'The 19th-century economist and social philosopher Henry George developed the theory of the business or trade cycle based on malspeculation in land value, although he did not use that term. Such malspeculation would not occur in a pure free market, thus the “business” cycle should more accurately be called "the interventionist cycle" or "the economic distortion cycle." There are two major interventions that cause malspeculation. First is an injection of money into the banking system, an increase in loanable funds not caused by higher savings but by money expansion. The resultant cheap credit fuels both malinvestment and malspeculation in real estate. When the money injections stop, interest rates rise back up, and such projects and purchases slow down and stop. When land values stop rising, speculators sell, and the fall in land values brings down the financial sector that provided the mortgages. Malspeculation carries land values beyond that warranted by the rents. Henry George called this a lockout of labor and capital. With the use of real estate now unprofitable and unaffordable, land values crash. -- The boom-bust real estate and economic distortion cycles have repeated for that past 200 years, yet the 2008 crash surprised not just malspeculators but also economists, financial analysts, and governmental officials. The reason the cycle recurs is that, as the philosopher Hegel observed, people do not learn from history. Or they learn the wrong lessons. They shun Georgist theory, and thus become mal-economists, mal-financiers, and mal-authorities. Add “malspeculation” to your dictionary. Malspeculation is a vital concept that curiously has not had a name, because the role of land in the boom-bust cycle has not been appreciated. The Crash of 2008 was caused by malspeculation, and so the word will find the light of day.'

'#7. Critics say that LVT redistributes wealth from landowners, but there is nothing morally wrong with an inequality in wealth and income. But when government provides public goods paid for by taxes other than on land, this pumps up rent and land value, redistributing wealth from workers to landowners. And for land value provided by nature, geoist ethics say that human equality requires an equal benefit from natural resources. Inequality in market wages respects equal self-ownership, while an unequal benefit from the natural heritage does violate our creation as moral equals. -- #9. Critics of LVT claim that much of wages is due to luck, connections, and talents, so a portion is wages is unearned. But as Henry George wrote, justice is the end, taxation only the means. It is just for the benefits of natural resource to be shared, and for landowners to pay back the rental generated by public goods. Self-ownership is also just, even if some have greater wealth due to luck. Nobody is coercively harmed if one person has more talent than others. If others own your luck, you become a slave to them, violating self-ownership. -- #14. Socialist critics claim that LVT leaves intact capital inequalities. But much of the historical inequality of wealth has come from land tenure. Over time, inherited wealth other than land dissipates or gets donated to charity. With good education and equal access to natural opportunities, inequalities in financial assets are not unjust so long as there is no force or fraud.'

'Real Estate 4 Ransom is a documentary about global property speculation and its impact on the economy. Real Estate 4 Ransom considers the changing motivations behind property investment and challenges the notion that the Global Financial Crisis was caused by bank lending alone.'

'The first man who, having enclosed a piece of ground, bethought himself of saying, This is mine, and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows, “Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.” -- From great inequality of fortunes and conditions, from the vast variety of passions and of talents, of useless and pernicious arts, of vain sciences, would arise a multitude of prejudices equally contrary to reason, happiness and virtue.'

'Failure to make the relationship of people to land the starting point for the study of modern economics has led to a proliferation of complicated, contradictory theories and to an imprecise use of terms. Since governments and major industries rely heavily on the advice of economists in making their decisions, the consequences of this confusion affect us all. #Land and Capital: The confusion between ‘land’ and ‘capital’ is particularly damaging to clear thought, because the two entities behave in utterly different ways in the process of wealth production: #1. Land is not produced by human beings at all, while capital is produced entirely by human activity (labour) operating on land. ... -- Ignoring the real nature of land and treating it as the private property of individuals has caused the human race much trouble and misery. Recognising this mistake gives us the opportunity to base our economy on a system of natural justice which will lead to a fairer, more prosperous and happier society.'

'Like all cartels, the unconscious combination of land speculators creates a "price umbrella" under which new resources enter the market. Students of cartels recognize a "price-umbrella syndrome". Cartels create an artificial scarcity of a resource or product and an artificially high "price umbrella" to shelter new competitors who come from outside the cartel. Previously marginal or untapped resources enter the market, often irreversibly. In urban growth, the cycle periodically thus creates an artificial surplus of half-developed land (graded, perhaps, roaded, platted, but lacking buildings). Other new land is even less than half-developed: accessed by new freeways, state highways, or county roads, but not even subdivided. At the same time, the lavish use of durable capital to bring settlers to all this marginal land creates a shortage of liquid capital, a shortage of loanable and investible funds, a rise of interest rates and a tightening of credit. The writer has analyzed elsewhere this lavish, irreversible misallocation of capital (Gaffney, 1976). Austrian cycle theorists have dwelt on this tilting of what they call "the structure of production", with too much capital getting sunk irrecoverably in what they call "higher order" goods. Well and good, they are onto something big and vital. Unfortunately, though, they find its cause solely in "forced saving" from bank expansion, with no reference at all to its "geo-economic" roots, and the role of inflated land collateral enabling bank expansion. Worst of all, they see no remedy except forcing down wage rates. -- Skeptics will wonder how we can take more taxes from rents when they are falling. Here is the key: the effect of untaxing trade, capital formation, enterprise, labor, and production is to raise and sustain land and resource rents as a tax base. This does not work through raising asking and holdout prices, but rather by raising bid prices, activating the market.'

