So long as we rely on OS central banks and the private ones here to own our currencies, there will never be enough money for our economy to function.

Money is not wealth. It is just a facilitator of economic activity. When this facilitator is created as debt by private banks, the debt will always be greater than the increases in productivity.

So in other words, why doesn’t the government tax foreign investors less now, in exchange for government taking the whole of their profits after ten or twenty years, and use the proceeds to pay for pensioners and other welfare recipients.

The starting point is nationalist: Australians versus foreigners. And socialist: all private property is to be held subject to a general right of government to dictate any and every condition, and take as much as it wants; in other words, the author is plugging national socialism.

(Government owning and controlling the means of production was at first called communism, but that got a bad name because of the millions of deaths by starvation, so they changed the name to socialist. That got a bad name because of Stalin, so they changed the name to national socialist. That got a bad name because of Hitler and Mussolini, so they changed the name to democratic socialist. That got a bad name because of Scargill (not to mention Pol Pot), so they keep changing the name, to social democracy, to the third way, the green economy, the blue economy, “reforming capitalism”, social responsibility, and so on.

(But let’s get one thing straight. At base there’s only two possibilities. Either you own your life, and the fruits of your labour and voluntary exchanges, and you believe in the individual and economic freedom that have raised the living standards of everyone including the poorest of the poor to the highest levels in the history of the world (to the stage that capitalism’s opponents are now moaning about how rich it makes the proletariat - ‘unsustainable’).

(Or it’s the same old communist sh!t sandwich in a different wrapping with the name changing all the time.)

“However, this approach would require a command economy of some sort that would not be acceptable in Australia.”
And
“A Google search will locate hundreds of his articles on reforming the theory and practice of capitalism.”

Bit of a self-contradiction there, Shann? Command economics are alright when it’s you formulating the commands, I suppose?

The premise of the article is that foreign investment creates open-ended “unlimited, unknown and uncontrollable foreign liabilities”. Shann makes no attempt to justify this statement.

But obviously the liabilities created by foreign investment are not “unlimited”: they’re limited to the property and tort rights incidental to the investment. Similarly they are not unknown or uncontrollable for the same reasons. This means the premise evaporates. The argument is nonsense.

To make sense, the argument would need to show that the social benefits of the proposed intervention would be greater than the social benefits of the investment. To do this he needs to know the discount for futurity of all relevant parties. Otherwise he cannot establish that the proposed intervention would attract foreign investment on “better terms” than it’s being attracted now.

It is *not* acceptable to define foreigners as non-humans, or sub-humans, or not part of human society. If foreigners are to be valued less as human beings than Australians, that needs to be made explicit and the rationale for discounting their values and needs should be explained and justified, which the author fails to do. This means the argument fails again – for the same reason that all national socialism is bad!

Quite apart from that, the argument turns on this paragraph:
“Modern investment analysis discounts at a compounding rate the value of obtaining cash in the future because of the opportunity cost of not earning a return today. At equity discounts rates this reduces the Present Value of all possible profits after ten to twenty years to a small fraction of the initial investment cost. When the value of future cash is discounted again because of operating risks arising from competition, changes in technology and markets the expected future Present Value becomes trivial.

Translation: people prefer the satisfaction of a given want sooner rather than later. When you add up the risks over time of various categories, there’s less and less reason to delay gratification by investing because of the risks in the future.

The fallacies of the argument are numerous. Shann assumes the liabilities of foreign investment are infinite, the present value of future profits is zero, and the benefits of government confiscating future profits automatically outweigh the costs. At no stage does he justify any of these assumptions, all of which are demonstrably false.

“In other words more investment can be attracted on the basis of eliminating all “unlimited, unknown and uncontrollable foreign liabilities” on a voluntary basis.”

But if the property owners don’t “agree” to the proposed intervention they’ll have property taken under compulsion, which is payment under duress, not agreement. Not even the government defines tax as a voluntary payment.

So it’s not voluntary, and the argument fails again.

At no stage does the author attempt to demonstrate that the benefit to society sacrificed because of his proposed intervention would be less than the benefit to society from the intervention: there’s that ole economic illiteracy again, that characterises all communism or whatever you want to call it. “If only we could all live out of the common storehouse, if only everyone could live at everyone else’s expense, then what a Paradise we would have. How much more productive and fairer society would be *sigh*.” It’s just the same old nonsense it’s always been.

“The income generated from formerly foreign owned investments after twenty years could then contribute to creating a universal minimum income for pensioners and welfare recipients.”

Notice how, as to the input side of the equation, capital is treated as morally suspect and presumptively anti-social unless taken over by the State in hopes the State will then receive the profits formerly created by the capitalists?

But the obvious question then arises, once the assets are fully-socialised, where does the author think the profits will come from? Bureaucrats? But if not, then why won’t the original supposed problem of open-ended liabilities attend the ownership of the remaining private capitalists?

“As these beneficiaries consume rather than invest they do not discount the future value of money.”

Nonsense. Consumers, qua consumers, discount the future *more* and desire only instant grat.

And notice how, as to the output side of the equation, the original problem is conceived to be how the government can fund pensioners and welfare recipients? At no stage is the brain of the author turned to what government might have done to cause the problem in the first place.

For example, how has government caused the problem of a dependent aged population by taking the majority of what people earn throughout their lifetime through taxes and inflation, strangling small businesses to death, forcing the poorest people into unemployment by making it illegal to employ them, taxing employers for employing them, subsidising and rewarding poverty, spending zillions on aid for the nations of foreigners whose inflowing wealth is supposedly the problem, and similar self-contradictory absurdities, thus making it difficult or impossible to provide for one’s old age, sending the population broke into retirement?

Notice how there’s no mention of the prime class of beneficiaries, the parasite class of bureaucrats that would be created to administer and enforce the proposed intervention?

Reforming capitalism? How about reforming the communism that's causing the problem!?

Notice how Shann’s economic incoherence merely assumed:
1. government has nothing to do with causing the problem, and
2. government knows better how to economise property than its private owners and producers!

Complete twaddle but of course if it’s true, then why stop at confiscating profits after twenty years?

All the author’s protectionist arguments were completely demolished by Bastiat in these two short humorous articles, as true today as when they were first published in 19th century France:
“A Negative Railway: http://mises.org/daily/5201/
and
“Must Free Trade Be Reciprocal?”:
http://mises.org/daily/6193/Must-Free-Trade-Be-Reciprocal

Read ‘em and weep. Shann might as well propose digging holes in the road where Chinese goods are received into Australia. Beneath all the faux economic jargon, that’s the intellectual and moral level of what he’s suggesting.

Hello Arjay
I agree with your sentiment that money should not be wealth and it is bizarre that we do not control the value of our own currency. This is a point I have suggested to be included in the forthcoming Financial System Inquiry. My submission will published by Treasury when they announce their final Terms of Reference.

But note that only Australians can create Australian currency and there is no limit to how much we could create with or without also creating debt. This has been demonstrated by Central Banks in US, Europe and the UK.