Golden Soil and Wealth for Spoil
Climate hypocrisy Down Under, name this country and a classic case of "pro causa" fallacy...
Joel Bowman, appraising the situation from Buenos Aires, Argentina...
Welcome to another Sunday Session, dear reader, that time of the week when we loosen the ascot, holster the ashplant, hang the Akubra and survey the scene from the fin del mundo... all while enjoying a glass or two of high altitude malbec.
(Speaking of which, Bill’s 2022 Tacana vintage is almost depleted. Did you secure a case yourself? It’s the perfect drop for helping you tune out political discussions during Thanksgiving. Our man, Diego, assures us if you order this weekend, you’ll have your case by Turkey Day. Grab yours, here.)
And now, a quick geography quiz to get the ball rolling this week. See if you can name the place...
This country has a small, homogenous population, something in the order of 5 million people. Most of the citizens share similar religious and cultural views, which helps with what sociologists sometimes call “cohesion.”
This country’s government runs a state-funded, universal healthcare system, which provides free care to all nationals (plus a generous public insurance plan to help alleviate healthcare costs for expatriates working inside the country).
The state also spends considerable sums building and maintaining public hospitals and employing plenty of doctors, nurses and healthcare professionals to serve all citizens.
Free public education is also high on the list of priorities, and the state here sets, and is primarily responsible for, guiding future generations through a national curriculum. All levels of education – from kindergarten to university – are completely free for students and parents. This country enjoys one of the highest literacy rates in its region.
In addition, the state provides mothers with paid maternity leave and all citizens with unemployment insurance and disability benefits, should they be unfit to work.
The government also invests heavily in its national infrastructure, including an extensive public transport system. There is also a state-owned airline (the largest in the country) and state owned seaports and airports.
The country has the strongest currency in the world and one of the highest per capita incomes.
Oh, and the state also maintains one of the richest sovereign wealth funds on the planet, which it manages on behalf of its citizens, to guarantee retirement pensions for all.
Any guesses?
We often hear the above talking points, or similar, marshaled in order to argue for a more interventionist welfare state. The so-called “Nordic model” is the go-to example for misty-eyed socialists, who insist that we could all be as happy, healthy and good looking as our viking cousins if only we were to adopt a more generous approach to social welfare benefits.
Alas, if you guessed Norway, you would be... wrong. While all the rest holds true, the Norwegian krone has fallen ~14% against the USD this year alone and is nowhere near the world’s strongest currency.
The proud owner of that title, and the correct response to our little pop quiz, is Kuwait. (A single Kuwaiti dinar currently trades for $3.23USD.)
Strangely, we seldom hear any of the above social programs as arguments in favor of adopting a Kuwaiti-style theocratic autocracy. Hmm... why don’t we see Bernie supporters waving “Anocracy Now!” placards, wearing “Tribal Monarchy Before Profits!” t-shirts and ditching their Che Guevara-style berets for Arabic-style ghutras? Curious, no?
Could it be that these nations have something else in common, aside from generous welfare schemes, that lies at the root of their vast fortunes? Indeed, might they be rich despite their spending habits, rather than because of them? Could their enormous sovereign wealth funds (Kuwait: $693 billion; Norway: $1.36 trillion) have originated from something other than their respective styles of “giveaway government?”
Hmm... what else do these tiny nations have in common? If only there was a simple, three letter answer, something rhyming with foil... or turmoil... disembroil. Quick, somebody call Sir Arthur Conan Doyle!
We raise this confounding conundrum because, if we don’t know and understand whence riches came - what Adam Smith referred to as the “Nature and Causes of the Wealth of Nations” – it’s highly unlikely we’ll be able to appreciate and safeguard them into the future. Indeed, we may end up killing the golden goose altogether!
Having in recent weeks taken aim at spoiled activists in the UK and Germany (see columns Ode to Oil and Useful Idiots, respectively), we thought it would only be fair to give our own country of birth some time in the editorial spotlight. Read on for today’s essay...
With Golden Soil and Wealth to Spoil
By Joel Bowman
A few weeks ago, one of your editor’s enthusiastic compatriots posted a link to a story congratulating Australians for being the “richest people in the world,” with the accompanying comment:
“Don’t let anyone tell you that your country can’t have universal healthcare, mandatory minimum wages, & progressive taxation.”
Aside from the myriad flaws with the underlying claim of the article (not least of which is that “median personal wealth per Australian adult” failed to account for total household debt... which, at an eye-watering 210% of net disposable income – more than double that in the US – is among the highest in the world), the editorial sidebar suffers from another common blunder, namely, the non causa pro causa fallacy. Or, in simple, Aussie English, putting the cart before the bloody horse.
That is to say, universal healthcare and mandatory minimum wages are ways of spending money, not earning it. Progressive taxation is a means of redistributing wealth, not producing it. The difference is not trivial. It would be like posting a link to Mike Tyson’s net worth and saying, “Don’t let anyone tell you that you can’t have a terrible acting career, an awful facial tattoo and a pet tiger.” These are things that cost Iron Mike money, not that made it for him.
Similarly, countries like Australia – and Kuwait... and Norway... – are not rich because of their government’s addiction to expensive giveaway programs, whatever one thinks of the merits or alleged compassion of such redistributive policies. Rather they are rich, in large measure, owing to a) their copious natural resource endowments and b) the hard work of honest citizens capitalizing on such terrific bounty. As Australia’s national anthem duly celebrates, it is the nation’s “golden soil and wealth for toil” for which her citizens ought to “Advance Australia Fair.”
