Sorry to be slow getting back Ludwig,

Re –“ Why shouldn’t the onus be on those who profit from the real estate market to justify the scale of their profits”

No one is “liable: to justify their prices or profits to anyone else, other than the person they are conducting trade with.

but you are the one who wants to interfere in the free trade in housing based on some notion of “fairness”. Thus you are the one who needs to justify your interference.

I am happy to let the market run its course and prefer to see non-interference in the “market process” by government.

As for “equalisation tax” - historically they have never worked.
The social order is composed of those who fail to see or seize the opportunity and the astute who do. Pretending you can “equalize” everyone thought tax policy is a philosophy fraught with far greater dangers than those derived from inequitability in housing / housing ownership.

The issue with immigration versus population stabilization.
In Australia the building industry is a significant employer and thus cycles income, one basis of “wealth” into those employed in it.
Remove immigration and you will reduce the housing demand and reduce the economic impetus generated from migrants needing somewhere to live.

That said, playing with peoples lives and “even up the wealth ratio” can only be done by disadvantaging / creating a disincentive to work against those who take the risks and fund the activities which create the jobs which employ others.

About 80 years ago, Stalin murdered all the Kulaks who grew "comparatively wealthy", despite the “leveling” policies of Lenin. I do not think you are suggesting tax-policies should be so extreme but they will have the same overall effect, a general degradation of society overall, as the “incentive to achieve” is outlawed.

Col

“No one is liable: to justify their prices or profits to anyone else, other than the person they are conducting trade with.”

I think that profits need to be justifiable to the general community. Surely the community and government have every right to request a reduction in fees or profit margins if profits are deemed to be too big. Huge profits can be seen as a sign of free enterprise tunning wild, a promulgation of the gap between the rich and the poor, and a lack of government protection for the little guy.

“…you are the one who wants to interfere in the free trade in housing based on some notion of ‘fairness’. Thus you are the one who needs to justify your interference.”

Yes I advocate ‘interference’ in this ‘free trade’ in the interests of fairness. This interference is easily justified. It’s what this thread is all about – house and land becoming too expensive for the first-home buyer or the average income-earner, while those at the big end get rapidly fatter. It is about unnaturally high prices.

“I am happy to let the market run its course…”

I am not happy to let the market run its course, because it would mean endless growth (human expansion), the freeing up of land releases and/or the continuation of a mortgage stranglehold on the average person, in a time rising interest rates, rising prices of basic commodities and falling job security.

“As for ‘equalisation tax’…”

An equalisation tax, or what ever we may call it, would amount to incentives that would lower prices. In other words, it would only be a small way along the spectrum towards complete equalisation, or communism if you like. It is the same principle as current first-home-buyer assistance, just a bit stronger… and drawn from those who reap the profits rather than the whole tax base.

I don’t know, it would probably just result in a further raising of prices to compensate. But the point is; governments should undertake some form of levelling. Much better this than a large-scale freeing up of land.

Regarding immigration versus population stabilisation…

The building industry certainly is a significant employer. But we have the same wobbly ‘Keatingesque’ argument here (from our politicians and business community in general); the notion that more people are needed to keep the economy strong rather than the notion of keeping the economy strong for the people. That is, treating the economy as the ultimate goal rather than quality of life.

When it comes to quality of life and society, surely per-capita economic growth is what counts. So a growing economy that is based on a growing population, in which there is no growth in average per-capita economic benefit, is just self-defeating.

The housing industry sits at the heart of this crazy upward spiral, that promulgates continuous growth and an ever-bigger economy and total scale of human operations on this continent, without contributing to real economic growth above population growth.

Real estate market forces and indeed business forces in general, push for ever-bigger demand by directly lobbying for high immigration, and in doing so exert unnatural pressure on the market. Any financial equalisation or any reduction in immigration or any measures to direct us towards sustainability undertaken by governments would be no more unnatural than this.

“I do not think you are suggesting tax-policies should be so extreme but they will have the same overall effect, a general degradation of society overall, as the ‘incentive to achieve’ is outlawed.”

I am not understanding why you think along these lines Col. The dole, the old-age pension, the sliding scale of taxation, and everything that is subsidised, are all equalisation measures. They sit at the heart of a healthy democratic society. They directly enrich our society

Ludwig – ‘Huge … free enterprise turning wild”

“Free enterprise” will see more participants on the supply side, greater competition and thus reduce prices profits, except for monopolies / oligopolies / cartels, which are outlawed by our competition laws.
Most examples of monopolies in Australia have been government run and have been progressively and rightly, sold off and forced to compete freely with independent competitors, Telstra, CBA and Qantas as classic examples.

