’s?

Also Roger, what is it about bank profits that makes them exorbitant?

Stuart McCarthy, re “large multi-national corporations as we currently know them will all but cease to exist as the economy gradually powers down and becomes re-localised.” So what is to become of today’s multi-nationals?

Personally Stuart I don’t think we’ll ever see the end of large multi-national corporations. Their names will change, their locations will too and their sources of revenue will adjust with the times, but generally they're here to stay.

Out of interest Stuart, what do you mean by the economy becoming re-localised?

You Can Bank On It

Gareth, that's an interesting question. Will Beazley cave in? In some form or another he will. He will need to satisfy his constituency while at the same time appeasing corporate Australia.

I have a theory about AWA's. Firstly, businesses that are primarily based here would see little advantage to AWAs. Their introduction has added an element of volatility and industrial uncertainty at the same time that the world economy is softening. Businesses don't like unplanned surprises and the introduction of the AWA serves only to strengthen a weakened union movement.

On the surface, it seems like a really dumb move on the part of the PM. No longer is he the champion of the Aussie battler, a moniker that has given him electoral success. Over the next 18 months we will see daily "horror" stories emerge and industrial action on a scale that we have not seen for 20 years.

However, AWAs can serve a far more sinister purpose. They could provide US companies, entering Australia under the FTA, with a legal mechanism to leave without honoring worker obligations. I think that is an area that needs closer watching.

Regarding bank profits, I can't take your question seriously. Banks are gouging customers with impunity, particularly through credit card charges. I work in the IT industry and I can say without question that an electronic entry into a database does not cost 50c or more as the banks charge. The total cost of software development, backbone line rental and cost and maintenance of hardware bears no relationship to the bank charges for those types of services. They are an almost complete profit item. Internet banking has meant that the bank gets you to do their work and charges you for privilege, once again with a fee that bears no relationship to the actual cost of providing such a service. They remunerate their top officers in line with the enormous profits generated on low cost service.

Latin American and Chinese Cash

Roger, I think you’re right a cashed up China is going to make for a very interesting period in international affairs. As many Latin American states experiment with socialism China is more that ready to step in with finance.

“With more than $1 trillion in foreign exchange reserves, China is in the process of becoming a serious investor in what it sees as "strategic assets" around the world. Chinese companies are increasingly taking stakes in foreign businesses, from mining operations to listed public companies.” Here: http://finance.news.com.au/story/0,10166,19625509-14305,00.html

Peak Oil, Power Down and Re-localisation

Gareth, the powerbrokers of today's globalised free-market economy will be sorted out by what the free-market ideologues themselves call 'demand-destruction' when peak oil renders their 'product lines' unviable within the next decade or so. Certainly the little people will also be hit hard, but large multi-national corporations as we currently know them will all but cease to exist as the economy gradually powers down and becomes re-localised.

If it walks like a duck...

Gareth; "Sure companies talk to each other and have many common interests; this doesn’t automatically mean they are behaving like a cartel."

Of course not. Unfortunately, international corporations, who can't be pinned down to one jurisdiction, can tend to be a bit cavalier towards local laws. I believe this is the heart of the matter.

I had dinner at a friend's house last weekend. This friend is the CFO for a large multinational here in Australia. To give you an idea of his company's size, he reckoned that a strike by their workforce in Australia would cost them around $260 000 a day in lost revenue. Obviously not a small operator. When talk turned to the question of the cost of doing business in Oz as opposed to South East Asia and, specifically the cost of compliance, my mate said, "We do as little as we need to and, in the absence of a strong regulator, we do what we want."

Says it all, doesn't it? Speaking of cartels, what do you make of this?

Who watches the watchers who aren't watching?

Hi Mark, surely you jest? Inadequate scrutiny of our corporations? Surely not like the economical doings?

Surely not like this lobbying:

 Wall Street Journal (sub req'd), June 27, 2006

By year's end, the European Union is expected to adopt REACH, a proposal that would "require manufacturers to test industrial chemicals used in the manufacturing process to gather health and safety data." REACH stands for "Registration, Evaluation and Authorization of Chemicals." The bill "has prompted a U.S.-led coalition of 13 countries to step up lobbying efforts to make the final measure more amenable to industry," reports the Wall Street Journal. "The diplomatic missions of the U.S., Japan, Australia, India and other countries issues a length joint critique of the proposed law this month, saying certain provisions would disrupt international trade without offering clear environmental benefits." C. Boyden Gray, the U.S. ambassador to the EU and former chair of FreedomWorks and Citizens for a Sound Economy, said European policymakers "never did a proper impact assessment to evaluate the risk-versus-benefit status of this legislation"

and combine with this.

Surely not environmental accountability being thwarted by our own government lobbying? (The Bush regime one expects it.)

And just out of curiosity does CFO mean CEO or something we plebs haven't heard of, like Corporate Fallguy Order, Corporate Foreign Oddity or Cheery Fellow Offtoslaughterifshithitsfan or whatever?

Fiona: I think it stands for Chief Financial Officer.

I still am curious about the high levels of uranium in the ground water and what type of uranium in Central Aust. We should be vigilant as US testing is being offshored to HERE and do we really know what is being tested and what the environmental impact of such is and why haven't they cleaned up the DU from the last bombings/shootings in Nth Queensland? And that ditched plane off Brisbane needs cleaning up too, or is it on offer for the first nation with a sub to collect? Surely there is some sensitive data or toxin that requires proper disposal. Or is it a bit like the nuke lost in Georgia? Too hard and no-one bothers to watch or care.

Cheers

Power and salary

Roger Fedyk, re “The only way to live with competitors is to form a cartel.” This is illegal, the ACCC’s actions against Amcor and Visy are a recent example of cartel activity being investigated and prosecuted (I don’t believe the court case is over yet though). Sure companies talk to each other and have many common interests; this doesn’t automatically mean they are behaving like a cartel.

Re “Business as a glorious ideal with "fair profits" and companies working for the greater national good are simple-minded fairy stories.” I agree: most firms are primarily working to satisfy the interests of their owners and customers.

Re “If the Prime Minister of this country gets paid $250,000 p.a. while the head of a bank gets $20 million, where does the power lie?” I don’t think ‘power’ (which is a hard term to define) and salary are linked so directly. If that were the case, Harry Kewell has more ‘power’ than John Howard; even average Rugby League players will have more ‘power’ than our PM. When it comes to the remuneration of our politicians, I reckon it’s a sacrifice they make to enter public office and satisfy their personal desires to ‘make a difference’ and whatever other reasons have drawn them to politics. Politics must be just about the only senior job nowadays where pay is not linked to a series of performance benchmarks.

