World Economic Review (Volume 1 Number 1, 2012) the journal of the World Economics Association has a brilliant paper by Michael Hudson and Dirk Bezemer which is a “must read” for those wanting to understand the deep flaw in the distributional system.

The paper Incorporating the Rentier Sector into a Financial Model calls the FIRE sector (finance, insurance and real estate) to account for fattening itself on the teat of society’s surplus whilst labour and capital have been made to starve.

As neo-classical economists wring their hands in complicity and ignorance, Hudson and Bezemer’s account surgically exposes why world economies are plummeting into another economic depression: “finance is not the economy”.

MacroBusiness founder Leith Van Onselen last night gave the 121^st Annual Henry George Commemoration Dinner address to an audience of sixty at the Pumphouse Hotel in Melbourne.

Van Onselen, known to MacroBusiness fans as The Unconventional Economist, provided a compelling commentary on the Australian residential market that gave an entirely different picture from recent fulminations out of the Reserve Bank of Australia.

It was entirely coincidental that LVO’s thoroughly researched case and charts complemented thoughts of Prosper Australia’s David Collyer in an Online Opinion piece yesterday.

The BBC World Service had a ‘phone-in last night about Gina Rinehart claiming wages are too high for businesses.  She had pointed out Africans can be had for $2.00 a day.

The discussion was a debacle, with the presenter apparently believing Gina was providing Australia with jobs – NOT that her workers have made her the richest woman in the world and that she has denied the nation its proper share of the rent.

Nobody so much as mentioned that Rinehart’s wealth came from natural resources, and that she’s not paying enough to the people of Australia for their removal.

She and her mining colleagues spent $22 million on advertising in order to to stop the 40% resource super-profits (rent) tax – remember?

The miners won out and got the RSPT whittled down to the piddly minerals resource rent tax (MRRT). The issue played no small part in Julia Gillard (MRRT) replacing Kevin Rudd (RSPT) as prime minister of Australia.

Well, none of these facts got out in the way of all the BBC’s ludicrous calls as the presenter dug himself into an even bigger hole than Gina’s company is able to dig. The most generous light you could put on his performance was that maybe he was promoting Gina’s case as a straw man for the sake of  the discussion.

It wasn’t until Robert Kuttner from American Prospect Magazine brought a bit of sense to the program by saying that the winding back of real wages in America over the last forty years is partly responsible for bringing the nation to its knees, that a note of common sense was injected into the meandering topic.  A healthy economy should NOT be reducing wages, he said.

Thankfully, the program ended appropriately with Kuttner saying Gina Rinehart was talking absolute nonsense.

And here’s why, Gina!

In the following diagram you’ll see if people paid the economic rent (which you and your class of 0.1% try to keep invisible) for the land and natural resource over which they’ve been granted the use and control, taxes on both labour and capital could be reduced.

That is, both workers and businesses would be far better off!  Get it?

But you don’t want that, do you Gina?

You want your profits AND our rents!

Nice!  Does greed know NO bounds, Gina?

It’s me …. I’m over here!

It gets very lonely sitting here and having the only remedy capable of repairing world economies overnight.  And it’s just a simple fiscal adjustment.

Meanwhile, TV and newspapers cover the global financial crisis relentlessly, running hither and yon for answers from the same clueless or corrupt individuals who couldn’t see the collapse coming from a long way off in the first instance.

Even the BBC and the ABC, who thinking people believe are capable of investigating fresh ideas in an unjaundiced fashion – no, they too are held hypnotically in the thrall of the modern economist.  It’s absolutely incredible!

I’m not big-headed enough to suggest I’m the only person with the antidote to all the financial turpitude and madness surrounding us. Henry Georgists have had it in their hands for 133 years now.

You see, Georgists are the only real experts in how to exit from economic depressions.  They’ve read and understood (that part’s critical: they understood, ‘saw the cat’) Progress and Poverty, the sub-title of which is (wait for it!….) — An inquiry into the cause of industrial depressions and of increase of want with increase of wealth … The Remedy.  The sub-title says it all!

