Ignoring the lessons of history
Any analysis of history shows that for justice to be done to all people, the rent of land must be paid into the public treasury for the privilege of the exclusive occupancy of land: it cannot be ‘owned’ without this contingent liability. All the great social philosophers, from Leviticus (25:23-24) to the USA’s Henry George have signed up on this point.
However, we close our minds to this requirement, choosing to break this natural law and building up inflation-generating land price bubbles. These regularly burst into recession every 18 years or so, and eventually into the major economic depression such as we are now experiencing.
As a real estate valuer acquainted with the principles of Ricardo’s Law, it seems obvious to me that we need to comprehend that land prices are necessarily inflationary, because they simply represent the privatisation of what should be public land rent. Pathological land prices therefore build up into bubbles until they burst into a partial correction. Although banks and borrowers are both savagely affected by this process, governments, in the thrall of the rent-seeking 0.1%, choose to bail out the banks who misguidedly lend against the security of a bubble. They should rather have chosen to write down the impossible debt of those borrowers conned by the banks who know this unfortunate history all too well. They prefer to bury this history in order to continue the monopoly game to their advantage.
There is a long history of people trying to feather their nest in land price bubbles, going back to Cicero in Ancient Rome: “The Consuls valued my house at nearly two million sesterces at their assessor’s advice: and the other places very stingily – my Tuscan villa at half a million sesterces, and my Formian at half that sum.”
We continue to ignore history’s rather obvious economics lessons because we like to think ‘it might be different this time’ – that is, before we learn to our great distress that it never is different.