Put them on the ground!
Put them on the ground!


Ben Franklin was wrong, and he knew it, when he said: “In this world nothing can be said to be certain, except death and taxes”, because he was aware that economic rent is a surplus arising out of the production process. He might more correctly have observed that nothing in life is certain except death and rent.

Franklin knew well that rent could be captured for public purposes without penalty to labour and capital, that is, without the introduction of taxation, but he didn’t want to offend his land-owning colleagues.

Like Franklin, Adam Smith also went to France to understudy the Physiocrats. That he was also impressed with the truism land rent must be the revenue base is evident in his writings, but Smith couldn’t quite bring himself to argue for l’impote unique, and that taxes be abolished.  Did this have anything to do with the Duke of Buccleuch being Smith’s mentor?

We’re told we ought not be dogmatic, that it’s a blessing to be adaptable and flexible, but that certainly does not apply to the revenue base which has to be land and natural resource rent – because corruptions begin to emerge if they’re not the base.

And, once we fall for the corruption represented by stealing from the earnings of labour and capital, the following social ills spill into society:-

  • The return to capital and wages proves inadequate and must be supplemented by taking on more and more debt.
  • Governments, besotted by and beholden to taxation, legislate and spend in areas they’d not have to if people were allowed to retain their own earnings. They’re forced to pay pensions of different descriptions, then try to get provision for these of these off their balance sheets by privatising retirement through compulsory contributions to private superannuation funds (further reducing peoples’ net wages).
  • Like taxation, private superannuation is revered as a public good.  Black becomes white.  Only a few see through this nonsense.
  • Government and superannuation both balloon impossibly, driving up household debt even further.  As rent is being privatised instead of captured for public purposes, it gets capitalised into an impossible land price bubble.
  • Businesses are forced offshore to where “labour is much cheaper”, but it is rarely said “to where taxes and land prices are much cheaper”.
  • The land price bubble implodes.
  • So does the financial system – because debt has been ‘secured’ against bubble-affected real estate prices.
  • As a form of survival, commerce sets up arrangements to defer payment for client purchases.  Business schemes become more and more elaborate, more and more questionable.  White collar crime becomes rampant.
  • Not only does it go unremarked that governments have drained effective demand out of the citizenry as rentiers are rewarded obscenely (bank CEOs being the most visible of this category), but a remedy is suggested: wages must be wound back. This acts to deepen the lack of demand in the economy, and to compound the corruption that has taken place.

All this happens when people are kept ignorant about the alternative to taxation.  

And, no, David McWilliams’ new account of the Irish being forced to nationalise their banks to keep them as ‘going concerns’ isn’t some sort of an Irish joke. (Hey! Isn’t the definition of a going concern an enterprise that is able meet its debts?)  It serves to demonstrate the depths into which the world’s taxation-induced corruptions have descended.

But as few understand the cause, few understand the urgent need to abolish taxation.  What unwitting sheep we humans can be!


“There is no subjugation so perfect as that which leaves the appearance of freedom.”

– Jean-Jacques Rousseau



Ken Henry


We can ask no more of our public servants than they do their jobs competently and well.  Occasionally, one emerges from the ruck to  go well beyond these criteria.

Dr Henry was one such person, and Prosper Australia’s David Collyer today expressess gratitude for Ken Henry’s service to the Australian public. 




PokerSOME GAMBLE!  (I’d be shorting)

I remember in my callow youth in the mid 1960s being invited to a poker game at the home of a colleague who also worked for the Claims Agent in the Commercial Branch of the Victorian Railways.

I can’t remember whether there were four or five of us playing, but early into the morning I was well ahead when one of them declared he’d have to be leaving shortly.

“We’re not finishing yet, while Bryan is up like this”, insisted my host.

I got the message, and duly commenced to lose before excusing myself with another guest sometime later.

Obviously, the relationship with my colleague changed. Fortunately for both of us, he left the Claims Office shortly thereafter. I’ve never since gambled at cards.

Seems to me, the world’s also playing in a rigged game. Having converted all their hard earned cash into their US host’s chips, world economies find the host has no real money in the game: he’s got someone out the back simply producing new chips for him.

The end of this game also promises to be ugly.



