The Ludwig von Mises Institute

The International Society for Individual Liberty is sponsoring an Austrian Economics Summit in Shanghai, China on July 20-23, 2012.

Speakers will include Richard Ebeling, Josef Sima, Mark Skousen, and Mises Institute technology whiz kid, David Veksler, among many others.

So, take a sojourn in China and then head to Mises University 2012.

And then if you are really hardcore get yourself to Bryn Mawr College for IHS‘s Advanced Studies Seminar on The Challenges and Future of Liberty.

I don’t know of a better way to spend two weeks in the middle of the summer.

Here in South Africa there is plenty of talk of nationalizing the nation’s mines, especially the country’s platinum mines. After all, SA is no longer the world leader in gold production, while the country still produces 80% of the world’s platinum. In fact platinum group metals (PGM) account for the bulk of SA’s mineral value.

However, as Nazmeera Moola points out in her “economic viewpoint” column in the February 24th Financial Mail, PGM production has been falling since 2007 at the same time profit margins fell, despite elevated prices. Ms. Moola writes that margins dropped 5-10 percent last year from the previous year, with rising wage and electricity costs to blame.

For the first time in years, the platinum price is lagging the gold price, despite the fall in production. And production will likely be further challenged going forward. Strike violence has not only led to 59 hospitalizations but three deaths, with the latest being a contract worker who was beaten to death. The body was found in Freedom Park near Impala Platinum’s Rustenburg mine.

Impala dismissed 17,000 workers over the labor unrest and 3,000 oz. of production is being lost each day. Through February 14th 60,000 oz. had been lost and the company announced that it would fall 40 percent short of fulfilling its contracted deliveries for April.

After six weeks, about half the the dismissed workers had been replaced, but workers are being prevented from entering the mine by striking workers. Some two dozen workers not wanting to take part in the illegal strike remain in the hospital after being assaulted by strikers.

Platinum mining is dangerous business and the South African government’s Department of Mineral Resources, while aiming for zero mining fatalities on the job, have stepped up the number of safety, or Section 54, stoppages. These DMR stoppages can lead to complete mine shutdowns.

According Ms. Moola, Section 54 stoppages accounted for half the 14% year-over-year drop in production at Aquarius Platinum, while causing Anglo Platinum to lose 101,000 ozs. of production in 2011. Impala’s production at Rustenburg was down in 12% in 2011 due to Section 54 stoppages.

“The combination of deeper mines and the increased focus on safety means mining techniques will need to adjust,” writes Moola. “This means less ore will be extracted and costs will rise.”

Platinum expert Steve Forrest makes the point that in addition to rising safety standards, there has been a lack of capital investment in platinum mining, and he believes PGM production peaked in 2008.

Impala has announced that once the strike is settled at Rustenburg, it will reassess the viability of each mine shaft at the project. At the same time Anglo American CEO Cynthia Carroll is considering either curtailing production at Anglo Platinum or getting rid of the company entirely.

South African’s ANC considers platinum a “sovereign resource.” So talk of nationalization could easily turn into heavy-handed government action. In neighboring Zimbabwe, the ham-handedness has already begun.

Just a week ago Implat’s David Brown received a demand letter from Robert Mugabe’s Zimbabwe government giving him two weeks to hand over the ownership of 29.5 percent of his company’s Zimplats operation to the state-run empowerment fund, threatening unspecified sanctions if it did not comply.

Perhaps Brown knew this was coming, as he had tendered his resignation weeks earlier, effective June 30th, with no replacement named. Brown was hoping to meet with government, attempting to negotiate a smaller taking, pointing out that handing over nearly a third (and eventually 51 percent) of the Zimbabwe operation will stop the company’s growth prospects.

Zimbabwe’s Empowerment Minister Saviour Kasukuwere says he is “sick and tired” of Brown’s delaying tactics regarding the ceding of shares under Zimbabwe’s controversial indigenisation legislation.

“We can only engage him if he comes here to implement the law,” Kasukuwere told Reuters, after stating that: “The problem with Brown is that he talks too much. We are sick and tired of his delaying tactics.”

Kasukuwere was quoted by Associated Press as saying that a proposed visit by Brown would not change the government’s decision. He also said he has no plans to meet Brown.

“I don’t need to meet them over anything. Why are they coming to see me? I’m not a zoo,” Kasukuwere told The AP. “I have nothing to discuss. They must respect the laws of this country.”

