Sometimes Ron gets reflective, and a piece such as this is the result. These words are from a speech Ron gave at the Bunning Family Seminar, where he spoke about government, the importance of philanthropy and adventures with his mate Gavin.
When one attains a certain age we start valuing friendships more and more. The two-way exchange of thoughts and ideas assist the stimulation process and as I was staring at a blank piece of paper, preparing for this presentation, an email arrived from a Perth friend, Dieter Kops:
Thank you for your birthday wishes. I was in the Java Sea looking for HMS Exeter on my birthday. We did not find the ship but did find a US submarine which was reported lost in March, 1942, a hundred miles east of the location we found it…”
I thought “what a great time capsule to find for one’s birthday?” It’s also like life itself – you go looking for something and you end up finding something else. The important thing is, of course, to be looking for something in the first place!
The very next email received was from another friend, Wolfgang Kasper, where he finished with:
“Ron, you are entitled to think that we are nuts to travel as we do – but someone has to look at the real world and not merely at the map, someone has to look at reality and not rely only on its distorted reflections in official reports and the spin doctored press!
“One final thought – since the direct pursuit of happiness only tends to lead to unsatisfactory hedonism and since happiness normally comes as a bi-product of a self-chosen pursuit of excellence, we wish you for 2007 the imagination, the drive and the freedom to do just that.”
Good, stimulating stuff, indicating the merits of the “indirect pursuit of happiness” rather than its “direct pursuit”. I value that sort of stimulating friendship.
Similarly, I value the friendship of the Bunning family, now spanning 50 years. Breaking the sound barrier in Gavin’s Mini Cooper in the 1960s, travelling from Kalgoorlie to Perth; planning museums with Gavin in the 1960s; playing clarinet duets with Gavin’s father; looking for nickel with Gavin and Will Loader and the General Minerals Exploration Syndicate in the 1970s.
Involvement in the 1966 Swan-Investment Club where we launched John Mair into his real estate career, even though we managed to get our money back many years later. It certainly developed our appetite for real estate development which I find works best when you surround yourself with good people with whom you can feel comfortable.
So, 50 years later, I still find myself doing interesting things with the Bunning family. I find that life’s not just about the numbers in the feasibility studies, it’s more about the people, your fellow travellers.
Friends, can I use the allotted time today to touch on a few current concerns and question whether we have all the answers and where we should be going in search of solutions?
I’ve noticed that economically, the world appears to be made up of two kinds of people. The first, usually the majority, who feel that what we need is more government involvement and less personal responsibility. The other group, usually the minority, who believe that we could have a better world with less government and more personal responsibility.
The sales pitch for bigger government is easy because they simply perpetuate the fallacy that “we can live at the expense of everyone else”. That system can only work as long as there is an unending supply of victims.
It was a bit like communism, socialism and even exemplified by the high tariff regime which erected artificial barriers between trade and commerce, which until recently existed in Australia.
These perverse systems don’t make much economic sense so you may wonder why they lasted so long. In economics it’s called “the law of concentrated benefits vs diffused costs”, where the benefits go to a select few, so they work their butts off to perpetuate the system, and ensuring that the costs are spread over a large number who are usually too busy earning a living to devote much of their time and effort to get together and change the system.
However, in the end, systems like that simply run out of victims and that’s certainly what happened with communism and socialism where the only place where it’s fashionable today is in our universities.
I mentioned earlier that economically there are two types of people and explained the seductive sales pitch used by the “more government – less personal responsibility people.” Now just to clear up where I stand, I’m not one of them because I stand firmly on the side of “smaller government – more personal responsibility.”
Generally that’s an economic and moral system referred to as free enterprise or capitalism, where people deal voluntarily with one another, guided by choice rather than coercion.
I can tell you it’s not an easy one to sell, when the vast majority of Australians are on welfare of some kind, whether it be family benefits, being paid to be abandoned or having babies, or free education or free medicine. All these responsibilities once rested on individuals.
That was before we put in place the vast battalions of people advising and recruiting even more people to become welfare recipients. In particular, I find it even more disturbing the corporate welfare system in Australia where business people are lured by government handouts.
My first experience of this was back in 1981 when I went to South Africa as one of the 12 delegates of the Perth Chamber of Commerce trade mission (some of you may remember that at the time, our federal government had declared it illegal for Australian’s to trade with South Africa in any way).
Off we went for three magnificent weeks of wining, dining and sightseeing in South Africa and when we returned I was asked to fill in a form for a market development grant, whereby 80 per cent of the total costs of my holiday would be be paid by the taxpayers.