BTW, you Ukranians (recently 4% of the hits here), stop your parliamentarians from brawling!  (Shouldn’t they be home, helping to prepare the borsht and cold cherry soups for Christmas?)


Pen mightierWhat are you going to do?

Although neo-liberal economists missed the boat in forecasting the financial collapse, they still control the levers of world economies. This seems crazy, as it will prolong the economic disaster. Printing money and bailing out banks can’t possibly resurrect economies, but that’s exactly what they’re doing.

But it’s not so crazy once you understand what’s been, and is being, done to you.

In the first instance, rent-seekers stole from your wages and salaries. Since the peak of the Kondratieff Wave in 1972 (whether in Australia, the US, or elsewhere), they got into the ear of governments, demanding they wind back property and resource-based revenues .

We can only surmise why governments listened.  They either naively believe it’s better to tax productive effort rather than land-speculating parasites, or else realise from whence real power stems, and have yielded to it, instead of representing their constituents.  And you don’t want to offend political powerbrokers! Just look at the tens of millions Australian miners were prepared to spend in advertising in order to defeat Prime Minister Kevin Rudd’s proposed 40% mining profits rent!

Oh sure, these top few rent-seekers also pay income taxes, but as land-based revenues were reduced, they made such enormous capital gains on their real estate and mineral assets that it dwarfs whatever they’ve paid in taxation.  Do you have this privilege also?  (I doubt it!)

But now that they’ve driven economies into the ground by taxing doers and rewarding themselves, what do they do?  They tell us it’s because we can’t compete with the cheap labour in China and India (not their lower land prices and taxes which, in reality, it is) and get their minions to pump-prime real estate markets with your (i.e. taxpayers’) money, because it would be ever so bad if real estate markets were allowed to correct to where they really ought to be!

And if banks were to collapse because of their abysmal risk management – as they shovelled more and more money into land price bubbles – that would be absolutely terrible for these leeches! The jig, as they say, would be up.

So we’re going through this period of economic crassness where privilege and those politicians in its pocket believe most people are idiots, stupid enough to go along with it.  (What ever happened to “the free market”? This is socialism for the super-rich, pure and simple.  You’re being done in the eye, folks!)

On the other hand, there are a number of heterodox economists (and one heterodox real estate valuer) who spoke out to say that real estate bubbles, such as this enormous one, must always lead to recession and depression.

Do you find yourself in the former or latter group? (Or neither; still under the influence of a ‘normalcy bias’ which makes you disbelieve what you’re seeing happening around you, perhaps?) 

And – if you are alert to what’s happening – do you simply give up, or do you intend to speak up about it?  

Some people are doing so:-   



UK House Price Crash

Land Values Research Group

Prosper Australia

Why not think about it – then act?  Too many people are still sitting around like stuffed dummies, copping it in the neck!


– BK


Julian Assange


Julian Assange and the media have done us a favour in reminding us of the secrets and hypocrisy behind international diplomacy.

But there’s no sign yet of the following on WikiLeaks.  Is it possible that the ‘powers that be’ keep these facts under a much deeper level of security?

  1. Classical economics was re-cast into neo-liberal economics for a particular reason, namely, to hide the manner in which those few who privatise the common wealth (land and natural resource rents) steal from the wages of the vast majority via taxation, thereby creating economic recessions.
  2. This parasitic process has accelerated since 1972 as the public capture of rent for revenue was wound back by a rent-seeking lobbyocracy.  It is a misbelief that people are better off now than they were 38 years ago because of the mountainous levels of household debt that have accompanied the resultant escalation of taxation and land prices (as land and resource rents increasingly became privatised).
  3. The current economic depression will continue to implode, because of crass public policies, such as creating more debt to solve the problem of excessive debt, and making taxpayers responsible for the delinquency of financial institutions.  
  4. Until we recapture resource rents back into the public purse, the after-tax returns to labour and capital will continue their drift towards vanishing point.

There’s a sense in which WikiLeaks’ exposure of all the political gossip amounts to little more than a distraction from these blatantly unaddressed socio-economic issues that lay waste to world economies.


Don’t study the times, study the eternities. 



It was great to catch up with former colleagues (male and female) in Melbourne yesterday to celebrate 100 years of the Australian Valuation Office.

