Professor Mark J. Perry's Blog for Economics and Finance
Starting back in the 1970s, high oil prices rise in the United States are frequently followed by calls for "windfall profits taxes" on oil companies. So what do you suppose is happening in some gold-producing countries now that gold prices are at record high levels? Here's what is happening in one of those countries?
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
15 Comments:
This is just the same old balderdash from looters. Even among advocates of a politically free market, the cost accounting of mining gold gets short shrift. If gold is the basis for all other currencies, you would have to explain why gold mines ever shut down, go broke, lay off workers, and otherwise act like steel mills or bus companies. In short, it is just a business, like any other. Here, however, in Ghana, a looter smells prey.
What needs exposure is the fallacy of "windfall profits." You made more than you thought you would, therefore, we have a moral right to take it
" You made more than you thought you would, therefore, we have a moral right to take it"
More like:
"You made more than we think you should, therefore, we have a moral right to take it."
if you start with the premise that what's in the ground belongs to the people of the country they are located in it's only logical that some benefit should go to those people through their goverment....
the "problem" here appears that that said goverment did not structure the benefit pegged to the price of gold or as a percentage of the profits....
Lately, in a lot of jurisdictions the goverment just takes an equity stake in the mine(s) as a condition of a mining permit...let the price of gold go to 5000....everybody wins....
multinationals, mining companies included, have a very long history of "raping" the resources of third world contries...
the "pendulum swings"...no one should be surprised at that....there's plenty enough wealth to go around
"if you start with the premise that what's in the ground belongs to the people of the country they are located in it's only logical that some benefit should go to those people through their goverment"...
What an incredibly silly premise!!
The people of the country didn't find the gold, didn't dig out, didn't spend a portion of their own wealth to buy the necessary tools to get the gold, seperate the gold from the surrounding ore, and didn't take a massive risk that it would pay off in the end...
Only a handful of individuals of the people did...
Apparently the union member put a union president into office that wasn't smart enough to ask for a piece of the action...
Did the union members want a piece of the financial risk?
"Lately, in a lot of jurisdictions the goverment just takes an equity stake in the mine(s) as a condition of a mining permit"...
That's called theft...
We have the samething happening in our country...
The farther away time wise we get from the Constitution the more the government (obviously put there by the people, what does that tell you about their collective knowledge of the Conbstitution?) the more we see government stealing the wealth of its citizens...
silly????
a sovereign country is a sovereign country....if a mining company doesn't like the conditions they can go dig somewhere else...who are you to dictate how nations should behave...? You make the rules for EVERYBODY now???
silly is bringing your beloved Constitution into this. That one's YOUR probem not other nations'.
The farther away time wise we get from the Constitution the more the government (obviously put there by the people, what does that tell you about their collective knowledge of the Conbstitution?) the more we see government stealing the wealth of its citizens...
The constitution is meaningless. The Soviet Union had one too and adherence to it was slightly lower than in the United States.
The constitution is upheld by the sacrifices of a well-armed citizenry. As soon as politicians have a slightly larger percentage of people living on the dole, this country will descend into hell and I believe the government here will be more aggressive toward its citizens than the social democracies of Europe precisely because the U.S. is so powerful.
Already it's the most aggressive country in what we call "the free world".
"if you start with the premise that what's in the ground belongs to the people of the country they are located in it's only logical that some benefit should go to those people through their goverment...."
Why would any sensible person start with a premise like that?
And, it's only logical that if what's in the ground belongs to "everyone", then "everyone" will wait for someone else to get it out, so they can have their share without much effort.
Incentives matter. You collectivists never seem to understand that.
Instead start with the premise that what's in the ground belongs to no one, and it's only logical that whoever is willing to get it out for the benefit of others, deserves to be rewarded for their effort.
Incentives matter. Keep repeating that to yourself until you understand it.
This is hilarious: "if a mining company doesn't like the conditions they can go dig somewhere else"...
Do you think a mining was going to go to some foreign country and invest tens if not hundreds of millions of dollars without some ironclad guarantees in contract form, do you?
What are you, a sixth grader?
The reason I mentioned the Constitution was to show you that even a great document can deterioate if the people don't want to pay attention to it...
Thank you methinks: "The constitution is upheld by the sacrifices of a well-armed citizenry. As soon as politicians have a slightly larger percentage of people living on the dole, this country will descend into hell and I believe the government here will be more aggressive toward its citizens than the social democracies of Europe precisely because the U.S. is so powerful"...
