Interesting facts – no unemployment in squatter cities! With free access to land we can always keep busy helping someone. Read more on population.

photo credit: Maria Gertsovskaya

From South Africa to Bolivia to here in Australia, the failure to approach land as a human right rather than a speculative kite is breeding dangerous undercurrents amongst those excluded from ‘the property game’.

The young firebrand South African ANC youth leader Julius Malema again fired up the masses with these comments:

“You need land to do everything. Without land voting means nothing,” he said.

Malema said South Africans can vote until they are purple.

He said as long as they did not have the economy of South Africa their votes were useless.

“You vote and you still go beg,” he said.

An economic democracy is vital. We need our birth rights, our earth rights. Speculative privileges have superseded those fundamental rights through distortions in the tax system. Julius went on:

—
Malema said he was told one should not talk politics of land and property or nationalisation because it would scare investors away.

“They invest in countries where there are civil wars. ” he said, adding that people should not believe the “lies” that investors would be scared off by talks of nationalisation.

Malema said Investors did not care about people and that they were interested in making profit.

Last night’s Today Tonight rang loud on the fear of Chinese investors buying up Australia. If a higher and flatter Land Tax was implemented on land valued yearly, the profits that attract foreign investors and agri-business would be greatly wound back.

Foreign investment in property is unproductive. No matter how much money is invested, investors can’t make any more land. The profits inherent in land as a scarce resource are the magnet for investment. It has little to do with providing housing for slum dwellers.

With our system there would be a re-balance away from land based profiteering and towards the provision of housing for a steady rate of return.

Nationalisation is not necessary. What is vital is capturing the community created rent (that capitalises into the massive property based profits). Private possession of land is still sacrosanct.

The catch is that this possession is based on the yearly payment of a land rent back to the community (once known as the government) in respect for the privilege of being a custodian of that piece of land. Outright ownership for 99 years is no longer reliant upon on a huge loan to banks.

The ANC has ignored the warnings of South African colleagues such as Godfrey Dunkley that bureaucratic land reform is a slowly imploding mess (witness Zimbabwe, not matter what the role of the IMF/ WB). Legal stouches and community infighting hamper who gets the land by the river and who gets to live next to the dusty quarry.

No farmer no matter what skin colour will voluntarily give up land they have cared for. Perhaps Mugabe and SA’s Zuma need to look at the speculative elite rather than race. Even then, we can’t put the blame on those lucky few, it is the system that needs changing.

Market forces directed by the tax system can do this much more effectively.

After 30 years of neoliberal dominance it is time that the people stood up and promoted an economic policy that delivers reward for effort for businessmen whilst simultaneously protecting the environment with a True Cost Economics system. Read more

photo credit: Listener42

George Monbiot writes another sterling piece, this time dispelling population as the bugbear of global warming. Click on our population tag to read other critiques of this issue – namely the link between poverty, education and poor health on population growth rates.

The Population Myth

It’s no coincidence that most of those who are obsessed with population growth are post-reproductive wealthy white men: it’s about the only environmental issue for which they can’t be blamed. The brilliant earth systems scientist James Lovelock, for example, claimed last month that “those who fail to see that population growth and climate change are two sides of the same coin are either ignorant or hiding from the truth. These two huge environmental problems are inseparable and to discuss one while ignoring the other is irrational.”(1) But it’s Lovelock who is being ignorant and irrational.

A paper published yesterday in the journal Environment and Urbanization shows that the places where population has been growing fastest are those in which carbon dioxide has been growing most slowly, and vice versa. Between 1980 and 2005, for example, Sub-Saharan Africa produced 18.5% of the world’s population growth and just 2.4% of the growth in CO2. North America turned out 4% of the extra people, but 14% of the extra emissions. Sixty-three per cent of the world’s population growth happened in places with very low emissions(2).

Even this does not capture it. The paper points out that around one sixth of the world’s population is so poor that it produces no significant emissions at all. This is also the group whose growth rate is likely to be highest. Households in India earning less than 3,000 rupees a month use a fifth of the electricity per head and one seventh of the transport fuel of households earning Rs30,000 or more. Street sleepers use almost nothing. Those who live by processing waste (a large part of the urban underclass) often save more greenhouse gases than they produce.

