…. however, neoclassical and neoliberal economics have ensured that nothing changes.

Click on chart or picture to see Prosper Australia’s telling video “Real Estate 4 Ran$om”.

People don’t like seeing the value of their homes decline; that’s why they don’t like land ‘taxes’. (They’re actually rents in nature, and therefore cannot be passed on in prices.)

Nor do would-be property investors want their property values decline, of course.

“Would-be” investors?

Yes, most of them won’t be able to make it through when land prices implode on them in 2027.

But both categories of people are acting to keep things as they are.

In doing so, they support a nefarious taxation regime. Taxation and its deadweight losses are passed on into all the prices of our goods and services.

They’re also supporting escalating land prices, even though land has no cost of production. It was just there; so, as land is common to humanity, we should be taxing its rent away. (If we did, there’d be no land price. *)

So, most people remain happy, both with the high prices of our goods and services and our extremely high land prices, even though the combination is very costly and acts to dispossess many people now and future generations.

The real beneficiaries of this situation aren’t the general homeowner nor small-scale property investors but the already uber-wealthy to whom the greater part of publicly-generated economic rent flows directly. This is the mechanism they use to grow their wealth at the expense of everybody else.

The big rent-seekers are thankful having so many others supporting the current tax regime they’ve designed to profit themselves.

The situation represents an impossible impasse which acts as a stumbling block to general prosperity.

Needs changing – but can’t be changed.

Pity about that!

_______________

*

What an absolutely horrible war was WWI.

And WWII was its natural corollary.

Lest we forget.

However, some in the West are now spoiling for WWIII with China.

By all means, we do need to be prepared to defend ourselves against invasion from any other country, but when an empire begins to surpass another industrially and commercially, this is absolutely no reason to seek to wage war against their peoples.

Beware obscenities arising from the Thucydides Trap.

Just saying.

The political and economic reforms following the 1893-1897 depression were driven largely by Georgists.

It became known as the Progressive Era.

However, despite the fact that all taxes and their excess burden come out of rent, at the 1930s depression the propertied class fought back saying that there was not enough economic rent to see ourselves through the depression.

This was the high point of ‘neoclassical economics’, the economics that ignores the role of land. We’ve not only remained in its thrall, but drifted further into the neoliberal economics of Ayn Rand. We must balance the national budget.

OK, so let’s hope that the third depression from 2027 sees the return to economic sanity?

Nice piece here. Thanks, Catherine!

In my opinion, once the destructive roles of taxes and land price cycles are clearly seen and understood, economic forecasting isn’t too difficult.

~~~

Australia’s Treasurer, Dr Jim Chalmers is off to Washington with Treasury Secretary Steven Kennedy and Reserve Bank Governor Philip Lowe for a meeting with G20 Finance Ministers and Central Bank Governors. In meetings between 12 and 14 April, he will also touch into one with the World Bank Group and International Monetary Fund.

The key issue, of course, is how governments might address and manage the current descent of world economies into obviously economically troubled times.

There will be many technical economic issues to be discussed, and I wish them all the very best in their deliberations.

On historical grounds, however, I’m not confident of a practical outcome from Dr Jim’s meetings, because they’re most likely to be based upon considerations of what can be done about the situation instead of what should be done. The study of neoclassical economics delimits us. It has proven to be silent on the subject of land, which in his new book “Land is a Big Deal”, Lars Doucet shows to be a massive part of world economies. So, what can be done if the meetings ignore what’s been happening to land prices around the world? It’s the key part of bank lending.

The price of land, and how we need to gradually reduce it, is what the meetings should be talking about. Tax regimes favouring speculative real estate activity over productivity is what they should be talking about. Taxing land values more, and wages and profits less, is what they should be talking about. How Treasurers do not need to be concerned about “budgetary constraints” if they act to contain spiralling land prices and speculation, is what they should be talking about.

And, finally, if these meetings to which Dr Jim is heading today fail to consider how land rent, owed equally to each citizen, is currently being distributed to rent-seekers only, Australia will certainly need to consider a living wage universal income for the economic depression which, in the absence of effective government action, is scheduled to commence in 2026/7.

(Click on chart for further)

As is Lars Doucet’s book.

“Vintage Leunig”

From THE AGE 8 April 2023