Roger, I share your distaste for the news coming from the commercial channels in Australia. I prefer to watch SBS, ABC and Sky for local news.

Salary Is An Indicator

Gareth, taking aside the world of entertainment and sport, personally, I think salary is exactly indicative of what power an indivdual holds.

No PM can afford to do anything or say anything that would drive down the profits of banks (exorbitant, to be sure), large manufacturers and resource sector industries. I have made the point before that if you or I phone John Howard, he will not take the call. If the chairman of BHP Billiton calls, it goes through. We have no power to exercise. But whatever BHP says to the government is actioned in one form or another. Money talks which is why politicians listen.

John Howard, or any other Prime Minister, are beholden to those interests that make Australian wealth. It cannot work any other way. If business/capital cannot get what it wants it goes somewhere else. What we, as the home electorate, have to say has little effect on those considerations.

Just a slight digression on my favourite hobby horse, the stupidity of the Australian voter. We have been subjected for many years now to the Howard/Beasley (change names as required) battle, who is the best PM, will you vote for Howard or the other fellow? During the last election, I lived in McPherson. My local member was Margaret May, as much as I would have liked to vote against the Immoral Midget, I couldn't. He was not on my ballot paper. We don't vote for PM's in this country, we are supposed to vote for independent representatives. Political parties are not mandated in the Australian Constitution. It is a glaring example of how most Australians have little comprehension of what happens anywhere where power and money are exercised.

Getting back to Bolivia, they are playing in a dangerous league and will find sources of finance drying up while the hegemon goes all out to give them a hard lesson. I hope that they succeed (probably by bringing a less avaricious partner (not too many around but the Chinese would be interested to get their hands on badly-needed power resources).

Still don't get what a 'fair' or 'normal' profit is

Phil Kendall, you haven’t outlined how we’re going to get to these ‘fair’ or ‘normal’ profits for resources. What other methods do you think will work, voluntary compliance, consumer boycott? If not by price fixing, then how?

Phil, it’s easy to dismiss all my questioning as ‘straw man’, ‘misleading and even ‘silly’. You’ve managed to ignore all of my legitimate questions, would you like me to repeat them?

I’ll show you the courtesy of answering every single one of your questions Phil, are you willing to do likewise this time? Let me know if I’ve missed any.

Re “What is this? I said, "Q: Show me where" [is this fabled 'true competition'?” I’ve already answered this generally, in my view the market price of any good/service that is sold in a genuinely competitive market is the same as any notion of a ‘fair’ ‘normal’ (or whatever else you want to call it) price. This is in theory, just like your ‘fair’ and ‘normal’ profits are at present.

Re “The whole point is not the sale-price per se, but who gets what share of the resource-rent/super-profit. Hmmm? Gareth, are you deliberately misunderstanding?” The sale price is always going to be at the heart of any discussion on resource rent and super profits. You can’t avoid this Phil, if you want to end up with ‘fair’ or ‘normal’ profits, then you have to determine a price that results in this. This price is likely to differ from the current market price and in the case of resources you sound like you are aiming below the current market price. This is why I’ve talked about the effects on supply when the ‘fair’/’normal’ price is lower than the market price. Phil I’m trying to understand how you expect this notion of a ‘fair’/’normal’ price will be achieved in practice?

Re “do you notice any petrol [oil] queues anywhere?” The reason there are no queues, is because petrol prices are currently allowed to fluctuate in response to changes in supply and demand, they are not based on the oil producers cost of production.

Re “please explain any connection between 'resource-rent' and "fresh water (water restrictions anyone?)" The price of household water in Australia is based on what the state govts think they can charge before eliciting a political backlash. If the price of household water was allowed to fluctuate in line with supply and demand, the price would be a lot higher and there would be no need for water restrictions. The water utilities (and state govts) would obviously benefit from increased ‘resource rent’ in this scenario.

One thing I really don’t’ understand Phil, is your notions of ‘fair’ profit, ‘normal’ and ‘abnormal’ profit and ‘super’ profit. I’m trying to comprehend these notions like you have asked, but I’m still not getting it. Help me out, are these notions based on a rate of return on equity (what rates?) or maybe a gross amount of profit (e.g. anything over 1 million)? I want to be able calculate if someone is actually making a ‘fair’ or ‘normal’ profit.

Well done Jay White

Speaking of oil; I asked Jay White early this year what his prediction was for the petrol price on 30 June. Jay predicted a price of around $1.35 per litre. I just drove past our local petrol station today and the price was 135.9. Well done old boy. Your prediction for xmas 2005 was also correct. Two out of two so far, would you like to predict the petrol price for xmas this year ?

Richard: Umm, I don't think Jay's around the place at the moment.. 

Market price = 'fair' price

Phil Kendall, are you suggesting that a different price should be fixed on resources based on the producers cost of production? The price of Shell petrol fixed at a different price to that from BP? Is that what you envisage?

Phil what rate of return is a ‘fair’ profit? What happens to companies that come in under a ‘fair’ profit, do they get subsidised? Who is going to monitor and manage all this price fixing?

Re “There may be a case for true competition driving prices towards 'fair'” Phil in my view the market price in a truly competitive market (i.e. minimal tax/regulation, no monopoly etc) is the same thing as the ‘fair’ price. To fix prices below the genuine market price screws up the whole process. If you fix the price below the market price then demand will exceed supply. That means people miss out Phil, if its food you starve, if its petrol no driving out to see Granny today kids and so on. Examples of this were common in communist Russia (remember the queues to buy bread) Australian examples include fresh water (water restrictions anyone?) and commuter trains (try Town Hall at 9am).

Phil don’t you think producers should retain the incentive to reduce the cost of production? Don’t you think innovation should be encouraged?

"We're Not In Kansas"

Gareth, I realise that I am repeating some of Phil's reply but I would like to reinforce some points.

Firstly, regarding your use of the term "fair profit", there is no such business axiom as a "fair profit". If you are in business to generate a "fair profit" your business will go broke quickly. Businesses take an enormous amount of energy and resources to establish. The last thing that a business owner wants is competitors and people to share his profits with.

The only way to live with competitors is to form a cartel. That is the purpose and point of having industry associations, namely to get every one singing off the same page. However, even within business cartels the operative by-word is "trust no one" and if the opportunity presents itself to kill a competitor, do so quickly and brutally. Business owners are the ultimate gladiators. Today you drink and eat with your associates and tomorrow you destroy them or they destroy you.

This is really what happens in business and if you have no stomach for it, you will get found out quickly and be easily dispatched. For those who are not in business, the ferocious intrigue and gory barbarity are unknowns.

