Just to finish off on Treasurers, it would be wrong not to mention the role played by Gordon Brown, the man who broke Britain. His hubris was amazing. Just before Britian’s real estate bubble burst, he claimed he’d killed off its boom-bust cycle as Treasurer.
Failed world Treasurers have been complicit in delivering average real weekly wages that are now less than they were in 1972 and in providing the 0.1% an enormous slice of the economic pie.
It’s time we lifted their game.
The ABC’s “Q and A” last night featured typical political dyspeptics between the Australian Treasurer, Chris Bowen, and Treasurer-To-Be, Joe Hockey.
In actuality they will join a long list of failed Treasurers, albeit economic commentators and the media may give them a pass mark, or even elevate them to the position of “world’s greatest Treasurer” a la Keating, Costello and Swan, which of course was monstrous nonsense.
Keating gave us compulsory superannuation for God’s sake! Costello presided over the world’s greatest real estate bubble and Swan did nothing to keep the lid on it, spending tens of billions of dollars in taxpayers’ money simply to delay it from bursting on his watch.
Joe Hockey took the opportunity on Q and A to display his ignorance of the difference between a tax and a rent, disporting himself triumphantly to the effect a Liberal government will abolish the mining ‘tax’. He also thought shortage of supply had something to do with the impossibly high price of housing (as was also proven wrong in the case of Southern California). Chris Bowen was too compliant and dull to pick him up on either important point.
Hockey had a brief flash of inspiration when he asserted that the current level of taxation adds to costs and prices, making Australia uncompetitive, but hadn’t the insight to discern that the capture of economic rent for revenue reduces costs and prices. Yes, even the mining ‘tax’–actually a natural resource rent, Joe–reduces costs and prices when employed as a tax offset.
So, as our various Treasurers have slowly but surely (relentlessly?) directed us into yet another economic depression, I wondered what a look back into the history of the 1890s depression might show us.
A peep at a 120 year-old copy of “The Beacon” dated 1 August 1893 shows there’s nothing new under the sun, at least until Australians have the wit to elect a Georgist Treasurer, the like of The UK’s David Lloyd George.
1. Moses led the Hebrew slaves to the Red Sea where they made unleavened bread, which is bread made without any ingredients.
2. Moses went up on Mount Cyanide to get the ten commandments. He died before he ever reached Canada.
3. Socrates was a famous Greek teacher who went around giving people advice. They killed him.
4. Socrates died from an overdose of wedlock. After his death, his career suffered a dramatic decline.
5. In midevil times most people were aliterate.
6. Joan of Arc was burned to a steak and was connonized by Bernard Shaw.
7. Finally Magna Carta provided that no man should be hanged twice for the same offense.
8. Nero was a cruel tyranny who would torture his subjects by playing the fiddle to them.
9. Julius Caesar extinguished himself on the battlefields of Gaul.
10. Solomon had three hundred wives and seven hundred porcupines.
11. Ancient Egypt was inhabited by mummies and they all wrote in hydraulics.
12. The climate of the Sarah is such that the inhabitants have to live elsewhere.
13. Queen Elizabeth was the “Virgin Queen.” As a queen she was a success. When she exposed herself before the troops they all shouted “hurrah.”
14. Actually Homer was not written by Homer but by another man by that name.
15. History calls people Romans because they never stayed in one place for very long.
16. Romeo and Juliet are an example of a heroic couplet. Romeo’s last wish was to be laid by Juliet.
17. Miguel Cervantes wrote “Donkey Hote.”
18. Milton wrote Paradise Lost. Then his wife died and he wrote Paradise Regained.
19. Christopher Columbus was a great navigator who discovered America while cursing about the Atlantic. His ships were called the Nina, the Pinta, and the Santa Fe.
20. Later, the Pilgrims crossed the ocean, and this was called Pilgrim’s Progress.
21. One of the causes of the Revolutionary War was the English put tacks in their tea.
22. Delegates from the original 13 states formed the Contented Congress.
23. Thomas Jefferson, a Virgin, and Benjamin Franklin were two singers of the Declaration of Independence.
24. Franklin discovered electricity by rubbing two cats backwards and declared, “A horse divided against itself cannot stand.” Franklin died in 1790 and is still dead.
25. Under the constitution the people enjoyed the right to keep bare arms.
26. The nineteenth century was a time of a great many thoughts and inventions. …The invention of the steamboat caused a network of rivers to spring up.
HAPPINESS WITH HIGH LAND PRICES: THE SACRED COW IN HOUSING AFFORDABILITY
Inquiries into housing unaffordability always involve much cant and hypocrisy, because they usually turn out to be exercises in inflating prices even further.