And it aint just words.  The ideas work!  But the high priests with their hands on the levers of economies like to say a 133 year-old remedy–it’s actually millennia old!–can’t possibly work in the 21^st century.

They’re wrong, of course, but they have to say that because they don’t want to offend the 0.1% who steal the greater part of our common wealth, our land and natural resource rents.  That’s what’s made them billionaires in the first place, and they’re not handing over their super-profits, our rents, to anyone!

And the modern economist toes their line.  That’s what neo-classical economics is all about: keeping sweet with the 0.1%, the rent-seeking parasites.

And our economic high priests also lie.  They say that land rent is only 1-2% of the economy, so it’s pretty pointless trying to capture that for public revenue when it needs to be around 30% of the economy, they assert.

I created a chart based upon the work of Dr Terry Dwyer, who actually bothered to do the work on land rent (instead of simply dreaming up an extremely low figure), which shows 1-2% to be nonsense.  It’s actually 32.5%.

If you add other natural resource rents, such as mineral rents, fishing, forestry and spectrum licenses to the rent of land, you’re looking at more than 40% of the economy–the common wealth–being creamed off, largely by super-wealthy parasites, the 0.1%.

Ken Henry became alert to this fact in his world-leading inquiry into the Australian taxation system.  His panel concluded Australia needs to abolish over 100 damaging taxes and use only four taxes as the revenue base: income tax, the GST, a land tax and a mining tax at the rate of 40% of net profits (i.e. the super-profit, or mineral rent).

So far, politicians and economists have assiduously avoided the land tax recommendation and severely reduced the mining tax. They’re now dutifully concentrating mainly on increasing the GST – because it’s easier on their bosses, the 0.1%.

We must NOT interfere with these parasites!  “That’s class warfare!”  The rents are theirs and must remain theirs!  Harumph! Common wealth, indeed!  🙁

The Gonski Report on education must be funded by increasing the GST, or taxes on labour and capital, as usual, they say: same for infrastructure, health, defence, social welfare.  Don’t look in our direction, at our natural resource rents.

Yes.  Don’t DARE look at that 40% of the economy currently stolen by the leeches, the 0.1%!  Let them remain invisible to everyone, and let us continue to wonder how we’re to fund a workable economy.

The Deputy Prime Minister of the UK, and leader of the Liberal-Democrats Nick Clegg, had the temerity to sing the advantages of a land value tax on the weekend.  And didn’t the 0.1%, including Prime Minister David Cameron come down on him like a ton of bricks!

Yep.  It’s lonely, isn’t it, Nick?

Let’s just sit in the corner together here singing the Liberal-Dems anthem, shall we, Nick?

That’s it! Sing it out!

THE LAND SONG

Sound the call for freedom boys, and sound it far and wide,
March along to victory, for God is on our side,
While the voice of nature thunders o’er the rising tide:
“God gave the land to the people.”

Chorus

The land, the land,
‘Twas God who made the land,
The land, the land,
The ground on which we stand,
Why should we be beggars
With the ballot in our hand?
God gave the land to the people.

Hark! The sound is spreading from the east and from the west!
Why should we work hard and let the landlords take the best?
Make them pay their taxes on the land just like the rest!
The land was meant for the people.

Chorus

Clear the way for liberty, the land must all be free,
None of us shall falter from the fight tho’ stern shall be.
‘Til the flag we love so well shall fly from sea to sea,
O’er the land that is free for the people.

Chorus

The army now is marching on, the battle to begin,
The standard now is raised on high to face the battle din,
We’ll never cease from fighting ’til the victory we win,
And the land is free for the people.

[SOMETIMES CONFUSED WITH PATERNALISTIC DAY]

I characterise the USA as Our Father who art over there, such is the deferential reverence Australian prime ministers have paid to a succession of war-mongering presidents of the USA since JFK. (In case you don’t know, it’s in the name of “bringing freedom and liberty”.)

Look who we’ve liberated:-

“We need you in Viet Nam.”

“Right. When?”

“We need you in Iraq.”

“Good-o. We’ll be there.”

“We need you in Afghanistan.”

“OK, you can count on us again.” (Aside: but what, if any, real chance this time? Didn’t Afghanistan stymie and defeat Alexander the Great AND the Ruskis?)

