Non sequitur

John Quiggin has an op-ed talking about subsidies to the auto industry. He finishes with this statement:

The “economic rationalist” case against car industry assistance is undermined by the fact that so many opponents of tariff protection lined up to support the mining industry in its opposition to a resource rent tax. As with the car industry, the miners relied heavily on claims that jobs would be destroyed unless the industry continued to be given open access to minerals located under both privately and publicly owned land.

Being opposed to bad economic policy in the case of the mining tax means that you can’t criticise another bad policy in the form of tariffs? Really?

But what about the facts? First nobody has suggested that miners want “open access to minerals” – the mining industry pays royalties to State governments for access to minerals. The original issue was that the output based royalty should be replaced by a profit based royalty but that was never the actual policy proposal. Second Mitch Hook of the Minerals Council of Australia, as reported in the AFR, had these arguments against the mining tax;

He said the proposed new tax would hit the mining industry with such a sledgehammer that it would destroy value, deter investment, reduce growth, and affect every mum and dad who has shares of equity or provides goods.

Implicit in that list is job losses, but the list seems more comprehensive.

Update: John Quiggin responds here.

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47 Responses to Non sequitur

  1. Tom N.

    While Quiggin says plenty of sensible things, alas on this one I agree that he has reverted to lowest common denominator style debating tactics.

  2. C.L.

    Access to minerals = tariff.


  3. .

    This is bizarre. He should retract.

    Does he realise Australian mining for a long time has had a negative ERP – in part due to auto and other tariffs?

  4. Skuter

    It’s all about the vibe, Sinc. Don’t you get it? The leader of the economic irrationalist school of thought, Johnny Kwiggin has enlightened all of us stupid folk that making cars is a romantic, noble pursuit. Oh and don’t forget the market for automobiles has failed! Dirty foreign miners however are simply raping and pillaging our land and taking the profits offshore, denying all of us our fair share from the minerals we all own 100 percent!

  5. Jim Rose

    where is the rent in the car industry?

  6. Skuter

    How lucky we are, as a nation, to have such a high quality public intellectual to protect us!

  7. .

    “where is the rent in the car industry?”

    Quality and value for money.

  8. Jack

    Norway had no problems slugging resource companies at a far higher rate than Australia. Resource companies still fell over themselves to develop norway’s oil resources. As a result, Norway has a massive sovereign investment fund. Australia should be doing much better.

  9. JC


    Please stop being a moron. First off Norway has oil, lots of it. Oil is much easier and quicker to extract than a regular mine ore mine, which takes up to 10 years to get going. Secondly we have profits based tax for off shore oil and that brilliant policy has given us one of the lowest prospecting rates in the world.

    lastly if you don’t live in a resource state it’s none of your freaking business what system they (states) use as its their resources not yours.

    This will of course be contested in the High Court and the Alliance will most likely lose in their Chavezian tactic of trying to steal.

  10. Adrien

    Being opposed to bad economic policy in the case of the mining tax means that you can’t criticise another bad policy in the form of tariffs?

    Yes I thought that was very strange as well. How is opposition to a tax inconsistent with opposition to tariffs?

  11. Peter Patton

    He uses this strain of argument all the time. Who can forget that because Hayek once met Pinochet therefore we should have a socialist revolution in Australia with P.Kwig’n himself and other academics as Fuhrer for Investment and Production!?

  12. Jim Rose

    Quiggin is opposed to privatisation despite being an inadvertent excellent critic of state ownership.

    He has devoted a lot of time to show that governments are so incompetent as business owners and so incapable of running a business process free of base politics that governments cannot even sell a state owned enterprise for a good price under the full glare of the media and public.

    Imagine how hopeless the day to day state owned enterprise decision making will be when they are not the leading topic of an election and Question Time?

  13. rog

    Blah bah and more blah.

    Norways oil is in the descendant and recent finds will only serve to extend the end.

    Mitch Hooks forecast has been proved wrong and spectacularly so.

    So when it comes to “facts” you guys wouldn’t know a fact if it bit you on the (collective) leg.