To help get young people into a home in Australia we’ve had a “first home buyer grant”. As vendors quite correctly regard it as a reason to increase their asking prices in order to profit from such a government-granted bonus, it would more properly be named the “home seller’s grant”.
You will NEVER see recommendations for land tax in order to make housing more affordable, even though it most certainly would. The property lobby even goes so far to say land tax will make houses dearer, but it won’t provide an answer to the simple question: “For which block of land would you pay more?”
A tension has developed between the generations: smug older homeowners with their mortgages paid off, or nearly so, versus Gen Y unable to afford somewhere to live as a result of bubble-inflated prices.
Another reason land tax can’t be mentioned in this context is that banks don’t like land tax. Escalating home prices are good for banks, especially when land prices in Australia have developed into an enormous profit-generating bubble since 1996.
So, with banks and most Australians who purchased at lower prices to be appeased, tax reform is off the radar in the September election.
BUSINESSES ALSO IN TROUBLE AND UNEMPLOYMENT FORECAST TO RISE
It’s the same process, of course, that’s seeing businesses being wound up in great numbers in Australia, many by the Australian Taxation Office. But banking and real estate, having been set upon a pedestal, make their super-profits at the expense of business and good government.
Watching Alan Kohler’s Inside Business on the ABC this morning, I was entertained by his expert panel winking and nodding as they discussed the faux emergence of the US and Europe from the Great Recession and the over-valuation of world sharemarkets.
The dye has been set. There will be no world recovery as long as 1) property owners retain the unearned increases in the value of their land and 2) we continue to tax people and businesses for daring to work.
Although our arse-backwards tax regime has generated both housing unaffordability and a financial collapse, most of us remain completely wedded to the status quo. We’re having this depression because we fear revenue reform.
Now there’s a grim irony! [Bob Dylan has it just about right in his best ever song.]
Three items caught my attention today:-
The Atlantic discovers differences between US and French rent-seeking.
“Houses and Holes” on the rise and rise of rent-seeking at MacroBusiness.
Jonathan Green discusses the trivialised Australian election (wherein rent-seeking remains undiscovered) on the ABC’s The Drum.
Yesterday, it was Cameron Clyne from the NAB promoting the GST to a receptive Neil Mitchell on 3AW. I usually don’t mind Cameron’s rather laid back style of analysis, but I was happy on this occasion to hear a listener pull them both up short with a question to the effect “How are dearer good and services going to help the economy?” They didn’t (couldn’t?) have a response.
Today it’s the more driven CBA boss Ian Narev, having delivered a record $7.8 billion profit, calling for the next federal government to lay out a “blueprint” for the economy. No doubt he’d look kindly on an extended GST, too. You see, apart from a little extra paperwork, it doesn’t affect their businesses. However, Narev DID call for people not to take on too much debt at the moment. (You’ve not been on the turps, Ian?)
Hey, guys! How about this? What about calling for Ken Henry’s all-in land tax? It’s in the nature of a rent and can’t add to prices. I mean, haven’t your super-profits been fuelled by bubble-inflated mortgages? And wouldn’t a single rate Australia-wide land tax make housing more affordable for our youngsters?
You’re not interested in that idea at all? I wonder why not.
Young Australians who are prepared to put their heads into the mortgage noose before this bubble deflates are about to get into BIG trouble.
Don’t make yourselves wage slaves. DON’T BUY NOW!
Mason Gaffney and Polly Cleveland explain how.
http://www.huffingtonpost.com/mary-manning-cleveland/detroit-tax-system_b_3734397.html
There are innate problems with the Left of politics, with those who believe government generates wealth or creates jobs.
But the Right also has it wrong. (Whilst it’s lonely here in the radical Centre, nothing beats knowledge and truth!)
The role of government is to ensure no harm is done by any part of society to others. In taxing labour or capital, or granting privileges to any part of society, the government itself is capable of doing terrible harm to society. (Witness what’s happening around the world!)
Therefore, the best we can hope for from that amount of government which is necessary is that it enforces the Rule of Law, that the latter is fair, that government grants no privileges to any sector of society, and most importantly, that the taxation of labour and capital is abolished.
Whereas society’s land and natural resource rents are generated by society as a whole and not by any individual, they are the natural and proper source of revenue, being owed equally to each and every member of society.
The Right positively believes–and the Left by default on the subject seemingly believes–that people and companies who seek the rent of our land and natural resources do no harm to society. Curiously, the Right goes so far as to say rent-seekers should be supported! They are both wrong and need to understand the latent catastrophe involved in the private rent-seeking of the public’s rent.
At bottom, the public capture of economic rent is the glue that adheres society. As public capture of rent has fallen away, so too have societies disintegrated as the world descends into another economic depression.
Maybe the following, which ought to be incorporated into any declaration of human rights, exposes the superficiality of both the Left and Right of politics on the subject of economic rent.
