Bryan Kavanagh

1
State of the Market
Have we been here before?

Bryan Kavanagh Land Values
Research Group
2
Total Real Estate Sale Prices Five Major
Australian States




80
New South Wales
60
Queensland
billion dollars
Victoria
40
Western Australia
20
South Australia

0
1986
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
2005
Source State government departments
3
Total Real Estate Sale Prices Tasmania, NT and
the ACT




4
ACT
Tas
3
billion dollars
2
NT
1

0
1986
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
2005
Source State Territories
4
Total Australian real estate sale prices (at
current prices)

2004 245.04 bn
bn
250
200
150
Increased 3 times since 1996
1989 87.7 bn
100
1981 26.90 bn
1996 75.52 bn
1973 10.65 bn
50
0
72
74
76
78
80
82
84
86
88
90
92
94
96
98
'00
'02
'05

5
Total Australian real estate sale prices (in
2005 bn)

2004 251.1
1989 140.6
1973 77.501

72
74
76
78
80
82
84
86
88
90
92
94
96
98
'00
'02
'05
6
Total number of Australian real estate sales


2003 766934
thousands
1988 694106
750
1973 651588
1994 579678
1984 579145
long increase from 1996
interrupted only in 2004
650
1981 556352
1976 501997
550
1986 508473
1990 486812
1983 483399
1996 475898
450
1974 406643
1978 382808
350
1972
74
76
78
80
82
84
86
88
90
92
94
96
98
'00
'02
'04

7
The Economys Barometer

total real estate sales prices divided by GDP


30
25
20
15
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
8
The Economys Barometer

total real estate sales prices divided by GDP


30
1973 comm/ind peak
25
20
15
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
9
The Economys Barometer

total real estate sales prices divided by GDP


30
1973 comm/ind peak
25
20
15
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
10
The Economys Barometer

total real estate sales prices divided by GDP


30
1973 comm/ind peak
25
1981 residential peak
20
15
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
11
The Economys Barometer

total real estate sales prices divided by GDP


30
1973 comm/ind peak
25
1981 residential peak
20
15
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
12
The Economys Barometer

total real estate sales prices divided by GDP


1988/89 comm/ind peak
30
1973 comm/ind peak
25
1981 residential peak
20
15
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
13
The Economys Barometer

total real estate sales prices divided by GDP


1988/89 comm/ind peak
30
1973 comm/ind peak
25
1981 residential peak
20
15
'91-92 recession. Hewson-led opposition
loses 'unloseable' 1993 election
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
14
The Economys Barometer

total real estate sales prices divided by GDP


1988/89 comm/ind peak
30
1973 comm/ind peak
Queensland boom, and end of distress sales from
late 1980s boom in other States
25
1981 residential peak
20

15
'91-92 recession. Hewson-led opposition
loses 'unloseable' 1993 election
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
15
The Economys Barometer

total real estate sales prices divided by GDP


1988/89 comm/ind peak
30
1973 comm/ind peak
Queensland boom, and end of distress sales from
late 1980s boom in other States
25
1981 residential peak
20
15
'91-92 recession. Hewson-led opposition
loses 'unloseable' 1993 election
Keating federal Goss Q?land governments defeated
in 1996. Queensland recession only
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
16
The Economys Barometer

total real estate sales prices divided by GDP

2004 residential peak

1988/89 comm/ind peak
30
1973 comm/ind peak
Queensland boom, and end of distress sales from
late 1980s boom in other States
25
1981 residential peak
20
15
'91-92 recession. Hewson-led opposition
loses 'unloseable' 1993 election
Keating federal Goss Q?land governments defeated
in 1996. Queensland recession only
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
17
The Economys Barometer

total real estate sales prices divided by GDP

2004 residential peak

1988/89 comm/ind peak
30
1973 comm/ind peak
Queensland boom, and end of distress sales from
late 1980s boom in other States
25
1981 residential peak
20
15
'91-92 recession. Hewson-led opposition
loses 'unloseable' 1993 election
Keating federal Goss Q?land governments defeated
in 1996. Queensland recession only
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
18
Lets define a bubble ...