POINTING FINGER IS POINTING --> 'To the extent that capitalism has gone wrong, it is because it was allowed to become corrupted and hijacked by vested interests. Capitalism’s tendency towards excess and self-destruction is a matter of well-documented record and repeated regret. As long ago as the 18th century, Adam Smith noted that “as soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce”.' <-- POINTING FINGER IS POINTING

'Socio-economics recognizes that the market process includes both competition and cooperation. It encompasses institutions as well as individual behavior, and recognizes sympathy with others as an important human motivator along with self-interest. Socio-economics views rationality more broadly than the narrow rational-expectations approach of neoclassical economics. Socio-economics encompasses both economic reality (positive economics) and social justice (normative economics). The moral dimension of socio-economics is in tune with the geoclassical economics of Henry George, who melded economics and ethics. To George, there is a harmony between morality and economic efficiency, since the policy that maximizes productivity is also morally just. That geoist policy is the full ownership of wages by the worker and the equal distribution of land rent either as dividends or for public revenue. A key interest of socio-economists such as Robert Ashford has been the failure of economics to perform to their maximum productive capacity, with unutilized labor and underutilized land and capital goods. Georgist economics explains why this occurs. Land speculation, pricing land at expected higher future values, prices land too high for current investment, causing investment to slump. Secondly, taxes on labor and enterprise create an excess burden of misallocated resources. Third, central-bank-distorted interest rates create artificial stimuli that create the waste of unprofitable real-estate development. All these distortions prevent the full use of labor and other resources.'

'The political divide between the champions of the public sector and the private sector misses the point; the key divide is between those who support the monopolistic tendencies of both capitalism and government, and those who support the competitive effects of markets. As Adam Smith, who championed the market but not capitalism, put it: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” The market is where these conspiracies get exposed. To win in it, you don’t lobby, you innovate. Wherever free markets have been even tentatively tried, from Ancient Greece to modern Hong Kong, they have produced not just rising living standards, but net moves towards peace, tolerance, freedom and equality. Capitalism represents the interests of the rich, whereas the market represents the interests of the poor. Let’s hear it for the market as the antidote to capitalism.'

'If production gives to the producer the right to exclusive possession and enjoyment, there can rightfully be no exclusive possession and enjoyment of anything not the production of labor; for the right to the produce of labor cannot be enjoyed without the right to the free use of the opportunities offered by nature. To admit the right of property in gifts of nature is to deny the right of property in the produce of labor. When nonproducers can claim a portion of the wealth created by producers, the right of the producers to the fruits of their labor is to that extent denied. Taxation, like slavery, is wrong because it seizes the fruits of someone else's labor without their permission. It makes no difference whether the tax collector is a government or a land holder; taxation is still wrong. Any institution that places any portion of the product of labor and/or capital into the hands of nonproducers is the moral equivalent of taxation. Public taxation is immoral and private taxation, recognized as such or not, is equally corrupt. Natural resources are not the fruits of human effort; capital is. Capital is not essential for human life; natural resources are. Natural resources are fixed in supply; capital is not. Capital holdings do not penalize or hamper the private producti on of wealth; natural resource holdings do. The just ownership of capital is demonstrable by tracing its origin in production; ownership of natural resources is demonstrable only by the say-so of the current government.'

'Land monopoly is not the only monopoly, but it is by far the greatest of monopolies -- it is a perpetual monopoly, and it is the mother of all other forms of monopoly. Unearned increments in land are not the only form of unearned or undeserved profit, but they are the principal form of unearned increment, and they are derived from processes which are not merely not beneficial, but positively detrimental to the general public. Land, which is a necessity of human existence, which is the original source of all wealth, which is strictly limited in extent, which is fixed in geographical position -- land, I say, differs from all other forms of property, and the immemorial customs of nearly every modern state have placed the tenure, transfer, and obligations of land in a wholly different category from other classes of property. Nothing is more amusing than to watch the efforts of land monopolists to claim that other forms of property and increment are similar in all respects to land and the unearned increment on land.'

'In the few cases (if any) where a deed to land did not involve any confiscation from anyone during its history, the claim of ownership still does not rest on any clear and consistent legal principle. For example, suppose the legal principle is "first discoverer gets the land." But how much land can a person or government claim? Did the first person to enter North America have the right to claim the whole continent? Or suppose the legal principle is "to claim land, mix your labor with it, such as by cultivating it, or fencing it." That principle might enable someone to own the top few inches of soil, and the fence itself. But how would it enable someone to own a mineral deposit twenty feet below the surface, or air space twenty feet above? Also, how much mixing of labor is required?'

'If one believes that land can be owned like any resource, then men can be owned and that makes slavery acceptable. On the same principle it would even be acceptable to own all the oxygen on the planet if some means could be found to enclose it by extracting it all. We in the Campaign are realistic and accept that we are where we are and have to move forward. Nobody here is suggesting that land titles should be taken away from their owners or that land should be nationalised. But the old injustice continues as land value is something that is continuously sustained and re-created by the presence and activities of the community today. There is an ongoing theft as this value is privately appropriated. Our case is that the stealing of this ongoing wealth stream should stop, through collection of the rental value of and its use as the main source of public revenue. This would make it possible to get rid of that other institutional theft, the taxation of human labour and its products.'