Business as a glorious ideal with "fair profits" and companies working for the greater national good are simple-minded fairy stories. It is something that gets "sold" to the public as part of an ever-present, extraordinary public relations campaign that has existed in one form or another since early man learned that his compatriots were easily suckered. Most people ("sheople" according to Phil) are both easily fooled and frightened which is why we have a huge working class and a very small wealth-owner class.

On top of this we have governments, "of the business-owner, by the business-owner and for the business-owner". Our great shame as a people is that we buy into the foolishness of believing that once every 3 years that we get a say in how things are run. What we actually get a say in is a popularity poll that puts a few hundred nincompoops and rogues into Parliament for our amusement while business goes on as usual. Ask Murdoch, Packer etc if they actually give a toss who is in government? If they really don't like who is in power, look no further than Whitlam to see what will happen.

A question for you! If the Prime Minister of this country gets paid $250,000 p.a. while the head of a bank gets $20 million, where does the power lie? As we now know, Mark Llewellyn, the disgruntled former Nine director of news was getting paid $750,000, three times what the Immoral Midget gets paid. Isn't that an eye-opener? The TV news is really not anything of super importance in anyone's life. You can live quite easily without it and if you don't see it today, you can catch up tomorrow. But James (Frank) Packer wanted to pay this fellow an exorbitant sum just so that we might hear something about the way Packer wants us to view the world every day, all day. What is "fair" about how the ordinary citizen's life is lived under such unrelenting propaganda?

Why would we discuss "fair profit" when 2 billion people will go to sleep hungry tonight? Life is not fair, government is not fair, business is not fair. We are getting screwed over by the biggest "lie machine" ever invented. Let's not do it with a smile on our face and stupidities on our lips.

Tricky

Gareth Eastwood: "Are you suggesting that a different price should be fixed.?."

Straw-man alert. I said nothing about 'price fixing'.

Gareth Eastwood: "The price of Shell petrol fixed at a different price to that from BP?"

Straw-man alert, the second. I said nothing about 'price fixing'.

Not 'only' that, but petrol [oil] pricing is collusive! (Cue Costello: "Haw, haw, haw! - Let us prey.")

Gareth Eastwood: "what rate of return is a ‘fair’ profit?"

Misleading. 'Resource-rent' is defined as super-profit, that is to say, an 'extra' over and above the 'normal' profit. [How many times?] The 'declared production cost' already contains the 'fair' profit (however 'creatively' inflated; read and comprehend the material, please); the 'declared production cost' is that cost/price point at which [in a normal, i.e. fair world] an exploiting entity could (profitably) work.

Gareth Eastwood: "the market price in a truly competitive market (i.e. minimal tax/regulation, no monopoly etc) is the same thing as the ‘fair’ price. To fix prices..."

a) Straw-man alert, the third! I said nothing about 'price fixing'.

b) What is this? I said, "Q: Show me where" [is this fabled 'true competition'?]

c) Misleading again. The whole point is not the sale-price per se, but who gets what share of the resource-rent/super-profit. Hmmm? Gareth, are you deliberately misunderstanding?

d) Not 'only' that, but it is suspected by many who should know, that current oil prices are being driven more by rank speculation, as opposed to any sort'a demand/supply. Or do you notice any petrol [oil] queues anywhere?

Gareth Eastwood
: [more on price fixing, discarded.]

Gareth, please explain any connection between 'resource-rent' and "fresh water (water restrictions anyone?)"

And "commuter trains" - getting a bit silly here, aren't we?

Gareth Eastwood: "don’t you think producers should retain the incentive to reduce the cost of production? Don’t you think innovation should be encouraged?"

Really. Producers form cartels wherever possible. True competition would drive both reducing costs and innovation. Any resource-rent retained by producers is exactly counter-productive with respect to efficiency. Oh, boy!

Once more, just for you, Gareth: "hit#2: Abnormal profit, also referred to as supernormal profit or pure profit, is an economic term of profit exceeding the normal profit. Normal profit equals the opportunity cost of labour and capital, while abnormal profit exceeds the normal return from these input factors in production. In principle there are three kind of abnormal profit:
Monopoly rent
Resource rent
Intra marginal rent"
[investordictionary]

Dear Gareth, the title of this Stiglitz article is "Who Owns Bolivia's Oil and Gas?" It opens up the question, who owns any natural resource; there are (at least) two possible answers: a) those who just walk up and grab them, or b) the sovereign people of the land.

You could say, that 'resource-rent' is a 'social justice' issue. Need I say more? Are you suggesting that we allow resource harvesting entities to rip-off our resources, with just a pittance (Oh, say: the freight costs paid to some QLD railway for shifting the coal, and not much else?) - yeah, just a mere pittance for us, we the people (the sovereign resource owners) and if so, would you care to specify just what miserable pittance we must grovellingly accept?

I suspect you know all this; are you trying to being tricky? - or what else?

In clear text: resource-rent is money-for-jam. If it belongs to anyone, it belongs to us, not to any them. Sooo, let's have it!

Queue for fuel? What fuel?.

Phil Kendall: Fuel. What fuel? Forget flaming Bolivia. Where’s the nearest pump? Everyone’s cleared out here the last two years, the tucker shop is up for sale and tonight they’ve turned the bowser off. You’d think at $1.60 (rip off!) they could make a quid, wouldn’t you, keep the place running? So now the other half says he’ll have to use up half a tank just to get a tank and he’s not too happy I can tell you. Nice fuel economy that!

But hope is on the horizon. Who said he has no heart? Little Johnnie, with your dough in his pocket, is thinking of giving us a helping hand. Idea is he turns the tap back on, and lets the dole boys run it, keeping us all fuelled up just so we can go on slaving away growing steaks for you guys, and wheat for the old AWB. So if he pulls it off, thanks folks. And BTW. Thanks for the PO too. That was neat. Little Johnnie wanted 100 grand for that. So what’s he do. Gives us a 100 grand of your dough and we pay him back with that. Neat! How about buying the tucker shop for us too? Then we’ll be all set up out here and you can come to dinner.

Now while we’re ripping each other off. Next time you buy your Sunday steak and hand over your 12 bucks or whatever, think of the miserable dollar and a bit we get. But of course with all the abattoirs closing down (Cowra. Watch this space), the poor beast now has to be shipped around 600 ks just to have his head cut off. And BP and Co do very nicely out of him too. Bolivia, here they come.

Phil Moffat: $1.35 you say. You lot should be so lucky! But wait till that $1.60 they slug us hits the steak. You’ll all have to take to veggies.

