Whether we like to acknowledge it or not, land value taxation (LVT) and a universal income (UBI) is a common requirement of humanity if we want easier access to a home and dispossession and poverty is to be abolished. We also need an understanding of how federal government spending works for a nation with its own currency. The latter has more recently come to be known as ‘modern monetary theory’ (MMT), although Henry George had a pretty good grip on it many years ago.

The combination of LVT, UBI and MMT (VIMMLBUTT) would work to achieve the abovementioned goals, but what we have now clearly isn’t working – especially the constant speculative bubbles in land prices that regularly burst into recession.

Taxing away the full rent of land reduces land prices to zero, but not its rent, which continues to increase. The increase in rent needs to be captured if land prices are not to emerge once more of course. A gradual switch to rents, away from taxes, may be managed easily.

Application of these ideas of Henry George and of the great philosophers (and once of the great religions) would effectively abolish the excesses of the left and right of the political spectrum. However, those who currently control the rent owed equally to everybody won’t give up without a fight – and of course they have clout!

It’s a lofty political program, but with a final frenzy in real estate prices likely over the next three years, it’s one needing to be addressed.

In discussing economics, one question needs to be asked. To whose benefit is it that we have corrupted the natural distribution of wealth, where: –

• 1.  individuals generate their own wages;
• 2. a truly working capital generates its own profit, and
• 3. the public as an entity generates its own net income, namely, the rent of its natural resources (‘land’)?

Surely the taxing of earned wages, profits and goods and services assists only those who, aided and abetted by a misbegotten tax regime, channel publicly-generated land rent to themselves, instead of it being distributed equally to everyone?

So, what’s the story we are given to justify this enormous corruption of economics? “There’s not enough rent!” No, that’s untrue, because all taxes and their excess burden come out of rent anyway–ATCOR & EBCOR.

This chart based on that in Dr Gavin Putland’s “Trickle-Up Economics” demonstrates our true situation: sadly declining returns to productive labour and capital, and escalating returns to land price speculation and monopoly super-profits. It needs fixing.

So, maybe we’ll come to see and repair this increasingly desperate state of affairs before having to face an upcoming financial depression?

Click and ye shall find Scott Santens’ great argument for a universal income.

We’ve improved in many respects over the centuries, but things definitely aren’t working at the moment. Health and education are struggling, housing has become incredibly dear, private debt has achieved near-impossible levels, and poverty and homelessness has increased. Then there’s climate excesses.

Are there reasons for the situation in which we find ourselves?

It’s arguable that we’ve become fascinated by detail and complexity, to such an extent that we overlook fundamentals. By missing or dismissing basic considerations, we generate more and more socio-economic problems. Mainstream media is quite OK with this, though, because “bad news sells“. Whoever wants to hear about fundamental principles that may help us?

It’s boring to learn truths about the natural distribution of wealth: –

that individuals generate their own wages;

that a truly working capital generates its own profit;

that the public, as a whole, generates its own net income: ‘land’ rent.

Ignoring these fundamentals has us constructing misguided tax regimes favoring corporations and individuals that privatise our publicly-generated land and natural resource rents. We’ve degenerated into taxing working people and providers of machinery that make work easier, far more than we do those who speculate in our land and natural resource rents. That’s where things go terribly awry: such that we experience repetitive booms and busts in real estate markets, then blandly dismiss these 18-year cycles as “the natural business cycle“. [By the way, we’re going to require VIMMLBUTT, come the 2027 depression.]

The problem is neither capitalist nor communist systems. It’s an elite in both that is permitted to channel the economy’s publicly-generated net surplus–the economic rent owed to the whole population, equally–unto itself.

Accordingly, we’ve put ourselves into a servitude as real as chattel slavery. We’ve come to work for the economy rather than have it work for us.

Quite incredibly, we had a fairer and more natural distribution of wealth during the fifteenth century than we have today. A humble English labourer with no special skills had more to spend after the provision of food, clothing and shelter than he or she has today!

No, the labourer at that time did not drive a vehicle nor own a television, but nor did the king of England. And, no, the high incomes shown in the chart were not the result of the labour force having been reduced by the ‘Black Death’: that actually shows up the earlier wage bubble preceding the one in the fifteenth century.

Of course, the political excesses of Henry VIII came along to put an end to this ‘Merrie England’. However, despite industrialisation, we’ve acceded to the corrupt privatisation of public land rent. And we understand that all taxes come out of rent–don’t we?–so why not put them there in the first instance, because they can’t be passed off into prices as taxes are?

