Nobel prize-winner Joseph Stiglitz has it pretty right. Like Michael Hudson, he notes a serious distinction between rents and taxes. Therefore, capturing economic rents (unearned incomes) should not be confused with “fiddling with taxation”, as some have critiqued the revenue switch from taxes to economic rents recommended for Australia by the Henry Tax Review.
Understanding rent-seeking is to see exactly how wages and profits are having the life squeezed out of them by speculation in economic rents. The rentier economy into which we’ve morphed has not only dug a vast wealth chasm between the 0.1% and everyone else, but it has clearly ground world economies to a halt. By blaming outcomes—governments; debt; Britain’s vote today to leave the European Union, and so on—we make ourselves impotent, effective action remaining both contentious and impossible.
The fact that the US has left the rent-seeking gate open suggests it has learnt nothing at all from the leveraged sins of Wall Street which led to its 2007 property collapse and brought the US financial system to its knees. This is nothing short of flabbergasting.
Surely we need to set our sights on capturing ‘super profits’ (economic rents) if wages and capital are to be freed up and the wheels of industry and productivity are to turn again? However, the remedy is either invisible to mainstream analysis or not contemplated by neoliberal governments because it will take the speculative puff out of land prices. Hopefully, Brexit will assist in undertaking this necessity.
Australia and the US employed this reform constructively during the Progressive Era, in the wake of the 1890s depression. Failing similarly to capture a far greater part of economic rent than we currently do will undoubtedly consign us to contracting Japan’s lingering economic disease.
As economic rent occupies some 25% of the economy, the term ought to be on everybody’s’ lips instead of being verboten, but if that’s too technical ‘unearned incomes’ will have to suffice.
Amending Benjamin Franklin: “The only certainties in life are death and economic rents.”