You’ll send us a tanker load will you? No don’t bother. You see some 0-50 IQ down there decided he won’t let the tanker chic/guy even put the nozzle in the old farm tank anymore. Too dangerous climbing up a step or two, we’re told, and the OHAS man is sneaking around the countryside after dark like the chook inspector of old.

I mean, where do you folk in the big smoke find these guys? Now they’re telling us we can’t ask anyone to climb above his head unless he’s harnessed up like a draught horse. But you didn’t see the OHAS man when some poor truckie loading cattle was left swinging upside down like a monkey off the side of a B Dub full of bullocks. And forget about the wife who pulled the other half clean off the roof of the hayshed. Well, maybe he shouldn’t have anchored himself to the tow bar of the ute, him all in a sling like that, up high and out of sight on the other side. Not her fault: she just hopped in and took off to do a bit of shopping. Now who is going to pay for his two busted legs, I wonder, let alone the divorce?

Spare us from the men from outer space!

Jay White, Richard? Well it seems he’s exiled himself to the boggery over at CC but don't ask me to go check him out. Not aiming to get my feet dirty again. But they love us all over there, I believe. Ask Phil the tailor. (Still think he’s lying about that. Tailor? With that tie, Phil? Then again, you probably wouldn’t believe I was once a ballet dancer either. Very graceful I was too.)

Sorry Phil the first. Yes, it's all a rip off, here, there, Bolivia. When was it ever any different? Feel a bit bad about the PO now. But thanks. It is nice to be able to buy a stamp even if we have to walk 50k to get it.

a 'correction' and a query

In my 'Occam's (binary) razor' post yesterday (29Jun'06), I wrote: "So I 'name names' and choose to name the worst offenders. See almost any of my previous posts. I am quite tenacious in this, and I 'name in order to shame', seeing this as my valid democratic right."

I realised later that 'my valid democratic right' was not perfect (we may not actually be guaranteed any right to free-speech); rather, it's really 'my valid democratic duty' to point out any (and in the case of US & Israel, criminal & murderous) malfeasance. Sorry for the inaccuracy; please feel free to substitute 'duty' for 'right'.

-=*=-

The run-up to my query: 'resource-rent' (aka 'super profit') is a bit of a hobby-horse of mine, and has been so - Oh, for yonks; ever since I first heard of it and realised its essential unfairness, in fact.

In a nutshell, resource-rent is the difference between the cost of digging something up (yep, including all costs, like exploration and then adding a 'normal' profit - costs, like a tax-free allowance for compound 'interest' on all 'up-front' expenditures, at an agreed-to 'fictitious' internal interest rate of Oh - 15% - 20%, say? Whatever accounting chicanery the market will bear!) - so, the difference between the (however 'creatively' inflated) production costs and the price actually achieved 'at market'.

As I pointed out yesterday, what were talking about here, is the difference between the price we may expect (i.e. cost plus fair profit) and the price actually demanded, which is (far too often): Whatever (extreme!) price the market will bear! There may be a case for true competition driving prices towards 'fair'. Q: Show me where?

A bit complicated? Well perhaps, but I made it so for some sort'a completeness; so let's try this: resource-rent is the difference between the declared production cost and the price the stuff is sold for. In the Stiglitz case of Bolivia, it's $3bio costs and $250bio at market. (Just you try 'investing' $3 anywhere else for a return of $250!) In the case of Iraqi oil, an accepted cost figure is $US1 per barrel, vs. the current 'market' price of around $73+. Perhaps not in the same league as the Bolivian rip-off as to %, but close enough - and Iraq's got a lot'a, lot'a oil. (As if this was news!)

Once again I reiterate: Q: 'Who owns this Earth / Country / individual citizen's paddock / mineral underlying this paddock'; if the answer is not 'the individual' then it's 'the whole country' or generalised perhaps, to 'the whole wide world'. A: The answer is definitely not the mining entities - yet that's who pockets the lions' share. Q: Just how fair is that? A: IMHO, not at all. It's taking from the rightful owners, without adequate recompense. Q: how does this differ from stealing? A: I can't see how.

Finally, the article states: "Bolivia possesses a great wealth of petroleum and natural gas, but these resources do not currently benefit the Bolivian people." Q: Why not? A: Well, because 82% of the profits, 'super-profits' by any and all measures (aka resource-rent) goes straight into the exploiting entities' pockets. Cads! Bounders! (By another name, thieves!)

So, to my actual query: why is there no discussion of this 'resource-rent' rip-off? Is it a) you all accept that there's a rip-off going on? (Essentially ripping-off our dough, we the people's) or b) some other, in which case what?

Deraeled

Your point is well taken, John Henry Calvinist. Let me assure you that the Red Sea shall part, manna will fall from heaven and every Midianite male shall be put to the sword before I, for one, again raise the topic of ... er ... whatsername. Comments on that topic, whatever it was, should rightly be made on the 'Repeal of Whatsit' thread, which lately has become eerily silent, wherever it is.

Medianite Males Smitten Mercilessly.

Are you sure they are not Crypto-Medianites, Jacob?

Smite-ing is too good for them.

Feeding The Fixation

Actually John Henry Calvinist, you miss the point.

This thread has not been hijacked by the Israel debate despite the efforts of Phil Kendall  and one or two others, who have some how managed to squeeze Israel into a discussion about, of all things, Bolivia.

I and others have however raised the subject of the behaviour of the "left" and other anti-Israel ranters and racists. Fairly, I believe, and well within context.

This is an issue within itself and is the one, I am going to suggest, you should be rather disturbed about.

I do not know how many comments I have posted on WD in the year or so I have been here. Several hundred by now I suppose and I guess roughly half have been on Israel/Palestine etc. But I have never raised the subject of Israel/Palestine. Never. Not even once.

I look forward to the day when I will never have to comment about Israel/Palestine again. That is in the hands of others.

 

Not quite so, old chap

1. The first mention of anything in any 'Israel' direction was by C Parsons on June 22, 2006 - 11:57am (that is, before my own entry), namely by way of his gratuitously throwing "Zionists" in. [Zionism n. movement for the re-establishment and development of a Jewish nation in what is now Israel.  Zionist n. & adj. POD]

2. Yes, I did subsequently mention Israel, but it occurred as a BTW (shall we say a 'collateral'?) in my reiteration of a previous-post para, which directly addressed an aspect of the topic on hand, i.e. 'resource-rent', whether in Bolivia or here.

3. This resulted in not one but (count 'em) two 'racist' slurs, one from Mike Lyvers on June 24, 2006 - 3:25pm which C Parsons parroted on June 26, 2006 - 12:01pm. Then came Geoff Pahoff on June 26, 2006 - 9:23pm: "... blood-dripping racism".