But our specialists and ‘experts’ continue investigating models and minutiae, and in every other direction, to solve our increasing social problems. We’ve totally lost sight of the natural economic rent forest for its many trees.

Click below

What is it that has our media going into infinite detail about rocketing home prices keeping many young families renting, and increasing rents sending renters back to mum and dad’s, or out onto the streets, without questioning the cause of their increasingly desperate plight?

Individuals are interviewed ad infinitum about their parlous circumstances. Suggestions are made about what private enterprise can do about it, or what government assistance may be given: –

“Can’t we allow greater density zoning to be able to build housing towers?”

“How about build-to-rent?”

“Put caps on rent increases?”

“Wouldn’t government financial assistance help renters?”

Whoever asks what got us to this parlous situation?

Maybe we operate under a corrupted system of government? One in which the tax regime fosters the commodification of land by nominating it “the right to private property”. Are not our wages and profits the real private property? Why do our tax systems tax these earned incomes at the expense of pumping land prices and private rents?

Except for speculative rent seekers, it’s not a pretty picture:

After all, if we were tax land values at greater rates, and wages, profits, goods and services less, land prices and the cost of goods and services will decline. That will surely assist in putting a safe and secure roof over people’s heads?

“Look, the high cost of housing is simply a matter of the under-supply of houses!”

Nup!

“So you saying we should tax land rents away? That sounds communist!” Not at all, communists don’t tax land rent to any significant extent. Xi Jinping tried to introduce a tax on land values in China in 2022 and was thoroughly rebuffed by the party.

Was the USA communist when much of its land rent was taxed during the Progressive Era? By the way, Australia did it even better, at all three levels of government, Australia’s first tax office being set up in 1910 to introduce not an income tax but the federal land tax.

You’ll note that, after some thirty years, neoclassical won the day at the 1930s depression telling the world: “There’s not enough rent. We need to tax your incomes!” There is enough rent, of course, because all taxes come out of rent.

That brings us to the root of the problem. Whether in communist countries or democracies, the rent-seeker, especially the BIG rent-seeker has come to favor himself at great cost to the generality of people. And big rent seekers tend to control the media both in democracies and communist countries. Maybe that answers the initial question: What is it?

Public capture of land rent is the only way to tackle the commodification and privatisation of land and the social problems that this has generated.

First nations peoples always understood this; the great philosophers always understood this; the great religions once understood this.

Why don’t we? Why is this? Cui bono?

A little self-indulgence.

Neil Mitchell is one of the better shock-jocks on Australian mainstream media. On 3AW this morning he was with state Liberal leader John Pesutto berating the increases in WorkCover. In my opinion they were thoroughly entitled to do so. The charges are terrible.

However, all taxes are terrible, except for the ‘tax’ that is not a tax: land ‘tax’, which is actually a rent and cannot be passed on in prices as all other taxes are currently being passed on – and getting the nation in one hell of a mess in so doing!

But Neil Mitchell is as antagonistic to land taxes as he is to all other public charges. He needs to see and understand economics’ most fundamental lesson. Here it is Neil.

First from the Classicists: –

Then from modern economists: –

So, we’re heading into a financial depression because we either deny, or are ignorant of, the socio-economic destruction that privatising publicly-generated economic rents generates each 18 years, Neil.

The original US Articles of Confederation looked like this: –

It’s obvious that the Founding Fathers understood socio-economic justice. However, things changed. Alexander Small wrote to his friend Benjamin Franklin to the effect “What the hell has happened, Ben?” To which Franklin replied as follows: –

Franklin seemed to be saying “Politics is the art of the possible, Alexander. You’ll never beat big landowning politicians.”

So has anything changed in this respect? To cite (part of) the song: “It’s still the same old story ….”

Which poses the question: If people from John Locke, Adam Smith, David Ricardo, Ben Franklin, to Mason Gaffney, Michael Hudson, Fred Harrison and Joseph Stiglitz (among others), can all see that taxes on people, industry and exchange come out of land rent, why do we instead endure the enormous excess burden of the array of punitive taxes that dispossess people and generate poverty?

Is it simply to assuage privileged landowners?

This needs investigation, because the privatisation of land rent also generates repetitive land price bubbles that burst in recession and depression. However, as Ben Franklin said, politicians won’t do anything about it because the majority of them are big landholders. It would seem that the neoclassical economics designed by JB Clark and his followers was set up expressly to hide the sins of real estate speculation.

So, the big guys are once again prepared for us to have the next financial depression, scheduled to begin in 2027. They can’t possibly be oblivious to the current real estate bubble which is about to be pumped by privilege into its final frenzy?