Ross Gittens in THE AGE today.
By exposing how the big rent-seekers have ripped Australians off, Gittens is rapidly moving himself upscale, away from the neoclassical dross, towards economists of the ilk of Mason Gaffney, Michael Hudson and Joseph Stiglitz.
Cartoon from THE AGE letters today.
So, which party is promoting The Henry Tax Review recommendations about an all-in land tax and getting a proper return for Australians–not just Gina–on our mining licences?
The Reserve Bank of Australia is worried about (a) exacerbating the property bubble by lowering interest rates any further, and (b) the Aussie dollar being too high. So it seems there’s no room to move – except maybe the RBA selling down the AUD, aided by Joe Hockey’s $8 billion injection? This would help Australian exporters.
Meanwhile, some commentators are astounded at the big four banks’ record profits given such ‘low’ interest rates and the sorry state of business in general. To which I’d pose two just questions:
Just a couple of things to ponder.
Misallocation of capital
Obscene wealth
Sport
Increasing poverty
Atrocities
Reality TV
Scams
Celebrity chefs
Crime
Apathy
Entropy
Is there nothing we can do about it?
There is. Self actualization is incomplete without a genuine interest in where society is headed.
Note: Press X to REMOVE the “download now” and “play now buttons’!
Amongst other things, today’s “Inside Business” mentioned Australia’s banking conundrum – that few businesses apart from the banks are doing well.
The four discussants, including host Alan Kohler, all acknowledged the existence of a stock market bubble, but only one, Gerald Minack, was prepared to say Australia has a real estate bubble.
Minack has for some time now said that Australians will eventually have to pay for our grossly overheated residential property market.
I’ve enjoyed the taste of realism, the increasing unease, that has crept into the once too self-assured tone of Inside Business; the uneasy shifting in seats about what’s going on in the world of business and finance that accompanies barely discernible nods and self-aware grins that all’s far from OK these days.
I’ll watch the show with interest–as a sort of belated barometer–if things worsen before the ABC axes it next year.
____________
And Paul Krugman’s getting closer, too. This blog in the NYT last week.
Economic depression: Falling output, rising unemployment and unsold stocks as a result of debt-induced ineffective demand, distinguished from recession by being prolonged and sustained.
Michael West is one of the few journalists with a realistic grasp on where the Australian economy currently stands and where it’s headed.
His installment in THE AGE today demonstrates the complicity of banks in bringing about social and financial collapse, and their expectation of being rewarded by taxpayer bailouts when the inevitable collapse does occur.
Is not the current practice of banks lending against bubble-inflated land prices to make their billions in profits the very definition of obscenity?
________________
What’s that Ian, Mike, Gail and Cameron? “No evidence of a bubble in land prices?” What’s this then?
Once you’ve seen the cat, the world of economics is no longer obscure.
You can see escalating land prices and mortgages are the result of rent-seeking in the community’s natural income; super profits for the few are coming at a severe cost to the many.
You can see a widening disparity of incomes between the 1% and the rest of society.
Where once small but committed communities were able to construct railways, highways, bridges and dams out of capturing some of the uplift in land values they provided, successive governments have now wound back this form of revenue, either in misguided or corrupt deference to rent seekers. Banks have become the main beneficiary.
We are now unable to maintain our existing infrastructure, let alone find funding for new capital works. Meanwhile, households are stricken with debt as billionaires continue to steal the public’s land and mineral rents.
In the search for money, governments make freeways private tollways. Privatisation, even of natural monopolies, is seen as the answer even though it has proven not to be. In our education systems publicly-generated land and natural resource rents have become ‘invisible’, so that private interests are able to keep taking them, unchallenged.
As government tax policy has come to reward rent-seeking parasites, and fine those who use their talents to work and create, rising land prices and greater taxes on labour and capital have become so pathological that western society has slowly ground to a halt.
Is it stupidity or complicity that has people, their governments, policy-makers and financial analysts running around in circles for answers?
Why is it that only Georgists are able to see that land price and taxation are the direct measure of society’s sickness, or that the capture of land rent as an alternative to taxation can provide the antidote for all this madness?
Have YOU seen the cat?
If not, as the American Henry George suggested, maybe you’re little different from this poor, witless bull?
“The dirty war for Europe’s integrity and soul” by Professor Yanis Varoufakis on Radio National’s BIG IDEAS is an eye-opener.
It’s worth the listen for anyone opposed to the neo-classical economics’ obscenity of selling Europeans out to save a handful of miscreant banks.
This article by Aditya Chakraboty appeared in the UK’s The Guardian yesterday:-
Rebellions aren’t meant to kick off in lecture theatres – but I saw one last Thursday night. It was small and well-read and it minded its Ps & Qs, and I think I shall remember it for some time.
We’d gathered at Downing College, Cambridge, to discuss the economic crisis, although the quotidian misery of that topic seemed a world away from the honeyed quads and endowment plush of this place.
Equally incongruous were the speakers. The Cambridge economist Victoria Bateman looked as if saturated fat wouldn’t melt in her mouth, yet demolished her colleagues. They’d been stupidly cocky before the crash – remember the 2003 boast from Nobel prizewinner Robert Lucas that the “central problem of depression-prevention has been solved”? – and had learned no lessons since. Yet they remained the seers of choice for prime ministers and presidents. She ended: “If you want to hang anyone for the crisis, hang me – and my fellow economists.”
