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Various Perspectives ...

Collated by Maireid Sullivan
2014, updated 2022
Work in progress
Note: Please refresh cache when revisiting these pages

"Who ordained that the few should have the land of Britain
as a perquisite; who made 10,000 people owners of the soil,
and the rest of us trespassers in the land of our birth?"
British PM David Lloyd George (1909)

"Tax bads, not goods:
- Shift municipal tax off buildings onto land value.
- Finance government by collecting economic rent
(revenue without a corresponding cost of production),
not by taxing jobs, business, sales."

Frank De Jong

"If you don't tax that value that attaches to land,
arising from the general wealth of the economy,
the banks get it.

Michael Hudson

Introduction
- Trickle-down Economics
- Single Bottom Line
vs Triple Bottom Line

Part 1
Hindsight is Perfect
- Too Big to Fail
- "Free Markets"
- Here's what Milton Friedman said ...

Part 2
Sir Winston Churchill and David Lloyd George tried!

Part 3
The Federal Reserve: President Woodrow Wilson's great sorrow
- Orwellian Economics

Part 4
What happened 30 years ago?
- Mrs. Thatcher’s mean-spirited legacy
- The Reagan Revolution
- U.S. history in context

Part 5
Commentaries
- History Repeats
- SIX dangers to America's future
- Real Estate and Banking “Boom Bust” cycles
- 18-year real estate boom cycles
- Debt: The First 5,000 Years
- Three reviews

Part 6
- Informed Opinions

Part 7
- Dissertations & Studies
- Forerunners of Henry George

Economics history was dropped from tertiary economics curriculum in 1980. 
No wonder most of us don't understand the impact of economics on current affairs. We are neophytes when it comes to familiarity with turning points in economic history, but that should not prevent us from recognising the need for economic justice and equity:
There can be no freedom without economic justice!

Classical Political Economics is often referred to as Resource Rent, Economic Rent, Land Value Tax, Single Tax, Ricardo's Law, Georgism, etc. The classical economists treated land as distinct from capital: "land, labor and capital" were the three basic "factors of production." They were mutually exclusive. 

Neo-classical Economists denied this distinction and undertook to purge land from economese. Thus, speculators and financial institutions treat "land" as capital when land isn't defined with "Capital Turnover"

Many of our greatest thinkers contributed to the development of Classical Political Economic theory: To name a few, John Locke (1632-1704), Adam Smith (1723-1790), and the English economist David Ricardo (1772 – 1823) whose development of the earlier French Physiocrats' ideas became known as Ricardo's Law. Henry George is the American economics journalist who attracted international public notice with his 1879 publication, Progress and Poverty.

"Clearly, the study of economics remains unscientific because it resists incorporating national real estate markets and the full quantum of land and natural resource rents into its analyses. It follows, therefore, that media commentary on business and economics also remains superficial because although some commentators have made the real estate connection they’ve not developed it, nor taken it through to its logical conclusion." - Bryan Kavanagh, Land Valuer (Retired) Australian Taxation Office (ATO) [Follow his BLOG]


"Trickle-down Economics"

Oxford English Dictionary:
Trickle-down, adj., of or based on the theory that economic benefits to particular groups
will inevitably be passed on to those less well off; orig. and chiefly U.S.


"Trickle down theory: the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows."
John Kenneth Galbraith



"Trickle-down economics" and the "trickle-down theory" are terms in United States politics to refer to the idea that tax breaks or other economic benefits provided by government to businesses and upper income levels will benefit poorer members of society by improving the economy as a whole. The term has been attributed to humorist Will Rogers, who, during the Great Depression, said: 'money was all appropriated for the top in hopes that it would trickle down to the needy.'" – Giangreco, D. M. & Moore, K. (1999), Dear Harry: Truman's Mailroom, 1945-1953

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." – Henry Ford, 1922

On the origin of “Trickle-down economics”
Explainer: trickle-down economics
by Gigi Foster, Professor of Economics, University of New South Wales
20 Feb. 2017
The Conversation

Excerpt:
... The origins of trickle-down can be traced back to William Jennings Bryan [1896], but his phrasing - “leak through” - didn’t really catch on. Through the years the same basic idea has also been known variously as “supply-side economics” and “Reaganomics”.
...
The broad idea of trickle-down economics is that giving economic help to companies or people at the top of society should, through one of various possible mechanisms, generate benefits for those in layers further down.
Let’s look at the various mechanisms through which this is theorised to work.


- Mechanism 1: Corporations who get tax cuts increase investments in the country that gives them.

Excerpt: …if our peer nations start taxing companies at rates below what is required to finance effective government, should we follow them?

- Mechanism 2: Rich people who get tax cuts will use the extra money in a way that helps the country as a whole.

Excerpt: …In fact, since rich people have a lower marginal propensity to consume than poorer people, they’re more likely to spend an extra dollar on investment than on stuff. … If the extra dollar ended up going to less productive businesses, we might see a temporary uptick in employment and intermediate goods sales that then melted away when the business was out-competed. If home buyers got the money instead, it might mainly fuel increased house prices.

- Mechanism 3: Aggregate tax revenue will rise when taxes are cut.

Excerpt: Perhaps the most radical notion in supply-side economics is that cutting taxes might, counter-intuitively, raise tax revenue.
Suppose a company were making $100 in profits and faced a company tax rate of 30% (creating $30 in tax liability), but then the tax rate dropped to 28%. The extra $2 of “found money” might be invested in the business in a way that generates a rise in profits, say to $110. This would then create a tax liability of $30.80, or $0.80 more than the government collected under the higher tax rate.
Notice how large the return on the investment of the “found money” had to be, in order to create even a tiny increase in corporate tax revenue, from this 2-percentage-point tax break. … >>>more


Single Bottom Line (SBL) - vs - Triple Bottom Line (3BL)

The Single Bottom Line (SBL)
The ultimate aim of the 'private sector' is focused on The Bottom Line (TBL): Overseeing perpetual growth to meet quarterly profit targets for shareholders has left the whole of society vulnerable under an 'economic aristocracy'.

In the United States, 96% of the rural population had moved to cities - "suburbia" - following WW2. Public services and infrastructure required to support those growing urban environments fostered the 'Big' corporate monopolies. Recent controversies include Public Private Partnerships (PPP), where Public Sector Comparator PSC) estimates calculated by 'vested interests' demonstrated savings and efficiencies to be expected from 'outsourcing' public sector funding to private sector entities.

The Triple Bottom Line (3BL)
The concept of the "triple bottom line" aka 3BL, which emerged in the mid-90s, was inspired by the environment movement as an antidote to the 1987-1993 "Real Estate & Banking boom-bust cycle". The aim was to help establish clear guidelines for financial, social, ecological concerns.

Following the GFC of 2007/8, debate around Single Bottom Line (SBL) vs Triple bottom line (3BL) agendas entered public awareness, with attention directed to examining the consequences of the mid-1980s "Boomer generation" popular swing to Wall St. where investment 'portfolios' require Public Corporation board members to focus on the 'Single Bottom Line' or be dismissed. Why? Because shareholder profits are prioratised while those same shareholders continue to ignore the wide-scale impacts of their influence.

The Triple Dividend
"The triple dividend might become the main motivation for climate policy."
- Professor Dr. Ottmar Edenhofer

Potsdam Institute for Climate Impact Research
"The triple dividend might become the main motivation for climate policy." - Professor Dr. Ottmar Edenhofer, 26 June 2013, Climate Change Mitigation, Justice and Investing in Capabilities Financing Global Public Goods, Workshop at MCC
Read the full report here (pdf):

Summary
(Note: "rent" refers to Economic Rent aka The Law of Rent -
see Economic Rent Explained)
Conventional economic wisdom perceives rent taxation as neutral.

  • Therefore, this "just“ tax has the largest potential to overcome the trade-off between justice and efficiency. Additionally, only reproducible factors in production should earn income (labor and capital).
  • The taxation of rents is perceived as a way to "socialise“ the commons even with private property rights.
  • However, the potential of rent taxation is not neutral. Therefore, the potential for reaping a triple dividend is widely underestimated:
  • Rent taxation can be combined with intergenerational transfer schemes in which the newborn are endowed with assets financed by rents.
  • Additionally, rent taxation can be used to finance public infrastructure.
  • Infrastructure can be seen as an investment in capabilities for the reduction of poverty.
  • Climate policy enhances the "Climate Rent“ which does not only mitigate climate change but also provides additional sources for infrastructure investments and intergenerational transfer schemes.
  • The triple dividend might become the main motivation for climate policy.

