Thesis Number: #4 (Page 2 of 8)
Bullied into Quiescence
Two techniques are deployed to inhibit people from insisting on the reform that would release them from taxation.
Intimidation Generating mass anxiety is the standard tactic employed by tyrants who need to mess with people’s emotions, to control them. Examples:
- “Banks would be bankrupted if the collateral value of real estate was reduced by fiscal policy.”
- “Widows who are cash-short but capital-rich would not be able to pay a rent-based charge for the expensive locations they occupy.”
- “The obligation to pay rent for land held in a vacant state would cause over-construction.”
The list is a long one. It is trotted out every time the issue of raising revenue from rent is proposed as the way to abolish taxes on earned incomes. Apologists for the current regime in effect tell people (to use a metaphor): coming off heroin is so painful that you should keep consuming the drug even though this will shorten your life. Evidence that exposes the dysfunctional impact of taxation is ignored. Take the case of the risk of bankrupting the banks – wasn’t it the current fiscal regime that rewarded people to over-invest in real estate, causing insolvency of many western banks in 2008?
The Ideological manipulation of rent
The Everyman’s Dictionary of Economics illustrates how economic rent was manipulated by post-classical economists for ideological purposes. The authors acknowledge that “the earnings of the fixed supply of land are entirely economic rent; it has no supply price; it would still be there whether it earned anything or not”.* But the significance of this insight is then diluted. Humans can apparently also receive economic rent. Pavarotti, the Italian opera singer, would happily sing for his supper for the wages paid to the barbers of Seville. But because of his singing gift (was it a gift? Did he have to train his voice?), he was paid astronomical sums to sing in the opera houses of London and New York. So the difference between the barber’s weekly wage and Pavarotti’s fee is treated by economists as economic rent, thereby disparaging the unique attributes of that value which represents the services of nature and society. Such theoretical contortions distracted western governments throughout the 20th century. This freed people to accumulate unearned rents from land which terminated in asset bubble busts every 18 years.
* Seldon and Pennance (1976: 115)
Misinformation Manipulation of language and statistics is the tactic for messing with people’s minds (Box 1). A standard ploy is for the “expert” to claim that “rent” would not generate sufficient revenue to fund public services. No supporting evidence is offered, though an arbitrary number may be clutched out of the air as proof. An example is contained in the textbook by Nobel Prize economist Paul Krugman.
In the US in 2004, apparently, “rent” constituted 1% of total income (Krugman and Wells 2006: 283). By such misinformation, professors have bent the minds of generations of students. Indoctrination is not an unfair charge. The evidence is overwhelming: people are deprived of an understanding of how land markets are linked to tax policy to damage the welfare of nations. Examples spanning the years since 1945 reveal the pattern of manipulation of people’s minds.
Nobel Prize economist Paul Samuelson published the first edition of Economics in 1948. Charging rents for the use of resources, he claimed, “may slow down their rate of depletion and serve to ration out such scarce, exhaustible resources. But in a freely competitive system, the self-interest of owners may well lead to the rapid using up of natural resources…. Unsightly and unhealthy slag piles may also be created…There may be deforestation that causes floods and soil erosion downstream…” (Samuelson 1955: 539). Scary? But aren’t these abuses of nature associated with the current fiscal regime, which favours the exploiters of resources by not charging them rent?