The above transcript and transposition of the formula offers a robust and testable economic model which might assist to demonstrate the inverse relationship between wages/profits and the privatization of economic rents. There are implications for the financial catastrophes which flow from excessively privatized rent capitalized into impossibly high land prices.
That the formula is fundamentally the same as that of Henry George published in “Progress and Poverty” back in 1879, namely;-
Produce – Rent = Wages + Interest
should add further to the model’s credibility.
Let’s take a peep at the repetitively destructive socio-economic role of bursting land price bubbles.
Another slant: –
So, yes, there is a proper response to misbegotten cyclic busts. They are not “the natural business cycle” as we’re often advised. They can be remedied by a genuine tax reform which includes an all-in land tax, along with the abolition of some 100 other taxes as a trade-off, along the lines recommended by the Henry Tax Review.