QUESTION TO CARDINAL GEORGE PELL, ARCHBISHOP OF SYDNEY:

Cardinal Pell, when questioned in the Victorian Child Abuse Inquiry today, you said “The problem is the inactivity of Church leaders.”
Do you believe this may also be the reason the religions no longer promote the Judeo-Christian covenant?

A QUIZZICAL NOTE :

Cardinal Pell, you also said of priestly sexual predators of children: “Excommunication is very rare”. However, the Church made no bones about excommunicating the Rev Dr Edward McGlynn for pressing the concept of the covenant, against the wishes of inactive Church leaders. This was apparently  worse than being a sexual predator.

AND

Then there’s the hierarchs’ mistreatment of local reformist priest, Fr. Eric Hodgens ….

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

It was good to hear Ian McNamara lay the blame on neo-classical economics on Australia All Over this morning for Australia’s descent into economic depression. Many of his listeners mightn’t know that ‘Macca’ was in fact university trained in neo-classical economics.

The question arises: has Ian read Gaffney’s “The Corruption of Economics” to have come to this conclusion, or did he arrive at it independently?

One listener rang in to agree we have a false economics, mentioning that Noam Chomsky has it right that the system favours corporate monopolists, but Macca wasn’t convinced Chomsky had the complete answer.

A “businessman” rang in to advise Macca to stop talking the economy down. That’d be right: it’s all just talk; it’s not really happening; it’s a matter of confidence. No, my friend, there’s a structural problem we have to face.

And all those right wing nutters who appeal to Adam Smith, but ignore that central to his argument was that he and David Ricardo understood taxes add to prices but land rents do not, need to quote Smith honestly.

Many of Macca’s rural listeners know they’re getting screwed and not getting a fair price for their product, but they don’t understand the role of taxation and land prices in pricing them out of the market.

Let’s hope Australia All Over educates Australians further on alternatives to neo-classical economics and taxation.

_________________________________________________________________

By the way, if you think there may be something to the idea of untaxing labour and capital and would like to join Prosper Australia, you can do so here.

And members are welcome to join us at the  Grand Opening of our new headquarters in 22 Punch Lane, Melbourne, Friday 31 May 2013 at 6:30 pm.

If you’d like to know more about our ideas and have 58 minutes to spare, then why not take a peep at Harold Channer’s interview with Francis Peddle last Thursday?

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

My letter to THE AGE (below) wasn’t published today because of a near-identical letter from Leo Gamble of Mentone. Well said, Mr Gamble!

___________

Letters editor, THE AGE 23 May

Mark Kenny is quite wrong that “GST may be the answer to balancing the books” (23 May). Simply because the Henry tax review was proscribed from considering the GST doesn’t necessarily qualify it to be “the answer”.

The GST falls most heavily on those with little or no propensity to save, and it certainly has not wiped out the black economy, as it was bruited to do. So, adding back fresh food, education and health care can scarcely repair the GST’s “fundamental injustice” as seen by Kenny, the Grattan Institute and others who’ve apparently missed the fact that businesses can claim their GST back. Make no mistake, the GST is a person-based tax and, more particularly, a poor-person-based tax.

It’s interesting, too, that the GST is a favourite of the Property Council of Australia, who are also pushing for the privatisation of our highways. What, apart from the self-interest of the 1%, is keeping us from investigating as a genuine answer one of the key recommendations of the Henry review, a federal land tax, where the wealthiest would at last have to pay their fair share?  Oh, sorry, I forget myself! An all-in land tax is a form of class envy whilst a disproportionate GST on the poor is not.

Bryan Kavanagh
Glen Waverley
__________________________

There was another anti-GST letter in THE AGE on Saturday 25th, presumably representative of many others, from a Mr Tim Mahar.

And one from Dr Terry Dwyer in the Canberra Times on Sunday 26th.

Nevertheless, I think it’s a done deal because the 1% has spoken, folks.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

“A democracy cannot exist as a permanent form of government. It can only
exist until the voters discover they can vote themselves largesse from the
public treasury. From that moment on, the majority always votes for the
candidates promising them the most benefits from the public treasury, with
the result that a democracy always collapses over a loss of fiscal
responsibility, always followed by a dictatorship. The average of the
world’s great civilizations before they decline has been 200 years. These
nations have progressed in this sequence: From bondage to spiritual faith;
from spiritual faith to great courage; from courage to liberty; from
liberty to abundance; from abundance to selfishness; from selfishness to
complacency; from complacency to apathy; from apathy to dependency; from
dependency back again to bondage.”

