“THERE IS NO BUBBLE” [AND BLACK IS WHITE!]

There are all sorts of opinions, I guess, but this is a quite dismissive one in The Conversation.

I chipped in, and Alex Fletcher commented as follows:-

“Yes, land price is the key issue. Price has escalated because land (the Earth’s crust) is a monopoly being in fixed supply (no more is being made) and each location is unique. Land price is simply the private capitalisation of a parcel of land’s rent, net of charges such as rates and land tax. Higher rates and land tax mean less privatised rent to be capitalised into land prices which means LOWER land prices. Basically you pay this anyway, either as a lump sum in your mortgage with bank interest or annually as a lower land tax. Classical economists like Adam Smith, David Ricardo and Henry George separated land, labour and capital but so called “neo-classical” economics, from the late 1800s conflated land into capital, so it is assumed to work with the same market forces as any man-made product. This is the hubris that has been continued by successive generations of economists and gives us monopoly capitalism with its inherent growing wealth disparity. When you buy land you have paid for a privately exchangeable licence that allows you to consume commonly created wealth without having to pay just compensation. A slice of the monopoly pie in other words. For the recipients, the landowners, this is the equivalent of a huge ongoing welfare payment, as even though it does not come via Centrelink, it comes from the community. In out topsy-turvy world our governments through taxation penalize work and through tax breaks and very little land value tax, facilitate the pursuit of capital gain (privatised economic rent) setting up the process where superfluous wealth concentrates to an ever smaller proportion of the population while the young take on huge mortgage debt and the natural trajectory is that over decades the majority of the population will be permanent renters. Unemployment and poverty is caused by this process as access to affordable land is a first requirement for enterprise. This is a link to a report on how to fund government from monopoly rents:- http://www.prosper.org.au/2013/12/03/harnessing-monopoly-to-finance-government/

To add your say go to http://theconversation.com/memo-to-the-imf-there-is-no-housing-bubble-27925