HOW AUSTRALIANS BECAME MUPPETS

ANNOUNCEMENT: THERE WILL BE NO NECESSARY CHANGE

Australia once had the gumption to lead the world in matters of social reform.

Without obsequiously establishing whether it was being done overseas, Australia saw the need to introduce a federal land tax under the Fisher government in 1910.

It was abolished by the Menzies’ government in 1952.

Australian governments now check with the halls of power and privilege whether it’s OK or not for a tax measure to be introduced.

Kevin Rudd failed to do this in the case of the RSPT and lost his prime ministership over it.

Julia Gillard then consulted with the big boys before coming up with the MRRT which will capture tens of billions less of Australians’ common wealth to the public purse.

Australians have become completely beholden to the 0.1%.

Whether or not we like to admit it, we’ve become their muppets.







18 thoughts on “HOW AUSTRALIANS BECAME MUPPETS”

  1. You say ‘Private interests have NO just share of rent. ‘

    As you hold to this by definition, not by argument, I think we will just have to agree to disagree on this. I find it self-evidently wrong in so many specific cases that the general case can not hold true.

    Under your proposal, no farmer would ever improve their land, for any benefit in doing so would be stolen by government in additional rent. This remains the most grievous case I have come across, but it on its own is enough to fatally wound any suggestion that your statement holds true in all cases and is thus a general statement.

    Yes, providing individuals with a share of the rent due from public investment and the land’s natural bounty is justifiable.

    No, arbitrarily declaring all rent to be public is not necessary for freedom from taxation. Collecting the rent due sourced from the natural bounty of the land, that from public investment, and that of indecipherable origin is sufficient. Especially as in taking the effort required to separate out as far as possible privately derived rent, you provide a distinct tie between community benefit and commercial return.

    For if acting in the communities best interest is also acting in the individuals best interest – that changes everything. And yet you declare definitively that no individual contribution to the community shall be recognised.

    Fixing the existing problem and replacing it with its inverse simply switches one set of problems for another.

    It is simply not enough that the contribution of the community to the individual be recognised and captured. The contribution of the individual to the community must also be recognised and returned. For only in doing so is there equity, and only in doing so do the interests of the community and the individual align in all cases.

  2. So.. Private reduction of rents should be incurred, but not private increase. Ok.

    Issue of new credit / money is just a different form of rent, and probably accounts for 10-15% of total rents.

    Yes, collecting rents will end the exacerbation of the confidence cycle and damp it instead.

    Privilege also includes granting right to public interests not available privately.

    Denying private interests their just share of rent keeps things simple, and allows the inequity required to make the system salable to the socialists.

    it also makes it anathema to Libertarians, as you seek to establish the very inequities they are trying to oppose in the existing system.

    It’s not your opposition to end private privilege that alienates you from Libertarians – on that issue you would find much support in Libertarian circles. It your desire to establish exorbitant government privilege that is unacceptable.

    1. You say: “Privilege also includes granting rights to public interests not available privately.”
      I say privilege is granting private interests the public’s rent, the ONLY thing that needs to be socialised in order that people may be freed from taxation.

      1. Also: “Denying private interests their just share of rent …. ”
        Private interests have NO just share of rent. OTHER, of course, than an EQUAL portion in its final distribution.

  3. No, just the rents they are properly due. Take the supermarkets, the jobs, the private schools and health facilities away, the factories, the power stations – and see that this also causes rents to collapse.

    Yes, the community contributes to rents. So does the work the community does – in the collective groups we call businesses – affect rent. To suggest that just because those rents are predicated upon the existence of a community, that the increase due to additional infrastructure provided by private funding does not inherently impose a corresponding requirement for financial recognition and recompense is a fallacy.

    The additional rent would not have occurred without the investment made. That an unrelated loss of community would have a negative effect is completely irrelevant, except that were that to occur, recompense would cease to be paid to the private interest for the now abandoned works.

    That’s risk, and no different under a rental arrangement than a cost recovery basis.

    Your suggestion that the government should coopt not only the return on public investment but that which rests upon private investment will lead to a whole series of negative consequences for the community.

    Governments will become less willing to invest in infrastructure as they get all the benefit with none of the costs by waiting for private investment to do the same. Private concerns will be less than eager to invest. The end result will be an ongoing underinvestment in infrastructure.

    Trick question – where a private company undertakes action that results in a drop in local land value and thus government rents, do you see the case that they should be liable for that loss?