What followed was angry agreement. On the night before the latest growth figures, no one in this 100-strong hall used the word “recovery” unless it was to be sarcastic. Instead, audience members – middle-aged, smartly dressed and doubtless sizably mortgaged – took it in turn to attack bankers, politicians and, yes, economists. They’d created the mess everyone else was paying for, yet they’d suffered no retribution.
In one of the world’s elite institutions, the elites were taking a pasting – from accountants, entrepreneurs and academics. They knew what they were on about, too. Given his turn on the mic, one biologist said: “I’ll believe economists have reformed when the men behind Black and Scholes [the theory that helps traders value financial derivatives] have been stripped of their Nobel prizes.”
One of the central facts of post-crash Britain is that the elites still hold power, but no longer command the credibility to wield it. You see that when Russell Brand talks on Newsnight about the corrupt lilliputian world of Westminster, and the various YouTube clips total more than 3m views. And I certainly saw it in Cambridge.
Like all the other plebs in Britain – whether on minimum wage, or a five-figure salary – the people in that lecture theatre had been told for decades to trust the politicians, policymakers and employers to provide the jobs, the houses and pensions, and the prospects for their kids. In the wake of the biggest economic rupture since the 1930s, they’re evidently no longer so willing to extend that trust.
But at the same time, the elites – whether in Whitehall or the City – remain in charge. Looking at mainstream economists gives us as good an idea as any as to how reform has been warded off.
As Bateman points out, by rights these PhD-armed boosters of The Great Moderation should have been widely discredited after the crash. After all, the most significant thing to emerge from academic economics in the past five years has not been any piece of research, but the superb documentary Inside Job, in which film-maker Charles Ferguson showed how some of the best minds at American universities had been paid by Big Finance to produce research helping Big Finance.
Yet look around at most of the major economics degree courses and neoclassical economics – that theory that treats humans as walking calculators, all-knowing and always out for themselves, and markets as inevitably returning to stability – remains in charge. Why? In a word: denial. The high priests of economics refuse to recognise the world has changed.
In his new book, Never Let a Serious Crisis Go to Waste, the US economist Philip Mirowski recounts how a colleague at his university was asked by students in spring 2009 to talk about the crisis. The world was apparently collapsing around them, and what better forum to discuss this in than a macroeconomics class. The response? “The students were curtly informed that it wasn’t on the syllabus, and there was nothing about it in the assigned textbook, and the instructor therefore did not wish to diverge from the set lesson plan. And he didn’t.”
Something similar is going on at Manchester University, where as my colleague Phillip Inman reported last week, economics undergraduates are petitioning their tutors for a syllabus that acknowledges there are other ways to view the world than as a series of algebraic problem sets. I was puzzled by this: did that mean Smith, Marx and Malthus weren’t taught? Yes, I was told, by final-year undergraduate Cahal Moran: in development studies. What about Joseph Schumpeter and his theory of creative destruction? Oh, he gets a mention – but literally only a mention.
This isn’t all the tutors’ fault: when you have to lecture to 400 students at once, it’s hard to find time and space to go off-piste. But the result is that economics students come out of exam halls and go off to government departments or the City with exactly the same toolkit that just five years ago produced a massive crash.
Economics ought to be a magpie discipline, taking in philosophy, history and politics. But heterodox approaches have long since been banished from most faculties, claims Tony Lawson. In the 1970s, when he started teaching at Cambridge, the economics faculty still boasted legends such as Nicky Kaldor and Joan Robinson. “There were big debates, and students would study politics, the history of economic thought.” And now? “Nothing. No debates, no politics or history of economic thought and the courses are nearly all maths.”
How do elites remain in charge? If the tale of the economists is any guide, by clearing out the opposition and then blocking their ears to reality. The result is the one we’re all paying for.
______________________
To which the following spot-on response was delivered by Quantas Flyer (Qantas Flyer, maybe?)
QuantasFlyer
No! It is not time Marx was back on the syllabus. He has had his chance, and made as much of a cock up as capitalism is doing right now. Look around you. The mass of rules and regulation of laws and of people to police it all – that is your Marx. Control, control, and more control. And, while it works for J.P.Morgan, it does not work for the people!
Staring you in the face is the land question. Academics to labourers have advocated the policy of collecting the Ground Rent for over a hundred and thirty years. And the economists’ bosses, the companies and the landowners, don’t want to know, which is why we have political entities (enemies) such as Cameron and Abbott holding the political gun to the nations head.
Reform is desperately needed. A change in thinking is desperately needed.
All wealth is produced by working men. Get used to it. That is not Marxist or Socialist: it is a statement of fact. The place we produce from is called land. And if it is all owned by companies and landowners and governments where does the ordinary man stand? If he pays the ground rent he may get a place to put his bed.
Have you never read “The Great Iniquity” by Leo Tolstoy? The London Times printed it in full, because they thought it was most important. Have you never read “Progress and Poverty” Henry George? Is it too simple to see that there are alternate ideas?
Get out of the working mans pockets, stop taxing his efforts. Freedom is the aim. It starts with the ownership of LAND – you know, the stuff you walk on everyday. It’s worth a fortune, the rent is very high. More so since they stopped making it.