2004 residential peak

1988/89 comm/ind peak
30
1973 comm/ind peak
Queensland boom, and end of distress sales from
late 1980s boom in other States
25
1981 residential peak
20
19 'bubble' line
15
'91-92 recession. Hewson-led opposition
loses 'unloseable' 1993 election
Keating federal Goss Q?land governments defeated
in 1996. Queensland recession only
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
19
The Economys Barometer

total real estate sales prices divided by GDP

2004 residential peak

1988/89 comm/ind peak
30
1973 comm/ind peak
Queensland boom, and end of distress sales from
late 1980s boom in other States
25
1981 residential peak
20
19 'bubble' line
15
'91-92 recession. Hewson-led opposition
loses 'unloseable' 1993 election
Keating federal Goss Q?land governments defeated
in 1996. Queensland recession only
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
20
The Economys Barometer

total real estate sales prices divided by GDP

2004 residential peak

1988/89 comm/ind peak
30
1973 comm/ind peak
Queensland boom, and end of distress sales from
late 1980s boom in other States
25
1981 residential peak
20
19 'bubble' line
15
'91-92 recession. Hewson-led opposition
loses 'unloseable' 1993 election
Keating federal Goss Q?land governments defeated
in 1996. Queensland recession only
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
21
The Economys Barometer

total real estate sales prices divided by GDP

2004 residential peak

1988/89 comm/ind peak
30
1973 comm/ind peak
Queensland boom, and end of distress sales from
late 1980s boom in other States
25
1981 residential peak
20
19 'bubble' line
15
'91-92 recession. Hewson-led opposition
loses 'unloseable' 1993 election
Keating federal Goss Q?land governments defeated
in 1996. Queensland recession only
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
22
Stock markets dont drive economies ....

1.25
ASX
GDP
2
1.20
1.8
1.6
1.15
ASX growth
1.4
1.10
1.2
1
1.05
GDP growth
0.8
0.6
1.00
86
88
90
92
94
96
98

'00

'02
'04

23
... real estate markets do

1.25
1.7
real estate sales growth
1.20
1.5
1.3
1.15
1.1
1.10
0.9
1.05
GDP growth
0.7
1.00
1972
74
76
78
80
82
84
86
88
90
92
94
96
98

'00

'02
'04

24
GDP growth
The economys barometer


30
25
25
20
20
15
15
10
10
5
5
0
0
1972
1982
1992
2002

25
The economys barometer
GDP growth


30
25
25
20
20
15
15
10
10
5
5
0
0
1972
1982
1992
2002

26

Land value/GDP Australia

Australias population increased 1.36 times
(from 15.0 million to 20.4 million) over the
period 1984 to 2004 Real GDP increased 1.86
times Real land values increased 3.2 times
2.5
2
1.5
1
0.5
0
1911
1924
1932
1944
1953
1972
1976
1989
2004
From Terry Dwyer?s The Taxable Capacity of
Australian Land and Resources Australian Tax
Forum, Vol 18 No. 1, 2003
27
The charter of the Reserve Bank of Australia is
to ensure ...

• (a) ... the stability of the Australian
  currency
• (b) ...the maintenance of full employment in
  Australia and
• (c) ...the economic prosperity and welfare of
  Australians
• It breaches its charter each time it permits a
  bubble, such as the recent housing bubble, to
  develop

28
At a recent RBA meeting ...
29
So our barometer is indicating that Mr
Housing Bubble is about to mock the RBA
once again
30
If cartoonists can joke about it ....
31
If cartoonists can joke about it ....
... Cant the RBA or APRA fix it?
32
If cartoonists can joke about it ....
... Cant the RBA or APRA fix it?
APPARENTLY NOT!
33
Modern economists have been reduced to playing a
placatory role ....
34
Neo-classical economics a scandal?
35
Neo-classical economics a scandal?
36
Neo-classical economics a scandal?

• "Land-based revenue systems are inappropriate
  because we are no longer agricultural economies
• There is a general ignorance of the dynamics
  between the annual value of land and the economy
  - and the amount of economic rent is usually
  grossly understated, eg. ...
• Henry Georges ...theory still has it adherents,
  likeable and mainly older people who overlook the
  fact that land rent forms such a small percentage
  of national income that 2 is nothing compared
  to the present tax percentages, which are around
  30. - Jan Pen (Groningen Uni) in Income
  Distribution

37

The heartening story of growth of
publicly-created resource rents ....
100
9
Resource rents

31
80
60
32
85
40
20

Based upon Dr Terry Dwyer,The Taxable Capacity of
Australian Land and Resources in Australian Tax
Forum, Vol 18 No. 1, 2003
0
1911
1924
1934
1944
1954
1964
1974
1984
1994
2004
Land Values Research Group 2004
38

... degenerated into the privatisation of rents
and the levying of taxes to such an extent ...
100
9
Resource rents
6

31
80
taxes
60
31
85
40
20

Based upon Dr Terry Dwyer,The Taxable Capacity of
Australian Land and Resources in Australian Tax
Forum, Vol 18 No. 1, 2003
0
1911
1924
1934
1944
1954
1964
1974
1984
1994
2004
Land Values Research Group 2004
39

