Alan Kohler has a piece in Business Spectator today entitled “Stumped for Global Growth” which gives another good rundown on the financial quandaries facing the world.
He refers to the Bill Gross article “Paranormal Economic Activity”, subject of my last blog, which also criticises what ‘the powers that be’ have been doing.
But that’s the problem, isn’t it? We know the measures being undertaken don’t address how to get economies working as we try to deleverage from impossible debt burdens, but don’t know exactly where we should be heading.
For starters, I’d suggest we must NOT support banks against the people.
It’s pretty simple: people need their effective demand returned, by writing off, or at least writing down, debt – or else economies simply cannot work.
Then, taxes have to be abolished, a la Ken Henry’s prescription for greater capture of our economic rents.
But that’s where it gets more than a bit embarrassing.
Although Alan Kohler himself used Land Values Research Group charts on ABC-TV news which forecast the financial collapse, it’s another thing altogether to support the Georgist solution on which they were based.
Business, unions and politicians have all tended to snigger at the idea of land value capture when things seemed to be going well (i.e. during the last twelve years of the property bubble), believing it to be an idea from the past.
And, as usual, the property lobby will call for municipal rates and land taxes to be further reduced when the Australian property bubble deflates. This is akin to supporting the banks against the people, as it directly opposes what needs to be done.
At this point it takes humility for the likes of Alan Kohler and Bill Gross, steeped in the habits of business, to admit that maybe Georgists are onto something: answers are NOT to be found in the status quo. Maybe Ken Henry’s proposals for tax reform, not far removed from those of the Georgists, offer a timely way out of the impasse?
This is certainly NOT the time for the failed Japanese remedy of supporting the banks at any cost.