With the mining magnates armed with an $8m war chest to defend their ability to gouge monopoly rents off the productive sector of the economy, it’s apt we put this video back up. Whose resources are these?
Caveats and Prejudices
photo credit: Thoth, God of Knowledge
Tohm Curtis
Week #6: Caveats and Prejudices
This week I’m going to twist a bit of military wisdom: ‘If the map doesn’t match the ground, the ground is wrong.’
It may be entirely the case that there is systemic bias to my criticism of my courses. For example, I can feel that my finance lecturers are grossly neglecting the role of inflation in investment decisions, but in the end they cover it 3 weeks later. My real criticism is that the lecturers don’t place the same emphasis as me on what I view to be important. Quite rightly, no academic institution would set a syllabus like this.
I’m currently reading ‘Animal Spirits’ by Robert Shiller and George Akerlof. It is a timely book, and points to the bias in processing information according to our prejudice.
Specifically this passage on confidence and its role in determining economic outcomes:
“The very meaning of trust is that we go beyond the rational. Indeed the truly trusting person often discards or discounts certain information… [they] act according to what [they] trust to be true.” Pg.17.
What’s missing from the quote is that ‘confidence’ has its etymological roots in ‘trust’ or ‘belief’. But the passage certainly communicates my experience, in both giving and receiving information.
Much of what I’m taught in economics I naturally wish to reject. I have a disadvantage (from the academic career perspective) in that I, unlike many students in my course, arrive prejudiced against Neo-classical models.
I have to study twice as hard because my mind reflexively dismisses models as unimportant since they don’t reflect the real world or real decisions anyway. But ‘real world’ is HECS debt and passing, so I need to learn what I will be assessed. I even need to learn it to competently critique the models.
But the issue of prejudice doesn’t stop there. How can we learn if we reject any new information that contradicts old information? Furthermore what are the implications for Georgists?
I think we (Prosper/Earthsharing) are equally guilty of this. For example, Geoists in History is a column that retrospectively labels notable figures as ‘Geoists’ or ‘Georgists’ even (as was the case of Ben Franklin) they died long before Henry George was even born and could formalise his theory. One can simply trawl through all the statements a person made and select all the info that conform to our prejudice and reject anything that doesn’t.
It is a bad (but beguiling) habit, so all I say is, take my criticisms with a grain of salt. I carry about me prejudices.
Kindly Remove Your Fingers From My Heartstrings, Aussie Pollies, You Don’t Know How To Play Them.
Have you ever heard the word ‘family’ bandied about so often as in the Government’s ‘response’ to the Henry Tax Review last week? I put the word ‘response’ in parenthesis because, as Alan Kohler so aptly pointed out on the ABC website, Henry’s comprehensive review and the Rudd/Swan tax ‘reform’ statement (sorry, our ‘leaders’ have driven me to parenthesis hell) had bugger all to do with each other. Except they were released on the same day. And they both mentioned tax a fair bit.
Why you would commission a tax review from some of the sharpest thinkers this nation has to offer and then ignore its findings is beyond me. Fine, waste every-one’s time but, damn it, leave my family out of it! I don’t think I would mind so much if they were only ignoring the first opportunity for progress our country has had for yonks, I just wish they wouldn’t do it so loudly. And cheesily.
A key recommendation of the report was for the introduction of a universal 1% land tax. Such a tax would encourage optimal use of land, discourage speculative land hoarding and promote housing affordability and worker mobility. But not only are the Government and Opposition ignoring this recommendation, they’re jumping up and down and yelling about their deliberate ignorance.
“Taxes on the family home,” says Abbott, “We reject that.”
“We want the Government to be honest,” says Hockey, “(about) land tax on the family home.”
And Rudd used the term ‘working families’ approximately 1.4 million times before “reject(ing) any moves to apply land tax on the family home,” (Herald Sun).
So a truly progressive and common-sensical reform has been rejected in a gush of fear mongering that implied it would somehow hurt our families and their homes.
Attention Rudd, Abbott, Swan, Hockey et al! You are not our parents and we are not little kids: we do not buy your clumsy spin. Especially when the tales you’re spinning are about our parents and our little kids. Honestly, if I have my family thrown at me one more time as an excuse for rejecting tax reform I’m gonna divorce my parents and tie my tubes.
Resource Rents in the Eye of the Storm
The might of the Australian mining industry is throwing everything it can at mainstream Australia at present.
Can Joe 6 pack comprehend the difference between industry that is man-made ie car manufacturing, versus the mining industry, who are ripping up our valuable earth as if they scientifically produced the iron ore?
Apparently, the Rudd Government is largely doing what the mining industry asked for in their submission. Thanks to the ever accurate Peter Martin, we read that the difference between now and the collapsing 2008 economic environment (when the Henry submissions were sent) is that ‘decades of profits to come’ are now expected.
Mining magnates have flipped their view now that they realise how much they will be contributing back to the commonwealth.
Miners had supported the Resource Rent Tax because it included the ability to write off losses.
