Gavin R. Putland,  BE PhD

Thursday, June 08, 2017 (Comment)

Who does what in the Australian economy

WORKERS  (i) pay rent, (ii) help their employers to pay rent, and (iii) raise some of the next generation of rent-payers.

LAND SPECULATORS  (i) receive economic rent for the gifts of nature, (ii) take the credit for providing them, and (iii) lobby governments for an ever-increasing supply of rent-payers.

BANKS  (i) borrow money from overseas and lend it against the gifts of nature, driving their prices as high as possible, in order to siphon off the largest possible share of the economic rent under the guise of the interest margin, (ii) ensure that home ownership is financed by debt instead of equity, so that new owners become human shields against price falls, and (iii) take the credit for facilitating changes of ownership that might otherwise have taken place at much lower prices.

HOME OWNERS  (i) work themselves to death in order to pay rent under the guise of interest on their inflated mortgages, and (ii) support any policy that would increase their "equity" in their homes by making life even harder for future buyers.

PROPERTY DEVELOPERS  drip-feed land to the market, after hoarding it for as long as possible in order to maximize prices (see LAND SPECULATORS).

IMMIGRANTS  supplement the ranks of working rent-payers because, mysteriously, people of that class can't afford to breed at a sufficient rate.

GOVERNMENTS  (i) enforce debts, (ii) protect property rights over the gifts of nature, (iii) provide public works and services that raise the market values of the gifts of nature for the benefit of the owners, (iv) bring in rent-paying immigrants who raise the market values of the gifts of nature even without public works and services, (v) fund these activities by taxing rent-payers, and (vi) take the credit for rising asset values.

THE UNEMPLOYED  (i) try to take jobs from other people, thereby putting downward pressure on the price of labour to compensate for the upward pressures caused by rents and taxes, and (ii) take the blame for all the free-riding in the system.

EMPLOYERS  (i) pay rent, (ii) help their workers to pay rent, (iii) collect taxes payable by their workers, their customers, and sometimes even their suppliers, without being paid for this service, but under threat of penalties if they don't perform it, (iv) foot the bill for minimum wage increments that are mostly confiscated by the central government via welfare clawbacks and income tax, (v) hire immigrants in a self-defeating attempt to compensate for the above costs, and (vi) take the blame for all the exploitation in the system.

ASYLUM SEEKERS  (i) divert attention from the far more numerous economic immigrants brought in by the central government, (ii) get branded as economic immigrants by the central government, and (iii) take the blame for the decline of national unity and national values.

LEFT-WING POLITICIANS pretend that employers can fix everything.

RIGHT-WING POLITICIANS pretend that the unemployed and precariously employed can fix everything.

ECONOMISTS provide plausible explanations why the system doesn't need fixing, but should be as it is, only more so.

VOTERS reward governments for policies that (i) maximize the rents and land prices that they have to pay, and (ii) make the unemployed try ever harder to take their jobs and their kids' jobs.

Did I leave anybody out?

[Comment at MacroBusiness.]

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