Out of the multiplying and menacing labour difficulties of our time there is but one way to escape, and that is by the restoration to all men of their natural and inalienable rights to the use upon equal terms of the element on which and from which all men must live —the land.

If there were a brisk demand for labour, there would be no surplus of labourers anxious for work upon any terms upon which
employers could draw. That there is not such a demand for labour is due simply to the fact that labourers are prevented by the monopoly of natural opportunities from employing themselves. Here is the point on which the efforts of labour should be concentrated.

The restoration of these opportunities can easily be obtained by the ballot. In the ballot, working men have in their hands the power
of so adjusting taxes as to make tin; dogs in the manger let go their hold. When this is done there will be no necessity for strikes, and competition, instead of crushing the labourer, will secure to him the full reward of his toil.

  • Henry George (just before his death, 1897)


We’re at a watershed. Real estate is tanking again and our politicians are going to bail out the banks, instead of bailing out mortgagors.

A banking Ponzi continues to be worked on the Australian people, and the Royal Commission into misconduct in the banking, superannuation and financial services industry was specifically precluded from investigating the macroeconomics of bank lending.

Curious? Not really. The Royal Commission might discover the need to reintegrate the theory of valuation back into economics and bank lending, and that would expose bank Ponzi-lending.

You see, the theory of valuation holds that the price of a piece real estate is found by the capitalisation of its net rental value. Although we short-circuit this approach by the direct comparison of sales, it still holds for the price of a piece of land. Its price can be found by capitalising its net rent – i.e. net of public charges thereon.

So, as land has no cost of production, its price is not determined by supply and demand, but by two things only:  how little the government taxes it, and to what extent banks are prepared to advance credit against it.

Our incomes and purchases are taxed because we fail to capture enough land rent to the public purse. Whereas the public capture of land rent carries no deadweight into the economy, taxes have a deadweight of at least twice the amount levied. (Income tax alone has a deadweight of 2.)

So, not only are our incomes reduced by taxes, but prices also increase, especially the price of land which has increased at a much greater rate than GDP. So if taxes represent a burden of twice the amount levied, we can add land prices to that, because an inadequate amount of land rent has been taxed away! Centuries ago, John Locke concluded this was crazy situation.

Adam Smith, David Ricardo, John Stuart Mill, Tom Paine and Henry George, too, said land rent needed to be taxed away in order to curb monopoly, and, as banking advances excessive credit against land prices, it has become the greatest of all monopolies. Banking generates bubbles in land prices which burst into recessions every 18 years – then the banks get bailed out! This is a Ponzi Scheme, pure and simple – and it’s about to happen again!

And, as Australia avoided a recession in 2008, this is going to be a real baddie!

But nothing must be said publicly about this banking Ponzi. It’s the one Ponzi we must respect.