I thought this was hilarious – a government actually paying us to visit a country where it was illegal for us to conduct business. I wasn’t at all enthusiastic about signing such as a document, however I was told “don’t let the side down because it’s important that we all have the same story.”
My conscience was almost cleared by donating that taxpayer funded grant to the Foundation for Economic Education so they could conduct a study on how government innovation always achieves the opposite of its intent. It also made me curious as to the aims and objectives of this Export Market Development Grant (EMDG) so I visited their head office in Melbourne and took the chief out to lunch.
You can imagine my surprise when I found they employed over 100 people who were engaged full time, simply in writing out cheques to enthusiastic businessmen like myself. I checked this morning and much to my surprise, this organisation still exists. As in many government departments there would be a good cause for it to be abolished.
Everywhere you look around the world there are examples of how government involvement should be reduced. I saw some statistics from the USA yesterday about the firearm death rate:
“If you consider that there has been an average of 160,000 troops in Iraq theatre operations during the past 22 months and a total of 2,112 deaths, that gives a firearm death rate of 60 per 10,000 soldiers.
“The firearm death rate in Washington DC is 80.6 per 10,000 for the same period. This means you are about 25 per cent more likely to be shot and killed in the US capital, which has some of the strictest gun control laws in the nation, than you are in Iraq.
Conclusion: the US government should pull out of Washington immediately.
Despite all the hardships of being in this ‘small government – more personal responsibility’ category, it is often obvious that very few of us have sufficient understanding of the incredible benefits of the free enterprise system. Once you become aware of the benefits, you become an enthusiast.
We can become part of a giant economic experiment that really works. It is not only the most moral system devised by mankind (being one of voluntary exchange) but it works better than any other alternative. More about that later.
Gavin asked me to raise a few concerns with you.
How this trivial issue was used to tie up our state government for almost a month and divert public attention from the more serious issues at stake. If we don’t “clock change” we are in the same time zone as one-third of the world’s population. They happen to be our major clients and are becoming more relevant than Sydney or Melbourne.
There is no valid reason to Western Australia to change our clocks twice per year, just to support the few people engaged in printing winter versus summer schedules.
This comes into almost every aspect of our lives. The Chamber of commerce and Industry (CCI) has quantified the costs with an extensive study. An example of outdated rules and regulations, and one in particular that affects most Western countries, is the laws governing the production and sale of milk.
Most of the current laws were passed many years ago, before refrigeration and stainless steel refrigerated tankers, so they may no longer apply under current circumstances. However, there is a lot of capital tied up in pasteurisation plant and similar equipment so it’s hard to break the status quo. This is all coming to a head around the world as people are now demanding that they have access to the raw milk if they so choose.
You might notice the police raid on areas selling raw milk in Ontario, Canada. So what?
I disagree that there is a shortage. Instead, over the past 20 years of relative inactivity in WA, we have seen vast hordes of people gravitate toward the comfort and security of jobs within government. I have also seen the proliferation of regulating authorities which have in turn become one of the major impediments to industry, requiring businesses to hire more and more staff in order to satisfy their regulatory demands.
A courageous state government would immediately institute a hiring freeze and start decimating their own numbers, setting about retraining half their staff to move over from the dark side to the productive sector – thus solving two problems in one.
The “Future Fund” or “Future Fraud”
Is the so-called Future Fund a fraud or just another tax on Australia’s struggling taxpayers? Today’s announcement of the A$14.5b contribution of ‘Your Telstra’ to the Future Fund is in addition to the A$18b of taxpayer funds contributed on May 5, 2006 and it’s only just the beginning.
The initial error made by the federal government was to implement an unsustainable, over-generous superannuation scheme for federal politicians and public servants. Rather than “unwind the unsustainable”, the federal government is going to hit you in the pocket to maintain the public service access to super funds beyond your wildest dreams.
So is the Future Fund a fraud just another tax?
First ask yourself: is playing the stock market a legitimate role for government? I can’t see “gambling with taxpayer’s money” anywhere in the job specification for the federal government, so the Future Fund (despite the quality of people selected to run it) is starting to look like a fraudulent attempt to overcome the unsustainability of over generosity to Australia’s public servants.
“As the receptacle for future budget surpluses and proceeds from the Telstra privatization, the Future Fund is expected to reach $62b as early as 2007. But these budget surpluses belong to taxpayers, and the receipts from the sale of Telstra should be remitted to the public, which owns these assets.
“If all of this money was handed back rather than hoarded, $62b would give every adult and child in Australia an initial $3000 of savings. Rather than one Future Fund, we could have 20 million.
“A truly liberal government would denationalise the Future Fund and reallocate the money to its rightful owners.”