    1. Not one cent of rent should find its way into private hands. We are having this economic depression because people, yourself included, cannot get their head around this critical point. As a real estate valuer for more than 40 years, this has stood out like a beacon to me. Libertarians who believe excessive credit and monetary issues are responsible are only partly correct: they should ask themselves on what the credit is always expended. Even were government, not banks, to issue the currency, even with all libertarian ideals set in concrete, we’d still be having economic recessions and depressions for this reason. “Creative destruction” is nonsense; rent capture would eliminate depressions altogether.

      Answer to your trick question: Anyone who despoils real estate values–rents, that is, certainly not prices!–should be held responsible for their actions.

      ps. To understand freedom, you need to understand its opposite, privilege, which applies chains to people. Privilege is the granting of rent, any rent at all, particularly any land or natural resource rents, to private interests.

  4. Forgive me, but that’s a ‘liberatarian’ PROVING he’s a muppet for the 1%! Take the local community away and privately provided infrastructure is worth nothing – zip! – and the capital works add absolutely no value to the land. The ‘entrepreneur’ would not even make his profit.

    Put the community back, and he’ll make a good profit – AND SHOULD NOT BE TAXED 1 cent upon it!

    And the government can capture the rent created–wait for it–NOT by the builder, but by the community – instead of taxes (and their devastating cascading deadweight through the economy).

    No? You want developers to be entitled to their profits, our rents, ergo, taxation to remain! Funny! So does the 1%!

    There’s Murray Rothbard and company’s royal libertarianism for you!

  5. The basic point of your first paragraph is that you think it is fine for the public to steal the rent created by private infrastructure, while it is not appropriate for private interests interests to steal the rent created by public infrastructure.

    It is this theft that is necessary to be able to make the claims you do, so you can’t let it go.

    It’s a different position than we currently have, but certainly not superior. It just leads to a different set of problems.

    Each contributor must be recompensed according to the contribution they make. The best way to recover infrastructure investment is through recovering land rent. The best way to recover variable costs is by charging for their use. Both mechanisms need to be available to private and public entities.

    Libertarians are mostly concerned with reducing the excesses of the state. Of course if you apporoach them with a system that promtes further theft by the state they are going to reject your premise.

    At the same time, Libertarians tend to go too far and not accept even the premise that the state is due rent for the works it has done, which is wrong. But if you present an option which enshrines public theft, you have no rational basis for discussion.

    Each is due for their contribution. Collecting this due as land rent is a logically consistent and economically efficient approach. If you insist on abusing the mechanism in order to take into public hands the rent due to private infrastructure, and Libertarians insist that there is no rent due to the public infrastructure, then both groups continue to lose out to the current system – which for all its faults does approximate this.

    Which is a pity, because the concept behind collecting land rent is beautifully simple, self-evidently just, and inexpensive as well.

  6. By definition, rent is generated by the public for the public. Individuals or companies have done nothing at all to earn it. Those private individuals or companies who construct buildings or infrastructure are entitled to their profits but not the public’s rent. This point is always lost upon ‘royal libertarians’.

    There should be NO arbitrary taxation. All that is necessary for freedom for all and the removal of privilege is that we capture all the rent, the whole rent, and nothing but the rent of land and natural resources. That frees labour and capital completely – but you want to deliver some rent back to privileged interests.

  7. So.. Given those figures, about 30% GDP should be being collected as ‘land rent’, of which around 2/3 should be being distributed back to recognise the benefits brought by private infrastructure, leaving 10% or so to cover government costs.

    Add in the mineral and other rights being managed and you end up back near today’s figures of 20% GDP.

    There is a tendency for government in many cases to follow what land value would suggest, even without using it as a methodology. It’s a measurable expression of what seems ‘fair’ anyway.

  8. It’s land value that I am talking about. The utility that is the prime driver of urban land value is due as much to the supermarket as it is to the school. All infrastructure that provides a service to a location increases land value.

    It’s not all public. I’d guess (without significant basis) it to be about 1/3 public, 2/3 private.

  9. The total amount of rent that occurs can easily be estimated by multiplying the current capital value of land by the cost of capital applicable.

    How much of that rent is publically sourced is a much more difficult question.

    A good estimate might be arrived at by looking at the ratio of private infrastructure investment to public infrastructure investment – ‘infrastructure’ here being a term meaning any built thing that impacts upon land pricing.

    Even assuming the results of each of those are similar (which is going to be incorrect) should get you a first approximation.

    Natural unimproved input is probably small enough to be ignored overall – maybe 3-5%, well within margin of error for the above calculation.

