Please, Keep Your Money?

As free traders appear to be winning the argument over trade v.
protectionism, I think that the protectionism of the future will look a lot more like this case, where the Australian Government has put the kibosh on Chinese mining firm Sinosteel's attempt to acquire a large portion of Australian Murchison Metals. I would imagine that, to the non-economist, there would not seem to be much similarity between restricting trade in goods and services and restricting corporate ownership. I would argue that the two are one and the same.

Why would one firm buy another one? The standard intuition is that the purchaser believes he can make a greater profit than the current owner can make, and the current owner will only sell if he is offered more than he believes he can earn in profit. How can the purchasing firm take the exact same set of resources and generate more profit? By having a better plan, or a better business model, or better corporate structure. So in the case of allowing a foreign firm to take over a domestic one, we should simply view this the domestic country importing a better plan or a better model, which is good for their economy. Increased profits will generally lead to some combination of increased output, lower consumer prices, and/or higher wages for workers in the firm.

So what is the upshot of all this? We should treat foreign investment in the exact same way as we treat international trade, meaning the less restrictions on it the better.

Alcopop Tax Folly Redux

About a month ago, I predicted that the alcopop tax would simply lead to a substitution away from premixed drinks into other alcoholic beverages. Looks like I was right. This article in the Sydney Morning Herald cites a recent industry study, finding that while alcopop sales dropped 38% as a result of the tax, the sale of 700ml bottles of spirits rose by 21%. And the industry is speculating that when one factors in other alcoholic beverages, total alcohol sales may have actually risen in the past month!

Speaking Ill of the Dead

Despite the federal govenment's difficulty in issuing an apology to the Stolen Generation, they seem to have no problems offering their condolences to the people of Indonesia over the death of former dictator Suharto. This, of course, is a man who was extremely corrupt, purged nearly one million dissenters, and was responsible for the human rights violations in East Timor, arguably one of the worst genocides since the Holocaust. What of these atrocities? Well, Kevin Rudd described these as "controversial." Alexander Downer described Suharto's human rights record as "less than desirable."

My initial thoughts on these comments was that I was rather unimpressed by the lack of conviction our leaders had for such a despicable character. Granted, in a few weeks they will likely change their tune (As far as I remember, Pinochet got a similar treatment) . But it did get me thinking...when is it OK to speak ill of the recently deceased? Somehow I doubt that Hitler's treatment of the Jews in 1945 was described as "controversial," and I sure don't remember anybody in the west describing Saddam Hussein's treatment of the Kurds as being "less than desirable." True, most of the west was at war with these men when they died, but I'd guess the same is true of such figures as Idi Amin, Pol Pot, Joseph Stalin, or Slobodan Milosevic. Yet at the same time, historical figures like Mao Ze Dong or Che Guevara seem to have, to some extent anyhow, been forgiven for their transgressions.

There are a number of rulers alive today that history will likely remember as cruel despots. Fidel Castro has killed thousands of political opponents, and imprisoned tens of thousands more. Little is known of the civil rights existing within Kim Jong Il's North Korea, but I suspect there is quite a bit of information suppression going on there. Robert Mugabe is widely regarded as a generally not-nice guy. And I can see Hugo Chavez regime travelling down an even uglier path any day now. Perhaps I'm being overly morbid, but I wonder who history will forgive and who history will celebrate?