~~~
Australia’s Treasurer, Dr Jim Chalmers is off to Washington with Treasury Secretary Steven Kennedy and Reserve Bank Governor Philip Lowe for a meeting with G20 Finance Ministers and Central Bank Governors. In meetings between 12 and 14 April, he will also touch into one with the World Bank Group and International Monetary Fund.
The key issue, of course, is how governments might address and manage the current descent of world economies into obviously economically troubled times.
There will be many technical economic issues to be discussed, and I wish them all the very best in their deliberations.
On historical grounds, however, I’m not confident of a practical outcome from Dr Jim’s meetings, because they’re most likely to be based upon considerations of what can be done about the situation instead of what should be done. The study of neoclassical economics delimits us. It has proven to be silent on the subject of land, which in his new book “Land is a Big Deal”, Lars Doucet shows to be a massive part of world economies. So, what can be done if the meetings ignore what’s been happening to land prices around the world? It’s the key part of bank lending.
The price of land, and how we need to gradually reduce it, is what the meetings should be talking about. Tax regimes favouring speculative real estate activity over productivity is what they should be talking about. Taxing land values more, and wages and profits less, is what they should be talking about. How Treasurers do not need to be concerned about “budgetary constraints” if they act to contain spiralling land prices and speculation, is what they should be talking about.
And, finally, if these meetings to which Dr Jim is heading today fail to consider how land rent, owed equally to each citizen, is currently being distributed to rent-seekers only, Australia will certainly need to consider a living wage universal income for the economic depression which, in the absence of effective government action, is scheduled to commence in 2026/7.
(Click on chart for further)