All posts by Bryan Kavanagh

I'm a real estate valuer who worked in the Australian Taxation Office (ATO) and Commonwealth Bank of Australia (CBA) before co-founding a private valuation practice, Westlink Consulting. I discovered that we leave too much publicly-generated land rent to be privately capitalised by banks and individuals into land price bubbles. This generates repetitive recessions and depressions. These need to be avoided by capturing more revenue from land values to free up wages and household debt.

WHAT Won’T BE SAID …..

…. in any Bill of Human Rights, or at any Royal Commission: that the economic rent, the economy’s surplus–the glue that should bind society together–is owed to each and every one of us – equally.

All else, including wages and profits, is private property.

The reason why it may not be spoken about is that whilst some of us may be permitted to obtain a little of this unearned income to keep us on side, it’s mainly reserved for the 0.1% – humanity’s leeches.

This needs changing.

‘Not many people know that.’

‘ALl-embracing’ ISN’T Stupid reductionism

Yesterday I saw an article Why Universal Basic Income is a Bad Idea which began with the words “We should always be wary of simple solutions to complex problems ….”

Uh oh, I thought: yet another piece wanting to hide the nub of the matter of UBI with unnecessary complexity. On reading the article, my suspicions were confirmed; confirmed absolutely.

I’ll go for Ockham’s Razor every time: What is the overarching problem, and does it have an overarching solution?

The point of this (my) website is to announce that we have an all-embracing economic problem, namely, that for all our ‘progress’, poverty and dispossession has increased in the west, and we’re heading into an economic depression. How on earth could this be possible in the 21st century?

Last night on the ABC’s Q and A, a woman questioner invoked ‘common ground’, without understanding what the term entails. People use common ground as a throw away line these days without understanding it, but classical economists and great philosophers have understood its truth: that the earth and its resources are indeed humanity’s common ground: they are not ‘private property’. To acknowledge that we have common ownership of the land, it follows essentially that the rent of land must be paid into the public purse. There’s plenty there!

This is what goes missing in EVERY bill of human rights, because the majority of humanity doesn’t accept that the world is common ground. Indigenous peoples have much to teach us in this regard.

All taxation can be replaced by levying ground rents of only half the amount of taxes currently levied on productivity and usefulness, but the apparently neo-liberal writer of the article abovementioned is too busy reducing the forest to its trees, instead of investigating the overarching possibilities.

There is great scope for a UBI if we were to abolish all taxes and to tax away economic rents. The reform would produce the economy of abundance.

Meanwhile, we’ll go on producing boom-bust and poverty with our devastating taxation regimes. Here’s the picture of Australia’s overarching real estate market to make the point. When real estate turnover exceeds 15%, we have a bubble. When y-o-y turnover crashes by 25%, we’re in for a recession – at least!

WAKE UP, OZ!

Some know the period between economic depressions as “the Kondratieff Wave”. The post-WWII K-wave topped out in 1972, and has trended down into the depressionary trough ever since.

Kondratieff didn’t know what fashioned his Wave, but it’s pretty clear to me that repetitive boom-busts in land prices keep getting bigger until a final gargantuan bubble collapses the economy altogether.

This tends to elude economists, because they can’t (won’t?) see that the private capitalisation of unearned income (economic rent) acts to destroy productivity, the creation of real wealth. [Hello, Productivity Commission!] Economists don’t think it’s as simple as this, but it really is. [What have they been able to forecast? …. Zip!]

So, as the process worsens and poverty and debt increase, this site helps me externalise the childish stupidity that is neo-liberal economics.

In doing so, I can also take a shot at those economic analysts who still believe that Australia needs to “balance the budget” (read: ” we need to send the private sector into deficit”). Do they really believe it, or are they playing up to their rent-seeking masters?

Or, that instead of taxation simply taking money out of the system, it’s actually generates a potful of cash, out of which the government funds its public services. [!]

Right now, there’s a powerful case for a universal basic income to kick-start economies and to allay the crushing private debt burden rent-seeking banks have placed upon us. However, this should not be done short of reforming the Australian taxation system.

We’ve got to abolish taxes on wages and tax away economic rents, if we want to reverse what’s the chart above shows. Mind you, it’s not likely to happen, because the uber-wealthy have another agenda altogether, and they hold sway. But writing this get their s**t off my liver.

Ahhhhhh! That worked!

The Cash Rate: Reductio ad absurdum

Economists rarely subscribe to the approximately 60-year ‘long wave’ between economic depressions noted by the Russian economist Nikolai Kondratieff. You see, they can’t, because it displays their absolute impotence in managing economies. So, as with the 18-yearly recession generated by land price bubbles which have been reduced to “a natural part of the business cycle”, they’re forced to put devastating socio-economic depressions into the same category. “They’re just a naturally-occurring phenomenon!”

Passing strange?

You bet!

The problem is that the neo-liberal economist is too busy with his head up his arse, fascinated by a vast amount of trivial detail–such as today’s cash rate being reduced to 1.25%–but unable to stand back and see the deflationary forest for its many trees.

What do we really expect if neoclassical economics can’t see the vast difference between (a) extractively pillaging unearned income out of the economy and (b) actually contributing to the creation of real wealth?

All the classical economists from Adam Smith, David Ricardo, JS Mill and Henry George understood that unearned “ground rent” needed to be taxed away for economies to work. Henry George reduced it to the simple proposition: wages and capital yields are what’s left after unearned economic rent has been extracted.

And haven’t we and our banks been majoring on capitalising land rent into obscene land prices! And why wouldn’t we do this if that’s what the tax regime tells us to do?

Problem is, we believe economists know what they’re doing as they inspect their own rectum interiere – but they’re unprepared to distinguish between speculation and productivity.