But we’ve got to keep the expansionist US war machine well oiled, don’t we?

BTW, how’s Iran shaping up as the next invadee, guys? (I guess we’ll be there in due course, too.)

Remember when US foreign policy was isolationist – the good ‘ol days?  [Sigh!]

US movers and shakers are wrong, however, to keep looking down their noses at the rest of us these days. Their Empire is falling apart. Like Ancients Rome and Greece, they’ve spread their encampments too thinly around the world to continue feeding a home market engaged, like the ancients, in real estate speculation. (Latifundia perdidere Italiam – remember?)

As with much of the world post-WWII, the US tax system began to promote real estate rorts above the creation of real wealth. The 0.1% have literally lapped up our rents, the common wealth, ever since.  Hence, the need to credit-feed –  and this eventual world financial collapse.

So, who’s going to be the CEO of this collapsing Empire, our Father’s Day daddy of them all?

Will Barack Obama get another term?  Maybe not, because he’s clearly an economic illiterate.

But is that any criterion for the upcoming election? Smarmily clever speeches from Mitt Romney (God bless religious freedom!) and his henchman Paul Ryan have proven economic ignorance to be no disqualification.

The Republicans are going to return America’s unemployed to work without 1) discovering rent, or 2) upsetting the 0.1%.

Good work boys, or should I say “fathers” on this day?  So, regardless of your rhetoric, in reality you’re blowing a raspberry at the American people, just as Obama has – and just like the King of Id to HIS subjects.

… AND IT’S ASTRONOMICAL HOUSEHOLD DEBT WHICH HAS PUT THE BRAKES ON THE ECONOMY

Here it is pictorially.

Two Australians offer the world alternatives to the stupidity of bank bailouts and austerity.  In combination, they’d definitely work:-

1)  Former Treasury head, Ken Henry:  Abolish all the deadweight taxation on labour and industry.

2)  Professor Steve Keen:  A ‘debt jubilee’ comprising a government grant to ALL citizens, to be applied in the first instance to household debt.

There’s something in the air down here in the Antipodes – and it’s exhilarating.

DON’T LET LYING DOGS SLEEP

Humphrey McQueen’s speech outside the British High Commission, Canberra, on 17 August 2012

The news that British police had entered the building containing the Embassy of Ecuador gave Melbourne’s Herald-Scum a further chance to distort the Wikileaks-Assange story. According to that Mass Murdoch outlet, hundreds of ‘professional protestors’ were gathering in London. This language came from an organisation, News International, notorious for its professional phone-hacking for profit in contrast to the ‘hacking’ to advance peace and justice that motivates Wikileaks and its hundreds of millions of supporters. So, here we are, the ‘professional protestors’. The implication behind ‘professional’ is that we are being paid. If we were truly professional we would have a union which would not let us work in the extreme cold and rain. Far from being ‘professional’ we are here as amateurs, as lovers of the truth behind the ‘news’ peddled by the professional liars and louts around Murdoch.

To say that one loves truth can be no more than a pious platitude. Indeed, we need to be wary of maxims such as ‘The truth will make us free’. The reality is several times more complicated. What can set us on the path to being freer is the struggle for the truth, especially the battle to communicate the truth beyond a few experts. On top of that hard task is the fact that truth-tellers are likely to end up in prison, Bradley Manning being a prime example. His incarceration is a physical expression of the emotional damage suffered by all whistle-blowers.

Without Bradley Manning, it is much less likely that the US war-machine would be after Wikileaks. Manning is a hero, displaying extraordinary moral and physical courage in withstanding months of soft torture to get him to rat. His reason for passing on the US government documents is why the world needs a Wikileaks. He had evidence of criminality. He told his superiors. They did nothing. In refusing to ‘obey orders’, and thus be complicit in those crimes, he made the material available to the world.

Manning lived out the legend about George Washington’s response when his mother asked him whether he had chopped down the cherry-tree: ‘Mother, I cannot tell a lie.’ Successive US governments seem incapable of doing anything else.  Their addiction to black propaganda extends to their allies in the UK, Sweden and Australia. As the US journalist and precursor of Wikileaks, I.F. ‘Izzy’ Stone used to put it: ‘All governments are run by liars and nothing they say should be believed.’

