It would appear that, based on recent comments[1] that the mining companies are taking "...$60 billion out of Australian taxpayers' pockets as they gouge profits out of Australian soil and ship it offshore," Greens' leader Bob Brown - despite his good intentions (we have to assume the best) - has either forgotten or never learnt how trade and exchange works in the real world.

“There’s nothing we read of in torture’s inventions,

Like a well-meaning dunce with the best of intentions.” - J.R. Lowell, A Fable for Critics (1848)

Trade 101: When trade occurs, there is mutual dependence – interdependence – and all parties benefit from it.

The fact that Australia 'digs up' and exports primary commodities in exchange for imports of manufactured goods does not, ceteris paribus, somehow make this trade harmful. The flawed logic that leads to this kind of thinking (that the mining boom is somehow harmful to Australians) is what economist Harold Demsetz called the "Nirvana Approach" to economics, where the present situation – that of an expansion in the mining and related sectors – is compared to an unattainable outcome[2].

Demsetz argues that when assessing the effects of trade, investment and other factors that contribute to economic activity the relevant comparison is between the present situation and the condition that would exist in the absence of the factors responsible for the change in economic activity. Greens' leader Bob Brown's recent argument that over $60bn[1] of Australian mining revenue is being exported "…at the expense of Australians," is completely irrelevant when assessing the impacts of foreign investment, international trade and so on.

As a result of his fallacious economic reasoning he is blinded to the potential unseen consequences of his policy: the addition of a mining tax to give Australian's (the Government) their "fair share" of the mining boom will only serve to erode the attractiveness of Australia as a place to invest by increasing both costs and the risk that foreign investors will have their capital seized rather than protected and freed up for export to their home country. In other words, it is the very capital that increases the wage rates, productivity and thus standard of living of Australian workers that Bob Brown wants to discourage from ever arriving in the first place, all under the guise of helping Australian workers.

To sum up, had foreign investment not been allowed (or discouraged through further taxes) in the first place, the current pool of mining revenue that stays in Australia would either never have existed or would be far smaller than it is today. If Bob Brown was running the show, the $60bn that is "stolen" from Australians and sent offshore would never have existed in the first place; the figures he is debating would be significantly smaller as the entire revenue pie would shrink.

While the government may well get an increase in short-term revenue as a result of a mining tax, in the long-term all Australians will suffer through the unseen effects of lower wages and productivity.