... that the legacy is a sad tale of declining
after-tax incomes
100
9
Resource rents
6

31
80
taxes
60
31
85
40
NET Incomes OF Labour Capital
38
20

Based upon Dr Terry Dwyer,The Taxable Capacity of
Australian Land and Resources in Australian Tax
Forum, Vol 18 No. 1, 2003
0
1911
1924
1934
1944
1954
1964
1974
1984
1994
2004
Land Values Research Group 2004
40
How we distribute the GDP pie now

• Less than 30 billion (12) of Australia's
  publicly-created 245 billion in resource rents
  was collected to the public purse in 2004
• 99.9 of those in BRWs Richest 200 list are
  rentiers
• As rentiers and homeowners were allowed to
  privatise 215 billion in publicly-created
  resource rents, it was necessary to tax incomes
  and goods and services to that extent
• Consequently, household debt has risen from
  289bn in 1996 to 818bn in 2004 (41,000 for
  every man woman and child)
• The bottom line is that as a proportion of GDP
  since 1972
• net incomes have declined by 40
• taxes have grown by 28
• annual land values (resource rents) have grown by
  150!

41
Land-based revenues cannot be passed on in
prices?
Pure rent is in the nature of a surplus which
can be taxed without affecting production
incentives - Samuelson Hancock and Wallace,
Economics, 2nd Australian ed., p. 623

42
Land-based revenues cannot be passed on in prices

• The case of the Poor Widow is always trotted out
  when increased land value charges are proposed
• Even when shes a pensioner, the Poor Widow
  pays for food, clothing and shelter, much of the
  price of which is the accumulation of cascading
  taxes
• She would be greatly advantaged by substantially
  cheaper prices under a land value charge,
  provided other taxes are reduced accordingly
• Any landholders with real payment problems, can
  defer the charge against their estate

43
As is
Tax 31.0
Rent 31.0
Net incomes (LC) 38.0
44
If we captured land values
Rent 31.0
Net incomes (LC) 69.0
45

The Australian GDP pie since 1972....
100
12
Resource rents
31 250 bn

80
25
taxes
31 250 bn
60
40
63
38 of 811 bn or
308 bn
NET Incomes OF Labour Capital
20

0
1974
1984
1994
2004
Land Values Research Group 2004
46

.... could have looked like this had we taken
more resource rents to eliminate real estate
bubbles
100
12.5 250 bn
12
Resource rents

12.5 250 bn
15
80
taxes
60
75 of 2000 bn or
1500 bn
40
NET Incomes OF Labour Capital
73
20

0
1974
1984
1994
2004
Land Values Research Group 2004
47
Australias actual and repaired GDP
2005 million
2500
2050
2000
Effect of doubling charges on land in the early
1970s and then graduating land value capture up
to 50 in 2004
1500
1000
830
actual
500
302
302
0
1972
1982
1992
2002

48
GDP growth (current prices) Australia

25
1975
20
15
growth off low base
10
5
0
1952
1962
1972
1982
1992
2002

49
GDP growth (current prices) Australia

25
Property taxes are out of control !
1975
20
15
growth off low base
10
5
0
1952
1962
1972
1982
1992
2002

50
GDP growth (current prices) Australia

25
1975
20
15
growth off low base
10
5
0
1952
1962
1972
1982
1992
2002

51
GDP growth (current prices) Australia

25
1975
20
15
growth off low base
10
5
0
1952
1962
1972
1982
1992
2002

52
GDP growth (current prices) USA

16
14
growth off low base
1978
12
10
8
6
4
2
0
1952
1962
1972
1982
1992
2002
53
GDP growth (current prices) USA

16
Property taxes are out of control !
14
growth off low base
1978
12
10
8
6
4
2
0
1952
1962
1972
1982
1992
2002
54
GDP growth (current prices) USA

16
14
growth off low base
1978
12
10
8
6
4
2
0
1952
1962
1972
1982
1992
2002
55
GDP growth (current prices) USA

16
14
growth off low base
1978
12
10
8
6
4
2
0
1952
1962
1972
1982
1992
2002
56
GDP growth (current prices) UK

30
1975
25
20
15
growth off low base
10
5
0
1952
1962
1972
1982
1992
2000
57
GDP growth (current prices) UK

30
Property taxes are out of control !
1975
25
20
15
growth off low base
10
5
0
1952
1962
1972
1982
1992
2000
58
GDP growth (current prices) UK

30
1975
25
20
15
growth off low base
10
5
0
1952
1962
1972
1982
1992
2000
59
GDP growth (current prices) UK

30
1975
25
20
15
growth off low base
10
5
0
1952
1962
1972
1982
1992
2000
60
State of the Market have we been here before?


