The Importance of the Land Ethic

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Alanna_Tom

Alanna Hartzok

The global financial crisis has demonstrated a deep systemic failure of the prevailing economic paradigm. So far, efforts to remedy the situation have failed to address the root causes of the meltdown and are digging the American people deeper into the hole of public debt.

In an op-ed titled “Obama’s Ersatz Capitalism” earlier this year, Joseph Stiglitz wrote that the bailout of banks by taxpayers is a “partnership in which one partner robs the other.” Considering that in 2004 the top 1 percent of the population of the United States owned more than $2.5 trillion more wealth than the bottom 90 percent, and that even in 1996 about 350 billionaires held more wealth than nearly half of humanity, we have surely arrived at the end of the capitalist monopoly game.

Rent-Seeking and Economic Restructuring

Alternative economic analysts have traced the severe wealth gap problem to the ability of the so-called FIRE sector—finance, insurance, and real estate—to concentrate large amounts of money, resources, and power into ever fewer hands via a variety of rent-seeking behaviors. “Rent” connotes unearned income. Alternative analysis considers economic rent to be a socially generated surplus that is being privately captured.

As an economy generates wealth, the price of land and other natural resources increases. Because the gifts of nature cannot be produced by human effort and supply cannot be increased to meet demand, holders of land and natural resources are in a position to capture the surplus—economic rent—generated by labor and capital.

While economic rent is essentially a measure of the social surplus it is not regarded as such under neoliberal economics, which treats this value as a market commodity for private profiteering. This fundamental flaw in market economics has created a highly inequitable global economic system. Lack of knowledge as to how to correct this flaw, and retain the benefits, efficiencies, and individual freedoms of the market, was the impetus for the emergence of centrally managed and controlled state socialism. An economic restructuring based on a full understanding of the role of economic rent is needed for a new economic framework beyond both the old right and the old left.

Read more at Policy Innovations

Haven’s for the Have’s

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Entrance to Heaven!
Creative Commons License photo credit: ManojVasanth

Renegade Economists Podcast

As broadcast on 3CR radio on Wed Dec 2nd
Subscribe to the podcast

Show Notes:
Havens for the Have’s: Dr Gregory Rawlings (Uni of Otago, NZ) discusses the history of Tax Havens and how the G20 reforms will effect them.

Make sure you read Dr Rawlings excellent piece on Laws, Liquidity and Eurobonds – The making of the Vanuatu Tax Haven

Tax Haven Crackdown

What began as a public squabble with the German government over records stolen from LGT has snowballed.

Last week, European finance ministers rallied behind Peer Steinbrück, their German colleague, and backed a crackdown on tax havens, claiming that some £77 billion in revenues was being lost by national governments each year.

Reserve Bank unfazed as housing prices keep rising

In a speech that amounted to a defence of Australia’s historically high house prices, Reserve Bank deputy governor Ric Battellino told a Melbourne housing conference yesterday to expect worse and to recognise that buyers were getting value for money.

Prices would climb further because the global economy was growing again and because Australia had entered ”a new upswing” that would extend its record 18 years of continuous economic expansion.
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‘Australians seem to spend less of their income on non-housing consumption than is the case for US households, with a significant part of this difference explained by lower health costs in Australia,” the deputy governor said.

Comment – but the Law of Rent sees landlords charging higher rents in Oz as they know we have the purchasing power.

Discount real estate

Louis Christopher from SQM Research has devised the “Home Discounts Report”, an internet tool that tracks houses that have been on the market for 60 days or more.

It is normally after 60 days that vendors start to panic if their properties have not been sold and they follow advice to lower their prices.
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There are 175,000 properties on the market right now. The home discounts report identifies 105,000 as potential bargains because they have been on sale for more than 60 days.

Music

Galactic Cadillac – Hermitude

For Ransom – the human right to a roof over our head

Karl FitzgeraldCommentaryLeave a Comment

Creative Commons License photo credit: redjar

Renegade Economists podcast 116

As broadcast on the almighty 3CR on Wed Nov 25th
Subscribe to the podcast

Show Notes:
Real Estate 4 Ransom: AJ discusses the 3rd I Want to Live Here report with a staggering number of houses that could hit the market if only speculators were to leave housing for humans, not captive for capital gains..

The great ‘Texas’ tax dodge

The change, effectively a halving of the headline rate of capital gains tax, benefited well-off individuals far more than any of the other more rigorously examined changes introduced at the same time.

Ralph said the cut would lead to a boom in investment in ”innovative, high-growth companies”.
Instead we rushed into real estate. It wasn’t exactly the ”better allocation of the nation’s capital resources” he said he foresaw.

Labor was asleep and waved it through with only one dissenting voice, then backbencher Mark Latham.

It would ”add to the great Australian disease of asset and property speculation, particularly in our big cities”, Latham told an uninterested chamber.

He was right. Before the change, Australian landlords actually made money. In 1999-2000 they pulled in a net $219 million from rent. By 2006-07 they were losing a net $5.37 billion.

Ralph – prodded by Howard – turned Australia into a nation of losers. He encouraged us to deliberately lose money in order to replace highly taxed income with lightly taxed capital gains.

As Macquarie Bank’s Rory Robertson told his clients at the time, ”Since September 1999 it is almost as though the Australian tax system has been screaming at taxpayers to gear up to earn increased capital gains rather than to work harder to earn increased wages or salaries.”

Dismantling the MIG machine

A Macquarie executive lost his job in 2003 when he crowed to investors about Britain’s M6 toll road: ‘‘We can put up the tolls by whatever we like and, almost as importantly, we can start the tolls on day one by whatever we like.’’

Music

Lord Monckton v Al Gore Rap – The Juice News
The War of Ideas – DJ Spooky

Inner city vacancies drive urban sprawl, affordability crisis

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trolley_Vac

The 2009 I Want to Live Here report reveals how speculative vacancies are overlooked in housing supply analyses.

“Inner city suburbs such as Richmond (7.40%), Princes Hill (8.76%) and Flemington (8.83%) had Genuine Vacancy Rates more than five times greater than the REIV’s vacancy rate of 1.4%” stated Earthsharing Australia spokesperson Karl Fitzgerald.

“By including speculative vacancies and under-utilised properties in our analysis, the genuine state of play in the property game is unveiled.”

“Speculative hot spots such as Carlton (11.05%), West Melbourne (16.56%) and Carlton South (28.96%) reflect how capital gains dominate the mindset of investors rather than rental returns.”

“When a speculator makes three times the capital gains over any rental income, writing off negative gearing is a petty consideration when hoarding saves on hassles and delivers bucket loads of cash.”

“With major infrastructure projects continually planned for these areas, speculators know they are onto a sure winner.”

“Student demand for apartments further solidifies the knowledge that these prime locations will always become more valuable.”

“Why sprawl the city when government policy should encourage us to build up, not out? Prime locations should be used for housing, not hoarding.”

“We call on governments at all levels to level the playing field between the productive and speculative sectors of the economy.”

“With the property industry benefiting from some of the world’s most generous tax breaks, our evidence shows they are squeezing the market. It is time for genuine tax reform.”

“Why tax houses? Abolish CIV and NAV rating so the family home is not subsidising the land banker.”

“Halve income taxes by flattening, widening and raising the Land Tax so there is less incentive for asset bubbles.”

“Lastly, give the RBA the power to implement Land Taxes so it removes this valuable policy lever from the lurches of lobbyists.” said Mr Fitzgerald.

The report sheds light on the poor utilisation of land by investigating the number of properties using little or no water.

2009 I Want to Live Here report (PDF 4.8MB)
Appendix 1 (PDF 4MB)
Appendix 2