The State of Victoria is now in recession. So we’re in the same basket as South Australia and Tasmania. Who would have thunk it? (BTW, that’s feigned surprise.)

Premier Ted Baillieu has resigned because he’s lost the support of his party room. The premier’s a decent man but couldn’t provide the leadership the Liberal party expected of him, nor did he fulfill his promises to Victoria’s teachers.  Negotiating a better outcome on teachers’ salaries is likely to be high on new premier Denis Napthine’s to-do list.

It’s unclear at this point whether this is beginning of Australia’s GREAT RECESSION, but there is an interesting Baillieu connection to Australia’s greatest social and economic collapse in the 1890s depression.

Michael Cannon’s “The Land Boomers” surgically documents Australia’s 1880s land price bubble and the 1890s depression which was largely directed out of Melbourne. (For one reason or another, Melbourne seems always to out-do Sydney as Bubble Meister.)

Various members of the Baillieu family loomed large in land deals across more than fifty pages of Cannon’s explosive narrative, perhaps none more so than WL Baillieu who secretly settled debts from his mining ventures for sixpence in the pound. Then “Baillieu simply formed himself into ‘WL Baillieu & Co’, auctioneer and estate agent, and blithely invited new business. Only a handful of people knew, or cared, about his secret insolvency.”

The Baillieu name remains closely associated to real estate agency to this day.

Like his successor, Ted Baillieu has the saving grace of being a Geelong supporter.

Like water seeking its own level, web-based movements such as Avaaz, Change, Getup, Occupy Wall Street, the Tea Party, or Wikileaks are flowing into obvious voids, challenging government and private misdeeds.

More often than not, they’re performing the sometimes controversial role of “tattle tale” or whistleblower.

Whilst they’ll be a burr under the saddle of some conservatives–undermining democracy in their estimation–I welcome their involvement in the democratic process.

I’d put the National Rifle Association in another category altogether: it may see guns as the ultimate defence against rampant government, but I’d much prefer to see the public discourse generated by the whistleblower groups as being much more fundamental to democracy.

As a member of the ultimate economic whistleblowing movement – Georgism – how could I possibly report on them unfavourably? They’re filling an essential role.

Unfortunately however, the economics that might provide a focus to all these organisations and put an end to the 0.1% stealing from the 99.9% continues to go unremarked.

Countries accordingly continue to descend deeper into the Great Recession.

I’ve mentioned before that Mark Twain “got it” and was a friend of Henry George. Here he gives a serve to that great “humanitarian” and founder of the Rhodes Scholarship, Cecil Rhodes.

OK, we often say by way of exoneration“things were different then”.  Not different enough to have fooled Mark Twain:-

The great bulk of the savages must go. The white man wants their lands, and all must go excepting such percentage of them as he will need to do his work for him upon terms to be determined by himself. Since history has removed the element of guesswork from this matter and made it certainty, the humanest way of diminishing the black population should be adopted, not the old cruel ways of the past. Mr. Rhodes and his gang have been following the old ways.

They are chartered to rob and slay, and they lawfully do it, but not in a compassionate and Christian spirit. They rob the Mashonas and the Matabeles of a portion of their territories in the hallowed old style of “purchase” for a song, and then they force a quarrel and take the rest by the strong hand. They rob the natives of their cattle under the pretext that all the cattle in the country belonged to the king whom they have tricked and assassinated.

They issue “regulations” requiring the incensed and harassed natives to work for the white settlers, and neglect their own affairs to do it. This is slavery, and is several times worse than was the American slavery which used to pain England so much; for when this Rhodesian slave is sick, superannuated, or otherwise disabled, he must support himself or starve – his master is under no obligation to support him.

The reduction of the population by Rhodesian methods to the desired limit is a return to the old-time slow-misery and lingering-death system of a discredited time and a crude “civilization.” We humanely reduce an overplus of dogs by swift chloroform; the Boer humanely reduced an overplus of blacks by swift suffocation; the nameless but right-hearted Australian pioneer humanely reduced his overplus of aboriginal neighbors by a sweetened swift death concealed in a poisoned pudding.

All these are admirable, and worthy of praise; you and I would rather suffer either of these deaths thirty times over in thirty successive days than linger out one of the Rhodesian twenty-year deaths, with its daily burden of insult, humiliation, and forced labor for a man whose entire race the victim hates. Rhodesia is a happy name for that land of piracy and pillage, and puts the right stain upon it.

Mark Twain, “Following the Equator”, Volume II, Chapter XXXII

* The Henry Tax Review suggested abolishing 125 taxes and introducing only two to replace them: the mining tax and a federal land tax.

The current world revenue model–taxing labour and profits and rewarding rent-seekers–has got us into the current mess. Reversing it, and having the tax system give the right signals to work and conservation, would act quickly to get us out of it.

USED AND ABUSED BY PPPs

The public is slowly waking to the fact that the Macquarie Bank model–private rent-seeking in the public’s assets via private/public partnerships (PPPs)–has had its day.  These letters and articles in the last couple of days suggest we’ve been used and abused by PPPs.

Toll Road debacle: royal commission a must – John L Goldberg

Widen concept of toll road beneficiaries – Gavin R Putland

Do PPPs have a future? – Stephen King

Outsider proves savant on toll road projects – Michael West

There is no doubt that natural monopolies are the natural purview of governments. By all means, call in private enterprise to assist in the building and maintenance of public infrastructure, but don’t give them carte blanche on their rents for thirty or more years. We need public, not private, capture of monopoly rents in order to pay for these projects.