'Bearing in mind that the State is the organization of the political means - that its primary intention is to enable the economic exploitation of one class by another - we see that it has always acted on the principle already cited, that expropriation must precede exploitation. There is no other way to make the political means effective. The first postulate of fundamental economics is that man is a land-animal, deriving his subsistence wholly from the land. His entire wealth is produced by the application of labour and capital to land; no form of wealth known to man can be produced in any other way. Hence, if his free access to land be shut off by legal predmption, he can apply his labour and capital only with the land-holder’s consent, and on the landholder’s terms; in other words, it is at this point, and this point only, that exploitation becomes practicable. Therefore the first concern of the State must be invariably, as we find it invariably is, with its policy of land-tenure.'

"A century ago a free market meant an economy free of rentiers, free of unearned income, free of landlords, and free of bankers."

'On your territory, only you are permitted to produce money. But that is not sufficient. Because as long as money is a regular good that must be expensively produced, there is nothing in it for you except expenses. More importantly, then, you must use your monopoly position in order to lower the production cost and the quality of money as close as possible to zero. Instead of costly quality money such as gold or silver, you must see to it that worthless pieces of paper that can be produced at practically zero cost will become money. Because you can create paper money out of thin air, you can also create credit out of thin air. In fact, because you can create credit out of nothing (without any savings on your part), you can offer loans at cheaper rates than anyone else, even at an interest rate as low as zero (or even at a negative rate). With this ability, not only is your former dependency on banks and the banking industry eliminated; you can, moreover, make banks dependent on you, and you can forge a permanent alliance and complicity between banks and state. You don't even have to become involved in the business of investing the credit yourself. That task, and the risk involved in it, you can safely leave to commercial banks. What you, your central bank, need to do is only this: You create credit out of thin air and then loan this money, at below-market interest rates, to commercial banks. Instead of you paying interest to banks, banks now pay interest to you. And the banks in turn loan out your newly created easy credit to their business friends at somewhat higher but still submarket interest rates (to earn from the interest differential). In addition, to make the banks especially keen on working with you, you may permit the banks to create a certain amount of their own new credit (of checkbook money) in addition and on top of the credit that you have created (fractional-reserve banking).'

'If you are a central banker in the destination country, it might be that the flood of carry-trade money could push inflation upwards. What is the central banker or policymaker to do? The ‘hot’ money flooding into their country might be causing an asset-price bubble, or inflation. Something must be done. The problem is this: if interest rates are increased, the incentive for the carry trade is likewise increased – and might even cause the inflow of even more ‘hot’ money. If the central bank targets low interest rates, then there is the possibility that this might end the carry trade, but at the cost of creating an internal stimulus to inflation. The strengthening of the destination country’s currency might, in turn, have a negative effect on the balance of trade and the export sector of the economy. Exports will fall... Despite this, assets in the destination will be going up, while the underlying performance of the economy will be going down (albeit disguised by the inflow of money).'

'Land is a creation of nature, not human action, and its value comes from natural features and the population, commerce, and public works of the community. Land rent is a pure surplus that mother nature offers to us as a gift by which to finance the public goods provided by government. But you have rejected mama’s natural offer. Instead, you, by voting for the status quo governmental chiefs, you attack the earnings of labor, and with that loot, you provide public goods that pump up land rent and land value. Yes, you, the voter! What happens then is that rent absorbs much of the gain from economic expansion and progress. Speculators jump in to leverage profit from the land-value rise. Landowners buy land with borrowed funds, so they engage their partners, the banks and other financiers. Speculation raises land values to peaks unaffordable for actual use, and then land values plunge, and the leveraged mortgages and derivatives crash. That is the source of panics and depressions.'

'The term “capitalism” has been the most successful propaganda term in human history. ...the term “capital” masks the underlying and more fundamental interest that receives governmental privileges: ... the big landowners. If you want to understand the economic policies of governments world-wide, and the main cause of social problems, it becomes clearer if you grasp this proposition: The main purpose of government is to serve the big landed interests. ...the biggest subsidy to landowners is implicit: it is the enormous increase in land rent and land value due to the public goods provided by government. Streets, parks, security, schooling, transit, etc., all make land more attractive and productive. The rich pay high taxes, but they get it back, and often much more, in higher land value. Taxes fall most heavily on the middle class, as the state tax-confiscates about half the wages of a typical worker, including the taxes the pay when from their remaining wages they buy taxed goods.'

'New new telcos provided multimedia services across multiple types of device using multiple modalities of communication. And they did everything “over the top”. No infrastructure costs. No on-premise software. And to top it all new new telcos had new new assets, information about relationships and flows. What Facebook call the Friend Graph. -- ...businesses used to be hierarchies of business units whose assets were called customers and products; that they are changing into networks of business units whose assets were called relationships and capabilities. New new assets. Relationships and capabilities. Social capital. Human capital. Assets we have carefully avoided learning how to value. Assets we have refused to value, however much we speak of the importance of talent and knowledge and collaboration. That’s where the new new value is. All just in time for a generation who have rediscovered community.'

