We don’t have to look further than Adam Smith, JS Mill and Henry George to know that the increasing extent of privatised land rent comes at great cost to wages and profits. This letter in the Australian Financial Review today makes the point. Is it ignorance or complicity with the 0.1% that silences the modern economist on this point?
Neutralise the unfair privileges of land tenure arrangements
Jennifer Hewitt (“Pay rises for all is the mantra of the moment”, January 18) correctly stresses the importance of productivity improvements as a necessary foundation for wage increases. But it seems that the harder the workers row and the more water they bail from our economic lifeboat, the bigger grows the hole in the hull. Despite labour productivity steadily increasing in recent years, wage growth has stagnated. Meanwhile, if we look at land prices, it appears that the economy is booming. ABS figures reveal that in the past decade total Australian land values have approximately doubled (to be now worth nearly $6 trillion) and last year alone they grew by around 13 per cent ($660 billion).
An increasingly large proportion of ballooning corporate profits is attributable merely to the capitalisation of rising land values. These gains accrue without effort by landowners (even while they sleep) at the expense both of the rightful wages of labour and fair returns on productive investment. One-dimensional proposals to cut company tax for big business would only exacerbate this disjunction between effort and reward. To boost overall economic efficiency and to free the market to facilitate fair rewards for producers, we must neutralise the unfair privileges that pervade our land tenure arrangements. This can be achieved by removing all taxes from labour and its products and instead relying upon community-generated land values for public revenue.
Ronald E. Johnson