(A question: Where were our leaders and philosophers, when we had a chance to set some sensible rules on how the game should be played?)
Nobel Laureate (1969) Paul Samuelson was once challenged by the mathematician Stanislaw Ulam to “name me one proposition in all of the social sciences which is both true and non-trivial.”
It was several years later that he thought of the correct response: comparative advantage. “That it is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.”[i]
I humbly suspect that our mining industry’s ‘bright and intelligent’ people were among those who didn’t appreciate this concept of comparative advantage, otherwise they would have resisted repeated successful attempts by various enemies of our industry to de-knacker it.
This has led to a decline from hero status to ‘pathetic performance status’, where investment returns are such that no-one in their right mind would rely on dividend flow from our resource companies to finance their future.
If what I’m saying is true, then this reflects badly on our industry leadership.
Talking about the word ‘leadership’ our Mannkal Foundation ran an essay context last year at Curtin - W.A. School of Mines. The contest challenged students to ’search for leadership in our industry and report on any examples they could find.’
There were 35 finalists in the contest.
Overall it confirmed that, apart from the courageous few (three or four), there exists a leadership crisis in our industry …. generally populated by puppets and caretakers.
The over-use of the word ‘leadership’ could lead to it becoming yet another ‘weasel’ word’ where any real meaning is blurred.’
Here are some other words and descriptions that fall into the category of ‘weasel words’:-
- Corporate Social Responsibility
- Social Justice
- Anthropogenic Global Warming
- Political Correctness
- Native title
- Traditional Owners, or the current push to change Australia Day to Invasion Day.
- & last, but not least, Stakeholders, (where companies are ranking stakeholder interests before shareholder interest …. it is no wonder that investors have gone elsewhere).
All of these words or phrases have been used by various rent-seekers as weapons in their campaigns. As public choice theory economists have shown, there is a lot of money to be made by the few who benefit, while the costs are designed to be spread across such a wide number of ‘victims’ that, although debilitating, they are not ‘life threatening’.
The result is that those who benefit greatly from these programs are incentivized to put in a huge effort to advance their interests, whereas the many who share the burden are not as well organized and continue to carry the financial burden.
The usefulness of public choice theory in explaining bad government (or company) policies was explained to me by Prof. James Buchanan in Moscow, Sept., 1990 and Robert Nozick described resulting government policy….
“The illegitimate use of a State, by economic interests, for their own ends, is based upon pre-existing power of the State to enrich some at the expense of others.”
Governments and corporate executives are in fact giving away money that is simply not theirs to give.
If they had any understanding of public choice theory they would realize that the moral thing to do is simply say no to all these competing demands for corporate support.
Economists describe this as ‘Concentrated Benefits and Diffused Costs’.
The costs are nevertheless substantial and have in many cases caused Australia to become uncompetitive.
*An excerpt from a speech to the Yilgarn 50 Year Retrospective - geosymposia.com.au - full notes on the speech will be available @ www.mannkal.org
[i] P.A. Samuelson, “The Way of an Economist.” In International Economic Relations: Proceedings of the Third Congress of the International Economic Association. (London: MacMillan, 1969), pp. 1-11.