'Open source is a really interesting twist in the midst of all this. Software businesses with profit margins greater than the current Treasury yield hate open source because it mostly eliminates rents. Forkability is a rent vaccine, so open source "products" tend to be sold or serviced at just about their producer's opportunity cost. In the case of community based software, it is by definition at opportunity cost, but that cost is as likely to be paid in reputation as in dollars -- making this a conversation on sociology and psychology rather than economics. In any case, open source software is a leverage-less wasteland from the point of view of anyone that has an MBA. Or, it's a wonderfully rich source of innovation for the people that never liked having rent forcibly extracted. ...rent holders who are losing always ..: try to influence the law to make their rents more permanent. ... through lobbying, aggressive (and abusive) patent strategies...'

'#Ending excuses for big government: Much of the government spending to which libertarians strenuously object is made necessary by its taxing productivity instead of land values. The property tax falls mostly on improvements, so less housing is built, giving the government an excuse to build public housing. Profits are taxed, leading to less employment and giving government an excuse to spend money on economic stimulus projects. Family income is taxed to the point that they have difficulty buying a house or sending their children to college, so government institutes subsidized mortgages and student loans. Even the indirect effects are substantial. Land speculations gone sour chew up inner cities, so poor people turn to crime (if drug selling and prostitution be crimes) and the government gets an excuse to beef up the police state. Even welfare increases do not stay in the hands of welfare recipients, but are quickly greeted by higher rent demands from ghetto landlords.'

'Financial services are mostly parasitic on the real economy since they produce nothing. Banks should not act as moneylenders, nor should they give credit for anything other than to facilitate the physical process of production. Thus it is right for banks to give credit for the purchase of seeds, tools and for the payment of the the farmers' sustenance over the season. It is not right that banks should give credit for land purchase because that has added nothing to the overall productive power of the economy (the land was there from time immemorial, all that has happened through land purchase is that a release fee has been paid to a land owner [right of use owner] to enable its use).'

'It is central banking that gives rise to the booms that lead to tremendous industrial euphorias. As these abate, revenues diminish and calls for increased taxes arise. As local economies fail, people grow angry and demand that the government act through increased regulation to punish wrongdoers and recalibrate marketplaces. It is central banking that ultimately hollows out economies by causing small businesses to fail and generating consolidation that favors grossly inefficient, corrupt and powerful multinationals that are controlled of course by the Western power elite rather than by local or regional entrepreneurs. Mercantilist central banking, in our humble opinion, lies at the heart of every problem that Western democracies face. The huge pools of money available to central bankers and their highly placed colleagues in private industry ensure that the worst elements of governance receive the most funding and are the most highly cultivated.'

'Max talks to Michael Hudson about debt, deficits, austerity, Greece and more.' -- Capitalists vs Rentiers

'The people that owned the debt in the old days were identifiable; Karl Marx [using Adam Smith's prior conception of 'rent' ] referred to them as the rentiers. They were the ones who lived by clipping coupons, doing no work; they were the leeches that lived off the work of others. The rentiers were not only the ‘sometimes’ enemies of the king and his court, but they also were the ‘constant’ enemy of the working masses and the middle class. As such they could be singled out by the authorities and persecuted or robbed without much fear. Who are those who benefit from this passive income, today’s rentiers? We public and private pensioners and life insurance holders are the ones who are the rentiers. About 30% of US GDP can be classified as passive. European numbers are similar. And, now that more and more of us are at retirement age, we are expecting to live on our savings. Our retirement income might look like an entitlement to some, but to us it is our right. What happens next?'

'This creates a state of affairs in which neither Greece nor the EC are “states” or “governments” in the traditional political sense. The EU and IMF bureaucracy is not elected. And at the point where their foreign-dictated financial plan succeeds, the economy’s capital will be stripped and social democracy will collapse. Is this where Western civilization really is supposed to be leading? Confronted by parliaments controlled by aristocracies, the 19th-century reformers sought to take them over on behalf of democracy. Classical political economy was a reform program to tax away the “free lunch” of land rents, monopoly rents and financial interest extraction. John Maynard Keynes celebrated this program in his gentle term, “euthanasia of the rentiers.” But the vested interests have fought back. Calling social democracy and public regulation “the road to serfdom,” they are trying to set Europe’s economies on the road to debt peonage.' -- (A statist, but useful for understanding land.)

'The human race has susceptibility to harm but Mr. Zuckerberg has attained an unenviable record: he has done more harm to the human race than anybody else his age. Because he harnessed Friday night. That is, everybody needs to get laid and he turned it into a structure for degenerating the integrity of human personality and he has to a remarkable extent succeeded with a very poor deal. Namely, “I will give you free web hosting and some PHP doodads and you get spying for free all the time”. And it works. Facebook is the Web with “I keep all the logs, how do you feel about that?” It’s a terrarium for what it feels like to live in a panopticon built out of web parts. -- I’m not lamenting progress of a sort of democratizing kind. On the contrary, I’m lamenting progress of a totalizing kind. I’m lamenting progress hostile to human freedom. We have to fess up if we’re the people who care about freedom, it’s late in the game and we’re behind. '

'"Unaffordable housing" The term still keeps cropping up. Which part of a house is not affordable? The roof? The bricks? The drains? The roofing tiles? The plumbing system? The amount builders have to be paid to put it all together? -- Too many have stood aside, not watched what is going on in the world and failed to try and make sense of it. Hence the talk about "unaffordable house prices" Anyone who uses the phrase "unaffordable house prices" without further explanation is guilty of extreme mental laziness. Which is most of us, and now we are living with the consequences of our neglect. This of course includes the Nationwide Building Society, which would do everyone a good turn if they scrapped their so-called House Price Index and replaced it with a housing Land Price Index.'

