We can no longer deny the critical sign of impending social fracture. Inequality has grown rapidly – and continues to grow apace. Over the millennia this ever-widening gap between rich and poor has been the seed that sprouted revolution and the collapse of empires.
For too long modern economists looking at GDP growth wrongly claimed it filtered down to the middle class and the poor, but Thomas Piketty‘s empirical studies in his best-seller “Capital in the Twenty-First Century” certainly show that it hasn’t.
So maybe we need workers to rise up in revolt against the 0.1% , in order to bring about socialism as advocated by Karl Marx?
Not at all necessary, said Henry George whose ideas Marx had called ‘capitalism’s last ditch’: you only need to socialise the rent of land which, although it is publicly-generated, is being improperly privatised. George claimed this action had potential to leave wages and capital completely untaxed, but he thought cooperation to this effect would prove difficult, because those who had the privilege of currently capturing publicly-created economic rent would not cede it readily.
These days we grant the rent-seeking privilege in no small part to banks, who not only create money as they write mortgages, but also generate ‘super-profits’ based upon escalating land prices, the rent of which rightly belongs to the community as a whole, rather than to banks and individuals.
Emergent economic questions are being ignored. Can we continue with the status quo without revolution? What will happen to those counties which have proceeded down the same extraordinary debt path as Greece? Does the fiscal measure of public capture of land rent indeed represent economic stability and much-needed social cohesion?
BREAKING! Bryan Kavanagh today stripped Australia of its AAA credit rating as a result of its now impossible level of private debt. “Debt that cannot be repaid will not be repaid”, Mr Kavanagh said, reduced the rating to BBB-.