The 26th Pan Pacific Congress of Real Estate Appraisers, Valuers and Counsellors has been held in Melbourne this week. The next will be in Singapore in 2014.
In one session of the congress this morning (Thursday 4 October) I gave an address “Land Price Bubbles and Land Value Capture”.
We’ve seen the following, I concluded: Japan’s 21-year failed attempt to rectify a debt deflation with low interest rates; ‘Helicopter Ben’ Bernanke’s succession of quantative easings in the US produce nil results, and; Europe’s economically doomed-to-fail measures to make the citizens of miscreant nations wear hair shirts. Trying to re-inflate land price bubbles aint the way to get economies moving again.
I suggested valuers’ knowledge of the theory of valuation sets them up to offer the world a quick-exit strategy from global financial collapse.
Although my talk was well received and several people wanted a copy, or to know if it would eventually appear in the Australian Property Journal, I discerned two pairs of eyes glaring daggers. They seemed unimpressed with the fairness of land value capture. Maybe personal interests v. society?
At the Melbourne headquarters of Prosper Australia, Philip Soos last night delivered a well documented presentation of the manner in which ‘negative gearing’–particularly of existing homes–has acted to deliver enormous capital gains to investors at the expense of most Australian taxpayers.
That can’t last.
Negative gearing should be abolished.
Philip also had this op-ed on the topic published in The Conversation yesterday.
Today’s address by Greens Senator Christine Milne to the National Press Club was everything a political address should be.
“An economy that serves people and nature” was big picture stuff. It was positive, relevant, informative, and offered the nation an optimistic outlook where peoples’ happiness should be included as a national criterion.
If the latter sounds like a typical ‘motherhood’ political statement, it wasn’t. It was well supported by plenty of policy detail – including the need to shift the tax system towards Ken Henry’s aspirations for Australia’s future tax system.
“Oh, but they can say these high-minded things because they’re unlikely to attain political power in their own right!” doesn’t quite cut it any longer when Milne painted such a all-encompassing picture, so markedly different from that of the Labor and Liberal parties.
That the Greens are having their programs costed also sets them and Labor apart from the Libs. [Wha …! Greens having their policies costed now?]
Maybe Milne’s address–no doubt to be nit-picked by nihilist journos in tomorrow’s newspapers–might even herald a long-awaited change from the major parties. [Michele Grattan, unable to resist dropping the tag “frustrating party” on the Greens, was handled well in response by the Green’s leader.]
Instead of abuse and game-playing, a bit of vision from all parties, as expounded today by Christine Milne, would go a long way with Australia’s voters, if not its media commentators.
And so it continues: the Left not knowing how taxes to which they’ve attached themselves like Ahab to Moby Dick have created this financial collapse; the Right believing that if any government revenue at all is necessary, it must only be used to fight ‘wars of liberation’ in foreign countries. Neither these, nor anything else, the latter say, should be funded from publicly-generated land values.
Modern political discussion has become hopelessly enmeshed in this great and unnecessary divide between aspirations for personal freedom and those who believe there is a necessary role for government.
It should be obvious that society can tolerate neither rampant personal freedoms which impinge on the freedoms of others and on good order, nor dictatorial governments propounding never-ending cases for hostility and war. But it’s obviously not obvious.
Though the American philosopher Henry George showed there’s a middle ground between these polar opposites, we divide ourselves more than ever by the pointless bifurcation.
The 0.1% is quite happy with this arrangement. Under the cloak of such ignorance it will continue to divide, rule and prosper at society’s expense.
Proponents of liberty would do well to consider whether any freedom can be possible when a knot in our distributional system clearly favours less than 0.1% of the population.
Similarly, those who acknowledge there is indeed a role for government should understand that it must not be funded—or stolen—from the earned incomes of labour or capital.
Once it’s understood that the unearned income from land—known by economists as rent— is sufficient to replace taxation at all levels of government, the means of reconciling both freedom and a necessary level of government for the harmonious running of society should become apparent to all.
Unfortunately, however, too few realise there is this middle ground.
In such an educational void, economic depression and the ensuing social upheaval must continue to settle across the globe as a permanent feature.
The solution patiently awaits recognition. ______________________________________
Henry George
“THERE come moments in our lives that summon all our powers — when we feel that, casting away illusions, we must decide and act with our utmost intelligence and energy. So in the lives of peoples come periods specially calling for earnestness and intelligence. We seem to have entered one of these periods. Over and again have nations and civilizations been confronted with problems which, like the riddle of the Sphinx, not to answer was to be destroyed; but never before have problems so vast and intricate been presented. This is not strange. That the closing years of this century must bring up momentous social questions follows from the material and intellectual progress that has marked its course.”
I was half way through this Warning I received today from ASIC, ACC, Victoria Police and Australia Post before I realised they weren’t talking about our superannuation funds.
Haven’t they invested many billions of our money, too, and ‘lost’ much of it in the process?
If this is providing for my future, give me the 9% of my wages my employer sets aside in a ‘super’ fund for me. I could put it in a bank with a slightly better degree of safety–or have much more fun losing it myself–than paying private superannuation funds big-time to lose so much of it for me.
I expect working Americans have achieved much the same results with their 401k, except they’ve been ‘scammed’: we’ve been ‘rorted’.
It’s strange world.
I guess there are official rorts, like the taxing of labour and capital, or retirement plans, then there are the sort of non-official rorts referred to in today’s letter.
“There are 47 percent of the people who will vote for the president no matter what.
All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it.
That that’s an entitlement.
And the government should give it to them.
And they’re hopeless.
I’ll never convince them they should take personal responsibility and care for their lives.”
This 0.1% of the population, billionaires, captures the greater part of our publicly-generated land and natural resource rents.
Although it’s theft, they seem to believe they are entitled to it.
They did not earn it, it is ours – owed equally to each one of us.
Get it? We are allentitled, equally, to the land and resource rents of the nation stolen by these billionaires.
But billionaires in their most incredibly distorted sense of entitlement believe it’s theirs – theirs alone.
Proof? Just try to legislate for the common wealth, the annual unearned value of land and resources, to be shared equally by ALL citizens ! [Listen to the screams! It’s theirs! They are entitled!]
Billionaires are unable to see their particular ‘entitlement’ is sick-making–far worse than the so-called ‘entitlement’ of the poor–because their entitlementcreates poverty, dispossession and crime – and they are unable to admit to these crimes.
It’s the Mitt Romneys of this world are hopeless. They are parasites.
In theory, income tax sounds very progressive, doesn’t it? It’s sorely abused however – and not simply by using smart lawyers and accountants. If you’re a mega-wealthy landowner, you will claw back every cent you’ve ever paid in income tax via the uplift in your land values – i.e. on the back of the public’s rent that you’ve been able to privatise.
Are renters able to offset their taxes in this way? Can the middle class do this? Is the rent of our land grotesquely under-taxed?
I’ll let you ponder the answer to those questions for yourself.
While land value-rating municipalities continue to distort their rating base with minimum rates, effectively subsidising the owners of more valuable land, and capital improved value rating municipalities penalise construction, and states at the same time underutilise their land-taxing powers–and both these levels of Australian government continue to put their hands out to the federal government for assistance–there can surely be no greater advertisement than Dr Putland’s chart for implementing the recommendations of the Henry Tax Review for an all-in federal tax?