'#Fear of Change. #Fear it will be just another tax on top of all existing ones. #Ignorance on the part of those in positions of influence. #Failure to understand economic laws. #Failure to understand LVT by economists. #Non-comprehension of incidence of taxation. #Belief that land and buildings are not separate. #Embedded self interest namely the great land owners, the church, universities. #The House of Lords. #Pension schemes. #Effective lobbying by those who currently benefit. #Common people's liking for the notion of 'property owning democracy'. #Desire for house price windfall. #Living on unearned income. #Calling it Land Tax. The name we give it. #Belief that economics should be separate from morality. #Cultural resistance - attachment to 'My Land'. #Lack of real public debate. #Hereditary monarchy. #Requires a paradigm shift in understanding. #Not a vote winner. #Disliked - seen as unfair (like rates) or last straw. #Belief of the fairness of Income tax.'

Gisted -- Harrison breaks the cycle down into 5 phases: #1 RECOVERY (7 yrs): After the previous crash, optimism returns. #2 MINI-RECESSION (A few months): Will typically bring calls for lower rates and tax cuts. #3 EXPLOSIVE (7 yrs): Low rates, mortgage tax breaks and loose lending terms combine to fuel speculation. Greed eventually overwhelms fear of being left off the property ladder. People con themselves into believing houses are an 'investment' rather than just a place to live. #4 WINNERS CURSE (The last 2 yrs): Wild enthusiasm for capital gains. Property must be acquired at any price cursing everyone with unsustainably high valuations. #5 CORRECTION (3–5 yrs): Mortgages default. Risk is perceived again. Banks tighten up; liquidity/credit/money dries up. Banks sell repossessed inventory at low prices. Prices are driven down. Mortgage holders who bought during the bubble now expect capital losses. Renters switch from renting into buying setting the stage for the next recovery.

"How does Harrison do it? Well, he uses an 18 year cycle. He has traced and verified the length of this cycle going all the way back to 1700. For Harrison, the length of the cycle arises partly from how homes are financed. He points out that 5% has been a normal mortgage interest rate for much of Britain's past and that 5% compounded will double in almost exactly 14 years. After a period of 14 years, property prices reach a level where prices are too high and rental yields are too low. When banks have exhausted all their tricks in finding ways to make prices look affordable, the high valuations choke off demand and once the peak is in place, the 3–5 year slide begins which brings prices back down to earth. The timeframe for the downturn is shorter because it operates on fear rather than greed. After the turn, increasing fear and bank tightening of lending terms destroys excessive valuations faster than greed built them up."

"All democratic governments maintain a tax system that milks the poor to keep the rich, rich. 'Progressive' taxes are a cover for a cruel hoax on people with low incomes. This is how the scam works..." -- Chart: 'UK Taxation History: The Shift From Land (Rent) To Labour (Wages)' http://www.flickr.com/photos/adamcrowe/4446366350

'The future of advantage: #Allocative. Google's advantage was built on allocating attention to content and ads better than its rivals. Google's real secret? Relevance, media's measure of how efficiently attention is allocated. #Creative. Apple... Creative advantage asks: is our strategic imagination 10x or 100x richer, faster, and deeper than our rivals? -- And the past: #Extractive. Over two decades, Microsoft has honed its extractive edge, coming up with cleverer and cleverer ways to extract profits from customers and suppliers. #Protective. Monsanto's made sure that farmers are locked in to Monsanto as tightly as possible. Protective advantage asks: are buyers and suppliers locked in to dealing with us, 10x or 100x more tightly than to rivals? -- These dimensions are mutually exclusive. The opportunity cost of protecting yesterday is creating tomorrow. The opportunity cost of extracting resources is allocating them in better ways.'

'Advertising is a bubble. If that's a true statement, Google is a bubble too. And if that's true, many of the goods we take for granted on the Web are at risk. [Advertising is] what pays for all the infrastructure Google is giving to the rest of us. As our dependency on Google verges on the absolute, this should be a concern. Think of advertising as oil and Google as one big emirate. What happens when the oil runs out? Maybe it already is. The free rides won't go on forever. There are better ways than advertising for demand and supply to find each other (including search, which is free), and more will be found. Google will be in the middle of that discovery process, no doubt. But it's an open question whether Google will make the same kind of money in a post-advertising marketplace. I'm betting they won't.' -- Click numbers down, attention limited, population limited, obvious ponzi is obvious, post-tech-deflation monopoly internet: all ur websitez are a tollbooth belong to us, etc

'P.M. Lawrence also expresses a view on the general Georgist approach that I have a lot of sympathy with: "Geoanarchism, or even anything with that much of a Georgist base, presumes an enduring problem with landlordism and gives up on it, preferring palliative care." -- Land value tax is a big hammer for dealing with externalities, which can be better handled on the micro scale by user fees. It treats all the forms of rent, which are created by poor internalization of the costs of public services, as an aggregate, and then treats land rent as a proxy for all the assorted externalities and subsidies created by the community. This leaves a very weak connection between the amount one pays in taxes, and the value of any particular service (undermining, in other words, George's own distinction between a tax in form and a tax in substance), and thus weakens any incentives to economize on the consumption of particular services in light of the cost of providing them.' -- Hmm...