–  ?  (Purportedly misattributed to Alexander Fraser Tytler in “The Decline and Fall of the Athenian Republic“, 1776.)

The following old  e-mail from the Longwaves List bears repeating – in part, because it supports the case I’d made that taxation and land speculation–i.e compared to land value-based revenues–is responsible for driving us into the economic depression that defines the period of a Kondatieff Long Wave – again.

Great minds think alike, eh Ariel?  🙂

[But first, have you noticed although income and sales taxes have driven Australia to the brink of the current Long Wave trough, the 1% are nevertheless self-interestedly pushing we plebs towards extending the Goods and Services Tax (GST) as the next phase of “tax reform”.  And, unfortunately, knowing no better, most OZplebs have actually come to believe this is indeed the direction Australia needs to take. What incredible mindlessness!]

A new (old) Long Wave approach: American Government Finance in the Long Run 1790-1990

by Ariel Viale

16 April 2000 05:58 PM UTC

Hi folks,

Every day I am more convinced that Bryan Kavanagh’s line of reasoning is the *key* for understanding the Long Wave (LW). I made some research, and I get trapped with a working paper titled: American Government Finance in the Long Run: 1790 to 1990 – “Journal of Economic Perspectives – Volume 14, Number 1 – Winter 2000 – pages 61-82. The author: Professor John Joseph Wallis from the University of Maryland.

The basic idea behind this working paper is that in the period under analysis, the US passed through three distinct systems of government finance. In each system, one type of revenue was relatively more important than in the other periods, and in each system, one level of government played a relatively more active role in promoting economic development than in the other periods.

In the author’s words: “The first financial system lasted from 1790 until about 1842. In this period, state government took active lead in promoting economic development through infrastructure investment and legal innovation to promote corporations and banks. Infrastructure investment and land sales offered governments the opportunity to collect “asset income”.

Given the national government’s unwillingness to participate in transportation improvements, states took the lead in those investments as well. By the late 1830s, state debt was roughly eight times the debts of the national and local governments combined.

The second financial system began to unfold in the 1840s and was dominated by local governments and property taxation. Local governments grew in size and importance and took over most of the important infrastructure investment in education, highways, water systems, and public utilities.

Property taxes grew to become the most important source of local and state finance. By 1900, local government debt was roughly eight times state government debt. On the eve of the Great Depression, local governments collected over half of the tax revenues collected by all governments and had incurred a debt for their investments equal to the national debt that remained from the WWI.

The Great Depression and New Deal ushered in the third financial system.

This system had two components: a federal system of domestic economic programs (including infrastructure investment) funded by national grants and administered by state and local governments, and a national system of defense and old age security. Income and sales taxes became the most important sources of government revenue at the national and state level.

While the system has not been static, the basic relations between national, state, and local governments has been broadly stable for the last 60 years.”

end of quote…

The eras are *marked* by distinct fiscal structures:

1) a first era of asset finance;

2) a second one of property tax finance; and

3) the third characterized by income tax-finance.

The eras can also be *marked* by the predominant level of government:

1) the first one with more active state governments;

2) the second dominated by local governments; and

3) a third stage with a dominant federal government.

So an important variable to follow the LW seems to be the *revenue structure* of government rather than the expenditure side of it. The author also emphasizes the now apparent fact that *changes* in revenue sources and responsibilities of the levels of government, grown out of crisis: like the depressions of 1839 and 1933.

This said in favor of Bryan K’s Long Wave Theory.

Eric, Tom, Andrea and their fans, argue that winter is behind us, and Bryan put the BIG question to them some time ago (still unanswered). If the national government is *truly* serious about devolving considerable responsibility back to the states, the LW perspective suggests that states need to acquire a prominent *new* revenue source. Moreover, this new revenue source will have to be one that is less costly to collect at the state level than at the national or local level.

