Debt In The Time Of Wall Street


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    Harris&Ewing Washington snow scenes April 1924 With all the media focus aimed at Greece, we might be inclined to overlook – deliberately or not – that
    [See the full post at: Debt In The Time Of Wall Street]


    Ilargi, you asked me a while ago to write about Henry George’s ideas and why the powers that be might go for them (no apologies for over-quoting Mason Gaffney):

    Greece to return classical masterpiece
    In 1879 Henry George published Progress and Poverty. The book was an international sensation, at the time outsold only by the Bible. It remains economics’ No. 1 best seller.
    Mason Gaffney continues:

    “George came out of a raw, naive new colony, California, as a scrappy marginal journalist. Yet his ideas exploded through the sophisticated metropolitan world as though into a vacuum. His book sales were in the millions. Seven short years after publishing Progress and Poverty in remote California he nearly took over as Mayor of New York City, the financial and intellectual capital of the nation. Three more years and he was a major influence in sophisticated Britain. In 1889, incredibly, he became “adviser and field-general in land reform strategy” to the Radical wing of the Liberal Party in Britain. It adopted a land-tax plank after 1891 (The “famous Newcastle Programme”), and came to carry George’s (muted) policies forward under successive Liberal Governments of Campbell-Bannerman, Asquith, and Lloyd George.“

    The book, you see, explained poverty. It answered why progress does not and cannot eradicate poverty. Disconcertingly for many, it also provided the solution – the Single Tax on land value aka Land Value Taxation (LVT).

    “The “single tax” is so simple, so fundamental, and so easy to carry into effect that I have no doubt that it will be about the last land reform the world will ever get. People in this world are not often logical.” – Clarence Darrow

    The land reform/single tax movement in Britain was strong enough to bend the Liberal govt to its will having delivered it a landslide in 1906. By 1910 there was a constitutional crisis over LVT.
    Gaffney argues that Henry George was deliberately written out of economics because he was too dangerous to the rentier state, the feudal core of capitalism. Maybe, and WW1 killed a generation of land reformers – this perhaps explains the absence of collective memory.

    The very language of George’s economics – classical economics – was changed – neoclassical economics deletes the concept of land – we talk of real estate because we can’t understand that land itself is priced. We can’t see that real estate booms and busts are actually land value booms and busts and thus can never stray into the territory where the rentier makes so much money. Land is just another form of capital – a costly intellectual regression.

    Greek Finance Minister Varoufakis meets Schäuble in Berlin Thu 5 Feb:
    “Our govt will stop at nothing to combat not only corruption tax evasion tax immunity, inefficiency and waste but also a whole political economy underpinning the ethos and the conventions of crippling rent seeking.”

    The rentier is an obscure, quaint character but he is the key character for Varoufakis.
    Progress and Poverty is all about the rentier and Varoufakis is graciously returning the book to us.

    In a democratic setting, playing a Georgist card can be a powerful move. Neither Right nor Left can criticise a Georgist position because Georgist reform gives them both what they want.

    George, as Mason Gaffney writes
    “had a way of taking two problems and composing them into one solution. He took two polar philosophies, collectivism and individualism, and synthesized a plan to combine the better features, and discard the worse features, of each.”

    “Thus, George would cut the Gordian knot of modern dilemma-bound economics by raising demand, raising supply, raising incentives, improving equity, freeing up the market, supporting government, fostering capital formation, and paying public debts, all in one simple stroke. It’s quite a stroke, enough to leave one breathless.“

    “George’s proposal lets us lower taxes on labour without raising taxes on capital. Indeed, it lets us lower taxes on both labour and capital at once, and without lowering public revenues.“

    “Ultimately, Georgist policy saves the cost of civil disturbances and insurrections, and/or the cost of putting them down.”



    The “Creature from Jekyll Island” taught us that debt=money. Repay the debt, you destroy the money. Deflation.