Next time you hear someone bemoan "capitalism" (in that blithe way that makes you suspect they don't really know what they're talking about), remember this link and pull them up on it. -- 'Rentier capitalism is a term ... which refers to a type of capitalism where a large amount of profit-income generated takes the form of property income, received as interest, rents, dividends, or capital gains. The beneficiaries of this income are a property-owning social class who play no productive role in the economy themselves but who monopolise the access to physical assets, financial assets and technologies. They make money not from producing anything new themselves, but purely from their ownership of property (which provides a claim to a revenue stream) and dealing in that property.' -- Doesn't sound like 'free market = capitalism', does it.

Max on possible WTO overrule of Volcker's 'too big to exist' Plan: "Who is the biggest financial terrorists? China? America? Wall St? Goldman? JPMorgan?" -- "They should all be thrown in jail as racketeers. Until people figure that out, the vampires will run riot." -- Stacy on the Supreme Court unlimited corporate campaign contributions ruling: America has become a Banana Republic. The people should start campigning for corporate rights. -- Fred Harrison explains the "forbidden knowledge" of the 18-year boom/bust cycle in the land market. Listen up.

'The Peak Oil school rests its theory on conventional Western geology textbooks, most by American or British geologists, which claim oil is a ‘fossil fuel,’ a biological residue or detritus of either fossilized dinosaur remains or perhaps algae, hence a product in finite supply. An entirely alternative [‘a-biotic’ —non-biological] theory of oil formation has existed since the early 1950’s in Russia, almost unknown to the West. The emergence of Russia and prior of the USSR as the world’s largest oil producer and natural gas producer has been based on the application of the theory in practice. This has geopolitical consequences of staggering magnitude. -- While the American oil multinationals were busy controlling the easily accessible large fields of Saudi Arabia, Kuwait, Iran and other areas of cheap, abundant oil [at the expense of domestic production] the Russians were busy testing their alternative theory. They began drilling in a supposedly barren region of Siberia.'

'Effectively, what the financial system has done is siphon off an increasing portion of the rents charged for various activities while justifying the increasing prices (that is, lower risk and therefore less reserve against "adverse events") through concealment via bogus "risk-shifting" and "risk-management" that in fact never really occurred. -- ...all the financial system has done is find ways to increase the amount of rent that lands in the financial system itself - instead of being distributed to the actual owners of the capital that is being lent out! -- The only way that one can "deal in" CDS and make a profit, as the banks have done, is if someone is willing to sell you protection at less than the true risk-adjusted cost, or you can manage to sell it at higher than the risk-adjusted price. Both require that someone be deceived - that is, that someone intentionally misrepresent either by commission or by intentional concealment of material facts. This is the definition of fraud!'

Bischoff: "The kind of taxation for which the school argues is the only tax that when applied does not provide less of what is taxed, namely land values. Any other tax applied causes a diminishing effect to the matter taxed." -- On America: "The only way the crises can be resolved is by returning to the gold standard, by reviving the Bill Market, by returning to the provisions of the original Federal Reserve Act of 1913, and definitely by suspending paragraph (b) of Section 14 of the act, and by repealing "legal tender" laws. Thereafter, the "invisible hand" of Adam Smith will take over and launch us on the road to an unimaginable prosperity, provided of course that the only tax collected by sovereign States and governments is Henry George's "single [land value] tax". Due to its constitution, and due to the work ethics, the general common sense and the goodness of its people, the United States is uniquely positioned to overcome the present economic and government crises."

Bischoff: "George's economic analysis has lost popularity due partly to a concerted effort by land and natural resource "owners" to protect their privilege of collecting community created land values. In this, they are aided by politicians who implement favorable tax policies and by the educational profession which has redefined land as "private" capital, thereby destroying the distinction between land and real capital. Taxation on land value reacts totally different from taxation on real capital. -- Americans have long deemed it a right to profit from community created land values. Now that land values are declining [due to deindustrialization], people feel themselves deprived of an assumed entitlement. They are beginning to wonder about the efficacy of speculating in land, particularly when it involves the land underneath their houses. It is quite likely that the present dilemma of declining land values will bring about a resurgence of the land value tax idea."

'The $820 billion cap-and-trade bill wanted by the Obama administration would basically nationalize the entire atmosphere over the United States, with the government selling and assigning permits dictating the amount of emissions that may be associated with every type of manufacturing in the U.S. With this power, those in political authority in Washington can determine not only the technologies with which every private enterprise in America can undertake any form of production, but will be able to decide who will be allowed to stay in business, as well as what they produce and for what purpose. It will represent a crushing stranglehold over all of the county's industry that will also be extremely expensive for the buying public. It has been estimated that within a decade or so, the higher costs of manufacturing due to cap-and-trade will raise by at least $3,000 a year the consumption expenditures of the average American household.'

'Geolibertarianism is a political movement that strives to reconcile libertarianism and Georgism (geoism). Geolibertarians are advocates of geoism, which is the position that all land is a common asset to which all individuals have an equal right to access, and therefore if individuals claim the land as their property they must pay rent to the community for doing so. Rent need not be paid for the mere use of land, but only for the right to exclude others from that land, and for the protection of one's title by government. They simultaneously agree with the libertarian position that each individual has an exclusive right to the fruits of his or her labor as their private property, as opposed to this product being owned collectively by society or the community, and that "one's labor, wages, and the products of labor" should not be taxed. Geolibertarians generally advocate distributing the land rent to the community via a land value tax, as proposed by Henry George and others before him.'

