TONGUE LASHINGS

A BIT OF HUMOUR, BEFORE A THOUGHT THAT FLASHED THROUGH MY MIND

Gotta laugh at Tongue lashings in THE AGE today. These included:-

Earl of Sandwich: “Wilkes, I do not know whether you will die on the gallows or of the pox.”

Wilkes: “That, my lord, depends on whether I embrace your principles or your mistress.”

Bette Davis, as a Hollywood starlet passes:  “There goes the good time that was had by all.”

Dorothy Parker, reviewing the play I Am a Camera:  “Me no Leica.”

Margot Asquith, when movie star Jean Harlow sounded the ‘T’ in her first name: “No dear, the T is silent, as in Harlow.”

 

———oooo———-oooo———-oooo———-

 

I wonder about the morality of seemingly intelligent people who can’t see permitting land rent to be privatised consigns their children–humanity for that matter–to lead terribly stunted lives?

Where’s religious morality on this question? As Pauline Hanson would say: “Please explain?” – but I think we might be waiting a long time for an explanation from the men in mitres.

“No, they have their reasons?”  Oh?  What might they be, then?

(BTW!)







THE REMEDY – IN 289 WORDS

Who out there doesn’t get what’s happening and what to do about it?

Whilst those who have cried “growth fetish” believe we’re consuming too much, and we will have to adapt to a more stringent lifestyle, this is to confuse two quite separate issues:

1.  More often than not, rape, pillage and despoliation of the environment has been largely conducted by the untouchables; the privileged 1%.

2.  Many of the dispossessed, the poor, and increasingly now the middle class, have had their reasonable expectations for a half-decent lifestyle frustrated. They have inadequate wherewithal and are shackled with too much debt.

Therefore, the financial world slowly grinds to a halt as a consequence of ineffective demand.

We should have learned by now that economies work when people are able satisfy their reasonable desires, and fail when self-seeking parasites deny this of them. Warren Buffett has appreciated the point for some time.

If the current slowdown provides satisfaction and Schadenfreude to idiots who want to complain about all economic growth, it should not, because history tells us that several years into these times, we can expect either bloody revolution or a ‘good’ war to ‘remedy’ such yawning social divides.

So, how do we resurrect effective demand then, Angela Merkel, Nicolas Sarkozy? ……  Zzzzt!  No, I’m sorry you’re both wrong.

What you have to do is this: increase production rapidly by abolishing taxes on labour and capital. As these will no longer be stolen from the earnings of labour and capital that flow immediately from production, the confidence of capital to invest and of labour to spend will return overnight.

Look to resource rents–so called ‘super profits’–for your necessary revenue, guys.

Oh! And all that debt?

Get rid of it!  Ultimately your people should be more important than the Euro.

 

THE NEWS

I see Australian GDP grew 1% for the September quarter (or by 2.4% since June). This was largely off the back of Western Australia’s 8.4% increase in state final product and Queensland’s 3.5% increase. Other states aint doing so good.

Those two states wouldn’t be the big mineral-exporters by any chance? Yup, Australia’s ‘two speed economy’ is alive and well – for now.

Ian Verrender has a very good article today in THE AGE’s Business Day: “Banks have got a good grip and are squeezing us in good times and bad”. He notes “If you want to know the classic definition of a monopoly, it is this: a corporation that prices its output on a ‘cost plus’ basis”.

Yes, Ian, more often than not you’re dealing with a rent-seeking corporation when it doesn’t have to meet the market and can simply go cost plus.  And, of course, banks most certainly have been grabbing our land rents, capitalised into skyrocketing land prices during the course of this 1999-2011 residential bubble, via principal and interest repayments on Australian mortgages.

So, maybe we should be looking to capture back some of that capitalised land rent for revenue?

Which leads me to a fascinating discussion that’s being had on the blogosphere:

Rumours have abounded that federal treasurer Wayne Swan has set up a working group to investigate the possibility of abolishing income tax on companies and replacing it with a ‘super profits’ tax, or return on equity (ROE) tax.  Readers here will understand that anyone getting a super profit is usually thieving a natural resource rent owed equally to all of us.

Although it’s been fairly well received, the odd comment in such places as Macrobusiness (here) and Catallaxy (here) indicate the suggestion is putting the wind up rent-seekers and the brain dead. (Maybe that’s a redundancy?)

Australia had the best standard of living in the world when we saw the need to capture part of our land rent via the  federal land tax (1911-1952).   We’re not trying to think independently again, are we?  Interesting times!

BREAD AND CIRCUSES

INEPTITUDE RULES

If you follow what is known as the “Great Recession” in the US [the “Global Financial Crisis” (GFC) in Australia] in the financial pages, you’ll be aware of the acres (hectares?) of newsprint devoted to international levels of public and household debt, and meeting after meeting of the highly-placed officials who try in vain to resolve it.

It has become a circus.

You seem vaguely to recall that Ancient Rome also went through these preliminaries of ‘bread and circuses’ as a prelude to its destruction.  Decaying societies don’t seem to have the wit to address solutions.  They prevaricate.

As some people try to deal with their debt, or drown their sorrows by means of these daily entertainments, their highly-placed representatives rub shoulders, wallowing in the hubris of self-importance for a photo opportunity.

