Rent-seeking deals with setting one’s cap for unearned incomes: getting rich without producing goods or services. It’s a form of parasitism.
Real estate and banking certainly provide services, but they then step beyond their superintendence to become political, by setting out to inflate bubbles in land prices.
Really? How do they do this?
Both real estate and banking have long resisted broadening or increasing land-based revenues – for the reason that it will curb their receipt of ‘super profits’ from publicly-generated land rents. When it’s understood that land price represents the capitalisation of the net land rent remaining in private hands after municipal rates and land tax have been deducted, it is absurd to suggest that our incredibly-inflated land prices are simply a function of the undersupply of land in Australia. Land prices are high because we fail to capture sufficient land rent to the public purse to reduce land prices.
Clearly, real estate and banking have a vested interest in inflating land prices—just as nakedly as the gambling industry wants to pick peoples’ pockets. Many people have come to believe rent-seeking in land prices also serves their interests, but you only have to witness the state of world economies to see they’re wrong.
If you follow these points you’ll also understand why Australia urgently needs a Royal Commission into banking. It needs to get down to such basics.
That’s why I enjoyed Clancy Yates’ piece in the AGE today.