  14. Jim Rose

    Friedman visited China several times and advised its government on economic policy.

    Friedman must be guilty by association for everything that happened afterwards in China. The hard men of the Chinese politburo were just putty in his hands.

    I am amazed how these two retired professors, one of whom was little known at the best of times at any time after 1950, rule so of the world even from the grave. “Hayek, who?” is a fair question even today?

    Marx would be so jealous. He needed military coups led by revolutionary cadres and foreign invasions installing puppet governments to get his ideas into play.

  15. .

    Gibberish rog. Can you ever stay OT?

  16. entropy

    The underlying assumption under Quigin’s statement would appear to be that a company’s profits are whatever the government decides it is allowed to have.

    That an educator should not be able to tell the difference between a tariff that increases a company’s profits on the one hand, with a tax that reduces a company’s profits on the other hand, is disturbing.

    The Gripping Hand is that this dude has been teaching young, gullible undergraduates for years.

  17. Annabelle

    Quiggin is being an opportunist: making whatever ad hoc argument suits the socialist cause.

    Fun fact: watching Gerry Jackson demolish Quiggin on economics turned me into an economic Austrian.

  18. Judith Sloan

    Jack – the Norwegian government owns the oil and gas company Statoil.

  19. Judith Sloan

    Oh and ironically Statoil is a big investor in the Canadian tar sands project – a pet hate of the Greenies. Norwegian oil reserves are in steep decline and the government needs to diversify.

  20. entropy

    I have just realised I should have been thinking about this from the perspective of a university professor.
    When he is equating a tariff on imported cars with the introduction of a new tax on (inset sector here), he was thinking about the impact on Renault, not GMH.

  21. Jim Rose

    who is Gerry Jackson? where did he demolish Quiggin

  22. rog

    Norway is a majority shareholder in Statoil but Statoil does not equal Norway Govt.

    The oil money flows into the Norwegian Pension Fund.

  23. David

    It’s amazing that Norway is still held up as a socialist paradise.

    A country that still whales (don’t hear much about that in the media do you), refuses to join the EU, refuses to support European countries in financial trouble with their vast sovereign reserves and halts work on North Sea projects due to UK tax increases of all things – so much for a fair share for the owners of the resources!

    Quite the principled socialists!

  24. Jack

    Norwegian govt. Owns part of statoil – it is listed though and earns very good returns for it’s investors. There are also private operators in Norwegian sector of north sea.

    Key issue is how are the profits on resource extraction (oil or iron ore et al) shared – is the balance right.

  25. Louis Hissink


    be careful in reacting to the writings of John Quiggin concerning mining – critically responding to the deliberations of an idiot is pointless.

  26. .

    “Jack” decides “when the balance is right”. Interesting, and completely ignorant of the taxes ALREADY paid.

  27. JC

    “Norways oil is in the descendant and recent finds will only serve to extend the end.”

    Well they better find new reserves the Wodge. And the point of this startling observation is?

    Nothing of course, as usual.

    “Mitch Hooks forecast has been proved wrong and spectacularly so.”

    Who’s Mitch Hooks?

    “So when it comes to “facts” you guys wouldn’t know a fact if it bit you on the (collective) leg.”

    But we do know you never finished high school , Wodge and we do know you were selected out.

    “Norway is a majority shareholder in Statoil but Statoil does not equal Norway Govt.”

    Majority owner pretty much determines direction, management and such things like div policy indirectly Quodger, so what is your point, you uneducated bumpkin?

    “The oil money flows into the Norwegian Pension Fund.”

    Some of it does. However it can’t here because the states own the rights to what is underground, so if your looking for a freebie, you ain’t getting it, you whiny little bitch.

  28. JC

    “Key issue is how are the profits on resource extraction (oil or iron ore et al) shared – is the balance right.”

    So you want to the Federal government to own the mines, Jack.

    Isn’t that getting back to the Rex Connor days when he tried to pull a couple of billion from the Saddam regime so “we” could own the farm.