I defended myself against both Lyvers and Pahoff, see my latest defence starting at "5. Pahoff" posted June 27, 2006 - 10:21pm.

Whereas I willingly admit that I do not mind, in any case, repeating my pro-social justice, anti-killing stance at the drop of any old hat. At the same time it is true, that there exists an 'Israel lobby' in WD, and they attack ferociously at the slightest provocation (and often even without), as shown. Israel makes itself a target of my particular pro-social justice, anti-killing stance by its murderous treatment of the prior (and one could make a case for 'still') legal owners of the land hitherto known as Palestine. The WD 'Israel lobby', as others of their ilk, seem to be just that little bit 'over-sensitive' about the fact that Israel murders for land and water.

But, especially in this case ('resource-rent') my intention is to follow the theme, I must always reserve my right to defend against attack.

BTW, Geoff, how about answering one of my posts addressed to you, hmmm? Like justifying your denigration of John Perkins' book? No? Didn't think so. All just bluster, abuse and no substance, Eh?

PS to WD moderators:

a) isn't this more 'ad-hom' than to the subject: "the behaviour of the 'left' and other anti-Israel ranters and racists." [Pahoff]

and b) why do you allow 'racist' at all? [racism n. 1 belief in the superiority of a particular race; prejudice based on this. 2 antagonism towards other races.  racist n. & adj. POD]

It would seem to me that any criticism of Israel has all to do with their (WYSIWYG: murderous!) actions, and nothing at all to do with any racial make-up? Hmmm?

Re: Highjacking?

Folks...I'm getting rather disturbed by the tendency on Webdiary for threads to get "highjacked" by divisive fights on issues COMPLETELY irrelevant to the column concerned...

Look - I almost totally avoid threads relating to Israel - in any shape or form - for EXACTLY the reason displayed here as, since I agree w/neither "side" on Israeli issues - and since the two sides so exhaustively insist on attacking each other - I think it entirely reasonable to walk away from said "debates". But...if they insist of turning all threads into this kind of game, I'll have little alternative but to walk away from the entire forum!

C. Parsons & I had a spat here - granted! But, said spat was re Bolivia/capitalism/populism...the ACTUAL topic at hand. What's more, we came (at least, to some degree) a sort of conclusion...unlike the bloody interminable s$$ttfights re Israel.

Look...if you really wanna debate re Israel, then there ARE threads on this forum where you can do so. Please...do the rest of us the courtesy of using them!

Hijacked

Hi John,

Like you and many others I've seen WebDiary work well, attracting all types of people with varying points of view which always allowed me to see different aspects of the various topics that were put forward.

Alas though John there is only 1 topic, forgive me, two topics. Being Israel and Iraq.

Every post is examined in minute detail for any possible misreading of what is written with the express purpose of changing the topic. What lives people must have to spend this amount of time combing for insults that aren't there.

The topic beginning a thread is now irrelevant. They might as well all just say Israel : 4,567or  Iraq : 2,546 or whatever the next consecutive number is for those two topics.

Like you I've lost interest in posting here except to keep saying what you have just said in your post, beingalong these lines :

Don't continue publishing these repetetive and boring, long winded diatribes aimed at the person and not the topic. If the editors here did decide to not publish such rubbish those submitting it would cry "Censorship!!" thus affirming their own perceived biases and predjudices.

I say bring it on! Call it censoring, who cares? Publishing what is mostly published recently is a waste of everybody's time, including my own repetetive moans about the rubbish others keep posting..

It is those few people who drive most visitors away. Those people who have such a low opinion of their own worth that they attack anything and everbody for holding views they don't even entertain, let alone hold.

I was accused months ago by C Parsons of being racist when there was no such inference in the post I had written. I replied by just telling him that any perceived racism was in his mind, not mine and he was welcome to interpret anything as he wished. But nothing stops it here until such posts are not published.

Like you John I have really already walked away but I browse, hoping that something has changed as this was a very promising forum and still can be. I have no idea what, if any responses my recent posts have had as I have decided I'm not interested in what anyone else has to say on the topic I write about here. Looking at any response is pointless as there is no change and the likelihood is about as good as Bush learning the English language.

Geoff has it all, too

Geoff Pahoff's lament regarding the standard of debate is a bit rich coming from him. His recent performance on the 'Repeal of Israel' thread is itself an indictment of the standard of debate hereabouts.

For anyone who missed it, the main features of Geoff's performance:

  • In advancing a contentious theory, link to a crypto-racist site that itself links, as suggested "additional reading" on the topic, to a feral-racist site.
  • Do not respond to legitimate questions from your opponent.
  • Rather, ramp up the invective.
  • When your opponent links to the feral-racist site in order to roundly debunk the information there, repudiate said feral-racist site.
  • Again, ramp up the invective to the max, including impugning the integrity of your opponent for linking to a feral-racist site.
  • Strongly suggest that your opponent should no longer "be taken seriously", throwing in another gratuitous lament about the 'the left'.
  • When challenged, maintain the evasive rhetoric and invective.

All in all, a pretty lamentable performance.

Taken seriously? Hah! For my money, Geoff has that very question hanging over him. I'm relieved that his offer to moderate for Webdiary was only made in jest. How could the very idea be taken seriously?

Another favourite flourish of Geoff's, which should be familiar to all, is the one he throws at opponents, of the form: "Is this what the 'Left' have sunk to?"

Well, to me the Pahoff method of debate represents a sadly depressed nadir in advocacy for Israel. This is not 'robust debate', it is slimy debate. Surely the many people suffering in this conflict, Arab and Israeli, deserve better.

Take A Cold Shower Jacob.

At least my links work.

Take A Leap Of Logic (Or Fantasy)

Geoff, I would be interested how you get from Bolivia to your rants in favour of Israel and your boorish put-downs of other respondents.

Could it be that the indigenous Bolivians are actually a lost tribe of Israel? Nah!

Could it be that Israel, as a major oil producing nation, has a vested interest in its Bolivian investments? Nah!

Could it be that there is a plot to subvert Israel's statehood by the mighty Bolivian forces at work within that nation? Nah!

Could be then that Israel reminds you of what Bolivia once was, a subservient vassal of US hegemony? Hmmm!

Are you secretly envious of Bolivia's bold action to stand alone against the combined economic and financial forces of the world, a step that Israel could never take because it is totally beholden to its US masters and could never survive in its current form without the might of the US arsenal at its disposal? Hmmmmmmmmmm!

