Recently, I’ve been interviewed fairly regularly on Sharon Firebrace’s “Razor Sharp” on radio Melbourne 3KND.

I make the point that economics is simply the interaction between people and the planet to produce wealth – because everything comes from the land.  So we proceed to discuss the issues of the day in terms of this measure – whether a particular activity is acting to benefit people and/or the planet.

Does the banks’ putting people into hock for thirty years against bubble-inflated mortgages assist or hinder people?

Do large corporates getting our mineral wealth out of the ground owe more than trivial royalties to the Australian people because, let’s face it, the extraction is pretty permanent, and the resources are ours?

Like Michael Hudson, we’ve also come to the conclusion that the FIRE sector (finance, insurance and real estate), like fire itself, is a good servant but a bad master.

As I mentioned to Sharon Firebrace yesterday, analytical and challenging programs such as hers and others on 3KND and on 3CR are not to be found on mainstream commercial stations. The latter are too busy comparing the selfsame policies of Tweedledum and Tweedledee – and trying hard to distinguish a difference.  There’s none.

The mainstream will interview a minister or a shadow minister and try to find something contentious in what they’ve said—if they do, they’ll get all worked up about it—but never challenge the social sickness of longstanding poverty or the wealth divide, nor how current policies are assisting to reinforce the obscenely growing gap between the mega rich and the 99(.9?)%.

Speakers for the status quo proliferate on the commercial stations, and any others are roundly derided or abused.

For all that, I’m confident that younger people have seen through the pointlessness of mainstream radio and are looking for alternatives sources of information, in programs such as “Razor Sharp”, and via the social media.

Much of the mainstream appeals to older people and those who are working themselves up into an angry tizz about the social change that every day becomes more essential.

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Those who cannot remember the past are condemned to repeat it.
– George Santayana

The banks funded land price bubbles in the 1880s.
We had a depression in the 1890s.
We said we’d regulate banks so it couldn’t happen again in the 1890s.
We had a world war from 1914 to 1918.

The banks funded land price bubbles in the 1920s.
We had a depression in the 1930s.
We said we’d regulate banks so it couldn’t happen again in the late 1920s.
We had a world war from 1939 to 1945.

The banks funded land price bubbles in the 2000s.
We’re experiencing another depression now.
We’re saying we’ll regulate banks so it can’t happen again.
We will ….

Early warnings:-

1880s:  “Progress and Poverty: An inquiry into the cause of industrial depressions and of increase of want with increase of wealth … The Remedy” – Henry George

1930s:   “There never was a time when the need was greater than it is today for the application of the philosophy and principles of Henry George to the economic and political conditions which are scourging the whole world. The root cause of the world’s economic distress is surely obvious to every man who has eyes to see and a brain to understand. So long as land is a monopoly, and men are denied free access to it to apply their labor to its uses, poverty and unemployment will exist. Permanent peace can only be established when men and nations have realized that natural resource should be a common heritage, and used for the good of all mankind…. I am of the opinion that rent belongs to society and that no single person has the right to appropriate and enjoy what belongs to society.” – First Viscount Philip Snowden

2000s:   “In the light of empirical facts suggesting that there is, in fact, a reciprocal relationship between real estate investment and the creation of wealth, in other words, between rent seeking and a nation’s economic health, Henry George’s remedy still awaits trial application. It is not only politicians, but leaders also of business, public instrumentalities and the churches who should be alarmed at the urgency of these economic signals. History will surely condemn their complacency should they fail to look at the extraordinary employment opportunities to be gained by shifting taxes off production and onto resource holding.” – Bryan Kavanagh

BENEATH THE HOUSING FINANCE HEADLINES (LVRG blog)

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!)

TIME TO EUTHANASE THE MAJOR POLITICAL PARTIES?

What else can you do when you can’t get them out of the pockets of the 1%?

These people could provide a most interesting alliance!

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.

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!

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.

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!