Painful Lesson for the French

Appeasement Never Works

The reaction of the French press and people to the kidnapping of two French journalists would be laughable if the situation wasn't so tragic (click here). The disbelief that this could happen when France has been so "pro Arab" (and, let's face it, "anti American") is evident. However, once again, it goes to show that appeasement doesn't work. When dealing with groups such as terrorists, any weakness simply encourages them to make further demands.

I'm not totally supportive of the policy of the US. However, it's clear to me that the agenda of the radical Islamic groups is an infringement on the West and we have the right to defend ourselves against this menace. Remember that terrorist attacks were going on long before 9/11 and even before the Bush administration came to office.

I'll discuss terrorism at greater length in another post. For now, let's just say that this is a problem that will unfortunately be with us for some time and there's no easy solution.

Olympic Games - The "Hangover"

Today's "Financial Times" carries an article entitled "After the grand Olympics party, the big hangover" and provides more details of the costs of staging the games and the budget overruns.

"The cost overruns, equivalent to about 2.5 per cent of gross domestic product, would push the budget deficit above the 3 per cent of GDP ceiling permitted under the eurozone stability and growth pact for a second successive year."

Can't help thinking that frivolous events like the Olympics are the modern day equivalent of the "Bread and Circuses" of ancient Rome - entertainments to distract the citizenry from more important issues.

Another negative of events like the Olympics is that they pander to and encourage the worst sort of chauvinistic nationalism. An example of this is an article in yesterday's "Sydney Morning Herald" by Paul Sheehan (click here). Sheehan glories in Australia's sporting success, even though he acknowledges the cost of this "success".

"I estimate the cost per Olympic medal at about $5million in direct government spending, which does not include corporate sponsorship, which is not measurable."

Of course, it's quite alright for the government to make this decision to spend your tax dollars.

"Some would consider $5million a medal, or about a quarter of a billion dollars over four years, as a frippery. Given how hard it is to excel on a world stage against all comers, and how expensive, I consider it money well spent.

Australia's success at these and other Olympics tells me this society is in great shape. Now we have to spread the elite Olympic wealth into the battle against the nation's spreading waistline."

So there you have it! Australia can hold it's head up high and look the world in the eye because a bunch of our youths have swum up and down a pool or raced round a cycle track better than the other lot! Much though I love Australia, this country has a serious self-esteem problem that often manifests itself in the arena of sports and the importance that is attached to them.

Let's be blunt. The money spent on sports is a complete waste. It has no direct benefit for the ordinary citizen. If Sheehan is so keen for Australia to excel on the world stage, then the money would go to better use by being left where it belongs - in the hands of the citizens who created it, rather than being handed out to a bunch of non-productive jock drones!

Australian Election

Where's the "None of the Above Box"?

Australian Prime Minister John Howard yesterday announced the date of the next federal election (Saturday, October 9). Now, you may think this blogger would be a die-hard Liberal voter, but that's not the case.

The problem we face is that the system of "Mis-representative" democracy that we have means that it doesn't make a lot of difference which party gets in. At the end of the day, they are both "Pro-Big Government" and pro the system that perpetuates them! Take a look at the current administration. Forget, what they say, look at what they do!

After some initial moves in the direction of fiscal responsibility, the current government has been a shameless "pork barreler". The last budget was an absolute disgrace and only last Monday we had the latest exercise in vote buying (another $445 million thrown at health care for the elderly). The relatively sound state of government finances in Australia is the result of increasing the tax burden (particularly on mugs such as yours truly, who until recently was trapped in the PAYE system!) and the good fortune of a strong economic performance in recent years (no credit to the current government for that!).

As regards the election itself, it looks like being very close. A "Socionomics" analysis (see www.socionomics.org for more details) would note that Howard has 2 big pluses going for him.

1. The stock market is at record highs and my guess is that there will not be any big sell-off before the election (although the US stockmarket is the wild card here, that is looking very vulnerable and I expect the US market to be down sharply over the rest of this year).

2. The real estate market, although softer, is holding it's ground and we may even see a small bounce with Spring approaching in Australia).

Why are these factors important? Because they are a reflection of the "social mood" and how confident people are. When they are upbeat, they tend to re-elect governments. When people are fearful and negative, they want to blame someone and they tend to kick out incumbents.

My guess is that Howard will get back in by a very small margin. The best result, from a Libertarian point of view, would be a deadlocked parliament with the Senate blocking any major legislation. The less government action the better! Labour getting in under those circumstance wouldn't be too bad and would have the benefit of getting rid of Howard.

