ENJOYABLE ROUND TABLE DISCUSSION ON 3CR

Rentiers Roundtable by Renegade Economists on Mixcloud

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AUSSIE, AUSSIE, AUSSIE, OI, OI, OI!

We dun real good!

Posted in Capture natural resource rents - to end the financial morass. | 2 Comments

HOW THE FINANCIAL WORLD TURNS?

Letters in THE AGE today about the sad state of teaching and another defending Jeff Kennett selling off our heritage to pay for the financial destruction flowing from the late 1980s ‘property’ (read land price) bubble.

There’s a common thread: teachers would be much better paid and could be proud of their profession–and property bubbles could not possibly arise–if they knew and understood the need to capture the economic rent of our natural resources.

“Economic rent?”

Yes – there’s the problem.  They don’t know.  Too technical.  Too hard.  Teachers are ignorant of this most fundamental aspect of finance and economics about which the world revolves.  So are many others.

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ECONOMICS 101: WHY ECONOMIES FALL APART

economy-1-1024x856 - Copy

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THE AUSTRALIAN NATIONAL ANTHEM

Buy up Australia fair!

by Gavin R Putland (25 June 2014)

Australians all let us regroup,
though we are old and tired;
With hoarded soil and crumbs for toil,
In rent-seeking we’re mired:
Our land delivers windfall gains
To privatize not share;
In history’s page cries every sage:
“Buy up Australia fair!”
In docile strains then let us sing,
“Buy up Australia fair!”

When gallant Cook from Albion sail’d,
To trace wide oceans o’er,
True British courage bore him on,
Till he landed on our shore.
Then here he raised Old England’s flag
On ground that we’ve excised
From our Migration Zone, lest our
Frontiers be compromised.
Let those who come by air not sea
Buy up Australia fair!

Shou’d foreign foe e’er sight our coast,
Or dare a plane to land,
We’ll rouse like sons of shopkeepers
To sell our native strand;
Britannia then shall surely know,
Beyond wide ocean’s roll,
Her sons in fair Australia’s land
Still keep a British soul.
In docile strains then let us sing,
“Buy up Australia fair!”

While other nations of the globe
Behold us from afar,
We’ll rise to high renown and shine
Like our glorious southern star;
From England’s, Scotia’s, Erin’s stock,
Born here our space to rent,
We’ve all combined, one common mind
To squeeze out every cent!
In docile strains then let us sing,
“Buy up Australia fair!”

Beneath our radiant southern Cross,
We’ll toil with hearts and hands;
To build this common wealth of ours
For hoarders of the lands;
To those who’ve never crossed the seas
We’ve jobless plains to sell;
With gratitude let all collude
To price Australia well.
In docile strains then let us sing,
“Buy up Australia fair!”

(Apologies to Peter Dodds McCormick.)

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HOW DO GOVERNMENTS MANAGE TO AVOID THIS LOGIC?


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WHERE DOES THE PUBLIC FIGURE IN THIS RELATIONSHIP?

janet-yellen

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“TAX UTOPIANS”? NO – ECONOMY REPAIRERS!

Tony Reardon replied to  Ronald Johnson’s letter in the AFR on 8 January which suggested a single tax solution for industrial relations:-

Beware tax utopians

Ronald Johnson and the Association for Good Government (‘‘Reform taxes for jobs boost’’, Letters January 8) want our tax system to be replaced by a single tax based on ‘‘unimproved land values’’ as per the 19th century ideas of Henry George. The theory is that we ought to rent our land off the government to maximise the usage value. If you don’t want to pay the notional rent, well, just move off that bit of land to one more suited to your pocket.

I freely admit that the current system is ridiculous. However, we have learned to live with it and many of us look forward to the end-of-year tax refund. I say beware utopians bearing gifts – no income tax, no consumption tax sounds great. Thank goodness there is literally no chance.

Tony Reardon, Terrey Hills, NSW     ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

If you were to reflect further, Tony, you may come to see the practical merit of publicly capturing land rent instead of the current system you yourself label as “ridiculous”. As elsewhere, it can only end badly for policy makers to have allowed Australia’s land rent to be privately capitalised into the biggest household debt bubble in the world.

In more thoughtful days, we did institute a federal land tax in 1910 and founded Canberra on a land rent system, both in the lingering wake of the 1890s depression which had ensued as a result of the 1880s bubble in land prices. Meanwhile in the UK, the British aristocracy believed the Liberal Party’s ‘Peoples’ Budget’ of 1909–which had people dancing in the streets about the proposed land tax–was so confronting the 0.1% began to concoct reasons to go to war – and the killing of Archduke Ferdinand proved their godsend.

In the Progressive Era (1890-1920), great US city mayors the likes of Al Smith, Tom L Johnson, Brand Whitlock, Daniel Hoan, Edward Robeson Taylor, “Sunny Jim” Rolph and Hazen Pingree instituted capital works and land taxes to resurrect their failing economies.

Seeking to switch from taxes on productivity to land rents were timely worldwide responses to impossible debt such as Australia now faces. You may also note that land and spectrum, being unable to flee to overseas jurisdictions, represent the only unavoidable revenue base. Oh! Maybe that’s why you believe there’s “no chance” for such a system now, Tony?

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CONGRATS OZ! [IRONIC]

top_dog

 

 

We’ve made top spot! –> Philip Soos in The Guardian.

Or, at the ABC.

 

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THE BIG SHORT

the big short

Wow!  Yesterday I saw ‘The Big Short’.  It’s based on Michael Lewis’ eponymous book, and the screenplay was ably co-written by director, Adam McKay.

It’s a most entertaining encapsulation of the US 2007 – 2008 financial collapse—for which some of my scribbling on the Australian real estate market stands as a proxy—and I’ll want to see it again, to enjoy the workmanship and pick up more of the nitty-gritty.

Quirky drama, action, characterisation and comedy manage to skirt around preaching, to display McKay’s abhorrence at the crookedness coming out of Wall Street.

Yes, finance, insurance and real estate—the FIRE sector—did bundle up a housing bubble into contaminated “AAA securities”, but it would be great to see a director with similar ability tackle the incredible puzzle of why we continue to allow the FIRE sector to rent-seek in land prices! Because this is the fundament of impossible mortgages on which the dregs of Wall Street rely for obscene super profits which crash the US economy every 18 years!  Can’t this truth be told?

Unlike McKays’ brilliant tirade, mine amounts to a rant, but it’s cathartic.

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