Steam train

The Train, a new 5 minute video by Fred Harrison

Harrison’s points include:-

  1. Passengers pay twice
  2. Trains pay for themselves
  3. Trains more than covers their costs
  4. Governments can pay for railways without taxing their citizens
  5. Investment in railways yields huge profits
  6. The problem is the way governments pay for the capital they invest in the tracks and rolling stock
  7. Payback is like winning the lottery
  8. The Jubilee line raised productivity in the London economy
  9. [Re the Jublilee Line] Every one pound invested provided a payback of 4 pounds
  10. That is what railways do, make the economy more efficient
  11. Who pocketed the fat profit? Not the shareholders, not the taxpayers, wages were not raised
  12. Profits cascaded into the profits of the land owners
  13. Taxes destroy jobs

…. and he’s right, you know.

EarthSharing has more about earth-based economics here.


Christchurch Cathedral
Christchurch Cathedral


Our hearts go out to the people of the beautiful city of Christchurch on New Zealand’s southern isle. What a catastrophic earthquake, as we learn of people needing limbs to be amputated so they may be rescued from the rubble of collapsed buildings in the city’s heart.

As this disaster follows hot on the heels of lives lost in the droughts, fires and floods of Australia, we Antipodeans wonder what we’ve done to have these natural disasters visited upon us. I am reminded of Gloucester’s cri de coeur from Shakespeare’s “King Lear”:-

As flies to wanton boys are we to th’ gods,
They kill us for their sport.
  [Act IV Scene 1]

When we look more broadly, however, we see that we’re not alone. Natural calamities occur fairly regularly around much of the world.


But not all calamities are natural; not all calamities grab the headlines, and our hearts.

Some, such as poverty, hunger, wage slavery and despair are more insidious. They are enormous, ongoing, and man-made, daily claiming more lives than those lost in nature’s most violent moments.

For these, Gloucester seems to have a more considered opinion:-

           ‘Tis the times’ plague, when madmen lead the blind. [Act IV Scene 1]

The American social philosopher, Henry George, tried to remedy this blindness, noting there was a simple “fiscal adjustment” for these most unnatural of disasters.

But Gloucester’s modern “blind” don’t want to see or understand this simple adjustment.  It won’t happen, they say. It can’t happen, they say. And they ironically liken this simple fiscal adjustment to encouraging turkeys to vote for Christmas.

But the reality is that if people of the world don’t vote for Christmas, whether rioting in the streets or not, they are surely carrying wealth, power and privilege on their backs, thereby making turkeys of themselves.


Financial havoc in the land of Oz

dreamingLast night I had the strangest dream – a nightmare. I was in a land called Oz, a land where the government taxed productivity. There were taxes on people’s earned incomes, on the goods and services they produced and purchased, and on their comings and goings in general. If businesses produced anything at all, they were fined for so doing. If they employed too many people they were slugged with something they called a payroll tax.

This was ‘post industrial’; this was an economy of high finance.

Oz had a Productivity Commission to ensure that as little real wealth as possible was produced. It did a fine job.

But they did give tax breaks to property speculation in Oz, calling it property ‘investment’, or an impetus to ‘the provision of housing’. You could ‘negatively gear’ your investment property and exaggerate your depreciation and repairs, so other taxpayers helped you buy your property. Nice?

Having fined the hard-earned salaries of the people of Oz with taxes on their efforts – as though they had just punched a policeman in the eye, or committed some other crime – the prices of their land shot up spectacularly because that’s what this strange tax regime had encouraged. Their ecclesiastical high priests preached that the phenomenon was “simply a matter of supply and demand: the tax system has nothing to do with high land prices.”

Look, I know this all sounds too stupid, but that’s often the way it is with dreams, isn’t it?

On top of their taxes and a Mediplank levy, the sad little wage earners of Oz were slugged a further 9% penalty called a superannuation levy, because it was thought they were too stupid to provide for themselves in retirement. Truly!

With all these taxes and the skyrocketing land prices of Oz, many people could no longer afford food, clothing and shelter without assistance – much less money for entertainment or recreation – so they increasingly turned to the banking sector or government for help or, at times, for their very survival.