Part 1
Back to top

Hindsight is Perfect
– Woodrow Wilson (1856-1924)
US President, 1913 to 1921
– David Lloyd George (1863-1945)
UK Prime Minister, 1916 to 1922
– John Maynard Keynes (1883-1946)
– Winston Churchill (1874-1965)
UK Prime Minister, 1940 to 1945 and 1951 to 1955
– Frederich Hayek (1899-1992)
– Ronald Reagan (1911-2004)
US President, 1981 to 1989
– Milton Friedman (1912-2006)
– Margaret Thatcher (1925-2013)
UK Prime Minister, 1979 until 1990

TOO BIG TO FAIL (TBTF)
Heads, I win.
Tails, tax payers lose.

According to conventional wisdom, the global financial crisis happened because markets were out of control - they were too free.
But what if the real cause was because they weren’t free enough?

John Maynard Keynes and Milton Friedman believed that government could steer the economy, supply money - print money, and socialize the cost of bailing out the banks. They offered government a way to champion Free Markets and hold on to power.

"FREE MARKETS"

"Governments that try to control the economy ultimately enslave its people."
–– Austrian economist Friedrich August von Hayek (1899-1992)

Frederich Hayek believed that by freeing the market you could prevent power from concentrating in the hands of politicians. He argued that fascism and socialism empowered the state over the individual and that government intervention in the market, such as propping up failing businesses, setting trade tariffs, or manipulating interest rates, would be counterproductive.
Hayek's The Road to Serfdom (1944) became
"an influential and popular exposition of market libertarianism".

However, Hayek failed to see that the so-called real estate “market” isn’t a real market until its land rent is captured for public purposes.  With Hayek’s principles in full force, absent the collection of land rent, we’d still have property bubbles (and recessions when they burst).

The remarkable influence of Friedrich Hayek
Modern free-market ideology owes much to the thought of an Austrian economist neglected for the first half of his life

By Ben Jackson, November 3, 2022, Prospect

Excerpt:
Everyone now agrees that Friedrich Hayek was an unusually influential intellectual. His writings are credited with inspiring a powerful pro-market revival in the late 20th century. Margaret Thatcher, Ronald Reagan and many other political leaders all declared that they had imbibed Hayek’s ideas at a formative stage. Thatcher recalled reading Hayek’s The Road to Serfdom while an 18-year-old undergraduate at Oxford. Fast forward half a century and another future prime minister, Liz Truss, is said to have been a member of the Oxford University Hayek Society, presumably while still a Liberal Democrat. Truss’s tax-cutting economic policies were incubated by think tanks who regard themselves as the keepers of the Hayekian flame. Yet this new biography by Bruce Caldwell and Hansjörg Klausinger of the first half of Hayek’s life tells a different story. Here we meet a Hayek who was widely believed to be intellectually defeated and marginal to mainstream politics. As such, it offers an opportunity to look again at Hayek as a historical rather than mythical figure.
The book has two strands: Hayek’s life, which in this period took him from Vienna to London to Chicago; and Hayek’s ideas, which moved from technical economics to sweeping political works. ... >>>more

Masters of Money
(2:3). Friedrich Hayek and the Free Market
BBC September 2012
Transcribed HERE

In the second episode of the BBC documentary series, The Masters of Money, Frederick Hayek and the Free Market, BBC economics editor Stephanie Flanders turned her attention to the radical free-market economist and Nobeloriate Friedrich Hayek (1899-1992), who believed in the primacy of the market and that all attempts to regulate and control it were misguided and would end in failure. Hayek believed free markets would deliver prosperity without policy intervention. He also argued that it was dangerous to treat economics as a science.

The Urge to Meddle
See BBC Presenter Stephanie Flander's introduction HERE 

Excerpt: . . . These leaders might pay lip service to liberalising the economy and setting markets free, but in practice it has been difficult for them truly to give up the urge to meddle, even when they are convinced of the intellectual case for doing so.
. . . why Hayek and some other Austrian economists have acquired a new generation of fans - including the Republican Congressman and presidential candidate Ron Paul. They find in Hayek's writing both a convincing explanation of the financial crisis and a bracing solution.
Leave well alone?
The Hayekian explanation for the crisis says it's all down to government meddling, to policymakers not giving markets the benefit of the doubt. And the worst kind of meddling, Hayek thought, came in the government's determination to control the price of money - also known as the interest rate.
In the Austrian view, the US Federal Reserve and other central banks helped cause the financial crisis, by always cutting interest rates when the economy showed signs of faltering; for example, after the bursting of the dotcom bubble.
That might have staved off a more serious downturn. But only at the cost of encouraging people to take on debts they couldn't afford - and giving banks an incentive to take excessive risks.
>>> more

Ending Too Big to Fail: Lessons from Continental Illinois
Notes from the Vault
Larry D. Wall
April 2016
Federal Reserve Bank of Atlanta

Too big to fail has been an important public policy issue since the 1984 bailout of Continental Illinois National Bank and Trust Company and its parent holding company, Continental Illinois Corp. Congress tried to end too big to fail (TBTF) in 1991 with its passage of the Federal Deposit Insurance Corporation Improvement Act (FDICIA). TBTF nevertheless persisted during the financial crisis so Congress again tried to end TBTF with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) in 2010, which provided the supervisors with numerous additional powers. However, doubts remain in the minds of many, including Federal Reserve Bank of Minneapolis President Neel Kashkari, who recently announced an initiative to develop an actionable plan to end too big to fail by year-end.

Some analysts have argued that an essential part of getting rid of TBTF is to return banking back to an earlier era when commercial banks were smaller and limited to providing traditional banking services. The DFA includes three structural changes that go part way in the direction of making banks simpler and smaller. Will these or more rigorous versions end TBTF? One of the few avenues available for assessing any attempt to end TBTF is to ask whether the proposed actions and regulatory changes would have prevented earlier bailouts. This post conducts such an analysis by revisiting the failure and bailout of Continental Illinois to see if the structural measures along the lines of DFA would have prevented the failure.
>>> more

Back to top


If you wanted to reduce the unpopularity of the property tax, the way to do it would simply be to provide for an effective method whereby it could be withheld at source, in small payments and that would eliminate a large part of the objection to it. Milton Friedman

Here's what Milton Friedman said...
Excerpt from the above film clip (1:00) >>>

– The least bad tax is a property tax on the unimproved value of land.
– The Henry George argument from many, many years ago.
– The next least bad tax a flat-rate tax on income above an exemption.


So, in answer to your question, if I could design my ideal tax system, it would contain an income tax but it would not be the kind of monstrosity we have now. It would be a flat-rate tax on all income, from whatever source derived, less (unclear at 1:44) a personal deduction and strict occupational expense. And that kind of an income tax I think would be the least inconsistent with a strong free enterprise system. You know why, it's an interesting thing, if you 're talking about taxes, about why it is that the property tax is so unpopular. It's not unpopular for good economic reasons. It's unpopular, in my opinion, for one simple reason: It's the only tax left on the books for which people have to write a big check. The income tax is a far worse tax. But, and I have to admit that I have some part of the guilt in this process because during WW2 I worked at the Treasury and helped to design the withholding system. (2:34)

2:40) But, with respect to the income tax, we've arranged it so it's taken off bit by bit and it's almost painless. With respect to the sales tax, we pay a little bit of it each time. With respect to the corporate tax, and excise taxes, they're hidden in the price of things we buy, we don't even know we're paying them. But with respect to the property tax, that remains a tax that we as individuals have to pay and we have to write a big check for. That's the fundamental reason, in my opinion, why it's so unpopular. And, in fact, I think and I hate to say this because it's giving hostages to fortune, but if you wanted to reduce the unpopularity of the property tax, the way to do it would simply be to provide for an effective method whereby it could be withheld at source, in small payments and that would eliminate a large part of the objection to it.

Part 2
Sir Winston Churchill and David Lloyd George tried!
Back to top

What was ‘going on’ in the UK when these two men promoted The People's Budget?

According to Geoffrey Lee, in The People's Budget: An Edwardian Tragedy (1996), The 1909/1910 People's Budget was championed by the Chancellor of the Exchequer, David Lloyd George, and Winston Churchill, who was then President of the Board of Trade.

Summary excerpt:
Lloyd George, the Chancellor of the Exchequer, needed to increase taxation to meet the cost of the recently introduced old-age pensions and, in his 1909 budget, he proposed his famously controversial land tax. This was based on Henry George’s philosophy as expounded in his economic bestseller, Progress and Poverty, published in 1879. Gladstone had incorporated his ideas in the Liberal Party’s programme.