Many of the emissions for which poorer countries are blamed should in fairness belong to us. Gas flaring by companies exporting oil from Nigeria, for example, has produced more greenhouse gases than all other sources in sub-Saharan Africa put together(3). Even deforestation in poor countries is driven mostly by commercial operations delivering timber, meat and animal feed to rich consumers. The rural poor do far less harm(4).

The paper’s author, David Satterthwaite of the International Institute for Environment and Development, points out that the old formula taught to all students of development – that total impact equals population times affluence times technology (I=PAT) – is wrong. Total impact should be measured as I=CAT: consumers times affluence times technology. Many of the world’s people use so little that they wouldn’t figure in this equation. They are the ones who have most children.

While there’s a weak correlation between global warming and population growth, there’s a strong correlation between global warming and wealth. I’ve been taking a look at a few superyachts, as I’ll need somewhere to entertain Labour ministers in the style to which they’re accustomed. First I went through the plans for Royal Falcon Fleet’s RFF135, but when I discovered that it burns only 750 litres of fuel per hour(5) I realised that it wasn’t going to impress Lord Mandelson. I might raise half an eyebrow in Brighton with the Overmarine Mangusta 105, which sucks up 850 l/hr(6). But the raft that’s really caught my eye is made by Wally Yachts in Monaco. The WallyPower 118 (which gives total wallies a sensation of power) consumes 3400 l/hr when travelling at 60 knots(7). That’s nearly one litre per second. Another way of putting it is 31 litres per kilometre(8).

Read more

photo credit: Super Is Sunny

Author unknown

Rev Thomas Robert Malthus (February, 1766 – December 23, 1834), was an English demographer and political economist best known for his pessimistic but highly influential views.

Malthus was born to a prosperous family. His father was a personal friend of the philosopher and sceptic David Hume and an acquaintance of Jean-Jacques Rousseau. The young Malthus was educated at home until his admission to Jesus College, Cambridge in 1784. There he studied many subjects and took prizes in English declamation, Latin and Greek. His principal subject was mathematics. He earned a masters degree in 1791 and was elected a fellow of Jesus College two years later. In 1797, he was ordained and became an Anglican country parson.

In An Essay on the Principle of Population, published in 1798, Malthus predicted population would outrun food supply, leading to a decrease in food per person.

This prediction was based on the idea that population if unchecked increases at a “Exponential rate” (i.e. 2, 4, 8, 16, 32, 64, 128, etc.) whereas the food supply grows at an “Arithmetic” rate (i.e. 1, 2, 3, 4, 5, 6, 7, etc.) (See Malthusian catastrophe for more information.) Only misery, moral restraint and vice (which for Malthus included contraception) could check excessive population growth. Malthus favoured “moral restraint” (including late marriage and sexual abstinence) as a check on population growth. However, it is worth noting that Malthus proposed this only for the working and poor classes. Thus, the lower social classes took a great deal of responsibility for societal ills, according to his theory. Essentially what this resulted in was the promotion of legislation which degenerated the conditions of the poor in England.

The foregoing is all taken from “Wikipedia, the free encyclopedia.htm” – An Essay on the Principle of Population. Ch 1

The different modes which nature takes to prevent or repress a redundant population, do not appear, indeed, to us so certain and regular; but though we cannot always predict the mode, we may with certainty predict the fact. If the proportion of births to deaths for a few years, indicate an increase of numbers much beyond the proportional increased or acquired produce of the country, we may be perfectly certain, that unless an emigration takes place, the deaths will shortly exceed the births; and that the increase that had taken place for a few years cannot be the real average increase of the population of the country. Were there no other depopulating causes, every country would, without doubt, be subject to periodical pestilences or famine.

“…the Malthusian doctrine, that population tends to increase faster than subsistence. Examination, however, shows that this doctrine has no real support either in fact or in analogy, and that when brought to a decisive test it is utterly disproved”
– H .George. Progress & Poverty (Preface 1880ed)

“The current doctrine as to the derivation and law of wages finds its strongest support in a doctrine as generally accepted—the doctrine to which Malthus has given his name—that population naturally tends to increase faster than subsistence. These two doctrines, fitting in with each other, frame the answer which the current political economy gives to the great problem we are endeavoring to solve.”

