IN WORDS OF ONE SYLLABLE

What’s tax?

What’s tax, dad?

It’s what they take out of my pay, son. They say it’s to pay for things our top brass spends on, but it’s not. It’s to stop price rise.

What do you mean: what price rise?

They’ve got to take some dough out of my pay so that our dough keeps its worth, son.

Why don’t they leave you what you earn, and tax the worth of land you hold – ‘cos no one earned that, did they?

You’re right, son. That’s a good one – ‘cos land price is what makes dough lose its worth in the first place. If we were to tax away the year’s worth of land, that would fix a lot of things. Land price would go to nil, and the cost of dough would be nil.

Don’t folks see that, dad?

No they don’t. The very few who do see it – the point one per cent of folk, I call them – don’t like it.

Is that why we have a lot of strife?

Yes it is, son.

That’s too bad, dad. What can we do?

We have to hope folks learn, I guess, but it’s hard.

But it seems so plain. Why’s it hard, dad?

It’s odd but, though it is plain, folks don’t know of it. And change is hard these days, son.

Gee, folks need to wake up to this!

Yes, they do, son.

MMT, LVT, INFLATION, LAND PRICES & MONOPOLY

Those who argue MMT per se is inflationary would do well to acquaint themselves with the subject*. The idea and practice isn’t particularly modern or new; Abraham Lincoln at least argued part of its case:

The government should create, issue and circulate all the currency and credits needed to satisfy the spending power of the government and the buying power of consumers. By adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.

…. and used it during the American Civil War.

Henry George approved the same principle, despite MMT advocate Bill Mitchell believing that Henry George simply favoured land value ‘taxation’ (actually rent) as an efficient revenue-raiser, and seeing LVT as being an “obsession’ which denies the role “financial capital plays in destabilising economic systems”.

Sorry, this just isn’t so, Bill. Seems you, too, may have been advised not to read Progress and Poverty because it’s rubbish? Like Adam Smith, David Ricardo, JS Mill and Tom Paine, Henry George understood that ‘ground rent’ must be taxed away in order to deliver their undiminished rightful rewards to labour and capital – and to bring an end to rent-seeking monopolies.

Viz, P – R = W + I

At least some MMT-ers* appear to appreciate that the full capture of land rent could, in fact, bring land prices and monetary inflation to zero, just as surely as MMT considers the rightful interest rate is also zero.

Zero interest: zero land price?

Food for thought – for everyone.

MMT and LVT anyone?

Wow, JOHN!

I just read John Passant‘s 2012 paper A basic guide to taxing economic rent in Australia again today.

It contains a lot of worthwhile discussion on a subject critical to economies repairing themselves from the vicissitudes of rent-seeking.

Given the topic, however, you’d expect in addition to Smith, Ricardo, Marx, Ken Henry, John Freebairn et al, Passant may at least have read a little Henry George.

He’s clearly never done so, otherwise he couldn’t possibly have included this risibly dismissive one-line reference to George:

“… the Henry George idea of land as the foundation for all wealth.”

I guess we all make mistakes – but that’s a clanger and a half!

Just one more example of the ongoing disinformation concerning George’s tightly argued case that economic rent must be taxed away to stop monopolies from developing, and for labour and capital to receive their rightful reward.

THE ASHES 2019

A good win by the Australian cricket team, especially our new Don Bradman and recent bad boy, Steve Smith; supported of course in this 4th test by some pretty good fast bowling: but not much else.

A striking ashes series in which Aussies have also to acknowledge the innings of English bad boy Ben Stokes in the 3rd test. It’ll be remembered for years, too.

Something about bad boys having to prove themselves?

Then there’s the other ‘ashes’ in which it’s pretty tough to engage people at all, because it’s not such good news as the result of the test cricket series is to Aussies. [Maybe to suffering Englishmen, then?]

I’m a slow bowler, coming in on the fast bowler’s run-up. You might say I’m the veteran of the team, coming in off the long run; that is, since the end of WWII: the beginning of Nikolai Kondratieff’s 4th Long Wave; the one K didn’t live to see.

Kondratieff didn’t claim to understand what fashioned his great cycle of approximately 60 years, in his time series analysis of 36 price studies from the US, UK, France and Germany.

Of course neoliberal economists will declaim the ‘K-wave’ cycle, because it exposes their absolute impotence and their often useless mathematical models – particularly as economic depressions define the period of each Long Wave.

This one’s unfortunately going to reduce world economies to ashes. Not everyone’s cup of tea for discussion or analysis, I guess. I suppose like all good grasshoppers we should remain positive, up and about, and happy – never like those crazily negative damn ants.

Otherwise, you don’t know what might happen!

Post WWII, the 4th K-wave built up nicely to its inflationary peak in 1971, since which time increasingly greater real estate bubbles–which Nikolai Kondratieff failed to see had developed each one of his Long Waves–have directed the world relentlessly towards yet another depressionary trough that I consider, beginning in 2008, will extend into the late 2020s – because tax regimes will continue to devastate productive activity as they reward tax evaders and rent-seekers via banking, real estate speculation and debt.

Heterodox economists, money and debt theorists, MMT-ers and UBI supporters, generally correct in their analyses, will at best be lukewarm to this remedy, whilst rent-seeking neolibs will resist it until the last man has been bowled out.

That’s why we mustn’t speak about this other ashes

………. yet.

Things that shouldn’t have been said:

???

He’s GONE

Robert Mugabe & Joshua Nkomo

Zimbabwe dictator Robert Mugabe died yesterday.

In 2011, late in his oppressive regime as leader of the nation, Mugabe argued that Zimbabwean miners should be paying 51% of their profits by way of rent to the nation. He was quite right.

However, 30 years earlier, he double-crossed his partner Joshua Nkomo and had 20,000 of Nkomo’s followers killed.

Key to Nkomo’s economic proposals was that the newly-freed nation must capture Zimbabwe’s land and mineral rents for the nation.

How ironic. Too late, Robert Mugabe.

It’s not uncommon that supporters of the constructively peaceful ideas of Henry George are overtaken by iron-fisted Marxists whom even Karl Marx himself would disavow.

2020 RECESSION?

So, household final consumption contributed a nearly-invisible 0.2% to Australian GDP in the June quarter? And Oz annual growth slumped to 1.4%, the worst it’s been since the GFC in 2009?

In terms of last year’s Kavanagh-Putland Index (shown in black above), the lack of good news is to be expected. The only issue now is whether the Morrison government’s tax cuts and stimulatory measures have been sufficient to allay the recession which usually ensues within 2 years of a 25% drop in the Index (shown in orange).

Put another way, will Treasurer Josh Frydenberg’s “goodies” match the more than $50 billion Wayne Swan spent in 2008-09 to successfully keep the property market “up there”, and to kick the property bubble can down along the road?

I don’t think so.

Why not?

Because a great number of Australians are already maxed out on debt, and a declining wage share doesn’t help resolve their indebtedness to banks. Rather, it applies additional financial constraint.

Australia

But hasn’t the property market shown recent improvement?

Yes, it has. But that’s the worry. It doesn’t resolve the problem of Australia’s extraordinary level of private debt. Our incredibly high land prices and mortgage debt are the main reason business, especially retail business, is so sluggish: aggregate demand is low.

Maybe curiously to some, the only hope for economic recovery is for the heat to come out of the property market, not to be shunted back into it. We and our politicians need to learn that the profitability of Oz banks does not translate to the general welfare of “hardworking Australians”.