THE AGE letters today
Banking on profits
How ironic that CBA boss Ian Narev is concerned that global wage growth has been “relatively weak” (‘CBA boss says sorry over ATM scandal’, The Age, 7/10). Adam Smith noted in Wealth of Nations that privatised land rent adds one-third to costs. (“This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land, and in the price of the greater part of commodities, makes a third.”)
The American social philosopher Henry George agreed with Smith that land rent needs to be publicly captured if wages and earned profits were not to suffer at the hands of those who seek to extract what amounts to unearned, publicly generated land rent.
What greater rent-seeker could there be than our banks who, by generating “super-profits” out of land price-inflated mortgages, have thereby leeched from the incomes of labour and capital?
Bryan Kavanagh, Mount Waverley