The House of Lords, set on defending the interests of its members, rejected the budget, thereby breaking an unwritten constitutional convention preventing it from opposing ‘money bills’. In return the Government sought an assurance from the King to create enough Liberal Peers to outvote the Conservative majority in the Lords. In the end the Peers backed down and the Parliament Act of 1911 established the supremacy of the elected chamber over the Lords.

The land tax, badly drafted and never fully implemented because of the start of the First World War, was abolished in the 1920s. This book concludes by looking at the attempts and failure of subsequent governments to devise acceptable methods of separating the public from the private revenue of land to recoup for the community what the community itself creates, the heart of Henry George’s argument. >>> more

Winston Churchill (1874-1965)

The Mother of all Monopolies
Winston L. Spencer-Churchill (1874-1965)
“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.”[From a Speech Delivered at King's Theatre in Edinburgh on 17 July 1909]
Excerpt

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.
>>> more

What else did Churchill say?

– Land and Income Taxes in the Budget
Speech presented by Winston Churchill
Edinburgh, July 17, 1909
Excerpt: We are often assured by sagacious persons that the civilisation of modern States is largely based upon respect for the rights of private property. If that be true, it is also true that such respect cannot be secured, and ought not, indeed, to be expected, unless property is associated in the minds of the great mass of the people with ideas of justice and of reason. . . .
A year ago I was fighting an election in Dundee. In the course of that election I attempted to draw a fundamental distinction between the principles of Liberalism and of Socialism, and I said "Socialism attacks capital; Liberalism attacks monopoly." And it is from that fundamental distinction that I come directly to the land proposals of the present Budget.
>>> more

Liberalism and the Social Problem
by Winston Spencer-Churchill
The principal speeches by Sir Winston Churchill, 1905-1909 published in FREE eBook format by Project Gutenberg

Churchill: His Radical Decade, Othila Press, 1999,
by Malcolm Hill. 

Reviewed for the International Churchill Society,
by Richard M. Langworth

Excerpt:

In 1854 in the United States, President Franklin Pierce vetoed a bill to finance a federal hospital for the mentally ill because "I find nothing in the Constitution to authorize this." In 1896, President Grover Cleveland opposed a bill for federal flood relief on the same grounds. Ten years later in Britain, when the Liberal Party swept into power in a landslide election, the ground shifted. The Liberal Government of 1906 held it a State responsibility to create what Churchill called "a Minimum Standard," below which no citizen should be allowed to fall. Not until the Franklin Roosevelt's New Deal did similar ideas arrive in America. Churchill's Liberals created a rudimentary welfare state twenty years before FDR, and might have extended it had World War I not intervened...

David Lloyd George (1863-1945)
"Who ordained that the few should have the land of Britain as a perquisite; who made 10,000 people owners of the soil, and the rest of us trespassers in the land of our birth?"
– British PM David Lloyd George, speech at Newcastle-on-Tyne (9th October, 1909)


The People's Budget
Excerpt

Lloyd George, who was the first Chancellor of the Exchequer who had not been to a private school, was considered to be a "man of the people". in one speech had warned that if the Liberal Party did not pass radical legislation, at the next election, the working-class would vote for the Labour Party: "If at the end of our term of office it were found that the present Parliament had done nothing to cope seriously with the social condition of the people, to remove the national degradation of slums and widespread poverty and destitution in a land glittering with wealth, if they do not provide an honourable sustenance for deserving old age, if they tamely allow the House of Lords to extract all virtue out of their bills, so that when the Liberal statute book is produced it is simply a bundle of sapless legislative faggots fit only for the fire - then a new cry will arise for a land with a new party, and many of us will join in that cry." >>> more

MORE from David Lloyd George
Lloyd George speeches are available on the Internet Archive
and on Wikiquotes
On the 30th July, 1909, David Lloyd George went to the working-class district of Limehouse in London and made a speech on how the House of Lords was blocking his People's Budget.
The Land and The People, Limehouse July 30, 1909, page 144, Internet Archive

. . . Lloyd George made another speech attacking the House of Lords: The Landlords' Tariff on Industry, Newcastle-on-Tyne, on 9th October, 1909, quoted in The Times (11 October 1909), p. 6, Page 157 Internet Archive
Excerpt

"Let them realize what they are doing. They are forcing a Revolution. The Peers may decree a Revolution, but the People will direct it. If they begin, issues will be raised that they little dream of. Questions will be asked which are now whispered in humble voice, and answers will be demanded with authority. It will be asked why 500 ordinary men, chosen accidentally from among the unemployed, should override the judgment - the deliberate judgment - of millions of people who are engaged in the industry which makes the wealth of the country. It will be asked who ordained a few should have the land of Britain as a perquisite? Who made ten thousand people owners of the soil, and the rest of us trespassers in the land of our birth? Where did that Table of the law come from? Whose finger inscribed it? These are questions that will be asked. The answers are charged with peril for the order of things that the Peers represent. But they are fraught with rare and refreshing fruit for the parched lips of the multitude, who have been treading along the dusty road which the People have marked through the Dark Ages, that are now emerging into the light." >>>more

Part 3
The Federal Reserve: President Woodrow Wilson's great sorrow

Back to top
When taxing income became the primary source
of revenue in the USA

"We are at the parting of the ways. We have, not one or two or three, but many, established and formidable monopolies in the United States. We have, not one or two, but many, fields of endeavor into which it is difficult, if not impossible, for the independent man to enter. We have restricted credit, we have restricted opportunity, we have controlled development, and we have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world–no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men." – President Woodrow Wilson (1856-1924),
28th President of the United States, 1913 to 1921:

"New Freedom: A Call for the Emancipation of the Generous Energies of a People" Doubleday, 1913, CH 8.
Available FREE @ Gutenberg.org

Note: his book was published the year the FED Act was signed.

Q:
When did the American Dream,
"Government of the people, by the people, for the people"

turn into a nightmare for the entire world?

A:
Two events sealed the deal:
– Founding of the Federal Reserve in 1913.
– Elected officials bankrupted the country and gutted the US economy in the 1930s.

How did this happen?
After previous attempts to push the Federal Reserve Act through Congress, a group of bankers funded and staffed Woodrow Wilson's campaign for President. He had committed to sign this act. In 1913, a Senator, Nelson Aldrich, maternal grandfather to the Rockefellers, pushed the Federal Reserve Act through Congress just before Christmas when much of Congress was on vacation (Reference 3, 4, 5). When elected, Wilson passed the FED. Later, Wilson remorsefully replied (referring to the FED):
'I have unwittingly ruined my country'

(Reference 17, P. 31: "Repeal the Federal Reserve Banks" (1983)
Father Casimir F. Gierut (1919-2007) (Author bio),
Chairman, National Committee Repeal Federal Reserve Act, from 1972.

According to American educational theorist and author Albert Jay Nock, (1870-1945), "natural law still exists and is still a respectable force. . . The first of these is called the law of diminishing returns, the second is called Gresham's law ["bad money drives out good"], and the third one is so seldom cited. . . the law of least exertion …"
– Albert Jay Nock, 1934, “The God’s Lookout"


Orwellian Economics

Back to top

How Euphemisms Have Turned Economics from a Science
to a Propaganda Device
by Dan Sullivan

Excerpt:

The Precision of Scientific Language
Scientific analysis requires precise language, and the "hard" sciences rely on such language. In aerodynamics, for example, the factors of flight are lift, thrust and drag. Each of these factors is rigorously defined, and each is distinct from the other two. ...

The Ambiguity of Modern Economic Terminology

Modern economics is riddled with influence from political factions, each focused on its own interests, each vigorously defending its own privileges and less vigorously decrying the privileges of others, and each trying to manipulate economics to support its agenda. The result is a pseudo-science based on terms with multiple meanings, with expediency masquerading as utility, and rationalization masquerading as logic. As we get into the history of how economics has become degraded, we will examine some of the euphemisms now in vogue and show how they lead to illogical conclusions.

"Macroeconomics" for "Political Economy"
Economics was originally called "political economy." Its explicit purpose was to analyze public policy alternatives and to advise kings and lords as to the effects of proposed policies. The moral purpose of political economy was ostensibly aligned with the moral purpose of government itself - to maintain order and to promote the general welfare. Modern economics, pretending to be a "pure" science, has stripped away terms that imply a moral purpose. However, we shall see that hidden agendas of interest groups have replaced the overt agendas of kings and of the people, and that these hidden agendas are served by obscuring the political purpose of "macroeconomics."

In many ways, the new economic thinking we have to work out has some close affinities with very old economic thinking, because what I think we need to do is to find a way to reconnect economic reasoning with moral reasoning. The classical economists understood their subject in this way, from Adam Smith, to Karl Marx, to John Stuart Mill - despite their ideological differences - the classical economists did not view economics as a value-neutral science, or even as an autonomous discipline. They all understood it to be a subfield of moral and political philosophy, and I think that we will succeed in recasting, in reinventing economics, when we reconnect it with this long, but largely forgotten tradition.
- INET presentation by Michael Sandell, Harvard professor of government and producer/host of the internet course, Justice.

