Yes, our share markets are reacting to goings on in China: the decline of her stock market; the devaluation of the yuan. But if I hear one more absolutely sanctimonious western financial commentator try to blame China for our current economic woe, I’ll explode! I must have seen four or five of them today!

It’s our impossible level of debt, guys!  You can’t blame China for that!  Yes, China has her own massive real estate-based debt, too.

But each of the world’s nations has set itself up nicely for a collapse of her own land and share markets.  China didn’t twist our arms to pay these ridiculously high prices for our real estate, and send all our asset prices up to nosebleed heights. Get real and put the blame where it properly lies – with us!

China, of course, may well be the catalyst for our “correction”.

Doesn’t the mantra “You can’t keep having economic growth on a finite planet” make you sick? It’s a cop-out that plumbs the depths of neo-Malthusian thinking.  Like the planet we, too, are finite, but we can meanwhile continue to grow until our end.  Meanwhile, trees, plants and our food sources can continue to grow and be replenished – until the planet’s end.  Meanwhile, we can continue to recycle the planet’s non-renewables.  Meanwhile, we can resume having economic growth.

Of course we can have economic growth. But not unless we abolish rent-seeking and taxation to fix the current economic impasse.

Neo-Malthusians seem to want us to adapt to the failed status quo – instead of first repairing it then reconsidering all options.  Malthus, scion of and apologist for the aristocracy had us all dead long ago.  He’s still wrong.

Single tax solution

Re “Local Wages will mean local jobs“, (January 6). There is no consistent international evidence to show that discounted regional wage floors, or indeed generally lower employment standards, lead to improved rates of employment and prosperity. In fact, in general terms, the countries with the highest wage levels also have the best performing economies.

The real impediment to job creation is not our workplace relations system, it is our crooked taxation system. Current taxes favour big business monopolies and unproductive speculation in rising land prices and punish genuine entrepreneurship and productive work. The most efficient and equitable mode of public revenue collection is a ‘single tax’ based on unimproved land values, in lieu of taxes on labour and capital. Those geographic areas that are currently disadvantaged and struggling would boom under the single tax because, in line with their lower land values, their tax burden would be massively discounted.

Ronald E. Johnson

Association for Good Government ACT Branch

Manuka, ACT

…. namely, rent-laden assets: asset prices that no longer reflect true market conditions because they’ve capitalised land rent up into bubbles, making yields incredibly low. Whilst high yields usually signify high risk so, too, do low yields such as we’re now experiencing (including returns on credit). In these circumstances, there must sometime be a significant correction of yields towards the long term mean. That sometime has been a long time coming and it’s quite arguable 2008 was but a prelude.

This correction may be delayed, as evidenced by Japan’s recent 25 zombie-like years, or sought to be avoided by febrile monetary and fiscal measures employed by the likes of China, the US and Australia, but their crunch must eventually arrive too, just as surely as it did in Japan, Ireland and Greece.

By failing to abolish an array of inefficient and counter-productive taxes (along the lines advocated by Australia’s 2010 Henry Tax Review) tax regimes continue to present all the wrong signals to markets for genuine wealth creation. This encourages worldwide rent-seeking. Leaving too much of our natural resource rents in private hands has been capitalised into excessive land and share market prices that, just as in the 1920s, must evaporate, leaving unpayable debt in their wake.

The situation is clearly pathological, and a massive debt deflation is unavoidable if productivity is ever to resume but, like the account of the slowly-boiled frog, we’ve not sought to remove ourselves from the predicament. Since the 1970s we’ve gradually become inured to publicly-generated economic rents being increasingly privately capitalised—we’ve been happy to take part in the process ourselves, because that’s to where the tax system has directed us—and we’ve witnessed the attendant gradual decline of real wages and the falling away of profits in all but such rent-seeking industries as banking and real estate.

Our corrupted tax regimes have much to answer for.  But are we not responsible for them?  For markets to work, we’ve got to take natural resource rents out of the equation.

THE AGE:  Wall Street set for worst yearly start since Great Depression after China market dives

Martin Adams promotes his book “Land: A New Paradigm for a Thriving World” in Sweden.