Just a day after the Empowerment Minister’s threatening comments, Zimbabwe Prime Minister Morgan Tsvangirai spoke to a trade and investment conference crowd in Johannesburg trying to drum up investment in his country. Using his best salesman spin, Tsvangirai called the indigenisation policy “rhetoric rather than reality.”

Business leaders in South Africa are talking about the opportunity for a “platinum valley,” emulating America’s Silicon Valley.

“Both big business and government are singing from the same hymn sheet of diversifying potential demand for platinum within the huge global energy arena,” writes Martin Creamer for Mining Weekly. “Platinum, clean energy and jobs can go hand in hand with the development of hydrogen fuel cells – zero-emission devices that are able to shrink the world’s carbon footprint.”

All this feel-good, job creating, clean energy rhetoric sounds great for spurring platinum demand and putting people to work. However, the government’s thievery (or threats to) of platinum assets only serve to stifle capital investment, leading to continued lower mine output.

Sadly, in a region with unemployment well over 20 percent and rampant poverty, the abundant precious minerals will stay in the ground, while millions living above ground starve.

My Home School Legal Defense Association membership renewal card arrived in the mail today. As I put the card in my wallet, I acknowledged the expense associated with the card and membership, an expense realized for the sole purpose of protecting my homeschooling family from government.

As I put my ever-lighter wallet in my pocket, I wondered how many other negative externalities are the result of the supposed public goods provided by the state, externalities so common place they are not recognized even as they occur.

note: HSLDA provides legal assistance to homeschooling families that offend the sensibilities of neighbors (qua local government officials) acting as the nanny do-gooders of the collective.

Former “private corporation” Fannie Mae returns to the government trough yet again; this time to ask for an additional $4.6 billion.

The Federal Housing Administration (FHA) raises premiums to shore up its insurance fund. Back in November, an audit of FHA suggested that it might need a bailout.

FHA now faces enormous strains on its finances, and it might be too big to fail:

The FHA’s share of the mortgage market has increased sharply since the depth of the financial crisis in 2008. It currently backs about a third of all new mortgages; in 2006, its share of the new loan market was just 5 percent.

Taking into account the big presence of Fannie Mae and Freddie Mac, the government now backs about nine of every 10 new home loans.

Bernanke reported to Congress this week and said he’ll keep QE3 loose in the holster. But in the meantime, he’ll keep interest rates at zero.

Ron Paul’s retort:

“Nobody’s smart enough to have central economic planning,” he said. “Our time has come for serious discussion on monetary reform.”
“The Fed’s going to self-destruct eventually anyways,” Paul added later.”

Meanwhile, Case-Shiller reported that its composite home price index was down 4 percent in December (year over year). Some say it may be headed toward the dreaded “triple dip.” On the other hand, houses are becoming more affordable.

Over the weekend, the NYT reported that “one group is sitting pretty: landlords.”

“They’re a damn nuisance, they are,” offered the man as we walked toward a group of tourists excitedly shooting pictures of two African Penguins standing silently in a drain pipe.

A nuisance? We were among dozens of tourists from all over the world walking toward the Boulders in Simon’s Town to see–the Boulder Colony of African Penguins.

The Simon’s Town local is certainly entitled to his opinion, but as he told us, “If you come to look at them once in your life, they’re cute. But if you live here, they’re noisy, stinky pests,” he was standing in front of a gelato cone stand (single scoop 20 Rand, double 25) located in what looked to be his backyard.

Now it’s possible he and his wife could sell a cone or two without these “pests,” but it’s doubtful. All day long, visitors walk down the residential street to The Boulders to see the cute little penguins.

The penguins make enough noise to be also known as Jackass Penguins, but anyone making a few rand from people going to see them, shouldn’t resent the cute little birds. After all, no one is walking down that street to see he and his wife.

However, the guy reminded me of Las Vegas locals who constantly complain about the tourists who come to Sin City, spend their money, and drive the economy. During the Comdex convention, Las Vegas locals complain about computer geeks. During the National Finals Rodeo, the cowboys are ridiculed by locals. And so on.

Perhaps the cone curmudgeon honestly believes that it’s the quality of his gelato that is driving his traffic, but it’s not. He had the entrepreneurial chutzpah to recognize the needs of customers walking by his house. He should remember what brings the customers to him.