Fortescue’s Fight Against the State.
Fortescue Metals [ASX: FMG] has today filed documents in the High Court of Australia, accusing the government of breaching section 51(ii) of the Australian Constitution.
What’s that all about? More below…
In 1850, British philosopher and sociologist Herbert Spencer wrote:
‘If every man has freedom to do all that he wills, provided he infringes not the equal freedom of any other man, then he is free to drop connection with the State, to relinquish its protection and to refuse paying towards its support.
It is self-evident that in so behaving he in no way trenches upon the liberty of others; for his position is a passive one, and, whilst passive, he cannot become an aggressor.’
Remember that the State is the aggressor in over 99% of cases. The most obvious is the violent way in which it levies taxes against individuals and businesses.
And the way it forces its will on individuals and businesses regardless of whether they approve. If they disagree with the State action they are punished: fined or sent to jail.
Yet if the State infringes on the individual or business, what’s the penalty?
Compensation? Maybe. But most likely, the government will just change the law so it can pursue what the court had previously deemed unlawful.
But what’s this about Fortescue Metals and the Constitution?
This morning, Fortescue lodged a constitutional challenge to the government’s Minerals Resource Rent Tax (MRRT). The press release states:
‘Fortescue…today lodged a challenge in the High Court of Australia against the Federal Government’s Minerals Resource Rent Tax (MRRT) on constitutional grounds.
‘Fortescue Chief Executive Officer Nev Power said Fortescue has taken legal advice and is challenging the tax on the grounds that the MRRT:
- Discriminates between the States contrary to section 51(ii) of the Constitution;
- Curtains State sovereignty contrary to the Melbourne Corporation principle;
- Gives preference to one State over another contrary to section 99 of the Constitution; and
- Restricts a State’s ability to encourage mining contrary to section 91 of the Constitution.’
Hats off to Fortescue for challenging the State. But we don’t fancy their chances. As we say, the State can do anything.
Evidence of that is in a successful challenge in the High Court earlier this week to a different government program. A father of four from Queensland had taken the government to court, claiming the Commonwealth chaplaincy program was unconstitutional.
The court agreed. It meant the government had acted illegally and should stop spending taxpayer dollars on this program.
The government’s response? As you’d expect, according to the Sydney Morning Herald yesterday:
‘Attorney General Nicola Roxon has told reporters in Canberra the government would continue funding the program, despite the landmark ruling.’
In other words, the State can do what it wants. It makes up laws and passes them, so it can do what it wants. Sometimes it doesn’t even make a law, it just goes ahead anyway. If the courts invalidate a program the State ignores the court or passes a law to legalise its previously illegal actions.
It’s a nice power to have, for a megalomaniac.
So while we’re pleased to see someone stand up to the brutality and aggressiveness of the State, we don’t hold out much hope that Fortescue will actually achieve anything…although they may get a moral victory if they win the case.
The fact is, government influence and interference is only going in one direction.
The BBC reports on a speech given by Alec Ross, a senior advisor to US Secretary of State, Hilary Clinton. In the speech he said:
‘As power is shifting from hierarchies to citizens, and networks of citizens, governments tend to feel overwhelmed. They feel over-run by this change. As governments accelerate; as revolutions increasingly make use of connective technologies; as pieces of legislation with massive corporate backing get shot in the head because of citizen-centred networks, what you should anticipate is a lashing back from government.’
We don’t expect Mr. Ross to stay in work for long with that kind of anti-government, pro-freedom talk.
Even though his main target are unelected dictatorships, what he says holds true for elected dictatorships in so-called democracies, too.
The UK is on the path to allowing the government to monitor all Internet and email usage. The US government is doing goodness knows what to infringe on the liberty of its own citizens (despite having a Nobel Peace Prize winner as President).
And the Aussie government is ploughing ahead with the National Broadband Network, which will inevitably allow the government to snoop on what you read, look at and watch.
Doubtless the Statists will say, ‘If you’re doing nothing wrong, you’ve nothing to worry about.’
That’s hardly the point. Individuals should have the freedom to do as they please without a busy-body bureaucrat snooping over their shoulder.
So, what does any of this have to do with investing and stock markets falling? Directly, not a great deal. But indirectly it is a big deal.
Investors need to get used to creeping socialism. That is, the more you earn the less the government will allow you to keep it, and the more you’ll be expected to fund the lifestyles of those who suck resources from taxpayers via the State.
That means doing as much as you can to control your own life. And doing as much as you can to prevent the government from stealing your wealth.
Make no mistake, the problems you see in the US and Europe (and soon enough in Australia) are a direct result of too much government involvement in national economies. And yet those governments believe they can correct things by getting more involved…hence the socialisation of wealth.
Eventually things will turn around, after governments have over-reached. But until then, expect more of the same…including volatile and risky stock markets.
This article is contributed by Money Morning. Click Here to Subscribe to their free newsletter.