REPAIRING ECONOMICS

Why do we fail to act upon the obvious? Public capture of ground rent for the use and abuse of our natural resources (instead of taxes), sets to rights the relationship between people and the planet.

The question needs asking: Do we prefer enslavement to debt and unnecessary social strife to freedom and prosperity? Taxes that inflate land prices in the interest of some at the expense of others, together with taxing labour and capital for working together, makes mockery of every bill of human rights. We should look askance at those calling for ‘rights’ without this simple fiscal adjustment. They are either ignorant, or complicit in the private capture of our publicly-generated economic rents.

As all taxes, together with their excess burden, are extracted from rent (ATCOR and EBCOR), we need to call out social parasites’ ludicrous claim that “There’s not enough rent!”

Never enough for them, perhaps?

WHAT’S HAPPENING?

Down, but no recession yet.

“On quarterly figures, as of the first quarter of 2023, house prices, building approvals, and lending for owner-occupation and investment are all headed downward, led from the demand side. Among these trends, the only bullish sign is the dip in building approvals, which, over time, has a negative effect on supply.”

– Dr Gavin Putland, 2 April 2023

But not to worry, folks, because the newKavanagh-Putland Ratio‘ isn’t indicating a recession before 2025. That’s to say, even if the aggregate weight of residential, commercial, rural and ‘other’ real estate sales to GDP were to decline drastically in 2023, there’s usually a 12-month lag before economic recession will set in.

But, yes, 2022 is our highest peak yet! Despite the price drops, there was an enormous aggregate turnover of real estate sales!

The new ‘ratio’ is based upon Commonwealth Grants Commission data showing total Australian real estate sales per capita divided by GDP per capita (from ABS National Accounts).

FORECASTING

I’ve had queries on Twitter to the effect of whether I can be certain about a financial collapse in 2027 following a rabid final real estate peak from 2024 to 2026.

The answer is no, of course. The forecast is based upon stochastic data.

However, the principle underpinning the forecast is scientific and deterministic, namely (as Henry George and have others noted), wages and earned profits (as separate from super-profits or rents) are residual after increasing land prices (privatised land rent), viz, P – R = W + I. It is only the timing that’s at issue regarding the real estate peak and financial collapse.

The approximate 18-year real estate cycle (with mid-term decline) since 1800 is the forecast’s variable, but the post-war peaks have been quite consistent: i.e. 1954, 1972, 1990, 2008, (2026).