Sycophants and Gold

Long ago - so long ago that I can no longer remember exactly when - I heard the expression "an ant's eye view of the Universe". This idea was communicated to me by someone with a bigger mind than mine to facilitate my understanding that any person who has such a view is incapable of seeing the greater "truth".

I have just finished reading a very passionate explanation by a very intelligent and learned man, that what has really been going on over the millennia is that governments have been waging a war on gold. It was clear to me that this man, who is obviously a very sincere and honest individual, is absolutely convinced of the truth of his argument. To be absolutely honest, I absolutely agree with him - at least in principle.

But what this man concluded as a result of his carefully constructed argument is that - therefore - if we only reverted to a gold standard, we can all live happily ever after.

In the body of his article the word 'sycophant' was used to describe the people who have been supporting the war against gold and, by implication, the war against his 'happily-ever-after' conclusion. I looked up the meaning of the word sycophant, and this is what I found: "A servile self-seeker who attempts to win favour by flattering influential people".

Now, I happen to be on of those who agrees with the principle that governments have been waging a war against gold, but I happen to disagree with the conclusion that if we only had a gold standard we would all live happily ever after. Further, by no stretch of the imagination - of anyone who knows me personally - can I be described as a sycophant. If anything, I fall at the opposite extreme of the spectrum which ranges from brown nosers to nut crushers.

My view is that the reason the individual concerned came to his happily-ever- conclusion is that the has an ant's eye view of the Universe and, before anyone gets upset that I may be in nut crushing mode, let me assure them that this statement is not intended to be disparaging. I say this because I believe it needs an eagle's-eye view of the world to arrive at solutions to VERY large problems. The unravelling of the world's financial system represents a VERY large problem which is not going to be solved by the simplistic stroke of a pen, as follows: "Now we have problems and no gold standard" Hmmmm? Wait! I've got it! "Now we have a gold standard and no problems". Problems solved.

I'm sorry to be the one to burst your bubble mate, but the absence of a gold standard is not what has caused our problems. It has been the presence of a flaw in human design - which we might be able to label "lust for personal power". In part, it has been an unholy circular alliance of financiers and politicians and big businessmen - all of whom have a lust for personal power - that has caused our problems. But I emphasise the words 'in part'.

Here is an example to illustrate the greater, society wide, problem.

Last night we had the family over for dinner. As normally happens in our home on a Friday night, discussion was "spirited", and the following example popped up to illustrate the point that "when it comes to money, for every honest individual who makes a rule, I will give you ten avaricious, power hungry, materialistic individuals who will happily break that rule and feel important and clever in the process".

The example revolved around American Express credit cards - which have no spending limits - and frequent flyer points. Some genius worked out that if he paid for his new home with his Amex card this would give him roughly a million frequent flyer points.

Of course, there will be many who will admire the genius who thought of this brilliant way of screwing Amex; and there will doubtless be an infinite variety of "rationalizations" that could be put forward to defend this action. But the bottom line is that Amex never intended its 'rule' to be abused in this way - and so they quickly put a stop to it. (Yeah! Yeah! I know. Amex deserves to be screwed)

Here is another example: There is a sub-culture in Australia of what we refer to as "dole bludgers" - people who rort the dole system. The dole was intended as a safety net for unemployed people - to provide them with an income whilst they looked for an alternative source of work if they had lost their jobs. Not to put too fine a point on it, a dole bludger is someone who has worked out a way of stealing money from the government.

There is also another government sponsored source of personal income whereby, if you can demonstrate that you are starting up your own business, you can have your small income augmented with a monthly grant to enable you to pay your living expenses whilst you are building your business. Of course, this is intended to be for the greater good of society as a whole. As everyone knows, "small business" is the backbone of the economy in every country.

I am not fully conversant with the methodology associated with rorting the system, but it goes something like this:

First, you have to be a migrant to Australia because this will enable you to 'park' most of your assets in your 'home' country - which you will probably visit fairly regularly.

Next, you have to cook your new business's books - and not show 'cash sales' - so that any external audit will validate that your income is below the threshold.

Then, having qualified by having no identifiable assets other than the furniture in your rented home - which is typically rented from a parent in whose name the home has been registered - and having an identifiable income that is below the poverty line, you are free to live high on the hog by spending your declared salary, your undeclared cash takings and your government grant.

