4 February 2002


In case you wondered, Murdoch.

The Australian parliament is girding it's loins and preparing to pay off a few debts.  It is about to free up the laws that were set in place to ensure that buddies kept control of the media, and stop potentially difficult proprietors from gaining a foothold.  (aka the "Keep Australian Media Australian" laws.).   Another tranche was the HDTV laws.

Of course the original media laws were all about concentrating ownership.  You just have to look at the stated purpose to learn that.  (The stated purpose was to prevent ownership being concentrated in a few hands, and to keep overseas interests out.)

Rupert (aka "Rupert  the Red" in his Oxford days) was quite definitely persona non grata, and when he became a US citizen (to circumvent similarly unworkable US media ownership laws), it was like Christmas for our Labour Party pollies.

But buddy mate Citizen Kerry was also caught by the laws, which stopped him from owning the SMH.   And after his BIG favor to little John, there is a lot of good feeling towards Kerry in Yarralumla (or whatever the Sydney residence is named:)


Last issue, SPIN foretold the crash of 2010, and explicitly described it's pathology.   Unless corporate tax legislation is repealed, ENRON is the merest foretaste of the next decade.

As usual, the problem exemplified by Enron is government.   Governments are organizations whose sole purpose is taxation of the people.   Governments from dictatorship to democracies are organizations that replace anarchy (entrepreneur or gangster taxation) with regulated state taxation.

Politicians are the chief beneficiaries of government.  As such, they are enraptured with the image of money producing organizations.  It is probably not an exaggeration to estimate that politicians in Australia directly and indirectly are responsible for the consumption of between 1% and 2% of the total Australian tax "take".  The other 98% - 99% is used to buy the votes that keep them in power.  I suspect that the figure is similar in the USA, and probably higher in most of Europe.

In the nineteenth century, theorists (cf Karl Marx believed that government itself could generate wealth for the people by owning production organizations.  Circa 1990 (with the fall of the USSR) that hypothesis was finally abandoned..

Recent economic theorists seem to believe that corporations generate wealth.  Governments are divesting themselves of production organizations as quickly as possible, and simultaneously enacting legislation to shape and control and tax corporations.   In Australia the GST is an example.  The Goods and Service Tax (VAT) adds 10% on to most things sold to the public.  The mass of "paperwork" required favors large, vertically integrated organizations, the sort of organizations that can be easily taxed.  The intent behind the GST seems to be that small business should shortly become a historical footnote.

At the same time the government has legislated to create mega-financial service corporations, by requiring all employees to pay 7% of their wages into a public superannuation corporation.

Looks like the government wants to hothouse (i.e. cause rapid growth) in the equities markets.  Questions arise.

  1. What training & qualifications are required of the people who manage those corporations?  Another MBA fiasco?
  2. How will management be regulated against fraud or stupidity?
  3. If those corporations fail, who will pay back the pensioners who were forced by legislation to invest?
Governments have already learned that they cannot manage corporations profitably.  (Not even utilities).  Banks have learned from bitter experience that they should not invest their customer's deposits in script.  Previously, insurance investment corporations were passive investors of their customer's funds in blue chip script.

So we have mega-marketing & mega production corporations that must have shareholders and also we have capital formation corporations that need something in which to invest.  Looks like somebody's simplistic plan.

The problem is, top managers are great men.  Usually they create their own mega-corporation (like Rupert, or Gates, or Jobs) and when one of the "degree factory" managers tries to take over (remember Apple?, or Franklins in Australia?) the corporation goes to negative growth.  So starting around 2006, the decade should be interesting.


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