Jurisprudence 5: The Jurisprudence and Religion

I am pleased to announce that the fifth edition of my journal, Jurisprudence, is to be published today.

Please find more information about it at www.jurisprudence.com.au

Defense Lake Attack

I ran the defense lake attack, 10km, yesterday.

Suffering from a cold, I didn't do particularly well.

I have a letter in today's The Age.

John Garnaut misunderstands Chinese culture ("How we got China so wrong", BusinessDay, 13/7). He suggests that Rio Tinto's PR firm hands out envelopes full of cash to journalists attending events.

These "red envelopes", or lai see packets, are central parts of the Chinese gift-giving tradition. In traditional Chinese culture, the most appropriate gift is cash rather than, say, as in Australian culture, a bottle of wine. I give lai see to my colleagues, family members and even to my local shopkeepers around the Chinese New Year.

This is not a bribe, but an expression of my wish for their continued good luck in the year to come. I believe it is incorrect to suggest, based on the facts in the article, that Rio's activities are somehow improper.

Aron Ping D'Souza, editor, The Journal Jurisprudence, Melbourne

Published in The Age on 15 July 2009. 

Should Australia join the EU (interview video)

part 1



and part 2....

The Globalisation of Tall Poppy Syndrome

As one of the world's smallest populations, we Australians are frequently nervous about our often fragile place in the global community. Our chronically inefficient industries produce few manufactured good worthy of export. One need only look to our pathetic domestic film industry to see that our cultural exports are effectively nil. We were once the richest country in the world, in the late nineteenth century, and we have declined in international stature and cultural significance ever since.

 

Yet, ironically, in the midst of the Global Financial Crisis, one of our greatest cultural traditions has not only take root, but risen to prominence throughout the world. What was once a uniquely Australian phenomenon is now the populist agenda of governments and citizens around the world. The tall poppy syndrome may, in fact, be our greatest cultural export.

 

Just a few years ago, hedge fund managers, investment bankers and short-sellers were the titans of Wall Street, what ever young man at Harvard and Oxford wanted to be. People like John Paulson, who made US$67 million in twenty-five minutes short selling, or Peter Theil, who turned a half-million dollars invested in Facebook into US$750 million, were among our pantheon of heroes.

 

These masters of the universe, so quickly, have become the scourge of capitalism gone wild, the scapegoat so quickly derided in Congress and Parliament. Bernie Madoff, the mastermind of a US$50 billion ponzi scheme, is now the face of a once proud profession.

 

No longer will we applaud those who worked hard to get into top universities, struggle to get MBAs and survive the cut-throat competition to rise to the top. Now, from Wall Street to the City, we want to cut them down.

 

But Australia was ahead of this trend; in fact, we invented it. Even in the heydays of a skyrocketing All Ordinaries, Australians derided their most successful bankers. In fact, outside of drinking and sports, as the adage goes, it is un-Australian be great at anything.

 

When Allan Moss retired from Macquarie Bank with a $100 million pay package, there was outrage. He didn't rape and pillage the most successful investment bank in Australian history, but there was outrage because he earned so much more than simple teachers and nurses. Editorial pages burst with letters deriding Moss' greed whilst pundits condemned him on talkback radio. It was the tall poppy syndrome at its finest.

 

The same kind of populist distain that was shown to the, in retrospect, angelic Mr Moss is now hurled throughout the world at the CEOs of AIG, Merrill Lynch and anyone who is braver enough to call himself a banker.

 

For years, Australians looked with disgust at Macquarie, and now that same attitude pervades the world.

 

Is the tall poppy syndrome the harbinger of the new economic order that will reform the world and save the world from greed?

 

Greed is now the third rail of global society, you touch it and you die. Yet, one cannot deny that self-interest created the amazing society we live in and produced the highest standard of living the world has ever seen.

 

Now, Americans and Europeans are just like us, disgusted by success and abhorring those who aspire to it.

 

Aron Ping D'Souza is the editor of the Journal Jurisprudence. 

Australia and the EU

I will be appearing on East Side FM in Sydney at 4:30 on Wednesday 29 April to discuss why Australia should join the EU.

Aron Ping D'Souza

Why housing prices can never fail.

With the share market recording its worst year on record in 2008, people are justifiably worried about their investments and keen to see stability in 2009. However, adding to the uneasiness of caused by the share market, some of Melbourne’s poshest suburbs have seen values apparently collapse in the last six months. Some fear an American-style negative equity crisis; which is not far fetched because of the high debt levels of Australian home owners.

A prominent property developer commented to me, “We’ve seen the ASX fall 40% in the last year, its impossible that one sector of the economy fall so much and property prices not reflect it. Its just a matter of time.”

Yet, this insight is founded upon a poor understanding of how the global market economy functions. The Australian Government is a bit player in the global share market; despite the Rudd government’s largest infrastructural investments, they are essentially powerless to improve the standing of the share market. The equities market is dictated by global forces and only a concerted effort by the international community can do anything to stabilise it.

In contrast, the domestic property prices, particularly housing prices, are not the product of the global market, but of government policy. The symphony of first home buyer grants, capital gains deductions, and investment property tax offsets have created the exploitation in housing prices in the last decade. The policies of successive governments created and sustained the sky-high housing prices we see today.

And it’s a one way street. Housing prices rose, and a generation of middle-aged and older Australians benefited, whilst disenfranchising younger Australians, who salaries will never be of the level to purchase quality inner-city housing. Yet, the housing boom was created under a pile of debt and if housing prices, not just in Toorak but nationally, decrease substantially – home owners would have more debt than equity in their homes. The American-style negative equity crisis would be at hand.

Housing prices in the United States are created by market forces, as the plethora of direct and indirect government incentives that exist in Australia would be inconceivable to our fat cousins. Essentially speaking, housing prices in the United States are created by market forces whilst in Australia, they are artificially inflated by government policy.

In concert with this is the fact that there are votes in property. Unlike the United States, where most investment is in the share market, Australians invest heavily in self-managed investment properties. Every second person I run into seems to have purchased, with heavily loans from the bank, a unit or townhouse that they rent out and negatively-gear to take advantage of tax benefits. We have a national obsession with real estate, as the number of ads and articles in this newspaper will testify to.

Although not literally, there are votes in real estate. If the housing market declined substantially, voters would become uneasy with the current government. MPs should take note that the highest debt to equity ratios are in margins constituencies – on the outer suburban fringe. Thus, because housing prices are artificially constructed in this country, and an emphasis is placed on property in such large and influential voting blocs, property can never fail as an investment in this country.

Any government, either liberal or labour, will be forced to bailout any substantial fall in the property market, through increases to home buyer grants or in the various tax deductions, if they intent to get or stay in power. Unlike the share market, the state and Commonwealth governments have the power to control the housing market, which voters will recognise. Thus, like the American car industry, housing in Australia, is “too big to fail.”