Click

How many people and organisations in Australia are involved in ‘raising funds’ for numerous good causes? It must be in the thousands.

How many of these would be unnecessary if Australia had a universal income?

All of the trials around the world have shown that a universal income does not have recipients sitting around doing nothing: Quite the contrary!

Nor is it inflationary, as delivery of a universal income is an immediate and direct deduction from currently stolen economic rents.

Yes, we’ll probably need to wait for another financial crisis to consider a universal income. So, let’s trust we do so with vigour when that opportunity arises!

When not one Australian politician is today prepared to say what our longest-serving Prime Minister, Robert Gordon Menzies, said (above) just before the Great Depression, we have a major problem.

Land prices are the private capitalisation of publicly generated land rent, and the national accounts (ABS Catalogue 5204 Table 61) shows that they have exploded to more than $10 trillion dollars, representing $375,000 for every man, woman and child in Australia.

We clearly need to be capturing more land rent publicly.

Where’s the politician who correctly sees land prices as the fundamental driver of inflation and entirely antithetical to productivity (eh, Productivity Commission)?

Are they silent on it because most of them are, like many Australians, commodifying land, ‘investing’, for their own retirement? The practice of Australians pumping land prices more than any other nation presents a grave threat to the country.

Poliricians self-justification: “Wouldn’t speaking out on the pumping of land values offend many people, and banking, real estate and media interests who leverage off property speculation? We can’t do that!“

So, onward we roll, into the next financial depression, as our gigantic bubble in land prices bursts.

____oooOooo____

David Brooks suggests people’s inner resentment has generated the outward hostility that we’re now experiencing, and that repair will follow the social rupture.

I doubt Brooks sees that he’s describing our descent into economic depression but agree that the outcome will be to our advantage; eventually.

Let’s trust that it will be akin to the 1898 to 1920 period, a new Progressive Era, where we come to see the need to capture rents instead of taxing our incomes and purchases, where we’ve taxed ourselves into impossible levels of private debt.

As we failed to see this at the 1930s depression, it may be that the wheel has turned in our favour and the times are once more with us.

Meanwhile, if inner resentment means outward hostility, things certainly aren’t looking good for incumbent governments.

Will the AI boom stop next year’s financial depression emanating from the real estate crash?

No, the AI boom is highly unlikely to stop a financial depression or recession caused by a real estate crash.

In fact, leading economic data suggests the AI boom itself is facing severe capital constraints and could potentially amplify a broader financial crisis rather than prevent it. [1, 2, 3, 4, 5]

The primary structural reasons why the AI surge cannot rescue a failing real estate sector, along with the hidden intersections between the two markets, are detailed below.

1. Divergent Financial Ecosystems

2. The Commercial Real Estate & AI “Fuse”

Instead of acting as an economic shield, the expansion of AI has actively worsened pockets of the Commercial Real Estate (CRE) market:

• The Death of Office Space: AI-driven remote productivity tools have permanently suppressed office demand, forcing multi-family and commercial delinquency rates over 7%. [1]
• Capital Competition: The complex asset-backed securities used to finance massive AI data centres are pulling capital away from traditional CRE lending channels, choking off refinancing options for struggling property developers. [1]

3. The “AI Bubble” Cannot Absorb Real Losses

• The ROI Bottleneck: Tech giant capital expenditures on AI are projected to hit hundreds of billions, but actual corporate cost savings and revenues are falling short of expectations. [1, 2, 3]
• The Debt Shift: Major tech giants are shifting from cash-rich operations to becoming net debtors to fund data centres. “Alarmingly, this seems to be how they are currently financing new investments – a recent Bank of America analysis warned that large tech companies are relying heavily on debt to build new data centres”. [1, 2]
• Wiping Out Household Wealth: Economists warn that if the AI market faces a dot-com style correction, it could wipe out up to $20 trillion in household wealth, compounding the destructive wealth effect of a parallel real estate crash. [1]

4. Structural Disconnection to Consumer Spending

• Jobless Productivity: Even if AI successfully drives corporate efficiency, it threatens to suppress white-collar employment and lower service-sector wages.
• The Consumption Hit: Because the top 20% of earners account for 65% of US consumer spending, any AI-driven white-collar displacement immediately weakens consumption, threatening the foundation of the US $13 trillion mortgage market. [1, 2]

And not to forget that ….

Dear Sir,

At this time in the history of Victoria, it is clearly a duty to speak plainly, as the leaders of commerce, of finance and of politics are thoroughly discredited.

The Premier has requested that I put in writing some statements relating to the public affairs of Victoria and, with directness, I venture to do so:

• # It is not in the nature of taxation levied upon the fruits of human industry to bring relief to an impoverished and over-burdened State such as Victoria – just as a greater weight placed upon a horse certainly will not ensure his better progress. Additional taxation means greater burdens upon the people.

• # Retrenchments and dismissals, in order to economise State revenue and repair deficits, however necessary and right, cannot make the country prosperous.

• # Legislation which will tend to cheapen land, and enable those of small means who need land to make the most of their capital without having to resort to money lenders, is the best for any country; the appropriation of ground rents would have this effect.

• # The feverish speculation in land has proved adverse to the best interests of the State. What explanation can be given of the fact that under your ministry all the most objectionable and disastrous effects of such a movement have been legalised and promoted?

____oOo_____

After he had interviewed the Hon. William Shiels, Premier of Victoria, reporter William Hopkins penned the above open letter in a now-defunct Victorian newspaper on 29 June 1892.

The 1893 to 1897 depression ensued the following year: commerce, finance and politics had ignored Hopkins’ thoughtful warning.