Meanwhile, important people in charge of things called trusts and investment funds shunted around hither and yon the billions to which people had to wave goodbye as it disappeared into almost certainly depleting superannuation funds playing favourites with share and property markets, and inflating with gay abandon bubbles in both. When the bubbles burst, so much for retirement, folks, but gee it has been quite an entertainment with your money, a regular hoot for fund managers and their minions!

Oz’s once efficient shipbuilding industry and most other significant manufacturing had long been shut down as a side effect of all its taxes on production and real wealth creation. It had now become a fantasy land where finance ruled the roost, and any manufacturer wishing to remain in business was forced offshore to where taxes and land were cheaper; or, as the financial spin had it “to where labour is cheaper”. It seemed, however, a well paid workforce in counter-culture land, Germandom, where manufacturing wasn’t regarded as some sort of sin, had no such problem. Nor did it prioritise home ownership as the sine qua non for heavenly bliss. Two-thirds of Germaniums actually rented their homes on long leases and knew not real estate bubbles.

Meanwhile Oz banks continued, unimpeded, to lend on bubble-inflated land prices, their CEOs paid handsomely in multi-millions to completely disregard the prudent risk management practice of not advancing funds into a soon-to-burst residential real estate bubble.

Journalists had become fascinated with the lively, if sometimes incredible, stories in and around the banking sector, putting banks on their front pages and upon a pedestal, quite oblivious to the pedestal’s precarious tilt.

Natural monopolies, once under government ownership and tight management, were sold off to private companies in the name of business “efficiency” and “competition” to help fund extravagant government, the companies craving to suck at the teat of the public’s surplus land rent. Freeways became tollways as the poor were directed into intentionally constructed labyrinthine side streets.

At the first sign of the real estate market flagging, more Oz revenues were directed into home-vendors’ schemes, in order to re-inflate their property prices and keep this unreal finance-based economy happening. They had to be kept primed or it was ‘game over’.

With household debt at record levels and economic instability now abounding, it was thought best the government should guarantee Oz banks, rather than let them go to the wall like failed businesses once ought.

Wasn’t this service industry capturing the public’s rent, that is, the common wealth, per medium of bubble-inflated capital and interest repayments on mortgages, more important than wealth creation itself? Banks were most certainly ‘too big to fail’ in this Noddy land, so the peasants could readily be taxed to bail them out if needs be.

The plutocracy ruled with finance and taxes as their weapons. As the poor and middle class in the land of Oz were left with little wherewithal and pitloads of debt, the economy turned ‘cactus’. So, what was to be done?

Maybe a $900 handout, maybe a BER program here, a home insulation program there, not to keep people paddling, mind, but to keep the weirdly-lopsided financial system and the uber wealthy of Oz afloat in this concocted life raft.

There was a fallback plan in this land of which I dreamt. If things turned really grisly, why not simply roll the money-printing presses, just like its gargantuan neighbour, Brobdingnag, had done? That’ll fix things. It’s that easy!

Suddenly, a bloke by the name Hen Kenry broke into my dream, crashing through a brick wall with a ponderous mallet, announcing Oz to be a financial mess. He and his Alice-in-Wonderland tea party panel that followed him through the wall opined that Oz abolish its taxes and instead tap its vast reserve of land and natural resource rents.

Killjoy! That certainly wouldn’t go down well in the land of Oz.

I awoke in a state of utter confusion and déjà vu.  Had I not visited this fantastic place before …… somewhere? ….. sometime?



Oh, Egypt’s President Hosni Mubarak is probably the world’s richest man, with real estate interests in London, New York and Los Angeles? How surprising.  (Not!)

That’s why privilege, power and landed interests have fought for centuries to have governments wind back land-based revenues. They have the money and influence, so governments listen.  But, by listening, governments and the wealthy generate economic depressions such as this.

Here we are in the 21st century having less to spend after expenses for food, clothing and shelter than people had in the 15th century.  Incredible, but true.

As invention, innovation and science have made great strides, we’ve permitted economics to retrogress back into the dark ages because privilege wants it that way. It suits them to hide this corruption.

