What a pity an otherwise good article degenerates into “There’s not enough rent!“, an old canard people have seen through, from John Locke many years ago, to Mason Gaffney today.
Locke first noted that all taxation comes out of land rent anyway, so why not put it there in the first instance for the sake of efficiency.
Professor Gaffney notes similarly, having shown that all taxes come out of rent [ATCOR], and that the excess burden [of counter-productive taxes] comes out of rent [EBCOR].
Therefore, “there’s not enough rent!” is no rebuttal Henry George’s insight into what is proving to be today’s great economic calamity, namely, that wages and profits are what’s left after [privatised] rents have been extracted from the economy.
Australia is about to have an election in which both sides are concerned about producing a budget surplus.
That is absolutely ridiculous in a situation where Australia’s massive private debt bubble (brought about by impossibly high mortgages) is in the process of bursting.
It’s the private debt about which we really should be worried – and a surplus budget will add incredible fuel to this deflationary fire!
Forget budget surpluses, guys! It’s time to spend up big – and responsibly!
Stephanie Kelton is not so good on the private debt issue, but she can’t be beaten on why governments should NOT be seeking to balance the budget.
I put the failure of land taxes to gain more than a toehold in economic thinking these days down to the fact that economists who support the relative benefits of resource rents–Nobel prize-winners though they may sometimes be–are rarely reported in a media perceiving the interests of its big bosses and major advertisers are not well served by abolishing rent-seeking. “There must be no such thing as public resource rents, there are only income and sales taxes – just remember that!” Free press? Baloney!
It’s counter-intuitive, but ad valorem land taxes respond precisely to the needs of an increasingly complex society. The benefits of available infrastructure, the relative size and location of each parcel in terms of community amenities, and even of new advances in science and technology are all differentially reflected in the market value of each and every allotment.
The principle of Ockham’s Razor is that the answer to complex problems is often a simple solution. Land taxes and electromagnetic spectrum rents are elegant solutions to the increasing economic canker and deadweight losses generated by income and sales taxes.
Far higher levels of resource rents replacing income and sales taxes may not be the answer to all of our economic ills – but the switch has much to recommend it.
Maybe economic cycles of death and renewal will always be with us , but we have an amazing and much underutilised tool which could prevent the cycles from being so repetitively socially devastating.