Renegade Economists Show 591
As broadcast on the 3CR airwaves 6 – 6.30pm on the fourth Wednesday of the month.
Subscribe to the monthly podcast.
Show Notes
Its an absolute pleasure to have Fred Harrison (Share the Rents) kick the year into gear with an appraisal of his new book series ‘We Are Rent’. Listening to his surgical tact one can’t help but feel these teachings contain deep and meaningful wisdoms addressing the key issues of our times. Just when you think you know it all, Fred unpeels another layer of understanding: “We continue to privatise the essence of our humanity. Those of us who claim to own land and therefore claim the rents that are produced in our societies are actually enacting the role of slavery. We are appropriating other people’s humanity.”
Related Links
We Are Rent website
Buy the book
Rent Unmasked
Past interviews with Fred:
Fred on the 18 year cycle:
Check the previous podcourse shows, designed for those wanting to understand the basics of Georgism.
Review our archive of weekly shows from over a decade on air.
Follow the Twitter and watch #LVT, #commons, #rentier.
Share with your friends, or if you could, provide an itunes review for the show. Thankyou!
Photo by Nina Strehl on Unsplash
MAKING MACROECONOMICS EASY TO UNDERSTAND, AS A TRUE SCIENCE
How many different KINDS of financial (business) transaction occur within society? Actually, only a limited number of them are possible. Consider the averages of the various kinds of activities (no matter who performs them), and idealize these to fall into those commonly shared and expressed in general terms of the various transactions. Here, these activities pass between a pair of agents—each with individual properties. To cover the whole national social system, only 19 kinds of exchanges are needed of the goods, services, access rights, taxes, valuable legal documents for savings, investment, etc., verses the opposing flows of money. Also these flows need to pass between only 6 different representative agents.
The analysis that led to this initially unexpected result was prepared by the author and is found in his working paper SSRN 2865571 “Einstein’s Criterion Applied to Logical Macroeconomics Modeling”. In this model these double flows of money verses goods, etc., are shown to pass between the role-playing agents. If one tries to eliminate all unnecessary complications but retains the more basic activities, then these particular quantities and flows provide a concise result–presentable in a comprehensive and seamless manner, suitable for analysis of the whole system.
Past representation of our sociological system by this type of an interpretation model has neither been derived nor presented before. Other partial versions have been modeled (using 4 agents, by Professor Hudson), but they are inexact due to their being over-simplified. Alternatively, in the case of econometrics, the models are far too complicated and impossible for students to follow. Either over-simplification or over-complexity are why non-scientific confusion was created by past economists and explains their failure to obtain a good understanding of how the whole system works.
The model described in this paper is unique, being the first to include, with some additional aspects, all the 3 factors of production, in Adam Smith’s “Wealth of Nations” book of 1776. These factors are Land, Labor and Capital, with their returns of Ground-Rent, Wages and Interest/Dividends. All of them are all included in the model, as a diagram in my paper, (see also SSRN 2600103 “A Mechanical Model for Teaching Macroeconomics”). With this model in its different forms, the aspects of the Big Picture of our society’s system can be identified and defined. By analysis, how our system works can then be properly seen, calculated and illustrated.
This analysis was devised by Nobel Laureate Wellesley W. Leontief, when he invented the important “Input-Output” matrix methodology (that he originally applied to the production sector). This short-hand method of modeling the whole sociological system replaces the block-and-flow diagram, enabling one to better appreciate what is going-on there. It is the topology of the matrix which actually provides the key to this. The logic and math are not hard and is suitable for high-school students, who have been shown the basic properties of square matrices.
By this technique it is comparatively easy to introduce a change to a preset sociological system that is theoretically in equilibrium (even though we know that this ideal is never actually attained–it being a convenient way to begin the study).
This change creates an imbalance and we need to regain equilibrium again. Sudden changes or policy decisions may be simulated and the effects of them determined, which will point the way to what policy is best. In my book about it, 3 changes associated with taxation are investigated in hand-worked numerical examples. In fact when I first worked it out, the irrefutable logical results were a surprise, even to me!
Developments of these ideas about making our subject more truly scientific (thereby avoiding the past pseudo-science being taught at universities), may be found in my book: “Consequential Macroeconomics—Rationalizing About How Our Social System Works”. Write to me at chesterdh@hotmail.com for a free e-copy and clear up past confusion with logic and scientific discovery.
A More Stealthy Georgist Cat By David Harold Chester, October 2019
The Georgist cat is small and lean
And often doesn’t get to be seen.
It hides in the branches of an economic’s-tree
So it takes a long while for you or for me,
To appreciate its cute and original form
That the landlords are so ready to scorn.
The economic’s-tree has many fine branches
(On which we contend, there are no free-lunches).
Whilst the land-owning rich in the city all claim
As bloated capitalists, that they’re not to blame
For the gap that lays ‘twixt the poor and the wealthy,
But oppose any tax to make our nation healthy.
Have you heard the tale of a committee, that
Thought to bell and get warning of a fat cat?
But could not find a soul to apply this device,
Because typically all were a council of mice!
Our Georgist cat has a bell ready-fitted,
(Which makes this analogy more to be pitted).
This warning sound makes our ideals unwanted,
For a new tax is how politicians get doubted.
So the Georgist cat fails to catch any mice
That pose as landlords, along with their vice.
But how shall we silence the bell’s warning sound
And quieten the news that our pussy’s around?
Our Georgist feline is in serious error,
‘Cause its bell draws attention not only to whether
Valuable sites can be ethically shared,
But also the rent from a site is declared
As the means to replace other kinds of taxation,
Which obviously causes the landlords vexation.
In the economic’s tree many other beasts lurk
But are missed, after learning of Henry G’s quirk
Through the cat-finder’s recently brilliant discovery.
This writer seeks a new means for recovery
From our politi-unacceptable claim,
And stealthily project LVT once again.
If we would but examine some more of the tree
Alternatives are waiting there for us to see.
Among them is hiding a far better way
For an equivalent LVT effect, to stay
In essence, without causing such evil offences
To the landlords and their partitioning fences.
When a property-owner decides to sell–quick
The gov’ment buys its land, and not the public!
Its occupant then leases it for a similar fee
To the One-Tax of Henry George’s decree.
Any buildings on-site should be sold as previously
But without the land, on which the price grievously
Had risen, with huge speculation in its advance
That stopped entrepreneurs from having a chance.
The cost of this land must be raised through new bonds
Which the government sells and the public responds,
‘Though their interest-rate’s a bit lower than rent,
Their returns are more stable than the average tenant!
This process will take many years to complete–
So its financial support is no great money feat.
After the lease-fees begin to collect,
Gov’ments can tax less, and firmly expect
To pursue this policy without change, until
All the lease-fees are site-rents in the national till.
With the land properly shared, the government sees
That site development stays with the current lessees.
Other taxes that cause so much trouble and hate
Are scrapped, with great pleasure to all in the state,
Except for some bankers and the tax collectors
Whose actions no longer apply in these sectors.
Land-rights will be shared through this simple device,
By a fast-growing country that takes our advice.
Thank you, that brought a smile to my face!
Fred nailed the issue about 10 minutes into the interview. The home owning majority will never accept it and do the politicians will not support it. Fred is now trying a new tact for his long established argument that rents= humanity. I am afraid it won’t work and the system will only change when it totally collapses. We need something as deadly as Covid for rent seekers before any change happens. Always stimulating to listen to Fred though.
Interesting that Fred owns property. I wonder how many?
Thats 2026 -27 I gather.