On ABC-TV last night Bob Katter said the Reserve Bank ought to have lowered interest rates yesterday. The cash rate should be 2%, half what it is now, he opined.

He’s right. Our high interest rates are keeping the AUD too high, and there aren’t many areas of the economy doing well.

Interviewer, Annabel Crabbe, asked Katter what this would do to real estate prices, however – Australia’s already being amongst the highest in the world.

He had an answer for that one.  He’d just seen a report by Malcolm Turnbull and “an Oxford Don” saying we should remove restrictions on the subdivision of land. That would fix the shortage of supply which has dogged our housing and made it so unaffordable.

…. What rot!

So, despite all the reports proving our high land prices are NOT the product of inadequate supply, it seems Katter, Turnbull and the Institute of Public Affairs (funded by Genghis Khan/Gina Rhinehart?) haven’t caught up with them yet, and still cling to this misbegotten belief – or maybe they don’t want to believe the facts?

Here’s one of the most recent reports to bring you up to date, guys. It shows the Australian residential market has actually become a Ponzi Scheme. Nothing to do with supply and demand.  Here’s a more technical one which fleshes out the theory.

Katter and the IPA are one thing, but you’d expect better from Malcolm Turnbull (if Katter is quoting him correctly).

Er, no, your Maj., it’s not just Freddy Goodwin – it’s the system.

Land prices wouldn’t exist if we captured the rent for revenue.  There’d be no need for taxes – at all.

But the system, especially banks, promote land prices, and therefore people are locked into mortgages with high land prices–impossible land prices during a bubble–and these have to be repaid with interest over 30 years.

It’s the way the system of which you are part, your Maj., keeps the 99.9% poor by capturing community-created land rents and privately capitalising them into land prices.

Professor Luis Garicano was talking arrant nonsense:  he’s an economist.

I hope this helps?

Happy 60 years!

UNFORTUNATELY, THE AUSTRALIAN TAX SYSTEM SUPPORTS THE FIRST

When I mentioned it was necessary to pay the rent under Mosaic Law, a correspondent reminded me that the Kingdom of Judah ruled by King Jehoiakim from 608 to 598 BC was forced to pay tribute, in turn, to the Egyptians, the Babylonians, and then the Egyptian Pharaoh again. The King saw to it, however, that the tribute was always levied fairly, striking the levy upon the value of his people’s landholdings.

Hey, IMF, World Bank, Europe and US! If the King of Judah could make the 1% pay their fair share in tough times, maybe there’s a lesson in it for us?

No? Why not? Ken Henry’s “Australia’s Future Tax System” panel believes there’s a very good case!

THE GREAT CAUSE OF INEQUALITY

The great cause of inequality in the distribution of wealth is inequality in the ownership of land.

The ownership of land is the great fundamental fact which ultimately determines the social, the political, and consequently the intellectual and moral condition of a people.  And it must be so.

For land is the habitation of man, the storehouse upon which he must draw for all his needs, the material to which his labor must be applied for the supply of all his desires; for even the products of the sea cannot be taken, the light of the sun enjoyed, or any of the forces of nature utilized, without the use of land or its products.

On the land we are born, from it we live, to it we return again – children of the soil as truly as is the blade of grass or the flower of the field.

Take away from man all that belongs to land, and he is but a disembodied spirit.  Material progress cannot rid us of our dependence upon land; it can but add to the power of producing wealth from land; and hence, when land is monopolized, it might go on to infinity without increasing wages or improving the condition of those who have but their labor.  It can but add to the value of land and the power which its possession gives.

Everywhere, in all times, among all peoples, the possession of land is the base of aristocracy, the foundation of great fortunes, the source of power.

– Henry George, “Progress and Poverty” Book 5, Chapter 2.

For decades, Mason Gaffney has stood out head and shoulders as the world’s foremost expert on land and resource economics.

He’s always had a gift for words and for challenging the economy’s excesses, as demonstrated in this 1942 The Freeman essay as a nineteen year-old.

Those who’ve taken my advice to read Gaffney’s “Neo-classical Economics as a Stratagem against Henry George” will have been rewarded by the detailed research and clarity of exposition, honed during his time as a reporter on TIME magazine.

Gaffney’s outspokenness on the land question has seen him survive a university board attempt to have him removed from his professorial duties when his students revolted to support him, presumably because they’d learnt things they’d never heard from anyone else.

Now, in a typically comprehensive and concise paper, “Reverberations between immoderate land-price cycles and banking cycles in Real-World Economic Review”, Mason Gaffney removes the veil from the stimuli behind the funding of the repetitive land booms and busts that led to this, the greatest land price bubble in history.  Enjoy his incisive brilliance.