In the year 2011, don’t you feel a little silly about allowing the privileged (who by private legislation) channel publicly-created wealth unto themselves? Not just a little bit shamed? No?

Hey, wake up world!


You're earning less than people earned centuries ago.
You're earning less than people earned centuries ago.


William Wilberforce
William Wilberforce


At any given moment there is an orthodoxy, a body of ideas which is assumed all right-thinking people will accept without question. It is not exactly forbidden to state this, that or the other, but it is “not done”. Anyone who challenges the prevailing orthodoxy finds himself silenced with surprising effectiveness. A genuinely unfashionable opinion is almost never given a fair hearing, neither in the popular press nor in highbrow periodicals.   – George Orwell, The Road to Wigan Pier

Over the years a relative handful of people endeavoured with mixed success to move the goal posts in connection with:-

Chinese foot binding



‘Honour’ killing

Female genital mutilation

The plutocracy’s privatisation of the public’s rent

… amongst a number of other worthy reforms.

As Orwell says, it’s just “not done”. To achieve change is difficult, even when it’s essential. The current hegemony employs very tough minders.

It can never happen; so why bother?

All of which makes the challenge the more worthwhile.



It’s a pity the vast majority of Australians don’t understand the term ‘rent seeking’, because they ought to know why the value of average real wages has been declining since 1972. The capitalist system has become terminally ill, because people and companies have given up producing wealth in favour of rent-seeking.

No, real wages simply decline as a result of inflation, some will say. Yes, but what generates that inflation? The printing of excessive paper currency? Yes, but why do governments find this to be necessary?

The decline in real wages and inflation can be traced back to the failure of governments to capture economic rent for their revenue. But what is this ‘rent’?  

Rent arises when people come together in a community. It shouldn’t be confounded and confused with the rent paid under a lease by a tenant.

Rent is the return, not to labor nor capital, but to natural resources. It includes: land rents; oil and mineral rents; electronic spectra rents; fishing and forestry rents; air traffic rights, etc. Rent is not privately produced but simply arises where a community of people utlise natural resources.

In English law there is a long tradition of rents being part of the common wealth. It is only in recent history that we’ve savagely reduced the collection for revenue of natural resource rents and started to raise personal income, company taxes and sales taxes.

As a direct result, this has allowed companies and individuals to set their sights on trying to privatise and monopolise these publicly generated rents. As governments have failed in their duty to capture the rents of nature for revenue, economic rent has become an easy target for private interests and so-called entrepreneurs.

I’ve shown in the (middle) “GDP graph” on this page that land rent alone could replace all of Australia’s taxation on labor and capital, which is one third of GDP. When you add the other natural resource rents listed above, total economic rent is somewhere in the order of fifty per cent of the economy and we  collect only about 5 per cent of this.

If we captured all of Australia’s economic rent for the necessary running of government and abolished the taxation that raises prices, lowers wages and generates periodic recessions, this would mean that there would be a substantial universal basic income payable to all Australians. There would be no need for pensions of any description.

In the spreadsheet in “Unlocking the Riches of Oz”, I showed how our GDP must rapidly double if we capture rent and abolish taxes on production, thrift and industry.

But we don’t capture rent, so we have those few, including banks, who do capture most of it – most certainly not the average home owner – growing incredibly wealthy at the expense of the other 99.5 per cent of Australians. You can’t become a billionaire without private capture of the public’s rent. This refers not only to holders of the most valuable lands across Australia, and those who take mortgages over them, but to the principals of big mining companies who finance ad campaigns to ensure they continue to retain the common wealth in their profits.   

Once Australians understand rent seeking, they will also come to see the manner in which they are being played for fools by the already super wealthy.

And they’ll come to understand why we’re having this depression.


Michael Lewis
Michael Lewis


I discovered a link on Dan Cox’s insightful Bubblepedia site to Michael Lewis’ nicely researched nine page Vanity Fair business feature “When Irish Eyes Are Crying”. 

The article doesn’t get to grips with causes, but is well worth the read. 