    If you think the government should muscle in and own the resources then come out of the closet and spit it out, you wannabe mining magnate.

    Me thinks you’re getting bullish in them resources at the top of the market, Jackie.

    Unless you’re suggesting the government ought to do a Huggy Chavez, run over the Constitution and nationalize resources you will be paying something like $250 billion for BHP to buy out the existing shareholders. If you want to buy Rio, you’re possibly looking at $150 billion there. Add the other miners, oil and gas dudes and you wouldn’t get much change from $ 1 trillion. Me thinks we can’t borrow that kinda money and you’re smoking something illicit.

  29. .

    It’s a stimulus JC. Anything which puts cash in the private sector is a stimulus…

  30. No Worries

    What’s a collective leg, and when’s my turn ?

  31. derp

    Sidebar kudos to entropy for the Motie reference

  32. No Worries

    I miss Gerard. What happened to him ?

  33. Sinclair Davidson

    Louis – I don’t know that its fair to called Quiggin an idiot – he is highly regarded and its important to correct basic points like this lest they become regarded as facts.

  34. JC


    Yep, Dot, it’s a stimulus. Nothing more needs to be said.

  35. Winston Smith

    Entropy, Derp, just bought the ebook of the Mote series after reading them a couple of decades ago.
    I loved the Watchmaker caste – who wouldn’t want a custom made toothbrush?

  36. Sinc. You say – “Louis – I don’t know that its fair to call Quiggin an idiot – he is highly regarded and it’s important to correct basic points like this lest they become regarded as facts”.

    JQ may not be an an idiot but Richard Tol, who is not, said on JQ’s own blog that he is not fit to teach econocmics.

    Ironically, JQ is a Keynesian, like me, albeit unlike you and your Steve Kates.

    But on all other issues he is indeed a nincompoop – against dams in Queensland, so he richly deserved the losses he incurred in the floods a year ago, and also against irrigation in the Murray Darling, against privatisation of power stations, ignorant of all aspects of Australia’s company taxation, whereby until the present clowns came to power, all companies faced a level playing field, by all facing the same 30% tax rate on their profits.

    Once that other idiot Ken Henry – supported by JQ and his fellow 22 idiots – proposed that mining companies should incur a further impost over and above the existing 30% uniform tax rate, of whose existence both KH and JQ certifiably had no knowledge, this country embarked on a terminal Zimbabwean collapse, soon to be manifest when the carbon tax begins this year, whereby users of cheap energy will be penalised if they do not get their electricity from obviously non-economic renewables.

  37. Annabelle

    I wouldn’t call JQ an idiot. I think of him as sly and crafty, like a peddler of quack cures –in his case Keynseyanim.

  38. .

    Keynes is crap Tim. It always ends in industry policy. You’re not for industry policy are you?

  39. JC


    With due respect, calling other people idiots when you yourself admit to believing in Keynesian economics is more than a little rich and a pill too big to swallow.

  40. Oh come on

    If I wasn’t Australian I’d say it’d be hilarious to watch the Australian government nationalise the big miners at the top of the market to the tune of trillions, then mismanage them into the ground (mining, into the ground; geddit?) – although not before writing off many hundreds of billions of dollars of equity when the market tanks…

    Comedy gold if you aren’t Australian.

  41. JC

    It would really be fun to watch OCO. I almost want to see it happen to for the fun of seeing it all go Grecian on them.

  42. JC

    ….and don’t think for a moment the alliance isn’t tempted.

  43. We are all Keynesians now, as without him there would have been no macroeconomics nor the sustained GDP growth rates since him far in excess of those before, with only the ocasional hiccup, and nothing like the Great Depression. The trouble with the Euro is that it did not apply Keynesian rules in its design.

    But for more idiocy, how about JQ’s belief the plunging prices of windmill and solar panels represent their competitiveness rather than the collapse in demand absent subsidies. Check out Vestas’ share price, down by 90%.

  44. Sinclair Davidson

    Tim – so you’re bitter you got banned at Quiggin’s blog. Okay. But as JC says you are in no position to criticise any of his economic views.

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