Yes sir! You nailed it...
"a sovereign country is a sovereign country....if a mining company doesn't like the conditions they can go dig somewhere else..."
And they will. Whatever is in the ground will stay there, and no benefit will accrue to anyone. That'll teach those evil mining companies!
Talk about cutting off your nose to spite your face!
"who are you to dictate how nations should behave...? You make the rules for EVERYBODY now???"
No, but it seems you would like to make a rule about who can own what.
"Yes sir! You nailed it..." ...Ma'am.
yeah sure Ron H.
"No, but it seems you would like to make a rule about who can own what."
well why not, the US of A certainly doesn't seem to have a problem with that concept...
The Cnoocc and Unocal deal...remember that???... quashed!
practice what you preach and you might gain a little more credibility boys....otherwise it's all just "free markets" selfserving BS
"well why not, the US of A certainly doesn't seem to have a problem with that concept...
The Cnoocc and Unocal deal...remember that???... quashed!
practice what you preach and you might gain a little more credibility boys....otherwise it's all just "free markets" selfserving BS"
It's not clear from this confused rant what point you are really trying to make, but it sounds like you may be confusing society and state, the US government with the people who live here, and they aren't the same thing.
What exactly was your problem with the outcome of the Conoco Unocal acquisition plan?
Conoco????...
http://www.nytimes.com/2005/06/24/business/worldbusiness/24china.html
apparently it DID matter who was going to own what. Congress voted almost unanimously to scrutinized the deal (read quash) and the public (your "society") seemed to be in agreement....faced with that level of opposition Cnoocc withdrew their offer (which was higher BTW)
you suggest that I and everybody else make a distinction between the US goverment and the US population...How's that supposed to work in international relations and international commmerce????
sounds a lot like the start of "Do as I say, not as I do"
When Americans complain about the French, Chinese, Russians (pick any number of countries with whom the US regularly has a "problem" with diplomatically or commercially) do they make a distinction between that goverment and it's people??? I don't think so. Why should the rest of the world make/see a difference between the US gov. and it's people.
no ranting here....just askin'
"apparently it DID matter who was going to own what. Congress voted almost unanimously to scrutinized the deal (read quash) and the public (your "society") seemed to be in agreement....faced with that level of opposition Cnoocc withdrew their offer (which was higher BTW)"
This is history, and not very important history, as far as I know, but it seems to be important to you for some reason.
Governments interfere in markets all the time. It's one of my most frequent complaints.
I don't know how you can know that "my society" seemed to be in agreement.
"When Americans complain about the French, Chinese, Russians (pick any number of countries with whom the US regularly has a "problem" with diplomatically or commercially) do they make a distinction between that goverment and it's people??? I don't think so. Why should the rest of the world make/see a difference between the US gov. and it's people."
Most sensible people know the difference between a country and a government, and a government and its people, and most are aware that governments, and not all the people with one voice, make decisions about things like the Conoco/Unocal merger, and that everyone isn't necessarily happy with the outcomes. You can't really believe that every person in the US agreed that the merger should be quashed, or even that every person knew or cared.
Are you even sure what you are arguing here? You seemed upset that a mining company wanted to do business in Ghana without offering the government a bigger piece of the action. You asserted that a government had every right to dictate how a company can do business within that country, and that every Ghanian citizen, as part owners of the gold being mined should profit from it.
How am I doing so far? Is that pretty close?
When I suggested that perhaps those that took the gold out of the ground, legally and with permission, mind you, and with proper payments as far as any of us know, had a legitimate right to the product of their efforts, and that you might not want to decide for others who owned the gold, you accused me of hypocracy for allowing the US government to quash the Conoco deal.
Does that cover it? If so, I don't know what you're arguing. Maybe you could state it differently.
that's about it.....your comments and others about this story were:
the resources belong to whoever digs them up period... well every goverment on the planet charges companies something for extracting them (The US royalties on oil are 12 to 16%)
The real news contained in the story was that a goverment wanted to renegogiate/reset the royalty given the new high price of gold.
While that is not ideal, as I said earlier, it should not be surprising. The flip side would be the price of gold plummeting, the company going bankrupt and abandonning the mine leaving the goverment and it's people to clean up a potential environmental mess at a very high cost (I got one of those in my backyard BTW).
Good companies adapt and move on...they don't whine...too much;)
Save the "outrage" for important stuff.
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