    John Day

    Debt Jubilee Time:
    Varoufakis is probably the guy to be the toe in the water before the world (necessarily) jumps into global debt restructuring.
    There is a win-win-win aspect to the reduction of catastrophic systemic risk.
    Everybody (almost) can agree to that.
    It’s like global warming, though, in that it is really hard to choose the sequencing of debts to be forgiven, entirely, or incrementally. There are a whole lot of vetoes who want “an edge”.
    I suspect that Varoufakis can’t sell a Greek haircut plan, that isn’t fundamentally a strategy to save the EU, with a sprig of parsley.
    He may have the outlines of something which could be widely accepted.
    I sure hope he does.

    V. Arnold

    @ GeoLib

    Thanks, that was a great read.
    Can you give a little more specific’s on LVT? Is it an annual tax? Not everybody owns land, so how does that work?
    Thanks in advance…


    If debt is indeed borrowing from the future, then the world is bankrupt for the balance of the century. There has been no growth in the US economy that was not based on debt, be it for homes, or cars, or retirement. The divorce of economic developement from demand to supply makes all of that growth meaningless. Now the world can sit in the midst of mountains of derivatives, sprawling tracts of MBS and securitized 7 year car loans, and wonder why there are no jobs.


    “The rentier is an obscure, quaint character but he is the key character for Varoufakis.”

    I think that one of their promises during the election was to get rid of a property tax that was annoying a lot of middle class Greeks.

    “Tsipras pledges measures to ease burden on Greece’s middle class, including abolition of the ENFIA property tax, raising the tax-free threshold to 12,000 euros and settlement of overdue taxes.”


    I should perhaps have written more about LVT but I decided not to as that’s already been done in many places on the web.


    There is a difference between LVT and property tax – LVT explicitly exempts buildings. Varoufakis – in the interviews he’s done for the Henry George School of social science – never touches on LVT so I don’t know exactly what kind of Georgist he is, but I find his focus on the rentier – as opposed to the capitalist – to be very enouraging: the rentier, unlike the capitalist, doesn’t have a leg to stand on.
    And LVT means nothing without the abolition of other taxes.


    One quote I feel Varoufakis understands, comes from Book X Ch 4 of Progress and Poverty:

    “What has destroyed every previous civilization has been the tendency to the unequal distribution of wealth and power. This same tendency, operating with increasing force, is observable in our civilization to-day, showing itself in every progressive community, and with greater intensity the more progressive the community. Wages and interest tend constantly to fall, rent to rise, the rich to become very much richer, the poor to become more helpless and hopeless, and the middle class to be swept away.

    I have traced this tendency to its cause. I have shown by what simple means this cause may be removed. I now wish to point out how, if this is not done, progress must turn to decadence, and modern civilization decline to barbarism, as have all previous civilizations.”

    V. Arnold

    @ GeoLib

    Thank you for your response. But, I’ve never heard of LVT until your post.
    The gods be good, there is so much “out there” and I’m an expat in SE Asia (12 years) with no access to English language books; and not trusting western media; good information is not easy to come by.
    So, please be patient with us who seek information.


    LVT would be an annual charge on the unimproved value of the land you own. Those without income could defer payment.
    LVT is meant to replace income tax, sales tax, all other taxes in fact.
    If you don’t own land – you don’t pay tax.
    Look out for these names – Mason Gaffney, Fred Harrison (esp his Youtube channel called Geophilos), Fred Foldvary and defnitely Michael Hudson, who I gather Varoufakis knows well.

    V. Arnold

    @ GeoLib
    Thank you sir, for the response, A lot to digest here.
    I must calm my racing mind…

    John Day

    LVT seems to assume capital controls and domestic capture of the wealthy class, not the global multinational corporate elites who now govern.
    The elites would control Greece, while owning no land there.
    LVT arose within a world where landed aristocracy was already losing primacy to financiers.
    I am no expert on it at all, but it arose at that stage, where in England the landed lords were beginning to lose power, compared to investors in the East India Company, and such.

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