H. George, Progress & Poverty Bk II, Population and Subsistance.

It is evident from the above sources that the Malthusian theory “that population tends to increase faster than subsistence” was used to blame the poor for their own condition. A very prevalent argument used today by politicians and others who advocate that nature is tardy and has not provided adequately for her offspring: Which is what George objected to and showed how it was wrong.

It was necessary for Henry George to debunk the Malthus theory for the simple reason that it was the accepted reason for the condition of the poor. If that theory was correct then no other reason was of any consequence. George spent four (4) chapters on the subject. Like all things, whether or not you accept his logic, it is a matter for mind and logic. There is little evidence that, today, the world suffers from any Malthusian ailment and the population is greater than anything Malthus could have imagined.

Julian Simon (late professor of business administration at the University of Maryland wrote in a policy report for the Cato Institute – a non-profit public policy research foundation.

“We have in our hands now – actually in our libraries – the technology to feed, clothe, and supply energy to an ever-growing population for the next 7 billion years.”

“This is the economic history of humanity in a nutshell:
“From 2 million or 200,000 or 20,000 or 2,000 years ago until the 18th Century there was slow growth in population, almost no increase in health or decrease in mortality, slow growth in the availability of natural resources (but not increased scarcity), increase in wealth for a few, and mixed effects on the environment. Since then there has been rapid growth in population due to spectacular decreases in the death rate, rapid growth in resources, widespread increases in wealth, and an unprecedently clean and beautiful living environment in many parts of the world along with a degraded environment in the poor and socialist parts of the world.

That is, more people and more wealth has correlated with more (rather than less) resources and a cleaner environment -just the opposite of what Malthusian theory leads one to believe.

The task before us is to make sense of these mind-boggling happy trends.”

“…when I began to work on population studies, I assumed that the accepted view was sound. I aimed to help the world contain its “exploding” population, which I believed to be one of the two main threats to humankind (war being the other). But my reading and research led me into confusion. Though the then-standard economic theory of population (which had hardly changed since Malthus) asserted that a higher population growth implies a lower standard of living, the available empirical data did not support that theory.”

“Let us start the analysis with a given population of workers and a given supply of physical capital – a given farm acreage, a given number of factories, and a given number of machines. If the number of workers increases, then the supply of capital will be diluted; that is, if there are more workers, there is less capital available for each worker to use. If there is less capital per worker, output (and income) per worker will fall. This Malthusian dilution effect is one of the main liabilities of additional population. The extent of the loss can be calculated easily. Twice as many workers with the same capital implies half as much capital per worker. In a typical modern economy this would reduce each worker’s output (and hence income) by about one third.”

Dr. Julian Simon wrote extensively on population:
www.wired.com/wired/archive/5.02/ffsimon_pr.html
www.cato.org/pubs/policy_report/cpr-20n2-1.html
www.juliansimon.com/writings/Ultimate_Resource/
www.juliansimon.com/writings/
The Hoodwinking of a Nation – Scarcity or Abundance? A Debate on the Environment – The Ultimate Resource II: People, Materials, and Environment

The Professor devoted much time to debunking ideas of doom, particularly Malthus. Whilst he showed the fallacies of the arguments he did not show or demonstrate an alternative policy for the relief of the poor.

We are left with the policies of George or those of Marx/Engels. All three wrote against Malthus.

photo credit: notsogoodphotography

Can land tenure reforms eliminate the neo-Malthusian poverty-environment trap?

High birth rates predominantly occur where health and education is low. This in turn results from a negligent revenue raising system. Check the United Nations World Population Prospects report list of population growth rates by country and you will see a dominance in the higher echelons of poorer countries.

Ethiopian farmers have 8 kids because they know only a few will survive. When resource rents are recycled amongst the people rather than into the deepest pockets of the wealthiest, respectable health and education funding is possible.

This critique of Malthusianism by no means discounts the immense challenges we face with desertification, water scarcity or wilting crop yields. We are interested in opening up the discussion to the wider market imperfections that lead to higher populations, the ignorance of eco-systems AND the speculative lure of commodity markets.

Whilst cultural and religious aspects may impact on population growth rates, the effect of the wealth gap dominates. The health olympics is a worthy study which re-iterates that regardless of the health spending, unless the over-riding economic policy encourages opportunity and equality, health efforts will be undermined. We need to be able to put food on the table to remain healthy.