Maireid Sullivan is:

• a singer
• a filmmaker/media arts consultant
• an alternate music proponent and
• curator of the Global Arts Collective.

After living in Ireland then the United States, where she met her partner, she now lives in Melbourne.

In her spare time (apparently she has some) Maireid’s efforts to reconcile the arts community and people in general with what increasingly appeared to be the failure of politics led her to discover Georgist economics.

Ireland’s and the United States’ loss has been Australia’s gain, but the part Maireid has played in the Hill of Tara campaign demonstrates her active role within the great Irish Diaspora.

We’re likely to be seeing more of the Irish here.

I continue to receive a copy of the excellent “Georgist Journal” for which I don’t believe I’ve paid.  After reading and enjoying it, I ensure each edition gets a good home.

It’s edited by Lindy Davies.  He also conducts the Henry George Institute’s “Understanding Economics” course which appears to be a knockout if his introduction is any indication.

While you’re investigating Lindy’s introduction, try running your cursor over the “Family Tree of Economics” to see where the development of Georgism has been written out of the study of economics by those who would confound it – presumably so we can experience this economic depression.

It hasn’t dawned on America’s 0.1% that they’ve wrecked the country.  They’re still blaming the 99.9%.

I’ve put these notes together based on my talk with Sharon Firebrace on her “Razor’s Edge” program this morning:

You’ll often see signs on land, “PRIVATE PROPERTY”.  They’re all wrong.  It’s simply land to which they hold title and have exclusive possession. Their responsibility doesn’t stop with municipal rates.

Economists have a term, ‘economic rent’.  It’s the most important thing in economics, but economists themselves don’t understand its importance.

All the great philosophers have said you can’t own the air; nor can you own the water – or the land.

Even the Bible commands Jews and Christians “The land must be rented, not owned, because you are only passing through.” (That’s Leviticus 25:23)

Like the philosophers, the original native American and native Australian peoples understood that land is PUBLIC PROPERTY for common use.  So, the PRIVATE PROPERTY signs are wrong.

PRIVATE PROPERTY is you, yourself.  What you make and what you earn. You have a right to yourself, and the government has NO right to you or YOUR income, providing you’re not doing harm to others.

When the Pilgrim fathers hit the shores of North America, they selected their sites but, for the privilege of having them, they had to pay the land rent as community revenue. That was PUBLIC property.  (Wm. Bradford, 1627,  History of Plymouth Plantation)

Let me quote Philadelphia’s first tax law on 30 January 1693:  “Put to the vote: as many are of the opinion that a public tax upon the land ought to be raised to defray the public charge, say ‘yea’. “Yea! “Carried in the affirmative, none dissenting.”

In the feudal times between the 9^th to the 15^th century, the land rent was paid up the social ladder to the King for public works and to maintain his army.

Even later under freehold title in British Law, the landholder was still expected to pay what was called “the quit-rent”, but we’ve permitted our system to morph into the same form of landholding that destroyed Ancients Greece and Rome, where they commoditised land, buying and selling it for a profit, without having to pay its economic rent into the public purse.

This transformation means we’re shackled with the worst of both worlds: taxed on our EARNED INCOMES and on our comings and goings AND paying high land prices.  Seventy per cent of Australian mortgages are land prices.  If we captured the economic rent of the land, land prices would be far less and we’d have more disposable income.

Just this morning I received some phenomenal preliminary work from a young researcher at Deakin University, Philp Soos, indicative that the net position of Australia’s super wealthy–the increase in their land values minus what they’ve paid in taxation–is running at a surplus in their favour of billions of dollars.  Renters and the poor can’t offset their taxes by the uplift in their property values in this way.  Is this fair?

People have failed to see the capture of most of the economic rent of our land and natural resources by the super-wealthy is why world economies are grinding to a halt.  There’s a vast wealth divide where the 99.9% have too much debt–which now equates to inadequate demand–whilst the 0.1% steal far too much of our publicly-generated economic rent.  Greed has won the day and banks, leading the way, still expect to be bailed out.

Of course, Gina Rinehart is not paying anything like the full economic rent for her iron ore leases, either. We’re being dudded and Australian society pays the penalty.

We’re currently witnessing the financial collapse of the US and Europe as they pay the price for not having captured the economic rent of their resources instead of taxes.  Australia will follow. That’s because people and their governments have failed to distinguish economic rent as PUBLIC PROPERTY and our earned incomes as PRIVATE PROPERTY.