Earlier this week, UK Foreign Secretary William Hague said that Assange was ‘facing criminal charges’ in Sweden, which is a bare-faced lie. The ‘special relationship’ between the US and UK is not affected by changeovers from Labour to Conservative administrations in Whitehall, as Blair demonstrated with the invasion of Iraq. UK governments are as alarmed as is the CIA at the prospect of endless exposures of its crimes from Wikileaks-style bodies.

At the same time, the Swedish politician driving the investigation in Stockholm was talking about ‘rape’. The ABC maintains a version of that slander by reporting that Assange is wanted for questioning about ‘sexual assault’, as if violence or some kind of coercion had taken place. It is a tribute to the good sense of a majority of Australians that the nature of the possible offence has broken through this campaign of character assassination. The conduct at issue is best described by one of his US lawyers as ‘misconduct’ and is not any kind of criminal offence in the UK, the US or Australia. However, even if Assange had never gone to Sweden, the US authorities would have come up with some way of diverting attention from their crimes onto him, as they have tried with his family background and with Manning’s sexuality. The tactic aims to fool people into believing that what goes on inside the heads of that pair is more important than the crimes they spotlight.

As much as we need to counter the black propaganda from overseas, our target has to be the liars in the ALP administration and the Australian-based media. Prime minister Gillard opened the lying with the allegation that Assange had engaged in criminal activities by releasing ‘top secret’ material. Since the Federal Police blew that charge out of the water, she has taken refuge in the claim that Australia cannot ‘interfere’ in legal processes elsewhere. That line is hard to square with interventions in Indonesia over drug traffickers and in Libya on behalf of a War Crimes lawyer.

The big lie concerns what the government has been doing by way of consular and diplomatic contact. Attorney-General Roxon and Foreign Minister Carr point to the occasions on which officials have approached Assange or his legal team. What they don’t own up to is what they are telling the US and UK authorities. Once a Wikileaks-style body publishes the traffic concerning Assange, Australian politicians and diplomats again will have a tough time maintaining their current positions as anything more than a morass of mendacity.

That exposure has started with information secured by the Fairfax media. We might ask why that content was not freely available in the first place. From the Washington Embassy, agent of US influence Beazley has had one concern above all others. He and Gillard have been pleading for at least a few hours notice of any overt moves by the US of A against Assange. The lickspittles need that time to get their lies straight.

A second foretaste of what to expect from the high-level emails came this week when freedom-of-information requests got the assessments from the Department of Defence about the allegation that the Wikileaks had endangered the lives or safety of Australian forces in Afghanistan. The report showed that there was no evidence for that claim. The danger, according to Defence, was that the revelations would further reduce support for the war. Hence, the commitment depends on keeping the truth about corruption and criminalities from the public. The case for keeping some diplomacy top-secret is once more shown to be a cover for deceit.

The wars in the Middle East point to the context needed to make sense of the ALP’s subservience to the US over Wikileaks. As ever, Canberra is giving the war machine what it wants with the Marine base in Darwin, a base for drones out of Katherine and greater access to HMAS Sterling near Perth. Those sell-outs were announced during a parade of sycophancy during the Obama visit last October which sickened even unquestioning supporters of the Alliance. The enthusiasm for the ‘American Alliance’ voiced by Gillard and Co. keeps quiet about its core component, namely, the intelligence-sharing network set up in the late 1940s. Publishing secrets is a low level of code-breaking.

Assange fears for his life if tried under the US Patriot Act. No doubt, his fears extend beyond any military commission at Guantanamo to what is likely to befall him on the streets of Quito. Should he get to Ecuador, he will not be safe from the US. They will never give up. Alongside the secret Grand Jury in Virginia preparing to indict him, he will know that Washington will also be preparing to oversee his murder. Wherever he goes, he will be a target for an assassination team.

