Polling day

Today is polling day for the Australian federal election. Although I can't vote, there is something immensely uplifting about seeing the queues of people outside the polling places waiting to vote. Yes democracy has it's flaws and most people know what they are, despite these it is the only system that we have so far invented that at least allows (if not actively encouraging it) free society to flourish. For that we should be thankful.

The destroyers of wealth

I was reading this article in the age this morning and was stunned by this:

One line of argument is that, if the merger must go ahead, the WA Government should press for guarantees for measures such as open access to rail infrastructure.

Kloppers dismissed such suggestions this week. Asked whether rail access might be offered as a "sweetener" to get approval for the merger, he said: "We do not believe the two issues are related." In fact, in a submission to the National Competition Council in 2004, the WA Government argued that BHP and Rio were required to allow third-party rail access under the terms of their original state agreements.

"To date, no access seeker has been able to negotiate satisfactory access arrangements," the report drily notes.

This proposed 'third-party' access to BHP's and Rio Tinto's rail lines is of course being pushed by a new start-up, Fortesque Metals Group. Incredibly, it seems that some people in the government believe it would be okay to effectively steal the privately owned rail systems and give their use to this new company which hasn't even produced a single tonne of iron ore. This would mean that empty trains would be travelling along the rail network preventing full trains from Rio or BHP from using their own rail lines!

The flow on effect of this is will reduce BHP and Rio's output, reduce their worldwide competitiveness, increase the price of iron ore due to an artificially imposed scarcity, and ultimately increase the price of every iron dependent product in the world (nearly everything).

It is ironic don't you think, that a government attempting to 'free' up the market, 'promote' competition and lower prices, by stealing the assets of one company and gifting them to another, will have precisely the opposite effect.

I am stunned that such attitudes still persist today.

Confronting the water 'crisis'

Australia has developed what I would call a hysterical attitude to water in the past few years. In the public there is an attitude of blame. An attitude that is constantly demanding someone else to fix the problem. The government needs to do this, the council should do that. These attitudes have been brought into the open by the prolonged drought but the drought is only a symptom of the problem not the cause.

The cause is far more fundamental - water is not free and not an automatic human right. If you want this scarce resource then you must earn it. Whether this means collecting it in a tank on your roof, or obtaining it from the municipal supply so be it. The problem is that we have the government distorting the system by providing an essentially free on tap supply for everyone by subsidising the 'semi private' watocracies.

Water is one of those untouchable dogmas that everyone assumes is a natural right for all humanity. Well, the fact is that your modern water system requires a complex system of pumps, dams, weirs, meters and valves. All this is not as inexpensive as most people believe. Complex engineering is required to keep this life blood flowing to Australian homes. It's true that people are wantonly wasteful of water in Australia. However, people are so irresponsible about it because it costs essentially nothing. This creates an exorbitant demand so that we are perpetually in a state of requiring more dams and more desal plants, yet the crisis never abates. The most irksome thing of all - the government is constantly giving us the guilts about our water usage. The ads on TV never stop! Focusing in on things like the guilty homeowner watering his lawn when it is not his turn!

My solution is this - auction off the water supply to the highest bidder and allow them to charge what they see fit. Initially prices will rise and people will pay more for their water. However, this will see a significant reduction in demand, and even if it doesn't, a market abhors a vacuum and new innovative entrepreneurs will come up with new and most likely better ways to supply water. In compensation for selling off of the water supply business, the government will then be obliged to reduce rates/taxes meaning that the average individual may be better off than before. In any case, he will then have personal choice on what he spends his money on, water or something else.

A rise in water prices will encourage investment in water infrastructure once budding entrepreneurs realise that there is a profit to be made. It could even mean a total revamp of the system, a water delivery business on trucks or something of that nature - who knows what the most efficient method of supply is, only a market can determine that.

A water entrepreneur must be allowed to recover his cost of investment by being allowed to charge whatever he desires. His only moral is to satisfy the market. If he charges too much nobody will buy his water and he will go out of business. If he charges too little he will also go out of business. The end result of such 'cut-throat' competition will be innovation. Innovation, which only occurs when there is a profit motive, will continue to drive the water price to the individual consumer down so that in some future year water will be even cheaper than it is now - yet it will be plentiful and people will be watering their gardens and lawns once again guilt free.

Can one book change your life?

Well after over 1070 pages of small print typing I have finished Ayn Rand's "Magnum Opus", the novel 'Atlas Shrugged' which describes in terms of a fictional story, the essential aspects of the objectivist philosophy she founded. I can now say, that second to no other book I have read, this novel resonated with me on a level that no other has. It has confirmed what I only previously suspected and sometimes was made to feel ashamed of by the 'mystics' of the world - that a rational world view is possible and essential to individual happiness. The essential tenets of her philosophy are rationality, liberty and mans right to be happy.

In any case, this book has made me question some of my previous posts as at times irrational. I will have more to say about this soon, particularly my views on global warming (not whether or not global warming is real, as this is a rational conclusion based on the facts, but more on what we should be doing about it). This will have to wait until another time as right now I'm tired and heading to bed.