stui magpie wrote:Maybe Governments should be looking at where they spend their money and whether the legions of public servants are really needed.
That's a throwaway line though, disproven in study after study. Government is no more wasteful than most companies in the private sector, and some are more productive and some less. Cuts and purges come and go in each over time.
And that's before we even get to the fact the services being delivered are essential, and subject to the strictest ethical standards and far higher scrutiny than private companies. As it should be, but we all know that private companies delivering the same services almost always do worse (which is not to say transition to private delivery shouldn't take place where superior, but we all know in current advanced economies the error is far more often dumb privatisation than it is dumb nationalisation - see American healthcare).
The valid argument you mention is the one concerning international competition and capital flight. There is a point where conditions become so onerous investment flees. Hence, the current negotiations on a global minimum corporate tax rate, which is a far better solution than far-left/far-right protectionism.
But even a tax rate only has meaning in context; i.e., it can be higher and companies still won't flee
if the higher rates are reflected in accompanying capital advantages, such as human capital and infrastructure.
And of course this exactly why mining can and should be taxed right up to the capital flight ceiling, given its externalities are extremely high and its capital overflows extremely low. That is, a dollar both produced by and spent on almost any other industry you care to name is more valuable to the nation than one spent in mining because its
multipliers are so low.
Mining notoriously redirects infrastructure spending to itself for very little aggregate benefit to other industries; mis-locates people; mis-trains people; and IIRC has a really bad capital-to-employment ratio. Add that to its distortionary capture of politics and legislation (remember fruitcake Abbott's attacks on green energy technology?), and massively high externalities, and Australia is ridiculously ignoring the opportunity cost.
People have to somehow escape the old dichotomy between left and right. The thing that makes capitalism so productive is competition. Nothing else. By definition, that makes high-rent industries the
absolutely worst focal point for any economy except in the earliest stages of development. Pretty much the entirety of economics is devoted to this very point, and it's about the only thing upon which every single economist agrees. (Hence, my policy focus is on competition, and specifically quality of competition, including helping people to better compete, making us all wealthier).
As with the science of global warming, none of this is controversial except to those so invested they have cornered themselves into being unable to maintain reason and diligence (see the internet crazies who spend and night devising deflections instead of facing the knowns, grasping the nettle, and rebalancing their portfolio). Think of all the hours people spent feverishly being wrong about things like Iraq, global warming denial, Trump, Brexit and on, scuppering sensible decision making.
(Part of ethics that is underrated, in my view, is maintaining agility, i.e., avoiding getting locked in to having to defend destructive positions, whether by investing in the wrong industry, clinging to some organisation or party, building a career in the wrong industry, or refusing to adjust when the writing is on the wall. It's endlessly frustrating watching people dig in and make everyone else pay while they cling to outdated nonsense. Admit error early and often, in my model, before getting locked in).
Mining is clearly an essential economic activity. But it's not a winning focal point for an economy beyond that essentiality except and/or until whatever resources are subject to proper competition and are costed accordingly. (This might happen sooner than expected if we harness energy more safely and companies start making their own 'energy appliances').
No economist ever wrote:"Let's transition from an advanced economy to a natural resources economy".