“Yes I advocate ‘interference’ in this ‘free trade’ in the interests of fairness.”

“Fairness” is a subject quality which cannot be used as a foundation of law.

“I am not happy to let the market run its course, because it would mean endless growth”

What would you prefer, endless recession?

You cannot have it both ways Ludwig. Government given the authorative power to interfere is a dictatorship in waiting.

“An equalisation tax,”
Such a tax removes incentive from society. It makes us all equally miserable.
It has been tried and has failed.
It is never going to produce any social benefit because all it does is stunt the benefits derived from the innovation and genius of the individual.

RE “quality of life and society, surely per-capita economic growth is what counts”

No – most of the factors which contribute to “Quality of Life” are not measurable on any economic scale. Typically
The sense of self worth and self determination we derive from making decisions for ourselves.
The pride and relief a parent gets from watching their children achieve for themselves.
The right of free association and the gift of friends.
The right to choose where to live and what job to do.

I trust you get my drift.

“The dole….. and everything that is subsidised,”
Such subsidies only “meddle” at the edges.

They do not “directly enrich our society” they shuffle the available resources from the able to the less able, an action which can be achieved by individual philanthropy.
Btw I am not knocking the dole, it is and should be seen as temporary subsistence and not as a right of the chronically unemployed

“ ‘Free enterprise’ will see more participants on the supply side….”

Free enterprise, with apparently healthy competition, does not stop the large banks from making obscenely large profits, resulting in very strong calls for reductions in fees. It hasn’t seen more participants on the supply side, and it is quite amazing that any smaller banks have become established in the last couple of decades. And banks are just one example.

“Most examples of monopolies in Australia have been government run and have been progressively and rightly, sold off and forced to compete freely with independent competitors…”

I strongly disagree that public utilities should be sold off. While they may gain efficiency by way of competition, they lose efficiency by way of being run with the motivation of maximised profit, and with that money being skimmed off rather than turned back into the business.

“What would you prefer, endless recession?”

I don’t understand why you are apparently completely against any government actions in the market. Surely the sorts of things we are discussing here are fundamental to the role of government… for the express purposes of making the whole economy more equitable and less controlled by the big, greedy and ruthless. We would surely fall into recession if we just let the market run its course untempered by government regulation.

“You cannot have it both ways Ludwig.”

It’s not a case of having it both ways; it’s a case of finding the point on a spectrum at which enough government intervention is a good thing. This point will vary with different circumstances. It’s shades of grey, not black and white stuff.

“No – most of the factors which contribute to “Quality of Life” are not measurable on any economic scale.”

Aha! Maybe this is the core of our differences. Quality of life is most definitely measurable on an economic scale and most definitely relates to average per-capita economic growth much moreso than to gross domestic product. But it is not always clear high-correlation relationship.

continued

Let’s look at your four examples;

“The sense of self worth and self determination we derive from making decisions for ourselves.”

As our whole society becomes bigger, the population grows, the stresses of this growth such as traffic congestion and air pollution increase, and it becomes apparent that a still rapidly growing economy is not helping the little person at all, our sense of self-worth and our ability to make decisions for ourselves is bound to decline. An ever-bigger economy premised on an ever-bigger population is certainly not going to help the vast majority of ordinary people.

“The pride and relief a parent gets from watching their children achieve for themselves.”

Again, on average, the ability for children to achieve for themselves is not going to increase as our current economic regime and continuous-growth paradigm continue.

“The right of free association and the gift of friends.”

I can’t see that this would be much affected, although the stresses of an ever-growing and not-improving-at-the-personal-level economic regime will mean more civil strife and may well lead to restrictions on who we can associate with or should be see to be associating with.

“The right to choose where to live and what job to do.”

As population pressure continues to mount in Sydney, SEQ, etc, it is very likely that our ability to choose where we live will be strongly compromised. The more the pressure in these areas, the more likely governments are to implement incentives to get people to do other than what they would do of their own free choice under a free market-force regime. Clearly, it is so-called free market forces that have led to the problems in SEQ and Sydney, and strong government initiatives are needed to counter the continued momentum.

So I guess we really do see things quite differently Col. But then, that is good. It has made for a good discussion.

Cheers