'Georgism, named after Henry George (1839-1897), is a philosophy and economic ideology that holds that everyone owns what they create, but that everything found in nature, most importantly land, belongs equally to all of humanity. The Georgist philosophy is usually associated with the idea of a single tax on land. Georgists argue that a tax on land is efficient, fair and equitable, and can accrue enough revenue so that other taxes (which are less efficient) can be reduced or eliminated. -- ...unlike other taxes, land taxes do not distort economic activity, and do not impose an excess burden (or "deadweight loss") on the economy. A replacement of other more distortionary taxes with a land tax would thus improve economic welfare. -- Georgism, which is nowadays associated with left-libertarian philosophy, has endured criticism from those right-libertarians who believe that common land ownership would result in an infringement of the rights of self-ownership and individual property.'

'Never before have so many Americans gone so deeply into debt so willingly. Most members of the rentier class are very rich. One might like to join that class. And so our paradox (seemingly) is resolved. With the real estate boom, the great mass of Americans can take on colossal debt today and realize colossal capital gains—and the concomitant rentier life of leisure—tomorrow. If you have the wherewithal to fill out a mortgage application, then you need never work again. What could be more inviting—or, for that matter, more egalitarian? -- The bubble will burst, and when it does, the people who thought they would be living the easy life of a landlord will soon find that what they really signed up for was the hard servitude of debt serfdom.' -- '...commercial real estate investors hide most of their economic rent in “depreciation” write-offs for their buildings, even as those buildings gainmarket value.'

Get you ration books out -- 'Lord Smith of Finsbury believes that implementing individual carbon allowances for every person will be the most effective way of meeting the targets for cutting greenhouse gas emissions. It would involve people being issued with a unique number which they would hand over when purchasing products that contribute to their carbon footprint, such as fuel, airline tickets and electricity. Like with a bank account, a statement would be sent out each month to help people keep track of what they are using. If their "carbon account" hits zero, they would have to pay to get more credits. Those who are frugal with their carbon usage will be able to sell their unused credits and make a profit.' -- A unique number. Why not just use the 'birth of a slave certificate' number?

Neo-liberal financialization as neo-feudalism: Explains how people have been fooled by bankster-infected government and think-tank propaganda into voting against property/land taxes.

'#The myth of personal empowerment takes root amidst a massive loss of personal control. -- Social technologies are cloaked in a rhetoric of liberation (customers are in control, the internet fosters democracy, social technologies propagate truth etc.) that tend to obscure the fact that never before have we handed so much personal information over in exchange for so little in return. This loss of control over personal information is on a collision course with the law of unintended consequences... Amidst this barrage of good news for how much power we wield in the transaction of commerce one has to wonder if we are giving away something quite precious in the bargain.' -- Give all your information over to Facebook and they'll rent your identity back to you.

'...only 20 percent of the federal housing aid goes to renters. The remaining 80 percent goes to homeowners, mostly in the form of mortgage-interest tax deductions. Another way of putting this is that America uses policy to create a rentier society, subsidizing landlords and creating property bubbles for their short-term benefit. The alibi for these subsidies to those who are already relatively privileged is that homeownership is an inherent good in its own right, a widely disputed claim. It is neither economically efficient, environmentally sustainable, nor the facilitator of more livable communities.' -- Dear middle class property ponzi schemers, how's gambling with each others tax money going?

'The conventional language employed to promote the re-socialisation of rent (and the re-privatisation of wages) will continue to obstruct fiscal reform. The entrenched interests will not allow a "tax on land values". After all, it's "their land", anyway, isn't it? -- ...it's NOT a tax. It's inviting middle-class home-owners (today's aristocracy, in political power terms) to honour their value system - pay for what you get, and get rid of taxes on the incomes you earn. This is the language of a political/moral prospectus that the voting majority - middle-class home-owners - would not be able to oppose, publicly. That's why the vested interests would have to try to shift the debate back onto the territory of the landowners' choosing: "this is a tax, really". That ploy would need to be resisted. -- People need to be reminded: stop whinging about what's wrong with this world, stop talking about your entitlements, accept personal responsibility and claim what is yours by right.'

'The advantages: #MARGINAL AREAS REVITALISED. Economic actitivities are handicapped by distance from the major centres of population. Conventional taxes such as VAT and those on transport fuels cause particular damage to the remoter areas of the country. Land Value Tax, by definition, bears lightly or not at all where land has little or no value, thereby stimulating economic activity away from the centre - it creates what are in effect tax havens exactly where they are most needed. #LESS URBAN SPRAWL. Land Value Taxation deters speculative land holding. Thus dilapidated inner-city areas are returned to good use, reducing the pressure for building on green-field sites. #NO AVOIDANCE OR EVASION. Land cannot be hidden, removed to a tax haven or concealed in an electronic data system. #AN END TO BOOM-SLUMP CYCLES -- Is it fair? ...land value owes nothing to individual effort and everything to the community at large. It belongs justly and uniquely to the community.'