The US military set up its School of Assassins (aka the School of the Americas) to train Latin American officers to murder tens of thousands of trade unionists and other progressives, including Catholic nuns and a bishop. Indeed, Even had President Correa refused Assange’s request for asylum he would be watching over his shoulder for an ‘accident’ to his aircraft and for a US-backed coup against his socially progressive administration. He survived a police revolt in October 2010 after he had cut off their funding from the US. The US faces a continent-wide challenge to its control of resources and markets. Washington backed the failed coup against Chavez in Venezuela in 2002. Two soft coups, Honduras and Paraguay,  have succeeded since 2009. More covert actions are in the pipeline to make ‘democracy safe for oil’.

The record shows that there is nothing the rich and powerful won’t do to hang onto their privileges. Why should anyone be amazed at the UK threat to enter Ecuador’s embassy when British governments have been invading countries for hundreds of years, most recently Iraq. Australia’s indigenous people can testify to that tradition.

Reflecting on the hope that the truth will set us free, we encounter Edward Said’s saying that the duty of the intellectual is to speak truth to power. That obligation is never confined to intellectuals. No one has done more than Bradley Manning to fulfill that moral imperative. So, what should we all be saying to the rich and powerful, that One Percent? First, we must join in telling them what they do not like to hear; even more, we must chorus what they do not want the rest of us to know.

‘Telling the truth’, whether to power or to the powerless, is not enough. Diluting the super-saturated solution of falsehoods that passes for ‘the news’ is valuable only to the extent that it helps to break the power of the US war machine as the advance guard of corporate plunder of the creativity of human labour and of the wealth of nature. That goal has brought us together in Canberra this afternoon in support of governments such as Ecuador’s that display the self-respect so lacking in British High Commission behind us and the national gasworks on the hill in front of us.

OMG – Tony Abbott, Australia’s Prime Minister-in-waiting on the ABC’s 7:30 last night.

It doesn’t bode well for the nation’s future at all.

BHP Billiton has announced it won’t be proceeding with the $20 billion expansion of the Olympic Dam copper-uranium mine in South Australia. CEO Marius Kloppers confirms this is not as a result of the new minerals resource rental tax. (MRRT)

But, no, Tony Abbott told the ABC’s Leigh Sales, it’s the MRRT that’s put the project on the back burner. Marius Kloppers was apparently just being nice to the Labor government.

“The new tax has pushed up BHP’s costs”, Tony declared adamantly.

No, Tony. A tax on natural resource rents cannot increase a company’s costs. It may reduce its super profits, but it can’t add to its costs.

That’s the beauty, and the difference, of a tax on land or natural resources, you see, Tony.  As the Henry Tax Review showed, it can’t be added to costs because it is in the nature of a rent.

That’s Economics 101.

Unfortunately, Leigh Sales picked you up on several statements, and noted Marius Kloppers said it wasn’t the mining tax, but she failed to pick you up on this important point.

Your offsider and our future Treasurer, Joe Hockey, is also misguided on the point. (There’s a pair!) He was out and about yesterday also laying the blame for the slowdown in mining projects at the door of the MRRT.

Not China’s slowdown; the deepening uncertainty about our major market.

Not the significant environmental costs appertaining to Olympic Dam.

It’s the MRRT.

And black is white, Tony?

It’s both sides of politics, of course.

Politics around the world has degenerated into the Goebbelslike-doublespeak of George Orwell’s 1984.

Big Brother is well and truly with us …… and it’s much worse than the TV show.

I’LL RE-CREATE JOHN HOWARD

Now Tony Abbott has announced that he’ll re-create Prime Minister John Howard’s ‘golden age’.

Want a bet, Tony?

And wasn’t it a false golden age, born out of the false prosperity of the greatest real estate bubble in Australia’s history, anyway?

You want all that again, Tony?  A mirage that makes people happy until the bubble bursts?

Mind you, I don’t think Malcolm Turnbull or Julia Gillard have anything real to offer, either.

Only BS.

An all-in land tax—in which the poor widow will be looked after—and abolishing the 125 penalty taxes recommended by the Henry Tax Review would fix this financial impasse quickly, Tony and Malcolm and Julia.

Oh, but then none of you can extract yourselves from the pockets of the 1%, can you?  Bit difficult?