Hey! And what a pity it would be if some of the older characters don’t get to  commit  the droll accounts of some of their more memorable experiences in the AVO into print.

How many valuers must the AVO have trained both for statutory purposes and for private enterprise over all those years!

The Valuation Branch of the Federal Land Tax Office was of course created by the new Commonwealth Government after enactment of the Federal Land Tax Act 1910.

This led the way for the professional body, the Commonwealth Institute of Valuers, now the Australian Property Institute, to be established in 1926.

The federal land tax was unfortunately abolished by the Menzies government in 1952 under the misbegotten belief that the land tax had done its job in freeing up land for Australians, and that new taxes were now in order.

The current Secretary to the Treasury, Ken Henry, and his panel of review of the Australian tax system have recommended reinstating the federal land tax and capturing our resource rents in general. In terms of the current state of the Australian economy, it has never been more necessary, but these days this imperative becomes lost in the dross that passes for economic analysis. 

That’s more than a pity because, site values being currently assessed all around Australia and competent AVO staff at the ready, the superstructure is already in place.  There’s probably no other nation in such a good position to be able to exit the GFC .


Eureka_stockade_Riot JB Henderson


Today, we commemorate, hopefully celebrate, the only armed rebellion in Australia’s history.

In a show of civil disobedience over the cost of their mining licences, thousands of Ballarat gold miners revolted. “No taxation without representation!” was their cry.

Only about 120 remained in and around the scanty ‘stockade’ on the morning of Sunday 3 December 1854 when 276 police and British soldiers cunningly attacked. 

The battle lasted only fifteen minutes. 22 miners and 6 soldiers died as a result of the one-sided skirmish.

Those later tried in Melbourne for sedition were released amid public adulation. As a direct result of the rebellion, full male suffrage was achieved for the Victorian parliamentary lower house. 

Like almost every rebellion, the battle at the Eureka stockade was fought over the right of a privileged class to levy taxation upon the poor.

"We swear by the Southern Cross to stand truly by each other and fight to defend our rights and liberties."
"We swear by the Southern Cross to stand truly by each other and fight to defend our rights and liberties."

By and by there was a result, and I think it may be called the finest thing in Australasian history. It was a revolution — small in size; but great politically; it was a strike for liberty, a struggle for principle, a stand against injustice and oppression….It is another instance of a victory won by a lost battle. It adds an honorable page to history; the people know it and are proud of it. They keep green the memory of the men who fell at the Eureka stockade, and Peter Lalor has his monument.  – Mark Twain (who was to visit the Ballarat goldfields in 1895).

An oldie but a goodie


We're getting rolled! .



“Give me whereon to stand”, said Archimedes, “and I will move the earth.” The boast was a pretty safe one, for he knew quite well that the standing place was wanting, and always would be wanting.

But suppose he had moved the earth, what then? What benefit would it have been to anybody? The job would never have paid working expenses, let alone dividends, and so what was the use of talking about it?

From what astronomers tell us, I should reckon that the earth moved quite fast enough already, and if there happened to be a few cranks who were dissatisfied with its rate of progress, as far as I am concerned, they might push it along for themselves; I would not move a finger or subscribe a penny piece to assist in anything of the kind.

Why such a fellow as Archimedes should be looked upon as a genius I never could understand; I never heard that he made a pile, or did anything else worth talking about. As for that last contract he took in hand, it was the worst bungle I ever knew; he undertook to keep the Romans out of Syracuse; he tried first one dodge and then another, but they got in after all, and when it came to fair fighting he was out of it altogether, a common soldier in a very business-like sort of way settling all his pretensions.

It is evident that he was an over-rated man. He was in the habit of making a lot of fuss about his screws and levers, but his knowledge of mechanics was in reality of a very limited character. I have never set up for a genius myself, but I know of a mechanical force more powerful than anything the vaunting engineer of Syracuse ever dreamed of. It is the force of land monopoly; it is a screw and lever all in one; it will screw the last penny out of a man’s pocket, and bend everything on earth to its own despotic will. Give me the private ownership of all the land, and will I move the earth?