Baby Boomers and Retirement

After the boom, a depressing retirement - why you don't want to rely on the government

In Saturday's "Sydney Morning Herald", there is an article by the truly awful Adele Horin entitled "After the boom, a depressing retirement" click here . It discusses the problem of funding an adequate retirement for the baby boom generation. It actually makes a number of good points and the conclusion, no surprise, is that most people are going to struggle.

It's the conclusion that is yet another example of the Collectivist mindset.

"But for the foreseeable future, access to subsidised medicines, a first-rate public hospital system and a decent age pension will remain the backbone of a dignified retirement. That's the reality baby boomers need to grasp."

No, that's NOT the reality boomers need to grasp! The reality is that governments are not going to be able to deliver on their promises! Why? Demographics and the harsh realities of public finances - the money simply will not be there. Many people struggle to understand this, particularly given the extortionate taxes that we already pay. The problem of course, is that much, if not most, of our tax dollars is wasted. People wouldn't need subsidised medicines etc (I won't talk about socialised medicine here, that's an entire blog in itself!) if they didn't have the government stealing so much of their income!

The harsh reality of our age is that every one of us will need to be financially self-sufficient. Governments are not going to be there to help us and in fact they are a major part of the problem. For a more detailed discussion of this issue, check out "The Sovereign Individual" by James Dale Davidson and William Rees-Mogg.

The Olympic Games - More Government Waste

Might as well start with something controversial (in Australia, at least!!). In the August 28-29 edition of the "Australian Financial Review" there is an article entitled "A great splash for our cash". It talks about the success of the Australian Olympic team at the Athens Olympics and contrasts it with the relatively poor performance of the Canadian team. One of the reasons for the difference is the amount of money that the Australian government spends on sport.

"In Australia over the four years to July next year, the federal government will have allocated (Australian) $187 million to high-performance sports, including more than $54 million to the Australian Institute of Sport specifically earmarked for Olympic sports"

The article then talks about the massive cost of the Athens Olympics (10 billion Euros), which will probably burden Greek taxpayers for years to come. The article concludes by saying:

"Greeks are bound to ask soon, was it worth it? But ask the same question about the large amount of their taxes that go to funding elite sport, most Australians will respond: "Absolutely"".

Well here's one Australian (albeit naturalised) that says "Absolutely Not!!!" This is a great example of the waste that occurs when governments get involved. What benefit is there to the average taxpayer from this subsidy? Sure, we'll get all the "National Prestige" type arguments but at the end of the day that's a complete load of rubbish!! If people want to support sports, that's fine but let them do it directly and out of their own pockets. The same applies to funding for the Arts.

The comment in the article reveals another issue, that is most Australians probably won't think there is anything wrong with this frivolous government spending. Wake up! The government has it's hand in your pocket and it's wasting your money!!

A Manifesto

OK, why this blog? What’s it about and what can you expect if you choose to check in and read? Well, without putting too fine a point on it, the cancer (and I choose that term very deliberately) of “Collectivist” thinking has become so prevalent in our society that it has become the “accepted wisdom”. So much so, that anyone who challenges this is viewed as some kind of a crank! Well, as far as I am concerned, “Collectivist” thinking is not only incorrect but downright evil and anti-prosperity.

What do I mean by “Collectivist” thinking? Basically, the idea that “Governments” are the answer to all our problems. The idea that the whole apparatus of government and the welfare state are beneficial. Rubbish!!!

Big Government is a mortal threat to our individual freedom and also our prosperity. This blog is pro-freedom and pro-prosperity and will be a vehicle to disseminate opinions and ideas that support these principles.

There are going to be a number of themes running through this blog.

Individual responsibility. In all areas of life, a key principle for success is that we are each responsible for our own actions and our own lives. Unfortunately, in our society today the “victim” mentality is all too prevalent.

Objectivism. There’s going to be a lot of reference to Ayn Rand and her philosophy. I don’t agree with her on everything but her key insights are incredibly valuable. Her classic “Atlas Shrugged” is even more relevant today than when it was published.

Austrian Economics. Mainstream economics, particularly “Keynesian” demand management type policies are wrong headed and responsible for a lot of the problems we face today. The Austrian school of economics provides a coherent approach based on solid principles.

Socionomics. Financial markets and investment is a fascination of mine and the fact is that today we are all investors, whether we like it or not. Unfortunately, most of the mainstream comment on financial markets is complete rubbish! One of the main approaches I like to market analysis is the Elliott Wave Theory and the related discipline of “Socionomics”.

One other thing. I’m a white, Anglo-Saxon male born in the U.K. and currently based in Sydney, Australia. Consequently, much of what I comment on will be Australian and UK oriented.

OK! That’s it in brief. I hope the blog at least provides a different viewpoint and stimulates some critical thinking. While the above comments may appear a little “cranky” I am at heart an optimist. We live in exciting times full of opportunity! To the Freedom and Prosperity of everyone!