RELATING TO MY PREVIOUS POST ….
…. Ian Verrender at The Drum believes it’s all about shortage of supply/excessive demand, too. [Sigh!]
C’mon, we’re about to find out there’s MUCH more to a land bubble than the ol’ supply and demand, guys!
Take the trouble to learn about the economic rent of land!
A SITE’S PRICE IS MERELY THE PRIVATE CAPITALISATION OF ITS NET RENT
I just saw the ABC’s Lyndal Curtis interview Queensland Liberal National Party Senator Matthew Canavan about his concerns that RBA Governor Glenn Stevens’ macroprudential efforts to restrain home borrowing might interfere with “the market”.
What market, Senator? In what way is the property market really a market in the absence of a significant land tax which poses the surgical question “Am I actually using this property, or am I simply holding it off the market for capital gain?”
If car manufacturers hold cars off the vehicle market, their models will become dated, devalue and eventually rust.
If tomatoes are held off the veggie market, they’ll rot.
If a residential property is held of the market its land price will usually continue escalating upwards.
Immediately afterwards, Lyndal Curtis interviewed Labor Senator Sam Dastyari. Unfortunately, Sam wasn’t much better. It was our growing population and issues of shortage of supply that have our residential property prices at these high levels.
Let me pose this question to both senators.
If we had an all-in, single rate federal land, tax rebated back to the States, as suggested by the Henry Tax Review, what do you think would happen overnight to the Australian real estate market?
That’s right! It would stabilise and probably decline. So, in whose real interests are our senators acting, may I ask? People trying to sponge further off the community like this? – because it’s certainly not first home buyers!
Although supply and demand does matter, we do need an overarching view: we need to understand that land prices represent the capitalisation of the net land rent left in private hands. If the government were to capture more land rent instead of taxes, there’d be less land rent to be capitalised into land prices.
Pretty simple! But two of “the nation’s best” managed to overlook the point. So, I repeat: In whose interests are our senators acting?
OCCUPY RENT-SEEKING FOR CLIMATE CHANGE?
TWO CRITICAL PROBLEMS
Following financial collapse around the world, the Occupy movement demonstrated its abhorrence of the deceit and trickery that has emanated from the finance, insurance and real estate (FIRE) sector of the economy. People began to ask: “How is it that capital markets have gained so much ascendancy over people and the real economy?”
Before the question was finally resolved, it was back to business as usual. The 1% remains ensconced in full control.
Now, as we miss renewable energy targets, we’re wrestling again with the issue of climate change. How is it possible to abolish, or at least reduce and sequester, carbon pollution?
Very few see the inter-relationship between financial collapse and climate change. They are features of the same phenomenon: private rent-seeking in a public asset.
The planet has come to be regarded as a resource to be exploited, raped and plundered – because we have given the green light to do so at nil cost to its over-exploiters, the 1% who enrich themselves at the expense of the environment and all others.
This is surely lose/lose?
THE COMMON ANSWER: PAY THE RENT
Were we to capture the economic rents of land and government-granted privileges to public resources, such as mining, the magnetic spectrum, fishing, forestry, aircraft rights, etc.—and abolish the arbitrary taxation of incomes, thrift and sales—the FIRE sector would immediately assume its correct role, simply a part of the service sector, and those who plunder the planet would pay dearly for doing so.
But here in the early part of the 21st century, very few people understand rent-seeking and the devastation it wreaks upon people and the planet. It has been the role of the 1% to ensure science and education remain ignorant about the unearned incomes economists have nominated as economic rents – because untaxing the productive side of the economy would deliver genuine free enterprise and true liberty.
As financial markets continue to implode and climate change remains virtually unaddressed, private rent-seeking in publicly generated incomes proceeds apace.
It must be ended.
ANOTHER VESTIGE OF THE AGE OF LANDED PRIVILEGE
AND IT’S ALL DONE BY *RENT-SEEKING*!
INFRASTRUCTURE: NO SELL-OFFS, NO TRICKS
AUSTRALIA’S HISTORY OF LAND REFORM PROVIDES LESSONS
LEGACIES OF THE NINETEENTH CENTURY LAND REFORMERS FROM MELVILLE TO GEORGE Continue reading AUSTRALIA’S HISTORY OF LAND REFORM PROVIDES LESSONS