RICARDO’S LAW OF RENT ….

… explains why land rent–not wages nor profits–has first claim on increases in productivity.

Dr Garrick Small provides a good explanation here in Property Valuation 11, part of a real estate valuation course.

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SOME THINGS DON’T CHANGE

wondering

bubble

ELECTION CAMPAIGN: WEEK TWO

poor super mal

YES, THERE IS! (Answer to final question)


CLASSICAL ECONOMICS 101.0

P – R = W + I  (production minus economic rent (unearned income) for revenue, leaves wages and earned profits untaxed.)

Therefore, to the extent that economic rent is permitted to become privately capitalised into land prices—and this has grown massively with the winding back of land-based revenues over the last 30 to 40 years—production, wages and profits will be reduced by taxation and its accompanying deadweight effects.  GDP growth will decline.

That’s what has occurred around the world: that’s why economies are struggling.

In this retrogression of economic thought, known as neo-classical or neo-liberal economics, labour and capital have been increasingly squeezed by rentiers, and economies are gradually grinding to a halt, into a deepening deflation.  The role of land and the pathology of land price have been ignored.

Incredible land price inflation, and financial products leveraged therefrom, together with household debt, has generated a deflation in other prices.

Economies  can recover only when this situation has been reversed: when land prices are allowed to retreat and impossible private debt has been written off. Debt that cannot be repaid won’t be repaid.

It would be best if governments could bring themselves to acknowledge this reality, but they are in the thrall of a false economics, and a powerful and self-serving set of rent-seekers who will try, Japan-like, to fight this essential reversal.

Fascinating times! Hyman Minsky and Nikolai Kondratieff had valuable things to say about these periods. Neither of them seemed to have realised that Henry George had already explained them.

THE AGE LETTER 17 MAY: TRANSURBAN’S RENT-SEEKING

Kennett has a cheek

It is bitterly ironic to hear Jeff Kennett now warn of the danger Transurban poses. In early 1994, Schroders Australia Corporate Finance was financial adviser to VicRoads on the CityLink project. That March my colleague David Lennon and I were invited to present a paper on road financing at an infrastructure symposium. It was attended by, among others, road authorities from three eastern states. We advised that it was commercially naive to think private tolling concessions would run their term and that the roads would then revert to government. We said incumbents would renegotiate to progressively extend tolling concessions, thus creating permanent private monopolies. We also explained how a tolling regime could be established that did not involve selling control of the toll revenue stream.

The response was swift and unambiguous. Shortly after the paper was delivered, Schroders’ Melbourne office was informed that its advisory mandate was being split into two “phases”, the first was to end immediately. The “second phase” was to be re-tendered; needless to say it was awarded to another firm.

“Independent” advisers cannot protect the public interest; they can only tinker at the edges of schemes that are favoured by politicians or bureaucrats. The privatisation of our roads has led to the needless waste of billions of dollars; money that is desperately needed elsewhere. Unless it is stopped, countless more billions will be wasted.

Stephen Morris, Coorparoo, Queensland

Read more: http://www.theage.com.au/comment/the-age-letters/head-20160516-gow9li.html#ixzz48rmwvLXq

‘THE AGE’ READERS CRITICISE NEGATIVE GEARING

negative-gearing

 

 

 

http://www.theage.com.au/comment/the-age-letters/its-time-to-end-this-rort-for-the-wealthy-20160515-goveu7.html

THE ELECTION CAMPAIGN: WEEK ONE

008

PRIVATISING PUBLIC ROADS ….

Transurban 2015

…. the shocking costs of shifting infrastructure off the public balance sheet.

THE AGE expose 14 May 2016. How Transurban mastered the art of rent-seeking.

DUNCAN (AGAIN)

So Q&A hero, Duncan has turned out to have feet of clay: he has criminal convictions.

Whilst I didn’t donate to Duncan’s GoFundMe cause, I wouldn’t feel too bad if I had, because his Q&A appearance should be judged on what he said, regardless of his background; and what he said about the beneficiaries of Liberal Party tax policy was accurate.

No excuse for Duncan’s criminality, but maybe his situation serves to underline Marcus Aurelius’ statement: “Poverty is the mother of crime.”