Friday, Jan 27, 2012
Sensible article, idiot comments
Inside Housing: Do not pass go
Root cause of housing problems is hard to grasp even for Occupiers let alone banks who effectively own most of the land through mortgage assets. The founding social organisations today are privatisation of the commons: virtually tax free private property in land. And socialisation of private property: taxation of wages, salaries and investment.
Is this the right way around? We’ve been taught this is economically sustainable so never question it. Yet everyone wants property because it always rises in value for free. So through each business cycle, property prices are bid upwards by expected future selling price, fuelled by limitless credit and a speculative bubble develops. The ability of people to pay the rising price for a home to live in diminishes...
10 Comments
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1. libertas said...
Austrian Theory of the Business Cycle: http://www.lewrockwell.com/lewrockwell-show/2008/08/12/17-austrian-theory-of-the-business-cycle/
2. libertas said...
Song about the business cycle
3. mark wadsworth said...
Libertas, have you answered my three polite questions on ?
Ah... I thought not.
Would you now like me to explain to you that what the "Austrians" refer to as credit bubbles are just as much land price bubbles as they are credit bubbles? It's the high land prices which cause the damage and which allow the credit bubbles to get out of control, credit creation in the sense of oiling the wheels of commerce is all rather splendid, it has its own natural upper limit.
Again, I guess not.
4. mark wadsworth said...
AARGH! Link went hopelessly wrong
I was trying to link to this thread.
5. mark said...
good news
www.dailymail.co.uk/news/article-2092487/UK-weather-Siberian-snow-storm-bring-5C-temperatures-Britain.html
the snow is coming now more recession snow rescues high street from collapse
6. nickb said...
MarkW
All rather splendid till we factor in the environment, whereupon it is disastrous.
N
7. mark wadsworth said...
NickB, are we back to that hoary old chestnut of whether LVT is good or bad for the enviroment? So how come most sensible Greens are in favour (apart from the landowning socialist Greens who want Robin Hood Taxes and the like)?
8. mr g said...
"Root cause of housing problems is hard to grasp"
No sh*t Sherlock when you read the sentence that follows that statement:
"The founding social organisations today are privatisation of the commons: virtually tax free private property in land. And socialisation of private property: taxation of wages, salaries and investment."
What the hell does that mean in plain English?
9. mark wadsworth said...
Mr G, I'm not sure what 'founding social organisations' means, but I think he means that the entire social and economic system is based on owning and speculating in land values.
"Privatisation of the commons" means that although the Home-Owner-Ists merrily admit that the value or price of a home is dictated by "Location, location, location" they will in the next breath hotly deny that land values are created by the actions of the community which surrounds that location, which might be the government building train stations or locating a school, or it might be just having nice neighbours and well-paying local employers. So the land value is created by the commons/the community, but is privatised because people buy and sell that value and collect the rents thereon.
"virtually tax free private property in land." means what it says. Although there are modest publicly collected taxes on land, the balance after tax is still a transfer from the community to the owner.
"socialisation of private property: taxation of wages, salaries and investment." means exactly what it says. So the stark contrast is that the system allows private individuals to collect community generated wealth (land values) it then makes things worse when the government collects privately created wealth via income tax etc.
10. mr g said...
@MW
Thanks for taking the time to interpret the statement.
I was not commenting on the content of the article as I genuinely could not understand what the writer was trying to say.