Perhaps we could substitute the words "Geoff Pahoff" for 'the "left"' in the following quote from your comment to Phil Kendall:

This is why the "left" has nothing worthwhile to contribute to the debate on global affairs including resources, geo-politics and the environment. Nothing whatsoever. The "left" is not worth hearing.

Rant on, Geoff, but it ain't debate!

"Left" Hooked On Israel.

"I would be interested how you get from Bolivia to your rants in favour of Israel and your boorish put-downs of other respondents."

Glad to oblige with an explanation, Roger.

I haven't mentioned Israel on this thread. Let alone rant in favour of it. Read my comment again. All I did was quote a single reference by another commenter.

Nor did I "get" from Bolivia, since I haven't mentioned it either.

Funny thing though. I had the exact same question in my mind. How on earth does someone manage to raise the subject of Israel on a thread about Bolivian government policy regarding its oil reserves? Least of all launch an attack using the vilest language of the ugliest Israel-haters? Any suggestions?

I have one. A suggestion I mean. It is a reflection of this truly extraordinary obsession that the "left" has with Israel. A similar thing happened just the other day in another place I occasionally hang out when I'm slumming it. Someone from the "left" came in with an attack on Israel alleging, among other things, that the Israelis intend to reoccupy Gaza at the first opportunity (this insight apparently justifies Hamas and IJ attacks on Israeli civilians and military, from Gaza). What was the thread about? Australian IR.

Is there any wonder that many, including me, see this fixation of the "left" as symptomatic of something pretty unhealthy. Is there any subject at all where the "left" would regard Israel as "off-topic"? Anything? How about "child-care"? The football? (Probably not. Kibbutzim and Frank Lowy would provide the only hooks the "left" need).  

Supplementary Question

Geoff, you are correct, your comment did not, in fact, mention the words "Israel" or "Bolivia". It did, as you have continued on, contain some vituperative prose about "the left". Of course, in your reply to me, you make it plain that "the left" is just a code word for anyone who disagrees with your passion for the Israeli cause.

There is obviously something out-of-kilter in the land of "the left" because it is at variance with Pahoffqueness. The Leftites are part of some unholy alliance, vow-bent on stitching the dear old I.....s right up, according to you. It is not, as you make plain, just a difference of opinion, but is something worthy of your unique form of tongue-lashing. It is reminiscent of a murderer's parents who can never accept or even admit that there is evidence to the contrary to their belief in the complete innocence of their child.

I would also consider that your style of response is also "unhealthy" so you hardly occupy some moral high-ground where you can now off-handedly make light comments about those whose you otherwise viciously disparage.

Of course, there is something a little bizarre in your code-word choices. "The left"! Now who exactly would "they" be? Organised, powerful, connected somebodies? Well I allow, that some unionists and fellow-travellers would probably admit to a fair use of that label for them. But generally, it is nonsensical. In my own case, I belong to no political party, though I did join the Democrats briefly some years back. I don't belong to a union. I don't attend rallies. I have an opinion about Israel which does not match yours, and I have solid reasons for them.

So how would I be of "the left", except that you might say I am because I disagree with you on I....? Is that your definition of "the left"? Left of what and on what points of discussion? You seem to exhibit a very narrow view of your own right-mindedness.

And what is your opinion of Bolivia's move to take control of its own wealth? If you have read Perkins, do you not think that he has put a persuasive argument as to his overall truthfulness, in the light of the Bolivian bold stroke?

The "Left" Spotlighted.

Roger, there is a reason why I never use the word "left" in a political context unless it is in inverted commas. I used to refer to this abstract as "left/liberal" but it was bit unwieldy and invited even greater misunderstanding.

I use the label because generally it is self-applied. I am not referring to individuals by virtue merely of them being, in the Australian context, members of the ALP (the only party incidentally that I have ever been a member) or even the Democrats or Greens. Clearly the ratbag cults, like those behind  CounterPunch, Green Left Weekly, What Really Happened and all the rest do qualify.  They need not necessarily be members of any party. Often they are not.

I agree, largely because of them, the term "left" is nonsensical. One of my main themes is how easily "progressive" movements and thought have been infiltrated by bigots, cultists, power and violence worshippers and fascists (a term I still use unashamedly without inverted commas).

Ardent anti-Israel bombast is just one hallmark of this self proclaimed "left". It is the the canary down the mine, as it were. The litmus test. Other features include (not necessarily all) anti-Americanism, moral equivalence sentiments particularly in regard to terrorism and murder, a strong inclination to search (not very far) for "root causes" which invariably involve blaming the victims, a contempt for democracy and democracies and liberal values that at times borders on hatred, rank hypocrisy especially when it comes to women's rights, personal freedoms and Islamist regimes and groups, historical revisionism and contempt for truth and memory generally and a tendency to accept and retail conspiracy stories especially about 9/11, neocons, Zionism, the Iraq war and/or the "Israel Lobby". I could go on.

I have some views on Bolivia and John Perkins. I will save them for another post.

Laugh You Bastards!! Either That Or Cry.

Phil Kendall's post has it all.

"58-year sore that Israel is, a truly murderous scab-on-the-earth". References to sheople. Incoherent nonsense about "super-profits". Citing that silly novel by that fraud John Perkins about "economic hitmen" as if it was some kind of reference authority. He reveals a blood-dripping racism as foul as any that stalks the world, short of actual violence. The contempt for the intellect of ordinary people, and democracy, and liberal values is so palpable and passionate he needs to invent new words to express its depth.

He is of the "left".

He is a classic illustration of why the "left" is a laughing stock. Afterall the only healthy response to a post like that is laughter. It is impossible to parody this stuff.

This is why the "left" has nothing worthwhile to contribute to the debate on global affairs including resources, geo-politics and the environment. Nothing whatsoever. The "left" is not worth hearing.

This is not a thing I celebrate. Perhaps in time a new politics will emerge from where now squats the septic-scab-on-the-landscape that the "left" has become.  A movement once again with its focus on the welfare of people. But it seems more and more likely that the "left" is beyond reform. The structures, including the parties and the intellectual powerhouses, are now irredeemably in the hands of the worst and ugliest of the enemy.

Lost forever.      

Retraction

I retract the word "racism" as used in this comment. For now.

And substitute "bigotry".

Occam's (binary) razor

The world is confronted by enormous problems; at the 'highest' level are problems of whole-world survival, i.e. the greenhouse, then sustainability in general followed by wide-area survival, i.e. hunger, disease etc then (long story short) right down to individual survival so aptly summed up by "Yeah, but what's in it for me?"

This thread is titled "Who Owns Bolivia's Oil and Gas?"