'Land value taxation (LVT) (or site value taxation) is an ad valorem tax on the value of land. This ignores buildings, improvements, and personal property. -- Critics of LVT warn that a rapid reduction of real estate values could have profoundly negative effects on banks and other financial institutions whose asset portfolios are dominated by real estate mortgage debt, and could thus threaten the stability of the whole financial system. -- LVT advocates support a gradual shift to avoid disrupting the economy, and argue that the reduction in private rent collection would result in increased net wages received from employment and asset growth from entrepreneurial activity. -- Hong Kong is perhaps the best modern example of the successful implementation of a high LVT. The Hong Kong government generates more than 35% of its revenue from land taxes. Because of this, they can keep their other taxes rates low or non-existent and still generate a budget surplus.'

'The logic of a land value tax is inescapable when serious people examine the causes and remedies of booms and busts in the property market. ...inevitably the vested interests and unthinking classes marshal their forces to kill it. The unthinking classes have a lot to lose if land reform fails again in Britain, as they are the fall guys for the big landowners and property speculators. It is not without fostering damaging myths and media management that the landed gentry, the descendants of the Norman invaders, still own more than 80% of the land in Britain.' -- Daily Express: 'The report’s author Toby Lloyd said: “Social justice demands that the gains in land value be shared more equitably with the community than at present, and a tax system that could stabilise the housing market and reduce the chances of booms and busts is in everyone’s interest. With an annual Land Value Tax, all land would be taxed on the unimproved site value... we are not talking about a tax on property values.'

'Most forms of direct taxation are inevitably a disincentive to enterprise and work. The advantage of a land tax over other kinds of tax is that it is in principle based on pure space and need not be a disincentive to either capital or labour. ...indeed it provides a positive incentive to use land wisely and not to hoard it. It is also one of these rare things: a redistributive measure with few adverse kickbacks. (Land ownership is far more concentrated than wage income or even capital ownership.) I suspect that the main reason for popular lack if enthusiasm for a land tax is the suspicion that it is not a genuine tax reform but an addition to the total tax burden, if not a stealth tax at least a backdoor tax. And who is to say that popular opinion would be wrong? It is therefore very important that some other highly visible tax is removed or reduced at the same time. A land tax should not be introduced in the context of a general tax-raising budget.'

'INSUFFICIENT attention has been paid to the ways in which the chaos makers in the land market shape our destinies. Land supply is in fixed supply in those places where people need to live, close to the opportunities for employment. ...speculation in land pushes its price beyond affordable limits ...instability manifests itself in myriad forms of conflict that torture the industrial economy (labour relations, unemployment, etc). -- The treatment of rent as a public revenue would eliminate the acquisitive force behind the booms and busts. The fiscal reform proposed here would ensure that the short-term private interests of the individual would converge with the long-term interests of the community. This would enable people to plan the accumulation of savings over their earning lifecycle to the point where the price of capital would drop to very low levels: it would be at this point that poverty and unemployment would be permanently eliminated within a system of sustainable development.'

'We should untax people's wages and savings: conventional taxes inflict deadweight losses on incomes. Instead, public services could be funded out of rents that people were willing to pay for the benefits they enjoy at a particular location. That is efficient. Productivity would rise and speculation in gains from land would fall. It is also fair. It is the voluntary, self-assessment approach in which payments are direct and proportionate to the public services people want to use. -- Politicians of all parties should champion a simple ad valorem charge on the location value of all land - excluding improvements such as buildings. A high enough rate would end boom and bust cycles and establish a new relationship between citizen and the state. The interface between the public and private sectors would be redefined, and many of the disputes that divide our communities would be resolved.' -- More: http://renegadeeconomist.com/video

'...the moral hazard of rent seeking can be considerable. If "buying" a favorable regulatory environment is cheaper than building more efficient production, a firm will choose the former option, reaping incomes entirely unrelated to any contribution to total wealth or well-being. This results in a sub-optimal allocation of resources — money spent on lobbyists and counter-lobbyists rather than on research and development, improved business practices, employee training, or additional capital goods — which retards economic growth. Claims that a firm is rent-seeking therefore often accompany allegations of government corruption, or the undue influence of special interests. Rent seeking may be initiated by government agents, such agents soliciting bribes or other favors from the individuals or firms that stand to gain from having special economic privileges, which opens up the possibility of exploitation of the consumer.'

'The Renegade Economist goes to New York to hear Dr. Michael Hudson's views on the state of the US Economy.' -- Explained.

No one looked at the bubble in land prices.

On the ideal size of government: "The issue is not how large government is, or how much the government takes in revenue, but *how* it takes that revenue."

'The welfare state rests on the belief that progressive taxation can relieve poverty, taking from each according to their means and giving to each according to their needs. This sounds fair: the rich pay more tax to help the poor. However, Harrison points out, the opposite is the result: taxation favours the rich at the expense of the poor because: #1. Public spending on roads, railways, schools, hospitals etc makes a major contribution to rising land values; #2. Rising land values benefit house-owners and other property-owners, rich ones more than poor ones, in rich locations and rich parts of the country more than poor ones; but they hurt people who rent their properties and have to pay rising rents; #3. Taxpayers' money, which finances public spending, is thus channelled behind the scenes from poor to rich people and from poor to rich parts of the country.'

"Charging too little for rent? Paying too much for rent? Enter your rental info below and find out!" Disruptive!