http://www.theguardian.com/business/2016/feb/05/public-debt-is-not-the-issue-thats-just-a-neo-con-scare-campaign

We’re constantly told “There aint no such thing as a free lunch“.

Phooey!  There is, you know.  ‘TANSTAAFL’ was got about by the 0.1% who’ve made themselves billionaires by sucking on the teat of publicly-generated land and natural resource rents (including spectrum) for generations.

Many of we ‘lesser’ folk like to try our hand at rent-seeking, too, because that’s what the tax system directs us to do – but we’re small fry.  And of course it suits the 0.1% to have us believe we can make it like they did–ripping off our rents–too.

Cumulative effect of all this rent-seeking?  Booms and busts, and the occasional economic depression such as we’re now experiencing.

There certainly is such a thing as a free lunch. It’s the economic rent of our natural resources – and it belongs to the community as a whole, not to the 0.1%.

Australia now has the highest private debt in the world. It’s mainly household debt and can’t possibly be repaid.  As Michael Hudson says with some finality: “Debt that can’t be repaid, won’t be repaid.” You can’t get blood out of a stone, so things must end badly for Australia – as they did in the USA and Europe in 2007 and 2008.

Here’s what Australia must not do:

Going back a step, to the bursting of Japan’s property bubble in 1990, we’ve had 25 years of Japan now proving you can’t possibly manage a debt deflation by printing money to bail out banks, nor by offering zero interest rates on your money. [Now it’s negative rates: The Japanese banks will now charge you to deposit your money and pay you to borrow!]  Clearly, this hasn’t worked, yet it’s the same anchor to which the USA has shackled itself!

As Steve Keen says, we’ve got to bail out people, not the banks. Somewhere along the line, Australians will need to be given a significant grant of money. This will provide for borrowers to pay down their debt, and give other Australians the confidence to spend.

But it can’t be allowed to stop there, as it did with the Rudd government’s $900 grant, the ‘pink batts’ scheme, and the building education revolution. It must be accompanied by complete reform the Australian tax system – which would abolish taxes, along the lines proposed by the Henry Tax Review, and to capture, as we once did, more of our public funds from land-based revenues.

That’s really the only alternative to Greek austerity, or to Japan’s zombie-like ‘lingering death’.

Economies need to resurrect.  Let Australia be the first to do so.

Land Price Bubbles and Land Value Capture

Bryan Kavanagh, Melbourne 4 October 2012

26th Pan Pacific Conference of Real Estate Appraisers and Valuers – abbreviated version.

See PDF here for original.

You’ve got to stand back and not bury your head in inconsequential detail if you want to understand history.  Land and poverty are always key.

Pax Romana

The Roman Empire was destroyed by having spread its powerful and expensive military too thinly to support counter-productive property bubbles at home.  Debt was partly serviced by military plunder of the resources from conquered nations.  Although the empire battled on–so to speak–for another three centuries following the death of Pliny the Elder at the eruption of Vesuvius in 79 AD, he had understood the damage land speculation was doing to the nation. It had destroyed it: “Latifundia perdidere Italiam“. The building of great estates came at an enormous cost to an impoverished middle class and to the agricultural poor, the latter who flooded into Rome for succour.  In rent-seeking economies, it seems farmers will always do it hard whilst the city flourishes.

Unfortunately, Pliny the Younger, who witnessed his uncle’s death, sought ‘to lay field to field’.  In De Officiis Book III, XXIII, Cicero chronicles the younger Pliny’s letter to Calvisius Rufus concerning a property abutting his. It was in decline:  “Now let me tell you the price at which I think I can purchase the property. It is three million sesterces, though it has been previously sold for five million, but owing to the lack of capital of the tenants, shortage of labourers, the income of the estate is reduced, and consequently its value.”

Needless to say, as part of the aristocracy, Plinys A and B were much better off than most of the citizenry, and it was this expanding wealth chasm back at home that brought the empire to its knees.

Pax Britannica

Ditto.  Britain plundered the resources of other countries, at least partly in order to feed the poor that its aristocracy had continually dispossessed at home. It is no fractured history to claim that the British aristocracy sought WW1 with its counterparty, the German Reich, because of proposed Liberal Party reforms that would have started to redress the gross imbalance in economic equality.

Therefore, what do you do when your situation is challenged, as it was by the People’s Budget of 1909/1910?  Lloyd George’s budget had actually called for an ad valorem tax on land, so patronage and privilege sought the refuge of the scoundrel, as always, in a call to patriotism.

For budgetary purposes, as Chancellor for the Exchequer Lloyd George had wanted to reduce Britain’s proposed spending on six dreadnought battleships to four, so the Lords encouraged a popular chant to challenge the Liberals ‘loyalty’: “We want eight and we won’t wait!” [Wikipedia is particularly weak on this diversionary facet to the Anglo-German naval race and the race to war.] Patriotism won the day as it always does, and Britain went to war.

She won the war but lost an empire.

Pax Americana

It’s happening again isn’t it?  You tell me: a land-engineered wealth divide; military expansionism? Same old, same old ….?

Now for a massive new war, eh?

Pax Sinae?

A new Chinese empire is a distinct possibility, but it may never really get off the ground—despite its infinite number of tall new buildings 🙂 — because of the incredible private debt in its land price bubble.  China’s poor and farmers have lost out to the obscene wealth of its property speculators. We watch on as the cycle of empires plays out once again.

Pax Americana crumbles and ‘education’ is left displaying its ignorance.  Are there lessons here?   🙁