 No; but I will do more. I will undertake to make slaves of all the human beings on the face of it. Not chattel slaves exactly, but slaves nevertheless. What an idiot I would be to make chattel slaves of them. I would have to find them salts and senna when they were sick, and whip them to work when they were lazy.

No, it is not good enough. Under the system I propose the fools would imagine they were all free. I would get a maximum of results, and have no responsibility whatever. They would cultivate the soil; they would dive into the bowels of the earth for its hidden treasures; they would build cities and construct railways and telegraphs; their ships would navigate the ocean; they would work and work, and invent and contrive; their warehouses would be full, their markets glutted, and:

The beauty of the whole concern would be
That everything they made would belong to me.

It would be this way, you see: As I owned all the land, they would of course, have to pay me rent. They could not reasonably expect me to allow them the use of the land for nothing. I am not a hard man, and in fixing the rent I would be very liberal with them. I would allow them, in fact, to fix it themselves. What could be fairer?

Here is a piece of land, let us say, it might be a farm, it might be a building site, or it might be something else – if there was only one man who wanted it, of course he would not offer me much, but if the land be really worth anything such a circumstance is not likely to happen. On the contrary, there would be a number who would want it, and they would go on bidding and bidding one against the other, in order to get it. I should accept the highest offer – what could be fairer?

Every increase of population, extension of trade, every advance in the arts and sciences would, as we all know, increase the value of land, and the competition that would naturally arise would continue to force rents upward, so much so, that in many cases the tenants would have little or nothing left for themselves.

In this case a number of those who were hard pushed would seek to borrow, and as for those who were not so hard pushed, they would, as a matter of course, get the idea into their heads that if they only had more capital they could extend their operations, and thereby make their business more profitable. Here I am again. The very man they stand in need of; a regular benefactor of my species, and always ready to oblige them. With such an enormous rent-roll I could furnish them with funds up to the full extent of the available security; they would not expect me to do more, and in the matter of interest I would be equally generous.

I would allow them to fix the rate of it themselves in precisely the same manner as they had fixed the rent. I should then have them by the wool, and if they failed in their payments it would be the easiest thing in the world to sell them out. They might bewail their lot, but business is business. They should have worked harder and been more provident. Whatever inconvenience they might suffer, it would be their concern, and not mine.

What a glorious time I would have of it! Rent and interest, interest and rent, and no limit to either, excepting the ability of the workers to pay. Rents would go up and up, and they would continue to pledge and mortgage, and as they went bung, bung, one after another, it would be the finest sport ever seen. thus, from the simple leverage of land monopoly, not only the great globe itself, but everything on the face of it would eventually belong to me. I would be king and lord of all, and the rest of mankind would be my most willing slaves.

It hardly needs to be said that it would not be consistent with my dignity to associate with the common rank and file of humanity; it would not be politic to say so, but, as a matter of fact, I not only hate work but I hate those who do work, and I would not have their stinking carcasses near me at any price. High above the contemptible herd I would sit enthroned amid a circle of devoted worshippers. I would choose for myself companions after my own heart. I would deck them with ribbons and gewgaws to tickle their vanity; they would esteem it an honour to kiss my glove, and would pay homage to the very chair that I sat upon; brave men would die for me, parsons would pray for me, and bright-eyed beauty would pander to my pleasures. For the proper management of public affairs I would have a parliament, and for the preservation of law and order there would be soldiers and policemen, all sworn to serve me faithfully; their pay would not be much, but their high sense of duty would be a sufficient guarantee that they would fulfil the terms of the contract.

Outside the charmed circle of my society would be others eagerly pressing forward in the hope of sharing my favours; outside of these would be others again who would be forever seeking to wriggle themselves into the ranks of those in front of them, and so on, outward and downward, until we reach the deep ranks of the workers forever toiling and forever struggling merely to live, and with the hell of poverty forever threatening to engulf them.

The hell of poverty, that outer realm of darkness where there is weeping and wailing and gnashing of teeth – the social Gehenna, where the worm dieth not, and the fire is not quenched – here is a whip more effective by far than the keenest lash of the chattel slave owner, urging them on by day, haunting their dreams by night, draining without stint the life blood from their veins, and pursuing them with relentless constancy to their graves. In the buoyancy of youth many would start full of hope and with high expectations; but, as they journeyed along, disappointment would follow disappointment, hope would gradually give place to despair, the promised cup of joy would be turned to bitterness, and the holiest affection would become a poisoned arrow quivering in the heart!

