Saturday, 11 December 2010

Why do your earnings never rise?

Because banks, landowners and monopoly corporations are grabbing them. Taking them as unearned incomes, nominally economic rents, having done no work at all. Daylight robbery. Perfectly legal.

Happy about that?


More Sources: Who is Getting Your Earnings - Useful sources.

The graph shows that production of wealth has grown 20 times, in real terms, over the past 100 years. We are not running out of anything. Ignore Malthus and questions of population.

It describes a pretty incredible economic law of nature, the Law of Rent. The more we can produce, the more location values rise, the more is distributed to rent. In proportion to what goes to wages. In itself this is a good thing and indicates a society in social and economic advance...

There is a caveat: This only works out well and sustainably for all of society when under free conditions.

This is not a problem if the rents are used for public revenue to benefit the entire community who actually added that value. And it remains no problem if work, savings and consumption are not taxed, as if these things  were injuring society.

But the primary social organisation across the civilised world today, supported fully by the laws we vote for, essentially the foundation of modern western democracy, allows these economic rents to be collected privately.

        Private property in land

Let the problems start.

The natural source of public revenue is lost. Your work, skill, industry and thrift must be taxed to pay for government. Production of wealth is treated as though it is a major problem. Its distribution is ignored.

The economic tendency is then to produce less goods and services, with more waste and effort. Workers and producers compete with each other for minimum wages and return on investment. Some drop into involuntary welfare. Others remain involuntarily employed as virtual slaves and no time for things like family and play.

Does anyone benefit? Yes! Owners of valuable locations and all the smaller monopolies. All the gain in production goes to the non producer. The producers being left with just enough to survive. Is that fair? 

Private recipients of this huge unearned benefit walk away scott free. Now that is what I call a real benefits scrounger! The enigmatic wealth divide explained fully for the first time.

To mitigate this injustice, government  has no choice but to tax your work increasingly to pay for ever more poverty, vice and misery caused by this legalised robbery, in rebellion preventing welfare, benefits and tax breaks.

It also explains how monopoly power accumulates vast capital stocks with great ease. Corporate monopolies use these economic rents to purchase capital with far greater ease than the genuine producers, workers and entrepreneurs. Things get ever the easier once you are on the economic rent asset ladder.

There is nothing special about corporate executives and their high pay. They skim off the top of these rents. They are experts at acquiring high location value assets for the company. They get paid accordingly. Rightly or wrongly. I am only pointing out what is there.

Who is the biggest robber today? Banks. Almost 100% of their profits are in the end economic rents from interest on loans for high value locations. They do relatively little work, add nothing much to the common stock of wealth, receive the highest pay, face no real cuts, take no risks as these assets are the only assets that always rise in value and even when they do not banks get bailed out by the tax payer. Most galling is today, they have so much power, they can tell our timid yet democratically elected government what to do... for them.

Who has the real power? The ones we elect or someone else? In the olden days Bankers would have been beheaded.

Who's fault is that today in this "democracy"? Ours. The people. We keep electing governments that allow it all to carry on.

There is a very simple remedy. Vote for Real Reform.
    Doing nothing is to continue protecting these unearned incomes. Taxing your work and enterprise is protectionism for the worlds primary social organisation: Private Property in Land. The Great Social Wrong.