    1. As I’m not interested in rent attributable to man-made buildings which is actually EARNED by owners, Chris, we don’t really need to go down the path you’ve suggested. We can go straight to total Australian land values to assess the UNEARNED land rent. (Incidentally, whilst the national accounts have never bothered to assess rent properly, to distinguish it from the incomes of labour and capital, the ABS does now produce a yearly total of Australia’s site values – ABS 5204 Table 61.)

      Thanks to Dr Terry Dwyer, we now have a time series analyis of Australia’s total land rent from 1911 to 1999 – the beginning of the current bubble. His figures showed land rent could replace ALL income and company tax. This gives the lie to neoclassical economics’ rubbish that land rent is now only about 1% of the economy. See http://www.prosper.org.au/wp-content/uploads/2007/11/dwyer-tax-resources.pdf

      I’ve updated land rent since 1999, using Dwyer’s technique. It’s approximately 30% of the economy. If you add an estimate for spectra, mineral, fishing and forestry licences, all natural resource rents total some 40% of the economy. There’s the COMMON WEALTH the 0.1% has stolen from all other Australians. That’s why innovation doesn’t lift us ALL out of the mire; that’s why the rich-poor gap widens; that’s why we’re having this particular economic depression.

  10. It’s not the responsibility of the federal government at all. Wanting it to be so doesn’t make it so. Collecting land and resource rents is, and was intended to remain, the sole domain of the state governments.

    In this I’m not trying to justify the position of the 0.1%. I understand what you are complaining about, but disagree with the methodology of achieving it.

    Georgist’s seem to have this belief that just because there is ‘theft’ in the current situation, where private interests do well at the expense of the common interest, that a situation in which the common interest does well at the expense of private interests is better in some way.

    It’s not better, it just has different problems.

    A solution has to resolve the need for the contribution of each to the other to be recognised.

    Georgism has many good aspects, and if taken to its logical conclusion provides resolution to a number of the problems that remain outstanding with Libertarians.

    However, for that resolution to occur, both groups have to give up their bit of ‘something for nothing’.

    And no one wants to do that.

    1. You missed my point. If timorous States want to keep putting their hands out to the federal government for handouts, and not using their own revenue sources, of course the feds will HAVE TO collect their rent for them.

      Was the federal land tax unconstitutional?

      I’ll believe a reconciliation between Georgists and Libertarians is possible when I see the latter acknowledge the quantum of PUBLICLY-GENERATED land rent in the economy. Apparently renters are not entitled to any of this. [!]

  11. Firstly, the Federal government has no right whatsoever to the mineral wealth of the states. If the capture mechanism is poor, it is a state and only a state matter.

    Secondly, Kevin Rudd and to a lesser extent Juila Gillard attempted to change the terms of contract with the miners half way through projects. That is poor form, and was recognised as such by the public.

    If a state had made the same changes, and made them for new projects, there would have been no fuss and no leg for the mining industry to stand on in the court of public opinion.

    Just because we find a better way doesn’t mean we get to renege on our standing agreements.

    For an example of how land rent can be gradually captured without abusing the privileges held in trust by government, have a look at Flowhold Title.

    1. I’m sorry, but you really don’t see that as muppet-speak, do you? That’s just more excuses for the 0.1%. You’re correct that mining licenses are the domain of the states, but if the states don’t capture what they should by way of land and resource rent, the feds have every right to step in, collect it and rebate it back to the states (as they did with the rotten GST). The states cry poormouth, tax and fine all and sundry, but won’t challenge the 0.1% for their rent-seeking. Not a little bit odd? No? Not just a wee bit?

      As for re-writing lease agreements: if you understood these leases, you’d know the states–or feds acting in their stead because of the states’ default on the issue–have EVERY right to review the rents up to a fair market value. The states were granted revenue powers and can’t keep putting their hands out to the feds, but they do! We are paying far too much arbitrary taxation, it’s theft!, whilst the 0.1% steals most of the 40% of the economy that is our rent.

      Still gobsmacked at your effort to justify the position of the 0.1%. I note many “libertarians” are big on this, and see no need at all for the 0.1% to pay back the COMMON wealth. Oh, that’s right! Most of them believe there’s no such thing because the word ‘common’ gets a little too close to the word ‘communism’ for comfort.

      The vast majority of libertarians are completely blinkered and unprincipled on this point, so I wouldn’t expect you to agree with me on this. Georgists are about REAL liberty, not your arty farty kind.

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