With this in mind, analyse the population growth rankings of Western (anglosphere) nations. From the above wiki list we see that Ireland is the first of the anglosphere countries to be listed in the population growth stakes at number 69. Ireland’s Catholic culture could explain why its birth rates are so high. Over on the CIA World Factbook (that many see as the most accurate information source) Australia comes in at no. 98, the highest anglosphere nation re birth rates. Our disastrous baby bonus and double the long term immigration rate are to blame. The baby bonus is the easiest play in the economic stimulus playbook. Immigration too pump primes the economic growth rate.

The Human Development Index is a more rounded look at the wellbeing of a country. It analyses life expectancy, literacy, education and standards of living. Poor countries with high birth rates do not feature in the top rankings. Of the top 10 highest birth rates in the CIA World Factbook, only 2 states also appear in the HDI upper echelons – at 29 is Kuwait and 31 is United Arab Emirates. These states share their oil wealth with the people, not just shareholders. The remaining other 6 countries (the Democratic Republic of Congo and Mayotte aren’t included in the HDI study) feature at the bottom end of country rankings from no 130 through to 176.

Social welfare is enhanced through better economic systems. By recycling resource rents such as those generated in oil, land, gold or carbon (soon), the people can get a natural share of the land bounty.

But why do people want to move countries?

Resource Rents recycled?
Our taxes fund infrastructure and services that make land in prime locations more valuable. Those in the know, know this! Property speculators are a hangover from neo-colonial times. Land dominance is the key to securing a relatively risk-free income stream (if you bought at the right time).

If instead these windfall gains were recycled back into the people’s hands via the government, a stable income source would assist opportunity rather than entrench privilege. This is the basis of a Resource Rentals system. Better yet, we could use his land bounty to remove painful taxes such as GST, payroll, stamp duty and income taxes.

The latest scaremongering by populationists that we need a 1 child policy is concerning.

Populationists the pawns of the pyramid purveyors?
Strong words yes, but high birth rates have always been used as a means for the wealthy to blame the poor for their own plight. ‘You have too many kids. You don’t wash your hands. It’s your fault you’re poor.’

This in turn deters poor, insecure and over-worked people from analysing the cause itself – the economic system. A tax system that penalises people for working but yet rewards those for speculating on the value of natural resources is what should be in focus. People need to look beyond banks and beyond capitalists or unions to recognise that the most valuable thing we have is the planet itself.

Unfortunately neo-classical and now neo-liberal economics does all it possibly can to ignore the value of the planet.

Diverting attention away from economic policy and blaming poor people for their own plight has been an effective diversionary tactic for too long.

The scarcity of natural resources means that land, gold, water or the electromagnetic spectrum are always going to increase in value. Economists call this scarcity rent or economic rent. This privatisation of what should be the birthright of all is the greatest injustice on this planet.

We need to switch taxes off wages and place them on resources so they are used sparingly, rather than hoarded for massive profits. We have 125 taxes in Australia. A Resource Rentals system scales taxes and compliance back. Would you like to pay (at most) half your present income tax? Would you like your tax mix to include an environmental reminder every time you pulled out your wallet?

How does this change behaviour?
Resource Rentals (RR) sees urban density rather than sprawl. The speculative vacancies held off the market to fabricate capital gains will no longer be economic. This will see an increase in the supply of land, pushing down the price. Cheaper land leads to higher employment and wages. RR’s usher GFC inspiring land speculators out of the land market and into productive work. The boom-bust nature of modern economics is downgraded. Stability is enhanced. Steady-state economics becomes possible.

With less tax paperwork, the creative rebels out there can start their business without having to employ nerdy accountants. People can then look after themselves. Demand for labour increases with the rise of small business, pushing up wages and re-tilting the playing field back towards equality of opportunity. With a RR system we can also afford to remove indirect taxes as well. The price of goods and services will fall by 20 – 40% when the accompanying deadweight costs are removed, making it easier for cash strapped start-ups to get their head above water.

By switching taxes off labour and onto natural resources, the price of water or pollution would be more reflective of it’s value. Some may say ‘aha this is regressive, why should the less privileged pay more than the wealthy?’. Wealthy people generally live in closer proximity to the CBD, to natural beauty, to infrastructural services. Thus they pay higher land rents than the rest of us do. This balances the regressive nature of eco-tax like charges.