And yet, rather than accepting the thoroughbred gift horse for what it is, a certain breed of spoiled elites insist on checking the animal’s dentistry in place of their own remarkable privilege. A recent tale from the world of cricket serves as today’s example...
That’s Not Cricket
Like baseball in the US, football (soccer) here in Argentina or bearded men in skirts tossing logs in Scotland, cricket is considered a national sport in Australia, a way of life bordering on secular religion. For sports fanatics, there are only two seasons Down Under: footy (AFL) and cricket. To wear the “baggy green” (the Australian team cap) is a sacred right... and to be anointed captain is akin to being elected to the highest office in the land. (Sports pages in Australian newspapers routinely outnumber other such apparently trivial matters as “current events” or “world affairs” by a considerable margin. Only the real estate section competes for column inches.)
Moreover, cricket games (matches) can last up to five days... and still end in a draw! Yet, die-slow fans remain doggedly undeterred. That is to say, you have to really annoy your audience before they turn away from their beloved game.
Enter the insufferable Pat Cummins, captain of the Australian cricket team... and enthusiastic climate activist.
It goes without saying that sports fans the world over love nothing more than having politics shoved down their throats while enjoying their weekend recreational game of choice. After a hard week at the grindstone, which for a quarter of a million Aussie men literally means “hard yakka” in “the mines,” nothing quite does it like having multi-millionaire sports entertainers use their platform to lecture common workers about their dirty boots and carbon footprints.
So when Mr. Cummins met with Cricket Australia’s (CA) CEO to discuss “ethical concerns” over the game’s major sponsor, Alinta Energy, which had poured $40 million into CA over the past four years, feathers were understandably ruffled.
“I hope that when we think of who we want to align with,” Mr. Cummins sermonized to members of the press, “who we want to invite into being part of cricket, I hope climate is a real priority.”
Mr. Cummins refused to appear in any (more) ads for the company, even though he has pocketed a pretty coin doing so in the past. (At time of publication, Mr. Cummins had made no mention of “ethical concerns” prompting him to return any of his banked sponsorship money.)
Left in the Lurch
“I've got my own personal views so when it comes to personal sponsorships there are some companies I wouldn't want to align with,” Cummins said. When we're getting money, whether it's programs for junior cricket, grassroots, things for fans around Australia, I feel a real responsibility that with that, we're doing on balance what is the right thing.”
“But wait,” we hear you protest, “doesn’t Alinta Energy retail natural gas and electricity to household, commercial and industrial customers across Australia?”
Well, yes...
“And don’t cricket stadiums use... um... like... massive amounts of electricity?”
Yes again!
“So doesn’t Mr. Cummins benefit directly from the power consumption he is complaining about?”
Uh, well...
“And come to think of it, doesn’t Mr. Cummins jetset around the world first class, which has 8x the carbon footprint of an economy seat (yes) and doesn’t he drive a quarter of a million $AUD, V8 Range Rover (yes) and hasn’t he earned millions from playing in the Indian Premier League (yes), in one of the world’s largest polluting countries (yes) and isn’t that league sponsored by highly pollutive Chinese smartphone company Vivo (yes) and...”
My oh my, dear reader... you do have a lot of questions, don’t you? And here we thought you knew nothing about cricket!
Predictably, Alinta Energy yanked their Cricket Australia sponsorship (which will end after they fulfill their next 12 months of contractual commitments), leaving junior clubs and kids who dream of growing up to be just like Patrick Cummins shouldering a massive financial shortfall.
As to the “powering cricket stadiums” question, Mr. Cummins was lately seen shilling for a Chinese solar panel company, LONGi. It’s perhaps unfortunate that the company sources its polysilicon from Hoshine Silicon Industry, which is currently under international trade restrictions for using “forced” (read: slave) labor from that nation’s Uyghur minorities in the Xinjiang province. Happily for Mr. Cummins, however, slave laborers don’t have a lot of downtime to watch self righteous entertainers get paid millions of dollars to hit cork balls around an oval with a stick, so he probably didn’t lose too many fans there. Phew!
Besides, it’s Mr. Cummins who’s really on the frontline here. The activist captain had previously complained (in an article in The Guardian, where else?) that global warming was already “wreaking havoc” on cricket with teams even occasionally deciding it was “too hot to be out on the field”... playing games! So you see, dear reader, whether you’re a slave laborer manning a 2,000 degree electric furnace or a stick-and-ball millionaire who has to retire for an early tea break, we’re all in this together.
Wealth for spoil, indeed.
And finally... if you missed yesterday’s Fatal Conceits podcast with Bonner Private Research’s macro analyst, Dan Denning, you can check it out here...
That’ll do for another Sunday Session. Bill will be back with his regular daily missives from tomorrow. Meanwhile, the sun is out down here in Buenos Aires, the Jacarandas are in full bloom and we’re off to the park to celebrate a dear friend’s birthday.
Whatever you’re up to this weekend, have a good one.
Until next time...
Cheers,
Joel Bowman
Well written, our cricket leader should be made to row a boat to Egypt for the climate conference as an example for the rest of us!
Along these same lines, Australian Womens professional netball, also a geographic anomaly, refused to accept $15 million from Gina Rinehart, the richest woman in Australia and a mining magnate. This is in spite of the fact that the league faces bankruptcy. Again, it was the players who forced the issue. As Forrest says “Stupid is as Stupid does”.