The ramifications of the earth’s privatisation are rearing their head where ever we look at the moment:
- Greece has run out of money due to a poor taxation system. The bursting of their property bubble has made their pensioners even angrier at having the retirement age raised from 53 to 67.
- Goldman Sachs is facing a raft of fraud cases and is now attempting an out of court settlement. The risky nature of the US property bubble saw the use of dodgy derivatives to offset this risk.
- Aus-Aid has announced a $53m ‘aid’ package to map and value the Pacific’s resources. We know this is code for ‘so we can sell it off to our mates in high places’. Tragically none of this money is being spent in Vanuatu to train local ni-vans on how to value the land (we are not sure about the rest of the Pacific). A hand-out ‘beg-for-aid’ mentality is ensured.
- Indonesia has opened up its property market to foreign investors.
- East Timor desperately needs land reform to move on from the post Indonesian rule and disputes over land title.
- China’s property bubble is on the precipice. Check how land speculators are dodging China’s credit restrictions.
Have a listen to our Renegade Economists podcast. The bottom line is that more people need to understand geonomics, an earth based economic system.
You can do this by joining Alanna Hartzok’s Earth Rights course. It takes about 4 hours to arm yourself with knowledge to read between the lines to decipher what the big boys are really up to. Click on the Earth Rights Pacific class to join so we can discuss local issues.
The earth has been sold off and the message in this course is that we can reclaim it, not by force but by redirecting the invisible hand to value and share the earth’s resources on all our behalf, not just for neo-colonising land speculators.
Negative Gearing Too Risky? So Are Property Bubbles…
The Rudd- Swan government’s flat denial of negative gearing reform proves that modern politics is incapable of dealing with the difficult questions. It was all too risky in an election year.
The dreams of working families are set to play second fiddle to the propertied class for years to come. But yet the announced reforms are the most significant tax reforms in living memory Mr Swan? Who are you playing us for?
Even more so today as interest rates are again raised. Hurrah – those who already own property don’t even have to ask for a subsidy from their subjects – the government is cheering the way via negative gearing write-offs.
The higher the interest rate, the greater the write-off.
Today’s write-offs equate to a $29.44m gift to the owners of the Great Australian Dream (1.6m negative gearing property owners with an average $300K mortgage over 30 years x 0.25/ 40%).
Working class people will have to pay the wealthiest via their taxes to cover this $30m trickle up.
All this and more is obvious to foreign economic experts. Our government and selected media insiders are the only ones that can’t acknowledge our bubble mania.
Our land and housing prices are more than 70% over their long term average, according to one visiting expert, Edward Chancellor, but yet the Rudd government has failed to even consider reforming the two most obvious tax distortions, negative gearing or the 50% capital gains tax deduction.
Post bubble, will renters thank negative gearing for keeping housing so high that they can’t enter the market?
Will they be happy when their superannuation investments are wiped out 2 – 3 times before retirement because of the dominance of lobbyocracy lording over long term thinking? Asset Bubbles in a financialised economy are ever so risky.
And Swan tempts young people to scream by saying that he is proud of the $700m first annual federal permanent infrastructure fund. Remember the statement:
“Your Taxes Fund the Infrastructure That Makes My Land More Valuable.”
“Cheers”
The Henry Review has opened up the field of discussion on land taxes – hurrah! However, we must take them to task over this statement:
Though the Review’s proposed reforms to taxes, in particular stamp duty and land tax, could play significant roles in addressing housing affordability, other policies are likely to have a more pronounced impact on the responsiveness of housing supply.
This has been jumped upon by the property lobby as another clarion call for further urban sprawl forever policies. What about the property lobby’s willingness to openly declare they will crimp supply to bump up profits? See Mirvac here and Stockland there.
Forget the fact that the National Housing Supply Council wimped out on stating that there are 622,781 speculative vacancies in Australia. Read our calculations plus other immediate supply resolutions in One Handed Housing Supply.
Christopher Joye even critiques the ABS/ government for there being no solid land valuation statistics. For years we have been wanting a central body to release the State data uniformly; S.A’s land price data is released the month after collection, whilst Victoria’s takes 18 sleepy months.
However, back to the land supply versus zoning issue. No government body has openly recognised the role of speculative vacancies. This must become a central COAG issue.
Few are talking about the need to build upwards, not outwards. Rob Adams talks about 500,000 people being able to be housed along our transport routes. Nothing was done about that by the Vic State Govt, but you can bet your bottom dollar the astute investor would have bought up along tram routes in cultural hot spots (see Sydney Rd).
The government must look at these factors to have a rounded view of the housing market.
Yesterday’s announcement’s that property prices have increased by 20% in the last year must make minimum wage earners wince. Workers received no wage increase last year, following a 4.1% increase (Oct 08) and a 7.7% increase in Dec 06.
‘Working families’ KRudd? The joke is on wage slaves when capital gains holds the reins.
Who lays the ALP’s golden eggs?