A *naive* conclusion will be that the *next* fiscal crisis will necessarily promote decentralization over centralization. But if the present welfare arrangements fall notably short during the *next* recession, there may be a push for greater centralization. Jas and others wrote a lot about what to expect. In other words it is hard to assess in what direction the revenue structure and government activity will be after the *exhaustion* of the third phase, but we have to agree that a NEW ECONOMY will be born painfully, as it always has been.

FWIW

Ariel

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review, sans GST, is a BIG step towards solving those problems.

THE AUSTRALIAN BUDGET AND THE OPPOSITION’S REPLY

The problem with the financial depression was exhibited in Treasurer Wayne Swan’s budget, in Opposition leader Tony Abbott’s response, and for that matter in what Ben Bernanke has been doing about it in the US.

To the extent they are able, they simply ignore it.

Yes, they realise the economic times are bad, but did you hear Swan, Abbott or Bernanke mention that we’re in a financial depression? They think they can’t, you see? It’s just not happening, because to acknowledge it would sap the confidence of the financial markets.

So they think they’ve got to continue pretending it’s not happening – that we’re emerging from whatever this was.

That’s why Australian Treasury estimates on economic growth and tax revenues proved to be optimistic; they were based on this weird lack of reality.

If they haven’t mouthed the ‘D’ word in connection with the collapse happening all about them, they’ve got the economists’ technical definitions on which to fall back and rely upon. As only Europe is technically in recession, Australian and US departments of Treasury, along with their political masters, can simply contend it just isn’t happening, and wait until we, too, have a “technical recession”. Even at that point, there’s further blue sky to be had for the financial markets before the recession will morph its way into something like the neocons agree is an economic depression. That’s a way off yet, so real intervention isn’t called for.

So, until that time, enjoy! Invest in the share market and you may do very well – at least for a while. Ben’s given us ‘confidence’, and he certainly won’t take his finger off the ‘print’ button whilst he directs the Fed. (He wrote a paper saying that printing money will defeat any deflation, remember?)

So, you see, it’s a matter of “Public good be damned!” Maintain the performance for the sake of the financial markets; let them take us over the brink and beyond; maintain ‘confidence’; keep face; keep the faith; point to the technical definitions; anything to deny the economic depression. Just like Japan did.

Therefore, once you’ve understood their misguided priorities, it makes some sort of sense for bureaucrats and politicians to believe they must keep up the act by claiming that the US is coming out of it, and that Australia isn’t going into it. Wall Street will continue its misrule, just as surely as the economic numbers will continue to prove to be “disappointing” – or maybe that’s “greenshoots” I can see “just around the corner”?  🙂

Do you see the conflict that has developed between the public good and banking, finance, share and real estate markets?

The FIRE (finance, insurance and real estate) sector has had its way with us, even if we think we are winning on the sharemarket.  All hail the FIRE sector!

Phil Anderson is a respected technical analyst mate of mine who provides good advice to his subscribers about the share market. He works on WD Gann theory, and there seems to be something to it.

But I ask to what extent share markets are acting for the public good when they are force-fed at public expense? Although I remain relatively clueless about Gann Theory and the share market, I am an expert on economic depressions, on the basis of my knowledge of real estate markets and the expositions of the American Henry George, a man who deferred to the public good rather than to the financial markets.

And in Henry George’s terms, this is certainly a deep economic depression from which we are NOT going to emerge easily – politicians, Treasury bureaucrats, technical definitions, and the FIRE sector notwithstanding.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

Peter Newman, Professor of Sustainability at Western Australia’s Curtain University, has been an indomitable force for rail transport. He is largely responsible for transforming the city of Perth’s public transport system into one of the world’s most efficient.

Newman has now turned his attention to a complementary light rail system for Perth, and to supporting proponents of rail and light rail elsewhere in Australia, such as North Hobart.

Those proclivities, of course, have pitched him against the incredibly strong road/freeway/bus lobby, but there’s little doubt he and his colleagues are winning on the basis of solid support from the public. Newman’s role in turning the worm against mindless road expansion has been central.

How ironic that the Swan River Colony, once famous for its initial founding failure under Peel explained variously by Karl Marx, Edward Gibbon Wakefield and Georgist  EJ Craigie as one of the best examples of capital’s inability to succeed without a cosseted labour force, now points the way to sustainability!