"Normative" for "moral"
Modern economists use the term "normative economics" for arguments about what should be, and "positive economics" for arguments about how things are and what "works." It is often insisted that positive economics must come first - that what is and what works must come before what should be. However, this begs the question, "works for whom?" Often, when there is no explicit moral agenda as to whom economic policy should serve, it serves an implicit agenda, as Elizabeth Warren observed in 2004:

What Alan Greenspan focuses on when he talks about the American family is whether or not they'll be able to continue to make the payments on those outstanding credit cards and outstanding loans, because if they can keep making the payments - if they can keep a shoulder to the wheel - then the banks are safe. Ultimately, Alan Greenspan's constituency is just the banks. Just keep those banks safe, and that means everything is happy.

This is the result of macroeconomics having divorced itself of political economy's explicit moral purpose, and it renders "positive economics" positively absurd. If you haven't defined who is supposed to benefit from a policy, how can you define whether that policy 'works'? None the less, substituting "normative economics" for "moral economics" avoids calling attention to how amoral, if not immoral, most economics is.

"Maximization of Wealth" for "Satisfaction of Desires"

Although the terminology of classical economics was generally more logical than today's terminology, it defined the whole point of economics in a monarchial context, and that mis-definition has remained with economics to this day. The first economists were employed by kings and high nobles, whose desires were, in fact, the maximization of wealth under their dominion.

"Rights" for "Privileges" . . . Continue reading here >>>


Part 4
What happened 30 years ago?
Back to top
Mrs. Thatcher’s mean-spirited legacy
The Queen Mother of Global Austerity and Financialization, 2013
by Professor Michael Hudson & Assoc. Professor Jeffrey Sommers

"We typically honor the convention to refrain from speaking ill of the recently departed. But Margaret Thatcher probably would not object to an epitaph focusing on how her political legacy was to achieve her professed aim of “irreversibly” dismantling Britain’s public sector. Attacking central planning by government, she shifted it into much more centralized financial hands – the City of London, unopposed by any economic back bench of financial regulation and “free” of meaningful anti-monopoly price regulation." >>> more

The Reagan Revolution
On November 13, 1979, the day Ronald Reagan declared for the presidency, the Dow Jones Industrial Average was at 814.
As of 2018, the Dow was over 20,000 and world GDP was almost $76 trillion [2018], per the World Bank Group.

"In the name of creating a “free market,” the Revolution created exactly the opposite. By cutting taxes on the rich and on corporations while raising payroll taxes, the Revolution tipped the policy balance in favor of the one percent and against small business. By cutting regulation and anti-trust enforcement, the revolution set off a wave of mergers and takeovers unparalleled since the era of robber barons."
Dr. Polly Cleveland

On the origin of “supply-side economics” and “Reaganomics”
Jack Kemp, Tax Reform, And The Way The World Works

by Ralph Banks
Forbes, Nov. 2017

Excerpt: The 1970s were even more of a mess, economically speaking, than today. . . Along came Jack Kemp. . . Kemp made himself into the hinge upon which history swung. . .
The foundational document of Supply-Side Economics, preceding Jude’s 1978 book The Way The World Works ... was Wanniski’s
The Mundell-Laffer Hypothesis -- a new way of looking at the world, published in the Spring 1975 issue of The Public Interest... >>>more

Jack Kemp’s Year of Decision, New York Times, Feb. 1985 profile
". . . one bit of history intrigued him: The tax cut enacted during the Kennedy Administration had engendered a strong recovery.
"

U.S. history in context
Back to top

Propaganda has been used to change the way the world thinks and behaves for thousands of years. >>> more

New Deal Reference Library, edited by Allison McNeill, et al., vol. 1:
Almanac, UXL, 2003, pp. 1-20.
What happened at the beginning of the 20th century?

Causes of the Great Depression

Excerpt:
When the stock market began to spiral downward, many looked on in disbelief. However, others recognized that the plummeting prices were a confirmation of severe economic problems long in the making. For much of the 1920s, the United States seemed prosperous. Many Americans were employed, and goods such as automobiles, appliances, and furniture flowed out of factories. Yet an undercurrent of unhealthy factors ran through the American economy— factors that all came together and surfaced in late 1929.

During the 1920s there was no national economic planning or any significant watchdog agency to monitor the U.S. economy. The Republican administrations of Presidents Warren G. Harding (1865–1923; served 1921–23), Calvin Coolidge (1872–1933; served 1923–29), and Herbert Hoover (1874–1964; served 1929–33) followed a laissez-faire approach.
Laissez-faire refers to the deliberate absence of government regulation.
None of these presidents attempted to regulate the buying or selling of stocks and bonds; they exercised no controls over banking, manufacturing, or agricultural production. Likewise, no attempt was made to gather or analyze statistics that would have pointed to increasing problems in stock investing and overproduction of agricultural products and consumer goods. This approach to government was a major contributing factor in the Great Depression.

Another general factor that contributed to the Depression was the "get rich quick" mentality that developed during the 1920s. Many Americans believed their fortune was just around the corner. This belief was fueled by the mass production of consumer goods, mass advertising in magazines and newspapers, and exotic silent movies telling tales of riches and success. With this "get rich quick" attitude, many Americans began to recklessly spend what little money they had. Hoping to look like glamorous movie stars, they bought a vast array of beauty products. On a larger scale, many Americans purchased, sight unseen, parcels of land in Florida and southern California. When some investors went to visit the lots that had been purchased, they found swamps or desert. Realizing they had made a poo
r investment, many turned to the roaring stock market to overcome their losses. Focused on their own individual situations, these people did not recognize that their actions would soon combine with a number of other factors to produce the Great Depression.

What caused the Great Depression?
Historians at the beginning of the 21st century recognize a number of causes for the Great Depression, including the following:

- Chronic agricultural overproduction and low prices for farm products

- Overproduction of consumer goods by manufacturing industries

- Concentration of wealth in the hands of a few (often referred to as maldistribution or unequal distribution of wealth; mal- means bad)

- The structure of American business and industry itself, which included several large holding companies

- Investors' speculation (buying stocks with the assumption that they can always be sold at a profit)

- The lack of action by the Federal Reserve System

- An unsound banking system


In 1937, the international School of Philosophy and Economic Science was founded in London by Leon MacLaren, with the active support of his father, British Member of Parliament, Andrew MacLaren MP. Both men were inspired by the work of the nineteenth century journalist and economist Henry George who held that everyone owns what they create, but that everything found in nature, most importantly land, belongs equally to all humanity.

'In the 4 years after 1933, the value of gold held by the Fed almost tripled, to $12 billion, in part due to the higher value of the existing stock of gold, in part to new inflows of gold abroad. . . Some of this was drawn from other central banks. But most came from the ground, as the higher price spurred the mining industry. . . A high fraction of this additional liquidity went into building up the reserves of banks, which, scarred by the years from 1931 to 1933, took a long time to regain their nerve.' 
– Liaquat Ahamed, author of the Pulitzer Award Winning book,
Lords of Finance: 1929, The Great Depression and The Banks Who Broke the World
, 2009, (page 474).
Reviewed here and here

Part 5
COMMENTARIES
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History Repeats

The Kondratieff Wave explained
Named after the Soviet economist Nikolai Kondratiev (1982-1938), "The Long Waves in Economic Life", 1935, Kondratieff, N. D.; Stolper, W. F. (1935). the Kondratiev wave follows the history of technological/industrial economic cycles over 45 to 60 years. (See his remarkable Legacy on Wikipedia)

Referring to the cycle leading up to the Global Financial Collapse of 2008, Australian Tax Office Land Valuer Bryan Kavanagh's review, Resource Rents Hold the Property Key, was published in The Age, June 15, 2005, and shared here.

Excerpt: "The Russian economist Nikolai Kondratieff did not have any explanation for the cause of the 50 to 60-year-long wave cycles he discovered in his studies of 140 years of the economies of the US, Britain, France and Germany. However, cycles of boom and bust seem to be inextricably linked to the failure of economies to capture the national rent for their coffers, and to the consequent escalation in land prices and taxes levied on productive work. Where most modern economic analysts don't like to acknowledge the existence of the Kondratieff wave because it is suggestive of their impotence during its deflationary decline, it is possible to clearly show the inflationary, then deflationary, courses of the fourth Kondratieff wave within the economies of Australia, the US and Britain. The end of each of the three preceding long waves was defined by economic depression."

