Hello Jardine K.

I am flattered by your attention in writing over 1500 words in response to my more modest 838.

You have forced me to respond because you could mislead other readers into thinking I am socialist or communist by making false imputations.

Other readers should note that my proposals are based on market forces not the dictate of a government as imputed by you.

They should also note that you have mischievously suggested that I am proposing government ownership of foreign investment when I make it clear the beneficiaries are individuals.

As a serial entrepreneur I have walked my talk and raised millions of dollars to finance vineyards, cotton production and films while not providing property rights to investors longer than 15 years.

This proves that if I gave my investors property rights for a longer time they would be paid more than was required to attract their investment. Overpaying investors is inconsistent with the fundamental justification of adopting a market economy!

Limited life investment increases the efficiency and effectiveness of a market economy. As I noted in my article all intellectual property rights have limited life. A basic problem arises from accounting doctrines that do not identify when an investment has been repaid and so the extent that investors obtain profits in excess of the incentive to invest.

You ask me to justify the statement by Professor Edith Penrose that foreign investment provides “unlimited, unknown and uncontrollable foreign liabilities”. The unlimited life of corporate investment arises because our society grants corporations the rights of perpetual succession. The liabilities are unknown because accounting doctrines do not identify when the investment has been paid back or identify profits in excess of the incentive to invest. The liabilities are uncontrollable because unlike all intellectual property we do not introduce a sunset provision on corporate existence.

Most of your words do not require a response as they are based on the false implication identified above.

But thanks for your very extended attention.

Shann, thanks for that.

How can you say your proposal is based on market forces when the terms offered are: “either submit to having all your profits confiscated later, or to us confiscating a larger share of your profits now than we would otherwise, or the whole deal will be prohibited?”

That’s not market forces, that’s the government telling people they have a choice between one or another kind of governmental confiscation or prohibition: the opposite of market forces. The “choice” would only make sense if we assume government has a right to all the property in Australia in the first place: national socialism.

Any social benefits that you allege, are downstream of that original proposed governmental expropriation of private property rights.

Therefore your proposal is communist or socialist, because it consists of government taking ownership or control of the means of production by government expropriation of private property rights, for some alleged higher social purpose represented by the State’s unilateral decision backed up by coercion, which is the very core and mechanism both of
a) your proposal, and
b) socialism or communism by definition;
and any name-changes are merely colourable.

“This proves that if I gave my investors property rights for a longer time they would be paid more than was required to attract their investment.”

It proves it as concerns your real market transaction; and that is all well and good. However it does not and cannot prove the same thing for your proposal for government to take future property rights in other different ventures, whose risk/return relation is almost certainly different. Because if it were true for them, there’d be no need for the policy, would there? The Australian vendors would be able to obtain the same terms, and investors would agree to forego those future property rights voluntarily, without the need for government threatening one compulsory expropriation or another.

Foreign corporations have perpetual succession: so do Australian ones. And liabilities being allegedly “uncontrollable” because of no sunset provision on corporations, is only the same point, and it applies equally to Australian corporations.

“[A]ccounting doctrines do not identify when the investment has been paid back”.

Why not, since that is the whole point of capital accounting? They identify it to the owners, surely? Even if they don’t, which they do, why is that any reason for government to take property and hand it out to pet political favourites?

Thus Penrose’s alleged open-ended liabilities of foreign investment are all equally characteristics of non-foreign investment. So the argument resolves to national socialism any way we look at it. The argument only makes sense if we regard either foreign, or all, investment and productive activity as somehow of suspect and anti-social character, to be remedied by state confiscation of assets and manipulation of markets on a presumption of governments' superior competence and goodness, which of course is socialism through and through.

Notwithstanding the goodness and acuity of your market transactions, still the lead of coercive socialism cannot be transmuted into the gold of freedom and consent - with all its moral and pragmatic superiority - by policy alchemy attempting to get government to play at doing what markets do. If they could, full socialism would have been a) possible, and b) a success, which it ain’t, that’s the whole point. As Mises once said, as soon as policy attempts to mimic the action of the markets, the socialists have lost the argument.

If the purpose of the exercise is to help the poor, there’s heaps of more obvious and simpler things that government could do by reducing its myriad interferences with freedom and capitalism, and gross waste, which are by far the main single cause of Australia's poverty in the first place, rather than launching even more regulations and handouts!

Dear readers
Please do not get mislead by the posting above by Jardine. He imputes that I am suggesting the very opposite to what I state!
Nowhere have I suggested that the government should take over own foreign investment or become owners of foreign investment or even discourage foreign investment. I say the opposite. I suggest we attract more foreign investment but do on a mutually more attractive terms to provide foreigners with bigger, quicker less risky profits.
His comments about socialism, communism and government reducing profits are in his imagination. I would welcome comments that are grounded in my arguments not imputations.

Shann, I'm sorry if I have misrepresented your argument.

But have I?

Why is it not true to say that your proposal amounts to the government saying to foreign investors:
“either submit to having all your profits confiscated later, or to us confiscating a larger share of your profits now than we would otherwise, or the whole deal will be prohibited?”

Shann

Would your proposed scheme be voluntary, in the sense that investors could elect not to comply and be no worse off than they are now?

Would you please acknowledge that all the reasons that you gave why the liabilities of foreign investment are allegedly unlimited, unknowable and uncontrollable, all apply equally to Australian companies?

Should the same policy apply to Australian companies, and if not, why not?

“I suggest we attract more foreign investment …
His comments about socialism, communism and government reducing profits are in his imagination.”

Who’s “we”?

Please confirm whether the scheme would work on the basis that the foreign investor would no longer have the future stream of income he would have in the absence of your scheme, as at the arbitrary cut-off date decided by government, and that government would assign the benefit of it to whoever was to be privileged to receive it?