But it doesn't end there because, Australia, being the wonderful country that it is, values equal opportunity. Our government looks at your wife - quite rightly - as a separate individual. So, if she doesn't actually work in your business (of course she does but let's just say she doesn't) because she has to stay home to look after the kids (who are actually being looked after by the parent in whose name the house is registered) then, under certain given circumstances, your wife can claim the dole.

So you and your wife in combination can live on your $19,999 declared salary, plus your $50,000 cash sales not declared plus the government grant of $20,000 whilst you are establishing your business, plus your wife's $20,000 unemployment cheque, plus whatever children's allowance may exist at the time. You can live in your 'rented' home (which gives your parent the ability to declare an income to pay their monthly expenses and thereby demonstrate that they are not dependent on the government for hand outs) and - wait for it - you can all live happily ever after; because NO ONE in your family needs to pay tax of any consequence.

Hands up everyone out there who thinks that this is a brilliant way of screwing the damned government who deserve to be screwed anyway.

Well, I've got news for you guys, you've lost the plot. There's nothing brilliant about this scheme. It's just plain dishonest, but our jails are probably not big enough to hold all the people who are doing this. This behaviour is the product of a mind that is bereft of ethics, and it serves to prove the point that "corruption" is not limited to politicians and bankers and big businessmen. It is everywhere you look.

Oh, you don't believe me yet? Isolated examples? Well, given that this is the Christmas season - the season where we all pay homage to the importance of ethics, morality, self sacrifice and charity - how about this example?:

An Australian executive only pays Australian tax if he lives and works in Australia. Imagine that you work for a large multinational corporation that is eyeing the booming India as an expansion opportunity. You want to rort the system? Here's how you do it.

You go to your boss and you tell him that, if the corporation pays the exorbitant apartment rental in India, you and your young family will make this huge sacrifice and go to live in India for a couple of years whilst you open a corporate office there. Because you will be living in India where there is a 'peppercorn' cost of living, you will only need (say) $40,000 p.a. living expenses over and above the apartment rental that the corporation will be paying for you as a legitimate business expense. The balance of your $250,000 p.a. salary (viz $210,000) they can pay you in Australia.

So let's look at the tax implications:

From the perspective of the Australian tax office, you are living and working in India and you have no Australian income - so you pay no tax. (From their perspective, it's as if you have been earning $250,000 in India and paying tax in India)

From the perspective of the Indian Tax office - which doesn't communicate at such a level of detail with the Australian tax office - you are paying your way. You are earning, declaring, and paying full tax on $40,000 income - which is not a bad income for an Indian.

From the perspective of your employer, he gets a tax deduction for your full salary - which (he says, quite truthfully) he is paying you to work in India, and he also gets a tax deduction for the apartment rent. Finally, he is probably also qualifying for a government grant called an Export Market Development Grant whereby 50 cents in the dollar spent on export market development is refundable in cash by the Australian government. Why would your employer be upset that he has to pay your rent? Only a small minded employer would do that.

You pay tax on $40,000 instead of $250,000 and, by the way, the rental that you can get for your home whilst you are living in India is able to be offset against the interest on your mortgage for tax purposes (because it is no longer your "primary" place of residence) and you can also get a tax deduction for that. (Something you automatically get in the USA, from what I understand).

Hands up all those who think this is a brilliant scheme. Who suffers? Ahh! Don't worry about it! It's just the bloody government's money. They would have pissed it against the wall in some other way.

Unfortunately, we have all forgotten that the "government" is "us". WE suffer.

So, to the gentlemen who genuinely, sincerely and honestly believes that our problems will be solved if the sycophants would just go away so that we can embrace a gold standard, I say this: "You clearly do not understand the problem, so let me define it for you:

Our "problem" is that the ethical fabric - which blankets society as a whole - has been ripped asunder as a consequence of our revolting behaviour in the pursuit of the buck.

Humanity's soul - by and large - has become corrupted, and you are off with the pixies if, with your ant's eye view of the Universe, you still think that a gold standard is going to solve this particular problem.

You want a topical example of what money does for the soul? Have a look at the argument currently raging between Donald Trump and Rosie O'Donnell. Look at the adjectives being used. It's enough to make anyone proud of where humanity has finally arrived. This argument is raging between a Captain of Industry, and the Host of a nationally broadcast TV show. And isn't in an interesting coincidence of timing that this argument happens to be raging over the Christmas Season? Good on yer' Donald and Rosie. Go for it. Show us all what you've got and, in the process, show us all what society has lost.

May we all have a very Merry Christmas as we ponder what 2007 may bring.