“Creative Destruction”
The Austrian-born economics professor Joseph Schumpeter (1883-1950), who joined Harvard University during the 1930s, is celebrated as one of the pioneers of evolutionary and innovative economic thinking. His interpretation of Karl Marx’s philosophy led to a completely different perspective - “Schumpeter’s gale” on "the essential facts of ‘capitalism'" led to his vision of entrepreneurial “Creative Destruction” re. invention of new methods of production, new markets, new sources of supply, etc.
Defining an entrepreneur as an inventor of new methods of production, new markets, new sources of supply, etc., in “Capitalism, Socialism and Democracy” (1942) Schumpeter developed a theory of economic innovation associated with long-term frequency of business cycle fluctuations, aka boom-and-bust cycles: “the incessant product and process innovation mechanism by which new production units replace outdated ones.”

Real Estate and Banking "Boom-Bust" cycles
While leading economic analysts, such as Prof. Mason Gaffney, Prof. Michael Hudson, Fred Harrison, MA, Fred Foldvary, PhD, and Bryan Kavanagh focus on teaching us how to correct a historically flawed system, we can also learn from the intelligence gathered by stock market analysts and traders who examine the potential impacts of major 'boom-bust cycles' on the economy. For example, Australian 'investment adviser' Phillip J. Anderson, author of The Secret Life of Real Estate and Banking, (2009) reports on land-banking cycles:

"The current financial crisis proves the neo-classical economy is working – not failing. . . .as long as land is tradeable and in private hands. It will continue to happen because people will chase the capitalised rent of land, . . . It will be gone only if the rent is collected by the government."
P. J. Anderson, 2009

The Finance, Insurance, Real Estate (F.I.R.E.) sector cycle continues on schedule: Counting from the 2007/2008 GFC, 14 years up to the real estate peak in 2022/23 and 3 or 4 years down to the next "GFC crash" in 2026/27.

Graphics by Lyrebird Media: Click on image for larger version (pdf)

economic cycleCycles Trends & forecasts,
by P. J. Anderson
October 2011
Excerpt:
Economists delight in recalling the Dutch tulip mania of 1636, the South Sea bubble of the 1720's, and in current times the internet investment bubble of the 1990's, because it involved colourful characters in what turned out to be awesome booms that turned quickly to bust. These were random events, responses to either luck (such as the alleged discovery of gold) or invention (money-making schemes of fertile imaginations). They could not have been predicted using the standard tools of the economist.

The financial crisis that broke in 2007 is different. This crisis was pre-determined by the structure of the economy. The present crash is NOT a market failure: it is actually proof that the monopoly capitalist system is working, and working well.

The instability of the system is inbuilt into the DNA of the economy. The process is underpinned by the enclosure of the economic rent, a concept first formalised by English economist, David Ricardo. Ricardo's Law of Rent states, simply, that the economic rent is not a cost of production. A house costs pretty much the same to build, wherever you build it – wages are the same, and materials costs are the same. But the selling price will depend on the location.
>>> more

18-year real estate boom cycles
"will repeat as long as land is tradeable and in private hands"
Interview with Philip J. Anderson.
New positive spin on S'pore's real estate sector
By TEH HOOI LING
February, 2009, The BusinessTimes
Download PDF:
EXCERPT:

The US began selling real estate, officially and under a set legal structure, on May 10, 1800, he said. 'Since then there were speculative peaks every 18 years.'

There were peaks in land sales or real estate speculation in 1818, 1836, 1854, 1888, 1908, 1926 and 1944. The peaks were followed by downturns or depressions, typically lasting four years. World War II disrupted the pattern. But the cycle resumed in 1955.

The real estate market in the US again peaked in 1989 and bottomed in 1991. And 18 years later, in 2006-07, it hit another high. We are now into the third year of downturn, so by next year the market should bottom, which will mark the beginning of the new 18-year cycle, according to Mr Anderson.

The next boom, peaking around 2024, will be huge because hundreds of millions of Chinese will enter the market for the first time . . .

China's privatisation of its real estate market guarantees a real estate cycle, according to him. Also, everything that has been done to tackle the current financial crisis is to preserve the system. 'So the system will start again.'

There are smaller cycles within the big 18-year cycles. The first seven years are characterised by a gradual improvement in activity and confidence following the previous crash. The next seven years see steeper increases in activity and prices, with the sharpest gains taking place in the final two of the seven years.

'That's when most people take on more debt. That's also the easiest time to buy real estate because loans are easy to get as banks have a lot of money. But that's absolutely the wrong time to do so,' said Mr Anderson. >>> more

"14 years up, 4 years down" explained:

Excerpt, page 339,
The Secret life of Real Estate and Banking (2009)

WHY 18 YEARS?
This is a tough one.

We have discovered that, if the economic rent could not be capitalised, there would not be a real estate cycle, or at least not one with such violent boom-busts. (There would still be slight seasonal variations, and structural building and population issues from time to time.) But why should the cycle we have, have averaged out to be 18 years? Since the land price low of 1955, after the Second World War, they have been exactly 18 years in duration.

Perhaps the answer is to be found in the historical long-run rate of interest - which is 5 per cent. In fact the key number in the real estate cycle may well be 14, not 18: 14 years just happens to be the time in which a sum of money, at 5 per cent compound interest, is doubled.

The sleuthing for a possible explanation of the length of the cycle was done by Fred Harrison in his book, Boom Bust, [2010] (Chapters 2 and 5 inparticular). The history goes back to the English 'Termination Societies'. During the Industrial Revolution, when people were shifting into the newly developing industrial centres, those without capital (the vast majority) had great difficulty affording a house. Back then there were no banks and credit institutions such as we are accustomed to today. How might this problem of affordability be solved?

The answer was found in a Birmingham pub in the late 18th century. The ale drinkers decided one day to band together, pool ther savings and buy their way into the housing market. It was agreed that each member of the group was to be levied 10s a month. In the group so formed lots were drawn to decide which person would have his house built first. . . . By the fourteenth year, all members had a home and the club could be disbanded.

These were the 'Termination Societies', the forerunner of what became known in the UK as Building Societies and in the US as Savings and Loans institutions. p. 339.

Further . . .

The More things Change
by Phil Anderson
The real estate cycle repeats because the underlying process of the scramble for the rent remains unchanged. Whilst the rent continues to be capitalised into a tradable government granted license, nothing can change, and the real estate cycle will (must) continue

November and December of 1933: President Roosevelt is having a meeting each morning with his newest economist, George Warren. The task at hand; to arbitrarily set the gold price higher and higher – US currency policy at this time - in order to devalue the US dollar as much as possible without upsetting the whole economic balance. In January of 1934, the price was finally set at US$35 an ounce, eventually devaluing the dollar by just over 40%. The terrible deflation of the time was proving a great burden to the capitalist world economies. . . 

The fall in the dollar was deliberately designed to get prices moving back upwards. If this could be made to happen, the ‘burden of interest payments and the real cost of money were automatically reduced, making business more willing to borrow and consumers more ready to spend’. But it did something else too. . . – Australian economist Phillip J. Anderson, author of The Secret Life of Real Estate and Banking (2009) and Director of Economic Indicator Services, a London based company that teaches subscribers how to accurately forecast the economy, has provided valuable insights and references on "The soaring cost of land as we go into the end years of the 18-year cycle" >>> more

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“If you owe the bank a hundred thousand dollars, the bank owns you. If you owe the bank a hundred million dollars, you own the bank.” - American proverb.

