Economists keep telling us that land prices are high because of “excessive demand” but this shows that supply and demand affects land rent, not land price: –
Here’s reality!
Just look at Australia’s land price increases since 1984! That’s why women must go out to work too early after the birth of their children.
Anyway, forget about taxing land values instead of incomes: you women had better just get out there to work! No UBI for you!
“But it wouldn’t be capitalism if we collected land rent instead of income taxes!” Yes it would. We made a pretty good effort during the Progressive Era when most taxes were levied on land values – until Neoclassical Economists lied to us that there was “No longer enough rent“.
That’s BS of course, because all taxes and their excess burden come out of rent anyway (ATCOR and EBCOR), so there’s always enough rent to be taxed away to rid us of inflation!
How refreshing to hear Dr Cameron Murray’s insights into ‘property’! It makes a mockery of economists’ idea suggesting we would reduce property prices if we were to rezone more land.
Pull up a seat and pour yourself a cuppa to hear an analysis that challenges often held misconceptions. It is worth listening right through if you want to learn how backward what is dished up to us as how finance and economics works really is.
(The story of the Singaporean social worker who had to come to Australia for a job because there was no homelessness in Singapore was particularly instructive!)
We had fair warning but were taught to disregard that prohibition.
But anyone who was anyone continued to say that the privatisation of land rent into a land price came at a great cost: it generates excessive private debt.
The English labourer of the 15th century lived the life of Reilly because he had more than half his income to spend after food, clothing and shelter. He had no debt because he paid land rent: land had no price. No, he didn’t drive a car, have TV nor a computer, but neither did the King of England. Today, like the rest of us, the English labourer is in debt.
Australia tops the class in pumping up land prices: it’s a case of every man to the wheel. Housing (read ‘land prices) has become unaffordable for everyone needing a house except the very wealthy. Many young people feel they need to overstate their incomes to be able get a loan from the bank for a house.
So, here we are today, with everybody saying the Reserve Bank of Australia needs to increase the cash rate from 0.1%, even though it will put many Australians into deep mortgage stress – and worse. Let’s see what the RBA does next Tuesday?
Whatever the RBA does, I doubt the property market will collapse next year. This looks more like October 1987 than October 1989 to me, when the share market collapsed two years before the property market. Of course, a property market collapse is the sine qua non for an economic depression, and many people don’t realise that world real estate markets had collapsed before the 1929 share market decided to follow suit.
The land price virus, along with all the taxes we levy on labour and capital (instead of on land prices), has just about done civilisation in. That’s why we’ve need bigger and bigger budget deficits to cope with the background inflation that’s not measured by the CPI.
So, my money remains on real estate markets topping out in 2026 before we have the mother of all financial depressions because of impossible land prices – once again. Obviously, this is not mainstream analysis, but it’s likely correct because it’s Georgist.
Oh, so we’re about to ‘tighten’ at a land price bubble again?
Well, lookee here!
From Fred Harrison’s “The Power in the Land: Unemployment, the Profits Crisis and the Land Speculator (1983)
And this from StephanieKelton, citing Frederick Thayer
Working towards a recession again – or is it a financial depression this time?
Seems we reject gentle fiscal action at this time because economists and politicians don’t understand the role of land prices and private debt in boom-bust?
Most economists say that the times have changed since Henry George and there is no longer enough rent to replace all other taxes. The times have changed, but there is more rent than ever before!
In fact, people from John Locke to Mason Gaffney and Joseph Stiglitz say that as all taxes come out of rent (ATCOR), there’s always sufficient rent. And, of course, the excess burden of taxation passed on into the prices of our goods and services also comes out of rent (EBCOR).
Australia’s total economic rent is now in the order of 50% of the economy, so the net incomes derived from work have declined to 50% of GDP.
If we taxed land rent away, this would not only reduce the inflation-generating burdens of land prices and taxation, but also provide scope for a decent universal income.
Seems we’re stuck here because too many people believe this is about as good as it gets. However, they’re wrong.
