Risk Taking or Rent Seeking?

Our third Evolving Economics Enews. Share it with your friends, join the enews list, sent bi-weekly.

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The enews of Prosper & Earthsharing Australia
June 11, 2014

Photo – Kicki Holmen
Three, no make that four conversation starters

Sometimes you get waves of key data worth storing for your storybag.

Recently we saw outstanding credit for business had fallen from 64% to 36% since 1990. However, owner occupied housing had doubled over that period. But the big one is that housing investors had quadrupled from 4% to 20%.

On the same day, UBS found that just 2.6% of all credit created in Australia since mid-2012 had gone to non-property related activities (AFR paywalled). That infers 97.4% of all credit created since mid-2012 has gone into one of the world’s largest land bubbles.

Those few words sum up how risk taking has been replaced by rent seeking. 

It’s hard to write an enews without quoting the work of Macrobusiness chief economist Leith van Onselen. Last week he revealed that Australia’s often quoted HIA -CBA housing affordability index was seriously flawed. He reminded us that the ABS data has seen an 11.3% increase in housing values over the last three years. However, the HIA-CBA index found home values had fallen 2.7%. A 14% differential is significant enough to turn public opinion and worthy of further investigation.

Recent government austerity measures see major changes to the ABS. David Collyer writes how the eight capital cities housing series is under threat. This will lead to further enclosure of public data, blinding the community to a greater degree whilst pushing NGOs such as ours towards expensive purchases from private entities. This is a threat to the global Georgist community, with previous cuts shutting the federal Australian Valuation Office, undermining our position as having one of the world’s best remaining data sets.

And on the global front, need we remind you of the mooted privatisation of the UK Land Registry Office? Transparency undermined under the cloak of budget emergency.

Fix the public revenue raising system.

Photo – Marwa Morgan
Prosper’s AGM – this thursday

A reminder to all members that our AGM is on this Thursday, 6:40 PM.

Venue: 2/22 Punch Lane, Melbourne.

A warm reminder for all members to attend our AGM and stay for the proceeding supper, followed by our monthly executive meeting. Go behind-the-scenes by hearing our staff provide their monthly updates on lobbying activities. Engage in the strategic side of our activities whilst meeting the executive committee who guide our activities. The evening is hosted in a warm atmosphere, chaired by President Andy Moore.

Photo – Amir Jina
The Way Forward Under Rentier Rule

Tuesday, June 24, 6.30 – 8 PM.

Speaker: Bob Keall, Land Rent for Revenue & Justice Association of New Zealand

Venue: 2/22 Punch Lane, CBD.

Join the lively Bob Keall, 83 years young as he gives his unique perspective on the role of resource rents in an age of rentier influence.

Bob is a worldly traveller with a passion for economic justice. Discussions often range from the World Bank, to the need for currency to be based on Labour, to concerns over national sovereignty raised by privatisation. He really has one of the most comprehensive Georgist mindsets going.

Event details

RSVP, donations appreciated.

 
Photo – Jennie M
The Law of Rent ‘On Air

Please support the Renegade Economists by donating to today’s 3CR Radiothon show. We need to raise a considerable sum to keep our drivetime slot, 5.30 – 6pm Wednesdays.

Check the recent Renegade Economists transcription – The Law of Rent in the Collaborative Economy, which goes into detail on our prime teaching, how the Law of Rent sets wages (amongst many other things). This show also includes an interesting interview with accountant Jodie Hutton on why Negative Gearing wont be widely used to offset the deficit levy. The show finishes asking ‘will the collaborative economy be the tech savvy saviour or simply result in even higher land rents?’ Consider how fast things are moving:

Flagship sharing platform Airbnb is or will very soon be the world’s largest hotelier: it has on its books 650,000 rooms in 192 countries, and has got there in 4 years. Hilton took 93 years to get to 610,000 rooms in 88 countries.

This panacea of the collaborative economy was teased out in more detail with Aron d’Souza, CEO of Good Super in the most recent show. We also looked at the need for greater risk by venture capitalists to encourage the start-up industry here in Australia.

As the evidence portrayed above demonstrates, there is little appetite for taxable risk taking when the naturally rising value of the Earth is untaxed and a sure bet.

Please support the Renegade Economists by donating to today’s 3CR Radiothon show. We need to raise a considerable sum to keep our drivetime slot, 5.30 – 6pm Wednesdays.

 
Photo – JB Reed
Queensland Investors Win Payback

Twenty Queensland local councils use Differential Rates to charge rental property owners more than residents. We have always argued this is dangerous and diverts from the justice angle that all should pay according to the benefits received. Now an investor group has taken the matter to the Queensland Supreme Court, which ruled the council practice invalid.  David Collyer explains.

The authorities did the sums and discovered they were liable to repay a staggering $2.3 billion to affected ratepayers. Rather than acknowledge the complete lack of integrity in Differential Rates, the Queensland Government rushed through retrospective changes to the Local Government Act at midnight last Wednesday.

 

This battle is not over.  Given the amount of money involved, the Queensland Appeals Court ruling – whatever it may be – is certain to be taken to the High Court of Australia.  All because councils tried to skew their rating system.

 

Photo – Emre Can
Media Matters

The latest Progress Magazine is one of the best – our 1111th edition! Become a member to receive your quarterly copy or download the digital version.

Joseph Stiglitz, the Nobel prize-winning economist and author of the Henry George theorem, appeared on two recent Bill Moyers programs. He discusses the need for tax reform to save the middle-class. Check the link to his Roosevelt Institute paper, providing his latest thoughts on tax evasion and reform. Whilst not entirely our agenda, he is at least herding people towards the reform agenda.

George Monbiot –  Homesick. His latest Guardian newspaper expose on the rentier shrieking that has deterred meaningful land reform of recent. 

The sharing economy – a film on the collaborative economy and the evolution that is occurring under our fingertips right now.

Finishing with more positive news, the Victorian Greens have included in their policy platform the replacement of Stamp Duty with a broad-based Land Tax (over 10 years). This sounds very much like the program the forward thinking ACT government has introduced.

thanks for your support in sharing our work,

Karl Fitzgerald

Project Director

Prosper Australia: Follow us on Twitter Facebook Earthsharing: Follow us on Twitter Facebook
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