Debt: The First 5,000 Years (2011)
by David Graeber (1961-2020), American anthropologist, professor of anthropology at the London School of Economics.
Google Books scan
Excerpt
CH. 1: On the Experience of Moral Confusion, p. 2-3

I launched into historical background, explaining how, during the '7os oil crisis, OPEC countries ended up pouring so much of their newfound riches into Western banks that the banks couldn't figure out where to invest the money; how Citibank and Chase therefore began sending agents around the world trying to convince Third World dictators and politicians to take out loans (at the time, this was called "go-go banking"); how they started out at extremely low rates of interest that almost immediately skyrocketed to 20 percent or so due to tight U.S. money policies in the early '8os; how, during the '8os and '9os, this led to the Third World debt crisis; how the IMF then stepped in to insist that, in order to obtain refinancing, poor countries would be obliged to abandon price supports on basic foodstuffs, or even policies of keeping strategic food reserves, and abandon free health care and free education; how all of this had led to the collapse of all the most basic supports for some of the poorest and most vulnerable people on earth. I spoke of poverty, of the looting of public resources, the collapse of societies, endemic violence, malnutrition, hopelessness, and broken lives.
. . .
Where to start? I could have begun by explaining how these loans had originally been taken out by unelected dictators who placed most of it directly in their Swiss bank accounts, and ask her to contemplate the justice of insisting that the lenders be repaid, not by the dictator, or even by his cronies, but by literally taking food from the mouths of hungry children. Or to think about how many of these poor countries had actually already paid back what they'd borrowed three or four times now, but that through the miracle of compound interest, it still hadn't made a significant dent in the principal. I could also observe that there was a difference between refinancing loans, and demanding that in order to obtain refinancing, countries have to follow some orthodox free-market economic policy designed in Washington or Zurich that their citizens had never agreed to and never would, and that it was a bit dishonest to insist that countries adopt democratic constitutions and then also insist that, whoever gets elected, they have no control over their country's policies anyway. Or that the economic policies imposed by the IMF didn't even work. But there was a more basic problem: the very assumption that debts have to be repaid. Actually, the remarkable thing about the statement "one has to pay one's debts" is that even according to standard economic theory, it isn't true. A lender is supposed to accept a certain degree of risk. If all loans, no matter how idiotic, were still retrievable--if there were no bankruptcy laws, for instance--the results would be disastrous. What reason would lenders have not to make a stupid loan?

"Well, I know that sounds like common sense," I said, "but the funny thing is, economically, that's not how loans are actually supposed to work. Financial institutions are supposed to be ways of directing resources toward profitable investments. If a bank were guaranteed to get its money back, plus interest, no matter what it did, the whole system wouldn't work. Say I were to walk into the nearest branch of the Royal Bank of Scotland and say 'You know, I just got a really great tip on the horses. Think you could lend me a couple million quid?' Obviously they'd just laugh at me. But that's just because they know if my horse didn't come in, there'd be no way for them to get the money back. But, imagine there was some law that said they were guaranteed to get their money back no matter what happens, even if that meant, I don't know, selling my daughter into slavery or harvesting my organs or something. Well, in that case, why not? Why bother waiting for someone to walk in who has a viable plan to set up a laundromat or some such? Basically, that's the situation the IMF created on a global level which is how you could have all those banks willing to fork over billions of dollars to a bunch of obvious crooks in the first place." pp. 2-3

Three reviews
Back to top

1st review
A Georgist Perspective on Thomas Piketty's book:
"Capital in the 21st Century."

By Professor Emeritus Mason Gaffney, 31 August 2014

"Piketty’s book is timely and will do a lot of good. We itemize below its good elements and then, sadly, its failings. The most basic of these is his conflating land with capital. Piketty’s policy conclusions, the bottom line of it all, feature a revival of the property tax, but in a totally impracticable form. . ." >>> more

2nd review
Economists and the Powerful
by Norbert Häring and Niall Douglas (Anthem Press, 2012).
"Häring and Douglas show that the economics discipline did not get this way by accident. ...they provide a wealth of references tracing how economics was turned into a propaganda exercise for financiers, landlords, monopolists, insiders, fraudsters and other rent-seeking predators whom classical economists sought to tax and regulate out of existence." – Professor Michael Hudson

predicting economyReality Economics
December 19, 2012
By Professor Michael Hudson


“Whom the gods would destroy, they first make mad. And if they would destroy economies, they first create a wealthy class on top, and let human nature do the rest. The acquisition of power soon leads to its abuse, to economic and social hubris. By seeking to protect its gains, perpetuate itself and make its wealth hereditary, power elites lock in their position in ways that exclude and injure those below. Turning government into an oligarchy, the wealthy indebt them and shift the tax burden onto the less powerful.

It is an ancient tale. The Greeks got matters right in seeing how power leads to hubris, bringing about its own downfall. Hubris is the addiction to wealth and power, an arrogant over-reaching that involves injury to others. By impoverishing economies it destroys the source of profits, interest, capital gains, and even recovery of the original savings and debt principal.

This abusive character of wealth and power is not what mainstream economic models describe. That is why economic theory is broken. The concept of diminishing marginal utility implies that the rich will become more satiated as they become wealthier, and hence less addicted to power. This idea of progressive satiation returns gets the direction of change wrong, denying the basic thrust of the past ten thousand years of human technology and civilization.

Today’s supply and demand approach treats the economy as a “market” in a crudely abstract way, as quantities of goods (already produced), labor (with a given productivity) and capital (already accumulated, no questions asked) are swapped and bartered with each other. This approach does not inquire deeply into how some people get the capital to “swap” for “labor.” To top matters, this approach gets the direction of technological growth and basic business experience wrong, by assuming conditions of diminishing returns and diminishing marginal utility. The intellectual result is a parallel universe, whose criterion for economic excellence is merely the internal consistency of its abstract assumptions, not their realism.
>>> more

3rd review
27 November 2012
Aditya Chakrabortty,
Big business has corrupted economics, TheGuardian

Economists and the Powerful, by Norbert Häring and Niall Douglas, traces how the most powerful of all the social sciences became a doctrine for helping the rich – with the aid of huge sums from business. You may be familiar with a version of this critique, thanks to the film Inside Job, which described how some of the best-known economists practising today are in the pay of Wall Street. But the history unearthed by Häring and Douglas is far more disturbing – because they argue that vested interests have slanted some of economics’ most fundamental ideas.

Part 6
Informed Opinions
Back to top
2022
A Philosophy for a Fair Society (Part I)
Michael Hudson & Jonathan Brown
1:12:35


... a two part interview with Michael Hudson, perhaps the world’s most influential (but rarely acknowledged) economist. Michael has had a remarkable career starting off as a practical or reality-based economist working for a variety of institutions looking [at] how banks really behave. ...
He now advises the Chinese Government on how to maintain an industrial economy and avoid the traps the US Finance economy has fallen into.

Michael’s most famous work is Super Imperialism, the Economic Strategy of American Empire...
In this first episode we looked at how economics got corrupted from industrial economics where people made money by making things, to a finance economy where a small elite group makes money by manipulating financial instruments. ...

Time stamps are as follows:
00:00 Welcome and introduction
02:27 How did he get into economics?
11:15
The effect of real estate and credit on the economy in today’s finance economy system
17:55
Why did the classical economists fight so hard to get rid of the rentier class?
21:21
Why was almost everyone a socialist at the start of the 20th century? And why was the public sector seen as the 4th factor of production?
31:07
The fight against classical economics and its concept of rent as unearned income
36:27
What Henry George got wrong
44:09
How the fight to maintain an industrial economy is being fought in Russia and China
53:11
How GDP calculations distort the value creation process today
59:13
How the University of Chicago and its graduates enjoy their free lunch
1:08:21
The New Road to Serfdom and the legacy of the new feudalism 1:11:51 Outro


2019
Detailed data show the value of land

under homes across the country

by Andrew Van Dam
January 2019
Washington Post
Excerpts:
A successful investment in residential land doesn’t contribute to the economy in the way an investment in a farm, factory or corporation might. As Columbia University economist Joseph Stiglitz explains, a jump in land prices “disproportionately affects the wealthy.”
There can be an increase in the value of land, without any increase in the productive potential of the economy,
” Stiglitz writes. Income generated by land accrues primarily to the person lucky enough to own it, whether he or she builds their own house there, or uses it as a rental property.

As a result, rising land values tend to reinforce existing class divides.
. . .
People often focus on what causes rising land prices. But few ask the crucial follow-up: what do rising land prices cause? Right now, the answer is inequality. >>> more

2018
Professor Michael Hudson, Ellen Brown, & Walt McRee

Published by End The Illusion, Febuary 17, 2018



EXCERPT from Historian and Economist Edward J. Dodson's
observations, shared on YouTube comments following the above discussion:

During the Q&A session, a comment was made by a professor in the audience regarding the benefit of being able to borrow from a public bank, charging much lower rates of interest than a commercial bank or other for-profit mortgage loan investor. What he needed to add is that the lower cost of borrowing is capitalized into higher land and, therefore, property prices. The property buyer is able to qualify for a higher level of mortgage debt. Thus, sellers are able to increase the price of property. Owners of vacant but developable land will, of course, increase the price of land charged developers. What is needed to make “housing” affordable is public policy that tames the land market and brings down the cost of land. The only means of doing so is for communities to impose an annual charge on the ownership of land equal to the potential annual rental value of whatever land is held. Elimination of the tax on actual housing units will further lower the cost of housing and make housing with more amenities more affordable.
– Edward J. Dodson

See also:
Michael Hudson's 2015 book, Killing the Host.

Abstact:
KILLING THE HOST exposes how finance, insurance, and real estate (the FIRE sector) have gained control of the global economy at the expense of industrial capitalism and governments.