From the article: "Morales’ actions are widely supported by Bolivians, who see the so-called privatizations (or 'capitalizations') under former President Gonzalo 'Goni' Sanchez de Lozada as a rip-off: Bolivia received only 18% of the proceeds! Bolivians wonder why investments of some $3 billion should entitle foreign investors to 82% of the country’s vast gas reserves, now estimated to be worth $250 billion."

When I first saw this article I thought "Bewdy, and about time."

Things went immediately wrong with the first comment post, which included, amongst other things, this statement: "The rhetoric of 'fair trade' as opposed to 'free trade' is one of the trendiest forms of gibberish right now with the romantic psuedo-intellectual left."

So much for any sort of rational 'debate', indeed it only got worse; currently slipping from "racism" to "bigotry!".

-=*=-

Getting back to the thread, I have asked, Q: 'Who owns this Earth / Country / individual citizen's paddock / mineral underlying this paddock'; if the answer is not 'the individual' then it's 'the whole country' or generalised perhaps, to 'the whole wide world'. A: The answer is definitely not the mining entities - yet that's who pockets the lions' share. Q: Just how fair is that? A: IMHO, not at all. It's taking from the rightful owners, without adequate recompense. Q: how does this differ from stealing? A: I can't see how.

Apart from a scant few 'renewables', the world is finite; especially so any fossil fuels. With an estimated remaining 'life' extending into the billions of years, sunlight can be regarded as 'free'. All else has to be paid for. (Note: this would immediately rule out any form of theft, and especially all armed and/or actually murderous theft.)

There are elements of 'equity' [n. (pl. -ies) 1 fairness. 2 principles of justice used to correct or supplement the law. POD] clearly violated by the Sanchez rip-off (one wonders as to the degree of 'equity' in the Howard/China $25bio gas deal; similar to that of Sanchez? I once worked out that it equated to a price of about ¢16.7 per litre of LPG, delivery included - a 'fire-sale' indeed!) - but to press on. Again ruling out theft, a 'fair' price for any consumable would equitably compensate for the intrinsic worth, plus the cost of any clean-up. The intrinsic worth of a non-renewable is hard to estimate given its fundamental 'irreplaceability', and the clean-up costs don't just include any prettying-up of the mine-site but also the long-term sustainability costs; now 'looping' back to the greenhouse.

One of the more ugly aspects of the current 'economic' paradigm is the so-called 'market'. This turns out to be mostly another 'Newspeak' furphy; the dominant feature is really power: the price demanded (for shoes, say) or offered (for potatoes, say) may differ from 'what it's really worth'. "The beginning of wisdom is to understand that profit-oriented businesses want to charge 'as much as the market will bear'." See here. (Ooops - quel surprise! - Ah, well; different strokes for different folks... but what a bloody nerve, not to mention 'selective quoting'.) Illustrations (WYSIWYG!) of the lack of a 'fair price' abound (i.e. McDonald's potato politics, or Trujillo railing about being prevented from 'leveraging' Telstra's monopoly), as do the mostly bunkum 'explanations' of just why the oil-price is currently as high as it is. (Illegal invasion of Iraq and filthy capitalist speculators not being involved, of course!)

Now, to complete the major loop. As mentioned, there are at least two ways of acquiring something; one can a) buy it or b) steal it. Under (a) we understand that there may be a 'fair' price, and others not-so-fair; the $3bio entitling foreign investors to 82% of Bolivia's $250bio Oil and Gas being firmly in the latter 'unfair' class; a classic capitalistic rip-off in fact.

The Bolivia 'deal' illustrates exactly two aspects of a filthy capitalistic rip-off; (1) the relatively low entry-price ($3bio; aka the cost of establishing production) and the obscene 'profit' available ($250bio; assumed after production costs equates to 'super-profit' or 'resource-rent') and (2) the toadally unfair 'split'; i.e. 18% to the real owners, and 82% to the mining entities. Here, the lack of equity.

Lastly, (b) stealing; an' that with or without force. Further, force being threatened (à la Iran?) or implemented, terminally 'with prejudice'. The Bolivia 'deal' could be called 'legal' theft, although the morality (if not outright corruption) of any government which does that sort'a 'deal' must be severely questioned. A not-much-better alternative to corruption would be the sort'a coercion mentioned in Perkins' "Economic Hit Man". Now, force. I make no apologies; we are 'embedded' in a world where forceful theft is actually taking place, and I, for one, object. So I 'name names' and choose to name the worst offenders. See almost any of my previous posts. I am quite tenacious in this, and I 'name in order to shame', seeing this as my valid democratic right.

But one thing I am not now, never was nor ever will be, is an apologist for the crimes mentioned here and elsewhere; namely the crimes of vicious bloody one-on-one to wholesale mass-murder, be it for land or oil or whatever. Stop the killing! NO WAR!

Purple-prose polemics

Themes: netiquette, labelling; lies'n abuse.

Geoff Pahoff on June 26, 2006 - 9:23pm: "'58-year sore that Israel is, a truly murderous scab-on-the-earth'. References to sheople. Incoherent nonsense about 'super-profits'. Citing that silly novel by that fraud John Perkins about "economic hitmen" as if it was some kind of reference authority. He reveals a blood-dripping racism as foul as any that stalks the world, short of actual violence."

1. The statement that the '58-year sore that Israel is, a truly murderous scab-on-the-earth' is IMHO a valid opinion, based on close observation of the facts (WYSIWYG); and that reality is even openly admitted by the 'Israel lobby' itself, something like: 'without [similarly murderous!] US support, Israel would be lost'. In particular, the scab-on-the-earth that is Israel continues to murder for the land and water once legally the province (pre-'48) of the 'native' Palestinians who were (brutally! illegally!) dispossessed by force & without reasonable, let alone adequate recompense - till this very day (and sadly, beyond).

2. "References to sheople" is again a valid opinion, based on close observation of the facts (WYSIWYG); it refers to the confirmed actions of 'the great unwashed' playing 'monkey-see, monkey-do' as they react to the programming delivered at (yeah, 'at') them via their (flat panel, etc) TVs. In particular, the sheople's (voluntary! mindless!) lapping-up of the tawdry 'shop till you drop' retail therapy message: "You are inadequate; go out and buy something!" proves my point. (Also, while thinking 'monkey-see, monkey-do', let's not forget the 'Judas-sheep' principle. Or, come to think of it, 'the walls came tumbling down'.)

3. There is nothing incoherent or nonsensical about 'super-profits'. They are a rip-off, pure and simple. It's in the article (fG'sS! - not that I ever do Gs); 82% of $250bio to the voracious rip-off resource-rent-harvesting (mainly US) entities. (Woss'a madda Matey, carn'cha read, even?)