What a beautiful arrangement – ambition urging in front, want and the fear of want bringing up the rear! In the conflicting interests that would be involved, in the throat-cutting competition that would prevail, in the bitterness that would be engendered between man and man, husband and wife, father and son, I should, of course, have no part. There would be lying and cheating, harsh treatment by masters, dishonesty of servants, strikes and lockouts, assaults and intimidation, family feuds and interminable broils; but they would not concern Me.

In the serene atmosphere of my earthly paradise I would be safe from all evil. I would feast on the daintiest of dishes, and sip wines of the choicest vintage; my gardens would have the most magnificent terraces and the finest walks. I would roam mid the umbrageous foliage of the trees, the blooming flowers, the warbling of birds, the jetting of fountains, and the splashing of pellucid waters. My palace would have its walls of alabaster and domes of crystal, there would be furniture of the most exquisite workmanship, carpets and hangings of the richest fabrics and finest textures, carvings and paintings that were miracles of art, vessels of gold and silver, gems of the purest ray glittering in their settings, the voluptuous strains of the sweetest music, the perfume of roses, the softest of couches, a horde of titled lackeys to come and go at my bidding, and a perfect galaxy of beauty to stimulate desire, and administer to my enjoyment.

Thus would I pass the happy hours away, while throughout the world it would be a hallmark of respectability to extol my virtues, and anthems would be everywhere sung in praise.

Archimedes never dreamt of anything like that. Yet, with the earth for my fulcrum and its private ownership for my lever, it is all possible. If it should be said that the people would eventually detect the fraud, and with swift vengeance hurl me and all my courtly parasites to perdition, I answer, “Nothing of the kind, the people are as good as gold, and would stand it like bricks – and I appeal to the facts of today to bear me witness.


“Archimedes” was first published in the Australian Standard in 1887 under the name “Twark Main.”  Questions have therefore been raised about its authenticity, but experts agree it’s authentic, not only because it is stylistically Twainian, but because it precurses other Twain writings. An imitator would have had to not only duplicate Twain’s style, but have anticipated some of his future statements.   – Dan Sullivan (














Gluing economies with economic rent 

–        by Bryan Kavanagh

[See also Online Opinion]

Some big questions are being asked of humanity at the end of the first decade of the twenty-first century. Many of us spent its first ten years privatising the land rent world renowned natural resource economist Mason Gaffney says the USA used to collect for government and public works in the first half of the twentieth century. Since that time, however, it has been substantially, if gradually, wound back. Australia has displayed many similarities to the Golden State which best characterised US public capture of land rent:-

California’s natural advantages (a mixed bag) did not promote much growth after the 1849 Gold Rush and the Civil War, when California growth lagged badly for 20 years or more.  Neither did the transcontinental rail connection, completed in 1867, promote much growth.  Eventually, though, INTERNAL growth-oriented forces prevailed.  California provided superior public services of many kinds: water supply, schools and free public universities, health and mental health services, transportation, parks and recreation, and others.  It held down utility rates by regulation, coupled with resisting the temptation to overtax utilities.

That all required tax revenues.  California had oil, but did not tax severing it, and still doesn’t.  Its wine industry went virtually untaxed.  There was and is hardly any tax on its magnificent redwood timber, either for cutting it or letting it stand.  There was no charge for using falling water for power, or withdrawing water to irrigate its deserts.  Most of those are good ideas, but they are not what California did.

Its main tax source was another kind of immobile resource: ordinary real estate.  Its tax valuers focused their attention on the most immobile part of that, the land, such that by 1918, land value comprised 72% of the property tax base – and on top of that there were special assessments on land.

People and capital flooded in, for they are mobile in response to opportunities.  California became the largest state, and a major or the largest producer of many things, from farm products up to the “tertiary” services of banking, finance and insurance….