The FIRE sector is responsible for today’s economic polarization (the 1% vs. the 99%) via favored tax status that inflates real estate prices while deflating the “real” economy of labor and production.

The Great 2008 Bailout saved the banks but not the economy, and plunged the U.S., Irish, Latvian and Greek economies into debt deflation and austerity.

This book describes how the phenomenon of debt deflation imposes austerity on the U.S. and European economies, siphoning wealth and income upward to the financial sector while impoverishing the middle class.
See The Table of Contents HERE


2017
Rachel Lomax – the very model of UK 'establishment'
:
"Where is the revolutionary thinking?"
Rachel-LomaxBig business has corrupted economics
by Aditya Chakrabortty

November, 2017

Excerpt: You know the country is in a financial mess when even establishment figures such as Rachel Lomax are calling for revolutionary thinking.

Rachel Lomax is practically the definition of establishment: Cheltenham Ladies' College followed by Cambridge and the LSE; principal private secretary to then-chancellor Nigel Lawson; deputy governor of the Bank of England for five years until 2008. Which makes what she said on Friday evening all the more startling.… The former Treasury mandarin made no bones about admitting that she had been part of a project of "dismantling a version of capitalism" and replacing it with "Anglo-American neo-liberalism". You'd struggle to get scholars of Thatcherism to speak with such straightforwardness, but here it was coming from one of the era's key backroom players.

And now this co-architect of Britain's economic model as good as admitted that the system she had helped create was broken. But Lomax had one question: "Where is the revolutionary thinking?" You surely couldn't ask for a better measure of the economic mess we're in, that even members of the establishment are now calling for revolution. >>> more

Joseph Stiglitz
Professor of Economics, Columbia University

"Rent is the secret tax the wealthy charge the poor."
– Joseph Stiglitz, 1998

2015
Joseph Stiglitz:
Thomas Piketty gets income inequality wrong

The famed economist reveals the real reason the rich are getting richer -- and what it means for the rest of us.
January 2, 2015 interview by Lynn Stuart Parramore:
Excerpt:
Lynn Parramore: You’ve mentioned that economic inequality was the subject of your Ph.D studies. How did you come to be interested in how income and wealth get divided up in society?
>>> more

2014
Turning point in economic thought:
"Economics Has to Come to Terms with Wealth and Income Inequality."Joseph Stiglitz

joseph stiglitzDuring his July 2014 visit to Australia, the esteemed Professor of Economics at Columbia University Joseph Stiglitz revealed why the IMF has had a change of perspective on the impacts of socio-economic inequality.

In order to understand the significance of his revelation, it is important to note that in 1926 Columbia University opened the first American economics department, funded by speculators with the express purpose of promoting John Bates Clark's Neo-Classical Economic Theorem, justifing the treatment of "Land" as Capital, against the growing wave of international public interest in Classical Political Economic Theorem re. collection and distribution of Economic Rent as a means to eliminating socio-economic inequality- aka POVERTY.

Interview Excerpts:
The IMF has pointed out that high inequality is associated with lower economic growth and more economic instability. This is a very big change in perspective from the way we thought about things before. We used to say, "Well, inequality is bad, but if we do anything about it, it will slow economic growth." Now we realise that inequality has reached a level where it's actually having adverse effects on countries like the United States and other advanced countries.
...
If you tax monopoly power, if you tax excess what we call rents of a whole variety of kinds, there are some ways in which raising taxes at the top can actually improve the efficiency of the economy. Let me give you an example. In the United States, the speculators are taxed at lower rates than those who work for a living. The result of that is more resources go into speculation. The result of that?: an economy that has an excessively large financial sector, an economy that's excessively unstable, excess activities in speculation, and, less of our scarcest resource, our most talented young people, fewer of them are going into research, into the kinds of things - transistors, lasers - all these basic research that would improve our standard of living. Why go into those low-paying research jobs if you can make a lot more money after tax in speculation?
...
Ask a simple question: is it better to tax bad things or good things? Is it better to tax something that's destroying the global planet or to tax work or savings? And my view is: let's tax carbon and use that revenue to enable a lowering of taxes on savings and work. To me, it's just common sense. Tax bad things rather than good things.


Full transcript: ABC Lateline interview with Professor Stiglitz

2014
Why the Rich Are Getting Richer
and Why It Could Get Much Worse

by Lynn Parramore, December 16, 2014

On December 4th, Stigltiz chaired the eighth Institute for New Economic Thinking Seminar Series at Columbia University, in which he presented a paper, New Theoretical Perspectives on the Distribution of Income and Wealth Among Individuals.

Key quote:
My paper begins with the observation that in fact, you cannot explain what has happened to the wealth/income ratio by that (Piketty's) analysis. A closer look at what has gone on suggests that a large fraction of the increase in wealth is an increase in the value of land, not in the amount of capital goods.

Lynn Parramore:
When you say “land,” you’re not talking about land in the Jane Austen sense, that is, agricultural land under the ownership of the lord of the manor.

Professor Joseph Stiglitz:
It’s not agricultural land.
It’s the value of urban land, and I would include in that, broadly, rents associated with natural resources. It’s the value of existing assets. As a footnote, some of what has gone on, in addition to an increase in the wealth/income ratio, is a capitalization of the increase in other kinds of rents, like monopoly rents. If monopoly rents get increased, if the market power of firms relative to workers gets increased, as when you have the ability of a few, like the banks, to get government guarantees — the value of that is increased and gets capitalized. And that increases wealth but it doesn’t increase capital. So it’s that distinction between wealth and capital that turns out to be critical.
>>> more

2013
The Price of Inequality (2013):
Professor Joseph Stiglitz speaks to "the need for the field of economics — and the country — to come to terms with the growing gulf between haves and have-nots." He believes this division is holding the country back.
>>> more

2013
– Professor Elizabeth Warren

So my question is ... with a minimum wage of $7.25 an hour -
what happened to the other $14.75?
It sure didn't go to the worker.

In March 2013, Senator Elizabeth Warren (D-Mass.) made a case for increasing the USD$7.25 minimum wage during a US Senate Committee Health, Education, Labor and Pensions hearing, in which she cited a study showing that wages have not kept up with increasing rates in worker productivity. In other words, the consequences of the lack of an equivalent Enterprise Bargaining system in the USA is only now being questioned. >>> more

2013
G. William Domhoff
Who Rules America?

An Investment Manager Breaks Down the Economic Top 1%
Says 0.1% Controls Political and Legislative Process

According to Professor G. William Domhoff, Sociology Dept. University of California, Santa Cruz, author of Who Rules America? (2013), this article was written by an investment manager who works with very wealthy clients, in July 2011, just one month before the launch of the Occupy Wall St. movement:

"I sit in an interesting chair in the financial services industry. Our clients largely fall into the top 1%, have a net worth of $5,000,000 or above, and if working make over $300,000 per year. My observations on the sources of their wealth and concerns come from my professional and social activities within this group. Work by various economists and tax experts make it indisputable that the top 1% controls a widely disproportionate share of the income and wealth in the United States. When does one enter that top 1%?..." >>> more

2011
Doing the MATH!
A Plan to Save the USA: Rescuing Americans from the 1%
5 December 2011
Bryan Kavanagh, Land Valuer (ret), Australian Tax Office
(re-published with permission)

The USA currently has 50% of its $14.66 trillion GDP stolen—viz, the $7.33 trillion being that part of the economy constituted by land and natural resource rents. This $7.33 trillion is mainly stolen by the 1%, leaving the 99% dancing to the tune of immense wealth. Observe how an apparently well-meaning President Obama has been bought off by Wall Street; the US has clearly morphed from a democracy into a kleptocracy. Goldman Sachs appears to rule.

As the government captures only a small part of the people’s economic rent at present, it is forced to tax the earnings of people and normal businesses to the tune of $3.456 trillion.  So this amount is also stolen from the 99%.  Debt and despondency pervade. >>> more

Part 7
Dissertation & Studies
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Study results show a loss of 14 IQ points due to living in poverty:
Poverty Impedes Cognitive Function
Anandi Mani1, Sendhil Mullainathan2,*, Eldar Shafir3,*, Jiaying Zhao4
Science 30 Aug 2013: Vol. 341, Issue 6149, pp. 976-980

Burden of Poverty
Lacking money or time can lead one to make poorer decisions, possibly because poverty imposes a cognitive load that saps attention and reduces effort. Mani et al. (p. 976; see the Perspective by Vohs) gathered evidence from shoppers in a New Jersey mall and from farmers in Tamil Nadu, India. They found that considering a projected financial decision, such as how to pay for a car repair, affects people's performance on unrelated spatial and reasoning tasks. Lower-income individuals performed poorly if the repairs were expensive but did fine if the cost was low, whereas higher-income individuals performed well in both conditions, as if the projected financial burden imposed no cognitive pressure. Similarly, the sugarcane farmers from Tamil Nadu performed these tasks better after harvest than before.

