Mason Gaffney’s “Neo-classical Economics as a Stratagem against Henry George” lays bare exactly how rent-seekers hijacked the science of economics, to turn it into a self-serving art. Natural resources were to be treated the same as man-made capital. Rentiers and lackey institutes still manage to quote Adam Smith favourably, but classical theory that land rent is the preeminently suitable revenue base goes missing: completely.
Economics textbooks go out of their way to lie that the economic rent of our natural resources is only one, two, three or four per cent of GDP, so it is of no great import. Studies actually bothering to quantify economic rent, show it to be some 25% of the economy – but these are ignored.
Rare genuine sorties into tax reform find land-based revenues to carry no deadweight and to be the most fair and efficient, but political parties funded by major rent-seekers sweep these under the carpet.
In the light of regular calamitous burstings of land price bubbles in real estate—representing not supply and demand but the ongoing private capitalisation of unearned land rent—it’s to our great shame that we continue to allow the education system to promote rent-seekers’ devastating case.
Economies of the world fester and crumble as banks run amok, but the 0.1 per cent still control the levers pushing speculative rent-seeking above productive activity.
“The Big Short” notwithstanding, we remain kowtowing to this greatest of all corruptions. Why?