Web Results 1 - 100 of about 279 English pages for "Resource rent" economic dictionary origin OR definition OR derivation. (0.66 secs)

hit#2: Abnormal profit, also referred to as supernormal profit or pure profit, is an economic term of profit exceeding the normal profit. Normal profit equals the opportunity cost of labour and capital, while abnormal profit exceeds the normal return from these input factors in production. In principle there are three kind of abnormal profit:
Monopoly rent
Resource rent
Intra marginal rent
[investordictionary]

(Interestingly enough (big new story-in-story); I have in the past quoted Wiki. But a quick visit shows that the definitions I've been recommending have been hijacked by - shudder! - Marxists, and other 'like' -ists. I fear a psyop on Wiki. - Shock, horror! Another "Boo! Hiss!" Will the bad news ever stop? No longer recommended.)

It (resource rent) exists and it afflicts us. I've said it (uncontested) before: have a look here. Then, check this. Quote: "The PRRT also provides the community-the ultimate owners of Australia's petroleum resources-with a fair proportion of the potentially high returns from the exploitation of scarce and non-renewable resources.
Under section 5 of the Petroleum Resource Rent Tax Act 1987, the rate of tax is 40 per cent."
Let me put that, another way: 60% of the extra return, that is, over and above a 'fair' profit, goes straight into the oil-production-entity's pocket. 60%! And in Stiglitz's article, 82%! Y'call that 'fair'? WYSIWYG! I defy anyone to fully follow the links then come back here and disprove it (PRRT - it's the law!) - or me. A genu-whine Aussie Resource Rent Tax; an' y'just can't tax something unless it exists! How many times ??! S**t! And Pahoff dares talks about 'incoherent nonsense!' I suspect that Pahoff is himself a psyop.

4. Pahoff: "silly novel by that fraud John Perkins about 'economic hitmen' as if it was some kind of reference authority" - no-one in this wide-brown Aus, or anywhere on Earth for that matter, can assert that (Pahoff's) sort'a rubbish - without proof. How about it, Geoff? You wanna talk about incoherent or nonsensical? What abso-bloody-lute, complete died-in-the-wool arrogance! So prove your rubbishy assertion. If you can't (see Costello, below), it deserves a toadal retraction (but I for one wouldn't dent my dignity by the smallest part of a pico-nano-metre by deigning to demand one. Oh, no: not this little black duck.)

5. Pahoff: "a blood-dripping racism". This really takes the cake. Like mike lyvers before him, the aspersion 'racist' is hurled, just as 'anti-Semite' was thrown at the M-S 'Israel lobby' publisher. This is neither acceptable 'debate' nor just a simple insult or attempt at intimidating or silencing an opponent; it is pure, slimy, offensive & libellous slander [—n. 1 false and damaging utterance about a person. POD] Pahoff in full: "He reveals a blood-dripping racism as foul as any that stalks the world, short of actual violence." Horror! Well, not all bad, Geoff; 'short of actual violence' shows that you do have a grip, however tiny, tenuous or vague on my avowed peace-loving nature.

6. As if all that wasn't enough, Pahoff has the nerve to scream: "He is of the 'left'". As if it would matter; left/right makes no difference (anymore), when there is no (political) choice; for example the Lib/Lab duo-uglies here offer us Nunn, a big, fat zero (not even Buckley's).

Well anyway, I'm not to be labelled. I am primarily concerned with a) the (coming!) Greenhouse climate catastrophe b) Stop the killing! c) NO WAR! and finally d) social justice: "Fair go, y'mug!" Only after all that, keeping body, soul (and family! An' don't forget y'mates!) together.

-=*=-

netiquette, labelling; lies'n abuse

Dear reader, you can make up your own mind, as to whether what I say is a valid representation based on accurate observations of 'the facts as they are on the ground (or anywhere else)', or not.

Most specifically, whether (say) the US 'went in' to Iraq to steal (even if 'only' control of) Iraqi oil, i.e. murder for oil, or whether (say) Israel continues its colonisation of the former Palestine using brutal (mainly US supplied & financed) force, i.e. murder for land and water, or not.

As a 'parting shot' I'd say the WD topic 'Online abuse: making the case for civility' has had little or no discernable effect; certainly none positive visible from the 'racist' epithet hurlers, or their ilk. Boo! Hiss! (Dear WD, having deleted the 'moron' post, then approving and later withdrawing 'legal lickspittle', then allowing 'idiot' and now the slanderous 'racist' twice, wither your moderation?)

Oh yeah, there is one other thing: keep laughing, Geoff; part of the good ol' Ameri-kulture is that laughter is reputed to be the best medicine, laughing may just cure you of whatever it is that Oh, so obviously afflicts you. You've put up quite some tirade there; you might be in danger of bursting a blood vessel - an' we wouldn't want that now, would we? (Cue Costello: "Haw, haw, haw! - Let us prey.")

Wrong, Phil:

"Like Mike Lyvers before him, the aspersion 'racist' is hurled,"

That is not true, Phil. All I wrote was that if the same thing had been said about Arabs, the accusation of racism would naturally follow. You owe me an apology, it would seem. But don't worry, I'm not expecting one.

It's blatant, isn't it?

mike lyvers "...this attitude would appear to long predate the creation of modern Israel"

Indeed, it does.

The trite formulaic "explanation" (purported justification) for this entrenched racism most frequently offered by so-called "anti-Zionists" on the Left is the influx of Zionist Jews to Palestine in the late 19th and early 20th Centuries.

If the Pew Global survey is even half accurate, it debunks the facile insistence that what the Muslim Arab world and their co-religionists in Iran, Indonesia, etc, are really looking for is a "secular, democratic Palestine" in which Jews would have a role.

They'd have a role alright. As untermenschen in another Holocaust.

The hate mongers ruling the Iranian Reich, for example, are not kidding when they look forward to a World Without Zionism - because they simply equate Jews with Zionism and are planning their anhilation.

It is hardly even plausibly deniable anymore that the Willing Executioners who daily regurgitate Hamas and official Iranian media releases under the pretext of 'discussion' about 'liberating Palestine' can be under even the faintest illusion about where this is all heading.

It's not their lying, murderous intent that surprises me. They've always done that.

It's not even their insouciance, as that has a venerable heritage, too.

It's their blythe assumption that the rest of humanity will be gulled by it that manages to shock me even now.

The pudding

John Henry Calvinist: "And, so...populism is not (entirely) just a matter of "gibberish" and bad economics - which is why I'll be very interested to see if Morales can deliver what the people actually need. The weight of history may be against him but, if he listens to intelligent economists like Stiglitz, the very real possibility is there..."

Time will tell

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