To me, Ireland has come to epitomise the procession of bursting national real estate bubbles. This is not so much because of my own fourth generational Irish background as the relative simplicity of Ireland’s case. It was Europe’s shooting star and then it disappeared.

America’s story can be similarly reduced, but the US has become lost in its Babel of cacophonic opinion.

Lewis’ piece says:  “Two things strike every Irish person when he comes to America, Irish friends tell me: the vastness of the country, and the seemingly endless desire of its people to talk about their personal problems.

Vast and gushing. Ireland is simpler. It’s not debatable that she attracted business by cutting business taxes, and that she attracted real estate speculation by insufficient property taxation. Now she’s bailing out her banks instead of her people. It’s so sad, but it’s terribly representative.  There are none so blind as those who will not see.

Maybe Ireland takes her advice from the cacophony?



It was US Supreme Court Chief Justice John Marshall (1755-1835) who famously said “The power to tax is the power to destroy.”

Unfortunately, there have been only a handful of lawyers openly prepared to challenge arbitrary taxation imposts as a government revenue base. The alternative to taxation, namely, capture of the rents of nature for revenue, strikes at the very heart of privilege and vested interest from whence top lawyers earn their living. They don’t want to cut their own throats, so it’s difficult to gainsay the leanings of the most powerful people in the profession, even when they’re wrong.

So, except for this few, The Law remains an ass.

Chief Justice John Marshall was influenced by William Blackstone’s “Commentaries on the Laws of England” amongst which are to be found the following words:  “The earth, therefore, and all things therein, are the general property of all mankind, from the immediate gift of the creator. … there is no foundation in natural law why a set of words on a parchment should convey the dominion of land.”

There have been other great lawyers to speak out against taxation, of course, the likes of Justice Louis Brandeis in the US and Sir Samuel Griffith and Justice Rae Else-Mitchell in Australia.

But inertia has carried the day and we’ve seen Australian Taxation Office stationery even bearing the Goebbels-like slogan “Building a better Australia.”  Incredible.


Whereas farmers were permitted to pay their land rent in kind, usually rice, under Raffles in colonial Indonesia, colonial powers in Africa used two tactics to keep the native population subservient: “One is to limit sharply the land available to the natives, and the other is to make taxes payable only in money.” (Geography of Hunger, Josue De Castro)

In Population Growth and Land Use, Colin Clark tells us that the second half of Tokugawa Japan (1750 to the revolution of 1868) wasn’t in a state of primitive barbarism despite exchange with foreigners being banned. Japan was largely urbanized and “bore some remarkable resemblances to Baroque Europe. …Taxation was excessive, and there were frequent famines. … both abortion and infanticide were widespread. … The drastic abolition of the old social order must have been welcomed as a great relief.”

Yes, that’s right. Infanticide. They were so financially desperate, they killed their children. That’s taxation under despots.

Today, taxation has become a little more subtle. It removes hundreds of billions of created wealth from those who created it and channels it to the uber wealthy, without requiring us to kill our kids to stay afloat. (That’s done by advancing excessive credit.)

Taxation creates recessions and depressions, but unlike infanticide, economists manage to keep this fact invisible to the public at large and off the front page. That’s the main function of economists: to ignore and hide economic rent, so the wealthy may continue to steal it.

Taxation allows Australian billionaires to protest in the streets claiming “We are paying our taxes, so why do you need your mineral rents?”

It destroys.



Thanks to my friend Ed Dodson providing me with a copy this morning, I’ve just been able to peruse the official United States of America government edition of this report for answers to the financial crisis. I didn’t find any.








We conclude this financial crisis was avoidable.

We conclude widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial markets.

We conclude dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis.

We conclude a combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis.

We conclude there was a systemic breakdown in accountability and ethics.

We conclude collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis.

We conclude over-the-counter derivatives contributed significantly to this crisis.

We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction.


Four of the ten commissioners held dissenting views, the most revealing sentence amongst which was “Causes of housing bubbles are still poorly understood”.


The commissioners and their staff will learn precisely how the tax system creates real estate bubbles when they investigate this blogsite. I forecast and explained this financial collapse. They’ve done neither.