…. In 1978, California took a giant step backwards by enacting its “Proposition 13,” capping property tax rates at about 1/3 of their previous level.  The national ranking of its services began a precipitous fall; so did its per capita income.  Struggling to maintain itself, the State has raised sales and income and business taxes to unprecedented levels.  These are taxes that “shoot anything that moves,” and spare immobile resources that don’t.  The result has been the rapid “Alabamization” of California, as we have fallen to join Alabama with the worst school system in the nation.  Inmigration has changed to outmigration, and of those who stay, California has by far the largest prison population of any state, so large that the union of prison guards is now our most powerful lobby, and building prisons is our fastest-growing construction industry.  None of these people, prisoners or prison-builders or guards, are producing goods and services for others, but are not counted as unemployed, and our unemployment rate is above the national average even without them.

(Professor Mason Gaffney, in keynote address to international conference on Fundamentals of International Legal Business Practice, Nassau, 16 July 1999)

Maybe California took its lead in dismantling its property-based revenues from Australia? In 1974, Prime Minister Gough Whitlam acceded to local government’s plaints to keep the lid on its naturally increasing property-based revenues by undertaking to fund half its costs out of federal taxes. In terms of making each level of government responsible for its own funding, this was a big mistake, but ceding the role of tax collector to the central government has also become state governments’ modus operandi.

Not only was the natural growth of municipal rates curbed by the Whitlam government, but the other states and the Commonwealth also quit the field of death duties after people flooded into Queensland when Premier Joh Bjelke-Petersen removed succession duties from its statute books in January 1977.  Like California, direct taxes on real estate had been minimised across Australia. 

Just as Professor Gaffney stepped down from his podium in the Bahamas in July 1999, having explained California’s economic decline, Australians recommenced acceding to the dictates of their own errant tax regime, as they had in the early and late 1980s. They sallied forth again in a big way into real estate, figuring if their earnings were to be slaughtered by the tax system, why shouldn’t they rent-seek where the tax breaks are?

It may have been logical, but it wasn’t in the best interests of the nation. Since 1999, during the respective treasurerships of Peter Costello and Wayne Swan, $2.76 trillion was spent on buying Australian properties. This inflated by far the biggest uninterrupted real estate bubble in our history.  In individualistic, partly taxpayer-funded pursuits into capital gains, 29 per cent of this figure (some $800 billion) has been left exposed to the bursting of our bubble.

There remain, of course, economists who, seeing no essential difference between productive and speculative investment, still deny Australia has experienced a real estate bubble at all. Repeating what was said in California immediately before the sub-prime residential crisis burst across the nation, they insist that extraordinary prices being achieved for Australian residential real estate simply reflect a condition of undersupply. Time will similarly prove them incorrect.

Being a surplus in the production process, land rent is properly owed back equally to all Australians, but as we allowed it to be expropriated by a privileged rentier class, the gap between the ultra-wealthy and everybody else has continued to widen obscenely. Daily, we now witness social fractures developing across the PIIGS (Portugal, Ireland, Italy, Greece and Spain) as a result of allowing the rich/poor divide to grow in this fashion worldwide. Such has been the nature of thirty years of neo-liberal economics, or ‘economic rationalism’.

Land and natural resource rents are the glue that has historically bound communities and nations together, it’s literally the ‘common wealth’, and if anything was lost across the globe over the last thirty years, it was certainly a sense of social cohesion, as we jostled each other doing deals to become multi-millionaires in real estate.

But all is not lost for Australia. We have two advantages going for us: time, and the recommendations made by Ken Henry’s panel of review for ‘Australia’s Future Tax System’.

We find ourselves later in the cycle than most other countries, so, in respect of the first advantage, we would be foolish if we didn’t learn from their mistakes as they’ve bailed out banks, printed too many dollars, and imposed impossible austerity measures upon their citizenry. There’s a far better response than these.

That relates to the second item in Australia’s favour: if we have the gumption and drive to put the Henry Review’s far-sighted recommendations for the capture of land and natural resource rents into practical application, and to abolish arbitrary imposts on labour and capital, we may even now be able to work our way out of arriving at Ireland’s perilous state, a plight for which we are otherwise destined when our real estate bubble bursts soon. 

The world got where it is by allowing the public’s rent to be privatised by a few. It can reverse the process by freeing up labour and capital and capturing land rent to the public purse.