(The Australian, January 2, 2006)
Why the silence from those who know how wrong the Future Fund is? Perhaps they are looking forward to the extra weight of money stirring the stock market even further. What are your thoughts on this misuse of taxpayer funds?
Do all booms end in tears?
This was the topic of a recent speech I gave. The following points and predictions were made by Marcus Padley, stockbroker and writer, in 2006.
- The PE on the market is 13.8x versus the 10 year average of 15.3x. It is not overvalued (unless the earnings numbers are all wrong).
- Ahead of the 1987 crash the market PE was 21x (up from 14x in a year).
- In the five years ahead of the 1987 crash the all ords went up 337 per cent. In the past three years (2003-2006) it is up ‘just’ 65.4 per cent’.
- Even if you do some selective data mining and take the bigger rise in the market since the Iraq war (103 per cent) we are still way under the 203 per cent rise in the all ords in the three years ahead of the 1987 crash.
- A crash is likely to be led by the US markets, but the Dow Jones is up just 21.5 per cent in the last five years. In the five years ahead of the 1987 crash it was up 155 per cent. No reason for the US market to fall over.
- We had two market corrections last year. The first one (in March) knocked 8.3 per cent off the market, lasted six weeks and recovered high in seven weeks. A correction is not to be feared, in this market it will probably be seen as another buying opportunity.
Of course some people worry about a crash 100 per cent of the time. You’ll never stop that (they make terrible investors/clients). But did you know crashes only happen 0.009987 per cent of the time? You can spend a lifetime worrying about nothing in a bull market and it will cost you a fortune. A crash is unlikely (famous last words); a correction is more likely.
The emerging moral crisis of the left, involving also the destructive use of language which is becoming an assault on civil society
Ideas do have consequences and throughout history, ideas have usually come first – political action has then followed. If we wish to encourage economic and personal freedoms in our society, we must encourage the free flow of ideas and the institutes that make it possible (An example, referring to global warming and its effect on free speech, can be found here).
Please don’t think I’m telling you what you should think or what’s right or wrong about issues like this. Although I have a fairly clear idea, I’m simply saying let’s continue to search for truth as rational individuals, and avoid such rantings from the far left.
I’m encouraged by comments made by Charles Murray at Atlas’s Freedom Dinner on November 16, 2006. He was examining the prospects for survival of western civilization as we know it. He noted three points:
- Advances in information technology will continue to undermine the authority of centralized bureaucracies, whether they be local government, state government, the post office or totalitarian governments. Yes, technology may provide governments with new means of control, but the forces of liberty have the advantage because all the smart computer geeks want to work for the private sector, not the government.
- In the next 10 years there will be an acceleration of this moral crisis of the left. The left is animated by equality, in particular the idea of making all groups equal in everything. But science will soon demonstrate – not as a matter of opinion or speculation, but as a matter of fact – that individuals really are different and groups are too. We will know, for example, that the Italians and the Dutch really are different and each group will be happy that it’s not like the other.
- As Western societies continue to become wealthier, economies will become less and less important as an argument for liberty. This development is a sign of how far the liberty movement has come, and it means that the ideological front-line will shift to making people better off spiritually. The importance of freedom is that it allows people to find fulfilment in the stuff of life – work, faith, family and community – in whichever order you, yourself, choose.
And that in itself is the indirect pursuit of happiness.
The joys of giving versus being battered into submission
Philanthropy and corporate social responsibility is summed up well by Rupert Myer, chairman of the Myer Family Company, a director of The Myer Family Office and chairman of the National Gallery of Australia in this speech from The Sherman Foundation Forum held in Sydney on August 10, 2006.
“In Australia, we are prone to use a language of giving that conveys a message to others that an act of benefaction is an act of solemn duty. Increasingly and monotonously, people who are identified as benefactors and philanthropists refer to their benefaction and philanthropy as ‘giving back’. This is not the language of generosity; it is the language of obligation. It reinforces a view held by some that, in order to ‘give back’ something must have been taken in the first place. At best, it reflects careless use of language. At worst, it establishes or reinforces in the minds of many a dubious motivation for their philanthropy. The assertion that philanthropy is ‘giving back’ is best left to those who are opposed to private wealth.
“Benefactors and foundations are part of, not apart from, the community. Their benefactions ought to be considered as part of a natural ecology. Instead of ‘giving back’, they ought to speak more freely of what they do as ‘giving’ or ‘grant making’. Private benefaction done well is engaging and enjoyable. It ought not to be motivated by the heavy and cumbersome hand of obligation, duty or noblesse oblige. Grant making is a professional activity that calls upon research, training, skill and judgement, as well as financial acumen and an acute understanding of the parts of the community in which benefactors and philanthropists wish to work.”