Abstract
The poor often behave in less capable ways, which can further perpetuate poverty. We hypothesize that poverty directly impedes cognitive function and present two studies that test this hypothesis. First, we experimentally induced thoughts about finances and found that this reduces cognitive performance among poor but not in well-off participants. Second, we examined the cognitive function of farmers over the planting cycle. We found that the same farmer shows diminished cognitive performance before harvest, when poor, as compared with after harvest, when rich. This cannot be explained by differences in time available, nutrition, or work effort. Nor can it be explained with stress: Although farmers do show more stress before harvest, that does not account for diminished cognitive performance. Instead, it appears that poverty itself reduces cognitive capacity. We suggest that this is because poverty-related concerns consume mental resources, leaving less for other tasks. These data provide a previously unexamined perspective and help explain a spectrum of behaviors among the poor. We discuss some implications for poverty policy. >>>more


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Henry George's 'AhHa' moment
Dr. Alexandra W. Lough, PhD dissertation (2013)
Brandeis University, Massachusetts
The Last Tax:
Henry George and the Social Politics of Land Reform
in the Gilded Age and Progressive Era.
(pdf)

Land and Liberty: Henry George, The Single Tax Movement, and the Origins of 20th Century Liberalism,
Christopher William England, Ph.D. Dissertation (
2015)
Georgetown University, Washington DC.

Abstract
In the 1880s, Henry George rose to fame with a series of best-selling books that proposed a social state funded by revenue from a single tax on land. Many historians have described his dramatic race for mayor of New York on a Labor Party ticket in 1886. Few, however, have written about the relationship between George, who died in 1897, and his campaign manager, Tom Johnson, who as Mayor of Cleveland became the nation’s leading proponent of public ownership of utilities during the early 20th century. Similarly absent from the literature is an appreciation of how Louis Post’s single-tax newspaper, The Public, modernized George’s policies for leading progressive reformers like Brand Whitlock, Newton Baker, William U’Ren, and Frederic C. Howe.

Rather than fading after George’s death, the movement had by the 1910s developed a firm basis of power in American cities, where it expanded the Democratic Party’s reach and accrued the political capital to obtain high positions in the Wilson Administration. Its leading members worked to establish important reforms like the Australian ballot, direct legislation, and the income tax.

I show that George’s ideas found their home in a cosmopolitan, urban, and transnational middle class. The historiography does not account for the importance of the single tax in British liberalism or the implementation of land value taxation in Australia, New Zealand, and Denmark. The single tax, I argue, was a response to exorbitant premiums charged for space in urban areas. George’s disciples hoped to redistribute the wealth levied in high urban rents. By attaching itself to this sort of universal factor of exchange, the movement garnered both global and cross-class appeal.
Furthermore, I show that Georgism was part of the transnational ideology of liberalism. Because classical economists like Adam Smith and David Ricardo had composed the canon of liberal thought with a view toward undermining the moral legitimacy of the landed aristocracy, George had ample precedent to argue that the success of modern capitalism was contingent upon the nationalization of land. George offered a powerful way to incorporate elements of socialism into classical liberalism. >>> more

2014

"The theory of Economic Elite Domination is fairly self-explanatory."

STUDY: The US Is An Oligarchy
By Hamilton Nolan
April 15, 2014
A new study by researchers from Princeton and Northwestern Universities finds that America's government policies reflect the wishes of the rich and of powerful interest groups, rather than the wishes of the majority of citizens.

The researchers examined close to 1,800 U.S. policy changes in the years between 1981 and 2002; then, they compared those policy changes with the expressed preferences of the median American, at the 50th percentile of income; with affluent Americans, at the 90th percentile of income; and with the position of powerful interest and lobbying groups.

The central point that emerges from our research is that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence. Our results provide substantial support for theories of Economic Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism...

Recent research by Larry Bartels and by one of the present authors (Gilens), which explicitly brings the preferences of "affluent" Americans into the analysis along with the preferences of those lower in the income distribution, indicates that the apparent connection between public policy and the preferences of the average citizen may indeed be largely or entirely spurious.

. . . the study found that the positions of powerful interest groups are "not substantially correlated with the preferences of average citizens," meaning that to the extent that special interests groups have political power, they are driving our government's decision making process away from the interests of the average American. >>> more


On Reflection

In a 2007 lecture, Going My Way? Winding Through the Stumbling Blocks Between Georgism and Catholicism, Professor Mason Gaffney stated:

This essay surveys the issues between Georgists and Roman Catholics in three classes: issues that are not peculiarly Roman Catholic (RC) but play out across faiths and denominations, issues that are peculiarly RC, and points of similarity and agreement. Addressed in this fashion are the tensions that arise between the social gospel and individual salvation, between specifics and glittering generalities, between noblesse oblige and governmental reform, between the doctrine of original sin and tabula rasa, between the rich and the poor, between the dignity of labor and the honor of predation, between democracy and authority, between the regulatory emphasis rooted in the philosophy of Aquinas and free markets, and between plain talk and gobbledegook.

Professor Gaffney' optimistic conclusion:

I was pleasantly surprised, as I worked along, how few of the stumbling blocks I had listed are peculiar to Catholicism; and how many are passable. The ones listed in “B” may remain, but I am optimistic that with good will on both sides we may find pathways through them, or over or around or even under them, to work together towards our common goals. I have not minced words to avoid tough problems, but tried to define issues clearly as a prelude to resolving them. Catholics of good will will not take offense, but detect the search for reconciliation beneath my frank words. I look to Catholic Georgists like Kelly, Kromkowski, and Dwyer to carry this resolution further. >>> more


Forerunners of Henry George (pdf)
by Samuel Milliken, 1917
Excerpt:

“When you have seen a truth that those around you do not see, it is one of the deepest of pleasures to hear of others who have seen it.” Thus Henry George wrote on learning that his proposal for a Single Tax had been evolved by men before his time, dead and almost forgotten. [source: The Science of Political Economy, P. II, Ch.3]
It would be an endless task to write adequately of all the thinkers who have denounced monopoly in land, and who have devised various remedies. This paper will be confined to those philosophers who have proposed for public purposes a single source of public revenue.
There have been various kinds of Single Tax…
...
In Palgrave’s Dictionary of Political Economy (II: 372) Caletot tells of an impot unique proposed in 1576-77 in France, in the states-general of Blois, "assessed according to the means of the owner of each dwelling." In 1573-75 and 1592-98 the cortes of Madrid proposed a Single Tax on grist, levied when it left the mill. In 1646 Arriaga in his Universal Plan for Suppression of Taxes proposed a general income tax of 2%. In 1651 Father Davila proposed a single, general progressive poll tax. (Palgrave 1: 485). Shortly before his death at Amsterdam, Benedict de Spinoza (1632-1677) composed Tractatus Politicus, an unfinished work. Therein he holds (Chap. VI: 12): "The fields and the whole soil and, if it can be managed, the houses should be public property, that is, the property of him who holds the right of the commonwealth: and let him let them at a yearly rent to the citizens, whether townsmen or countrymen, and with this exception let them all be free or exempt from every kind of taxation in time of peace." >>>more

On January 8, 1887, Henry George launched the weekly newspaper,
The Standard. Here is an excerpt from his introductory statement:

Salutatory
I begin the publication of this paper in response to many urgent requests, and because I believe that there is a field for a journal that shall serve as a focus for news and opinions relating to the great movement, now beginning, for the emancipation of labor by the restoration of natural rights.
The generation that abolished chattel slavery is passing away, and the political distinctions that grew out of that contest are becoming meaningless. The work now before us is the abolition of industrial slavery.
What God created for the use of all should be utilized for the benefit of all; what is produced by the individual belongs rightfully to the individual. The neglect of these simple principles has brought upon us the curse of widespread poverty and all the evils that flow from it. Their recognition will abolish poverty, will secure to the humblest independence and leisure, and will lay abroad and strong foundation on which all other reforms may be based. To secure the full recognition of these principles is the most important task to which any man can address himself today. It is in the hope of aiding in this work that I establish this paper.
I believe that the Declaration of Independence is not a mere string of glittering generalities. I believe that all men are really created equal, and that the securing of those equal natural rights is the true purpose and test of government. And against whatever law, custom or device that restrains men in the exercise of their natural rights to life, liberty, and the pursuit of happiness I shall raise my voice.
..

Continued here, with links to all issues.




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