Hear Hear! Bryan Kavanagh. You point clearly to the reasons why every government in the Western world and the Middle East and in Asia is on the nose. People everywhere are upset with what governments are doing. That includes those of the far right and those of the left, those that claim to be democratic and those that are totalitarian. “Power corrupts, absolute power corrupts absolutely.” (Acton)

Nowhere is this more prominent than in Australia at this time. Just look at what is happening in the states.

GenY are possibly the people who will reform our society. If they are not then they will have a personal police officer within a few years to ensure they fart in the right key and note!

The reform you propose is the simple answer. The land rent belongs to the people. It is our responsibility to collect it. It is a reform that is desperately needed for the simplest of justice. Politicians of all parties have failed in this respect. If there is to be worthwhile reform of the finances of our nation then the politicians must have the people on thei.r side to influence “The plutocracy is now too powerful for our politicians;” First we need a politician(s) who understands the people needs and not go to parliament for the career opportunities in in corporate governance

Bryan Kavanagh, Thanks.

You say;

“For years I've argued that we ensure the phenomenon of recurrent financial and social collapses once we come to believe that taxes are essential to the running of government, that is, once we lose sight of the truism that taxation destroys”

I know people who do not pay tax.

I meet with them, ‘the real philosophers of our age’ at the free-tucker joints; we sleep under bridges or under anywhere that can protect us from the ravages of the weather.

Until we, you and me, meet there you are a payer of taxes.

A revolution, like the one you foster, is a personal act.

It is impossible to ask anyone to eat, drink or make love for you.

It is preposterous to ask the one who needs shelter to stop getting it, just to satisfy a theory to which you prescribe.

We all, including you and me, by our own indolence, are engaged in a mortal duel with the State.

We know that if we ceased to pay rents, rates and taxes the State would collapse.

But are we sufficiently educated to follow this course of action?

Not yet, Mr. Cavanagh or not until the institutions that sustain the State are manned by people who believe that Justice is essential.

The author argues that “economic rent” is publicly generated. But he doesn’t define this key term, nor explain why, or how he knows, it’s publicly generated.

The closest he comes is saying: “rent is the surplus arising in the production process.”

But what does that really mean? And even if it were true, why would that mean it is publicly generated?

For example suppose a farmer has a paddock that, in its current state, cannot be used to produce food. He improves it by expending capital and labour on it, undertaking the risk that his efforts will be frustrated by flood, fire, pests, and all that, and supports himself and family during the period until it produces. At the end, if all goes well, he will have produce that he can sell and the price he gets for it will be greater than the cost of the original factors of production including the price of the land, the mortgage payments, the labour, the tractor, diesel, seed, fertilizer, and the ordinary bank interest on the money expended.

So when it comes to seizing the fruits of his labour, why is “the public” (translation: the state) in any better position in the name of “economic rent”, than it is in taxing income which the author recognizes is “theft”?

What sense does the word “economic” add? We don’t say “economic wages” or “economic interest” or “economic profit”. The addition of the word “economic” adds no sensible meaning, while falsely implying it arises from everyone else's efforts.

What about rent? It usually means the cost of hiring something. It has been used in economics to mean, for a particular piece of land, the surplus of its product over the cost of production.

But why is this “publicly generated”?

Of course nothing could be easier than to persuade the greed of the unprincipled that they are entitled to an equal share in other people’s efforts. But the author has given no more sound reason for a tax on so-called economic rent, which he promotes, than for a tax on income, which he rightly condemns.

Thank you. Land is not made by people, to gain wealth just by owning it and making profits from selling it.
But taxes on all forms of speculation are needed as well.

ozideas
That's your idea of sound reasoning is it?

Peter Hume wants to lump his farmer's return on labour and return on capital (which rightly belongs to the farmer) into economic rent (which rightly belongs to the public, so that taxes on labour and capital can, in turn, be reduced).

Then Peter conflates rent (payment for the temporary use of something owned by someone else i.e. hiring) with economic rent (a payment to a factor of production in excess of that which is needed to keep it employed in its current use), so that he can make those advocating the taxation of economic rent appear to be advocating the taxing of capital and/or labour, the opposite of their actual argument.

The farmer's land, in Peter's example, would have very low economic rent, if any, if its highest-and-best use as agricultural land (as distinct from residential subdivision, for example) is possible only with such significant capital and labour input as Peter describes. To suggest that a tax on economic rent would take away the fruits of the farmer's labour is to misconceive what economic rent (as distinct from contract rent, or hiring) is.

Looking forward to Peter's next post!