If a 1-child policy was implemented, this would only free up the remaining natural resources for gluttonous consumption by the lucky few within a country’s borders. A RR system ensures that over-consumers pay more than the frugal. Polluting products face a pricing penalty. Many of the eating disorders come from the fast paced world we live in. We work so many hours in such unfulfilling jobs in order to …pay the rent!

Short term commodity speculation is threatening global food security. The G8 are making noises. Food riots and wilting food supply issues are certainly a disturbing trend and hint at the need for the more efficient use of resources.

One of the other common critiques of developing countries is to blame their peril on the ‘resource curse’. The genuine problem is the urgent need for a decent tax system with no loopholes and transparent accountability. It’s the lack of resource rentals captured from those lucky enough to ‘own’ a piece of the earth that hands the free lunch to mining or property speculating companies. The potential of these countries is limited by a poor tax system. Fred Harrison spells this out in The Silver Bullet – a must read. Transparency International has many useful resources for good governance. East Timor is proving that oil wealth can be invested wisely.

Cheaper land and higher wages could restore our connection with family and community. We would have less stress at home with the reduced pressure to keep a roof over our heads. This would give us the opportunity to be better educated under the free education system now possible. Many reports have been written on this topic including:

In Kerala, female literacy is the highest (65%). And at 3.4 children/women, it has 1 of the lowest fertility rates. For the 14 states studied, the total fertility rate was 5.0 children/woman, the child mortality rate was 126/1000, and the female literacy rate was 22%. In contrast in Rajasthan where female literacy is 11% (the lowest of the 14 states studied) fertility is the highest at 6.0 children/woman.

Tying this in with free condoms as part of the public health program would have a drastic effect on birth rates. More must be done to educate on cultural taboos regarding birth control.

Importantly, this system of RR smooths out the imbalance felt between rural and city dwellers, curtailing the urban drift phenomena. Under the present system, a property owner in central Melbourne earns massive capital gains in their primary residence during a boom. Their land (and house …but remember that houses depreciate, land appreciates) price inflates due to no effort of their own. This windfall gain can offset a lifetime of income taxes in just a few years, if sold at the correct time.

However, rural locations face lower windfall profits due to their distance from prime locations. Thus the subsidy they receive from capital gains in their family home is lower than in the city. Watch Ricardo’s Law for more on this or read the book from our bookshop.

A RR system sees all landowners pay an equal percentage. The percentage function is adept at dealing fairly with locations that had high rainfall for eg, compared to those farms that didn’t.

How many wars are fought over land? If we have the better locations paying more to the government, in effect compensating those land owners who don’t farm next to the river, this reduces the pressure for war. Such land rent payments must seem fairer than what we presently endure. With less war, there will be less refugees. War in Africa for example has become a rapid fire way to cleanse traditional owners off the land to make way for neo-colonial investors interested in maximising their own food security. Listen to a fascinating audio story by Philip Adams on such land cleansing.

With more homegrown employment possible due to the overall lower land price and reduced paperwork, the re-localisation of community is possible. Urban mega cities then aren’t pressured. With less slums in urban areas, there’s less pressure for proud people to leave their country as refugees.

Certainly the property industry are in co-hoots with the high immigration levels. Download the Property Developers Guide to Sydney (13MB) to see how influential the rent seekers are there too. But we are looking at a holistic reform. With regulation we can barely patch up one dike before another bursts.

If we went to the source of the issues – upside down tax systems and poor transparency, the population growth rate currently stretching Melbourne would be much lower. With cheaper land in both Australia and the rest of the world, more cool, hip communities with decent health and education systems (that reflect the care we should genuinely show each other) would flourish. With more competition there would be less demand to move to Melbourne.

Australia’s continental size, stable political system and affable nature will prove increasingly attractive in this age of drastic climate shift. We must ensure that speculators do not profiteer from the mass of environmental refugees looming on the horizon. The hills around major ports will become very valuable. Why should speculators benefit from the largest overhaul of society in living memory?

Recycling land rents won’t solve everything, but it certainly will give sovereign countries a synergistic mechanism for people to work together, rather than to exploit each other. Population growth rates can be checked by a fairer revenue raising system that incorporates a true cost pricing mechanism. We must go to the source of the problem to address these important pressures.

Listen to the Renegade Economists podcast covering land rent issues weekly.