IN SIMPLE TERMS

Steps taken to remedy the global financial crisis both in Europe and the US are clearly proving hopelessly inadequate, and media commentary and analysis is no better. They’re not radical enough, not getting to the root of the matter. (Latin radix, root)

Question: What have the US, most of Europe and, yes, Australia and China got in common?

Answer: They all tax labour, capital, production, thrift and enterprise and undertax land price speculation.

Question: How do economies respond to these tax signals?

Answer:  Quite naturally. Property monopoly, speculation and development are favoured because that’s to where tax regimes direct people and companies. Apart from property construction in the developed west, other forms of production tend to drift offshore, to where land, labour and capital is cheaper. Growth becomes pathologically exponential in the service sector, especially in finance, insurance and real estate. (The ‘FIRE’ sector.)

Question: Did the bubble in land price burst in the US and Europe?

Answer: Yes.

Question: Will the bubbles burst in China and Australia?

Answer: Yes, they must, because of inadequate land value capture and too many taxes on productivity.

Question: Are the US and EU shifting taxes from labour, capital and productivity, onto land and natural resources in order to arrest these pathologies and turn economies around?

Answer: No.  Where this is happening  it’s inadequate.

Question:  Meanwhile, where are our land rents going?

Answer:  To the 0.01% as usual – creating a vast wealth divide and economic depression.

Click on above model for greater detail.