Angela Merkel [flashbulb!], Nicolas Sarkozy [flashbulb!], Christine Lagarde [flashbulb!], Wolfgang Schauble [flashbulb!], Oh, and look, an international celebrity from across the ditch! Barack Obama! [flashbulb! flashbulb! flashbulb!] They’re all going to save us!  [Not!]

It sells more newspapers, more ads on TV, to present this infinite amount of evidence of intertwined financial, economic and social disorder, and to offer the public such diversions.  Solutions certainly will not sell like this!

Who knows Ireland is to implement a site value tax in 2012?

Or, that Greece is introducing a property tax immediately?

Or that there are people in all parties in Britain who believe a land tax should be considered?

REAL solutions actually embarrass politicians because they remove the tax privileges of the 1% — and you don’t want to offend powerful interests!

When national leaders are able see the need to ….

  1. Support their people
  2. Nationalise their banks and write off debt
  3. Abolish taxes on labour and capital
  4. Use land taxes and natural resource rentals to replace damaging taxation …

… you’ll know the days of bread and circuses are numbered.  Not before.

A PLAN TO SAVE THE USA

RESCUING AMERICANS FROM THE 1%

The USA currently has 50% of its $14.66 trillion GDP stolen—viz, the $7.33 trillion being that part of the economy constituted by land and natural resource rents.  This $7.33 trillion is mainly stolen by the 1%, leaving the 99% dancing to the tune of immense wealth.  Observe how an apparently well-meaning President Obama has been bought off by Wall Street; the US has clearly morphed from a democracy into a kleptocracy.  Goldman Sachs appears to rule.

As the government captures only a small part of the people’s economic rent at present, it is forced to tax the earnings of people and normal businesses to the tune of $3.456 trillion.  So this amount is also stolen from the 99%.  Debt and despondency pervade.

However, were the US to capture the 50% of the economy which is the rent of land and natural resources, it could not only abolish all taxation, but, after the necessary running of government, could actually deliver a dividend of $3.874 trillion ($7.33 trillion – $3.456 trillion) to be shared equally between all of its citizens. i.e. $12,389 per head – for every man, woman and child.

This would allow the nation to grow again by eliminating the structural financial and fiscal burdens besetting it.

Wages would then flow directly from this increased production to its producers, instead of to rent-seeking parasites; no ‘wage fund’ is necessary!

Cowardice, partisanship and political dysfunction should not be permitted to stop this plan from being put into place—if US society is not to be completely destroyed.

IN SUMMARY, THE USA NEEDS TO:

  1. default on its national debt – as debt that can’t be repaid won’t be repaid
  2. nationalize the banks, writing off all private debt relating to land
  3. dismantle the IRS (in favour of a small body to preside over the new revenue base)
  4. institute site rents on land and natural resources for revenue, viz:-

1) shift the revenue base from taxes to the site value of all land only (i.e. exempt improvements)
2) charge the market rent for frequency ‘sites’ on the electromagnetic spectrum
3) apply a resource super profits tax on all mining (@50% on profits to acknowledge the American people’s joint ownership of its natural resources), and
4) charge market rents for airport slots, fishing and forestry licenses, etc.

This is the only plan that can work, but the USA is far from this solution, so batten down everyone!

LAND TAX AND LABOR

With issues of great moment up for debate at the Labor Party’s annual conference this weekend, now that Ken Henry has put land tax back on the national agenda, the time may be ripe for ALP-inclined people to consider how the land tax plank came to disappear from Labor’s platform.

It was written out of the Labor platform in 1964 by party secretary Cyril Wyndham.

It was never voted out by the membership, as required.

When the federal land tax was abolished in 1952 by Robert Gordon Menzies, Labor’s  Arthur Calwell had promised to restore it when Labor returned to office.

But land tax was ‘forgotten’.  It was uncomfortable.  And the 1% have never had a better time of it.

GERALDINE DOOGUE

Like the entertainment industry in general, shock jocks, agents for the 1%, disseminate their bilious opinions with incredible self-importance. Ignorance is bliss, and hubris must be your stamp if you aspire to the biggest audiences. Sometimes you may even be both correct and right.

On the other hand, I’m always amazed when perpetually perplexed commentators of the left are able to conduct their discussions with such confidence and aplomb. I guess the search for answers remains their anchor and inspiration.

I’m not sure whether the ABC’s Geraldine Doogue, the thinking person’s commentator, can be classified as being on the left of the political spectrum, but I’d put her into the second category anyway.

On Saturday Extra this morning, Doogue managed to skirt around and overlook economic rent in her discussion on social cohesion in modern day Britain with Gary Sturgess, director of the Serco Institute.

In looking for “the glue that holds society together” she might also have blended rent into her following topic –  Resolving the future of a viable banking sector – with Harrison Young, a non-executive director of the Commonwealth Bank of Australia .

You see, if you don’t understand public capture of economic rent holds society together, you won’t perceive that it’s the privatisation and breaking down of this common glue that almost single-handedly generated the global financial collapse.

And banks were the culprit, the catalyst, in taking this publicly-generated surplus away from the people to whom it was owed, and in delivering it to the 1%.

For this reason, I’m not as confident as Gary Sturgess that things will repair themselves in Britain, nor that Australian banks are as solid as Harrison Young believed in this morning’s program.

Meanwhile, Geraldine, please try to discover economic rent. You’ll become wide-eyed!