By the way, easily the best way to establish whether a major infrastructure project is a goer is to do a “before and after” assessment on the widely-surrounding land values. If the conservatively-projected increase in land values is greater than the realistically-assessed cost of the project, it is workable and self-funding.

One of the more sickening aspects of PPP’s privatising the peoples’ highways and byways, airports, etc., has been the the big churches’ unholy scramble to secure sizable shareholdings in these private rent-seeking enterprises.  Apparently a case of “morality, shmorality”.

…. from banks’ “long, ugly list of house price precedents”?

Another fine piece from Philip Soos, which leaves Australian house price bubble-deniers nowhere to go except for the fanciful “under-supply” argument used in Southern California just before its bubble burst (and the argument demolished here).

Economists who manfully try to analyse real estate bubbles only in terms of supply and demand will always be found wanting.

Well done, Philip Soos!

1. Businessmen in rented premises: do you need your head read?

1. The Reserve Bank of Australia about their difficulties in trying to re-inflate the Australian housing bubble.

1. All progressives (Don’t bother reading if you’re in love with the status quo.)

I can’t complain about the first para being omitted from my letter in THE AGE today, because it amounts to blowing its bags for Saturday’s editorial piece.

Original first paragraph:

Saturday’s editorial “Digging deep for next to nothing” is a clear exposition of the manner in which Australians were dudded by Julia Gillard doing a backroom deal with the big miners in 2010. She managed to turn Kevin Rudd’s super profits tax which would have raised tens of billions of dollars into BHP Billiton’s, Rio Tinto’s and Xstrata’s minerals resource rent tax which will now raise tens of millions of dollars only.

LABOR COWARDS

A Labor Party government of yore would have stood tall through the miners’ twenty-two million dollar scare campaign, but Labor is now poll-driven and has sadly deserted its principles.

Someday, hopefully soon, Australians will come to see the Henry Tax Review’s recommendations to abolish more than one hundred taxes on labour and capital by a revenue switch to land and natural resource-holding as the prescription necessary to get the Australian economy moving again. We could be leading the world out of the downturn instead of descending further into it.

Bryan Kavanagh, Glen Waverley

————–

postscript

In an attempt to bury further the Henry Tax Review–the most far-reaching recipe for regenerating the Australian economy–the Gillard Government’s $1 Billion Jobs Plan was announced yesterday.

You almost sob with despair to see the incredible lengths to which the Gillard Labor government will go to ignore the common sense that resulted from “Australia’s Future Tax System” commissioned by the Rudd Labor government. It’s as though the Henry Tax review never occurred – so it becomes necessary to continue fiddling around the edges with such expensive “plans”.

They’re off and running. First, there’s the now weirdly-named Liberal Party which has morphed into populist hard-right conservatism to such an extent the misnomer is an affront to any sensible person.

They’re the hot favourite to win the government of Australia on 14 September.  Without some catastrophe happening to the Liberals, the Labor government’s gone.

On the other hand, despite its parliamentary representatives’ and adherents’ protestations to the contrary, the Labor Party’s “light on the hill” has been extinguished.

At least the hard-right Tories–against any societal change at all unless it favours the 1% because “they know how to run the economy”–understand what they represent. Labor, however, having also sold out to the 1% by its actions, if not its lingering high-minded words, no longer knows for what it stands, and much of the party’s diminishing membership resents its loss of direction.  The diehards know they’re now useful only to hand out how-to-vote cards on election day but stick to the party, dreaming it may return to its roots.

Is this too severe a critique of the Labor Party? Not at all.

When Prime Minister Kevin Rudd, dared to institute an all-in 40% tax on miners’ super-profits for the Australian people, which accorded with Labor Party principles, he was unceremoniously dumped by his colleagues. They’ve been unable to explain knifing Rudd in the back except in terms of his having been “non-consultative” and “too remote” from his fellows. The real story was Labor moving further rightward towards the requirements of the 1% and its rampant FIRE sector.

Enter new Prime Minister Julia Gillard to conduct a backroom deal with a handful of big miners. This reversed Kevin Rudd’s application of one of the key pillar’s of the Henry Tax Review’s proposed tax-shift off labour and capital, reducing the tens of billions in rent the miners would properly have had to pay to the Australian people by way of rent to a peppercorn rent yielding instead only tens of millions. (See THE AGE editorial 16 February)

Meanwhile, as businesses begin to tank, the revenue base has rapidly declined. The Labor Party is nowhere on the revenue conundrum whilst the Liberal Party’s response is to slash 24,000 jobs in Canberra. Sans Kevin Rudd, Ken Henry’s workable tax-shift is now ignored by both parties.

Incredibly, most Australians cling like limpets to one of these two sell-out political parties. Some, not liking the smaller parties or independents, will vote for them out of a sense of resignation for what they once stood.

Australia, you’re in for a lot of bluster and BS over the next six months. These two parties are no longer located at different ends of the political spectrum. They are the yin and yang of the 1%.

Where’s high public purpose in this election? Missing.

Where are the economic policies that might avoid the approaching depression?  Missing.

Both parties offer their version of status quo.

All is division and populism: the pollsters rule.

Though the charade is no longer enjoyable, I’ll continue to commentate by way of catharsis.