And there was Peter Newman on Saturday Extra this morning educating Geraldine Doogue’s listeners on how urban rail may be self-funded by land value capture.

A statue should be erected to the man.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

At the 39th annual conference of the Eastern Economic Association held at Cooper Union, New York, 9 to 11 May 2013, Professor Mason Gaffney delivered a paper which gets to the crux of the world financial collapse.  Obviously, few policymakers have appreciated the extraordinary implications of his algebra.

Read Gaffney’s address “Great Expectations: How credit markets twist the allocation and distribution of land” here —-> Gt-Expectations-MS1.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

The Reserve Bank of Australia (RBA) is a statutory authority whose duty is to contribute to the stability of the currency, to full employment, and to the economic prosperity and welfare of all Australians.

The RBA sets the cash rate in order to meet a medium-term inflation target. It also issues Australia’s banknotes and manages its gold and forex reserves.

Sometimes it increases the cash rate, the overnight lending rate, and sometimes it decreases it – usually by 25 basis points or 0.25%.

Let’s look at the rationale for increasing interest rates. “The economy is performing too well and has to be slowed.” Oh? It’s the RBA job to put the brakes on a healthy economy? Can it be too healthy?

“There’s incipient inflation that might take us past our target inflation rate.” That’s more like it; but then what has induced these inflationary pressures?  Surely not the ‘velocity of money’? That’s an effect rather than a cause?

Sometimes, in my wild erratic imaginings, I even start to think it may possibly have something to do with the non-productive, or speculative, side of the economy. But then I say to myself: “Self, that could not be right at all, because that’s not what Reserve Bank and all those bright financial analysts tell us.” They say the whole economy must be slowed by making the cost of money generally higher, effectively including people’s mortgages, business loans and venture capital.

Silly me, because the extension of my stupid line of reasoning would have the bank selectively target speculative real estate activity and leave wealth creation efforts alone, instead of making money dearer for everyone! But who really wants to tax speculative rent-seekers or have lower interest rates for businesses, workers and genuine investors – only a killjoy, surely?

Then there are times like these, when the RBA has been busy cutting the cash rate. We’re down to 2.75% here in Oz–not as low as many countries– but we may not have finished lowering interest rates yet. So, what’s going on in this case?

Well, the economy is rapidly slowing down and farmers, shopkeepers and many other businesses are feeling it – so the RBA’s got to help them out with lower interest rates.

But why’s the economy slowing down? Well, many people are in debt, especially mortgage debt, because of the gigantic real estate bubble we’ve experienced, and still the bills keep rolling in. People need assistance with credit.

But aren’t real estate bubbles, by their very nature because they end up bursting, part of the speculative bubble developed by the banking and real estate industries – so won’t the lower interest rates tend to attract more people back into the bubble housing market, acting to stop it from correcting, keeping house prices high? Doesn’t this just aid the banks, not the people?

So it’s the RBA’s job to assist bank profits? But the RBA’s charter, spelled out in the first paragraph above, doesn’t mention this to be its duty. Shouldn’t it be targeting speculators, both on the upside and down, instead of helping them rip Australians off? Is the RBA therefore breaching its charter? No? Why not?

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.

Forget the Australian budget: it was a yawn.

However, if you can get your head around his broad Aberdeen accent, Professor Mark Blyth has to be one of the world’s most entertaining speakers on international political economy. His book’s probably very good, too, but even though he notes John Locke sees property as ours in common (“so what’s the problem?”), I suspect he fails to see there’s an even more fundamental mischief than credit bubbles. I may be wrong, because Blyth does perceive Gordon Brown’s economic “prudence” failed to quell to the UK real estate bubble.

“The world has been engorging itself on a credit binge”, says Blyth; however, managed austerity has brought nations more, rather than less, debt. Austerity was introduced only to save the banks, and pensioners have been conscripted into this “Golden Dawn” in the misbelief that “there’s a free lunch if you skip your dinner.”

He reminds us it was not Karl Marx, but laissez-faire’s Adam Smith, who said “Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.” And “For one very rich man there must be at least five hundred poor.”

Blyth’s talk, replayed on Radio National’s “Big Ideas” last night, unlike the budget, is a must listen.

You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.