2004 residential peak

1988/89 comm/ind peak
30
1973 comm/ind peak
Queensland boom, and end of distress sales from
late 1980s boom in other States
25
1981 residential peak
20
19 'bubble' line
15
'91-92 recession. Hewson-led opposition
loses 'unloseable' 1993 election
Keating federal Goss Q?land governments defeated
in 1996. Queensland recession only
1982-'83 recession. Fraser government defeated
1974-'75 recession. Whitlam government dismissed
10
5
0
1972
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
'05
61
Have we shattered some shibboleths?
62
Have we shattered some shibboleths?

• Repetitive cycles of boom and bust are NOT
  natural
• Land values DO constitute an adequate revenue
  base
• High taxation and land prices are NOT inevitable
• A revenue switch to resource rents WILL create
  sustainable economic growth
• The poor widow will NOT lose out if we capture
  land values
• There IS a natural growth fund we can tap for the
  provision of quality public education,
  health and infrastructure
• Untaxing labour and its products and capturing
  more land value FREES labour and CONSERVES the
  environment

63
State of the Market
Have we been here before?

Bryan Kavanagh Land Values
Research Group
64
State of the Market
Have we been here before?

Bryan Kavanagh Land Values
Research Group
65
State of the Market
Have we been here before?

Bryan Kavanagh Land Values
Research Group
66
In the 1845 parliamentary Corn Law debates,
Richard Cobden (1804-1865) noted how the
people had been ?cheated, robbed and bamboozled?
?For a period of 150 years after the conquest,
the whole of the revenue of the country was
derived from the land. During the next 150 years
it yielded 19/20ths of the revenue. For the next
century, down to the reign of Richard III it was
9/10ths. During the next 70 years to the time of
Mary it fell to about 3/4ths. From this time, to
the end of the Commonwealth, land appeared to
have yielded one half the revenue. Down to the
reign of Anne it was 1/4th. In her reign it was
1/6th. For the first 30 years of the reign of
George III the land yielded 1/7th of the revenue.
From 1793 to 1816 (during the period of the land
tax) land contributed 1/9th. From which time to
the present 1/25th only of the revenue had been
derived directly from the land.?
67
In the 1845 parliamentary Corn Law debates,
Richard Cobden (1804-1865) noted how the
people had been ?cheated, robbed and bamboozled?
?For a period of 150 years after the conquest,
the whole of the revenue of the country was
derived from the land. During the next 150 years
it yielded 19/20ths of the revenue. For the next
century, down to the reign of Richard III it was
9/10ths. During the next 70 years to the time of
Mary it fell to about 3/4ths. From this time, to
the end of the Commonwealth, land appeared to
have yielded one half the revenue. Down to the
reign of Anne it was 1/4th. In her reign it was
1/6th. For the first 30 years of the reign of
George III the land yielded 1/7th of the revenue.
From 1793 to 1816 (during the period of the land
tax) land contributed 1/9th. From which time to
the present 1/25th only of the revenue had been
derived directly from the land. Thus the land,
which anciently paid the whole of taxation, paid
now only a fraction ... notwithstanding the
immense increase that had taken place in the
value of rentals. The people had fared better
under despotic monarchs than when the power of
the State had fallen into the hands of a landed
oligarchy, who had first exempted themselves from
taxation, and next claimed compensation for
themselves by a Corn Law for their heavy and
peculiar burdens.?
68
UK revenue base over six centuries


Revenue Cost of Living 100
100
80
60
LAND REVENUES
TAXES
40
20
Derived from Richard Cobden?s parliamentary Corn
Laws debate (1845)
0
1290
1390
1490
1590
1690
1790
1890
1215 Magna Carta
Land Values Research Group 2005
69
Thorold Rogers (1823-1890) wages decline
when people are denied cheap access to land

• ?The 15th century and the first quarter of the
  16th were the golden age of the English labourer,
  if we are to interpret the wages which he earned
  by the cost of the necessaries of life. At no
  time were wages, relatively speaking, so high,
  and at no time was food so cheap ....
• It is possible that as the distribution of land
  became more general, and the tenancy for a term
  of years became habitual, the phenomenon which
  has often been noticed of peasant proprietorship,
  a high rate of wages paid to the free labourer,
  may have been exhibited in the period?

James Edwin Thorold Rogers, ?Six Centuries of
Work and Wages?, 11th edition, 1912, p.326
70
Disposable income of English Labourer (family of
five)


Revenue Cost of Living 100
300
280
'Merrie England'
250
HIGH DISPOSABLE INCOMES
Chart by Rev WDP Bliss, based on Thorold Rogers
200
150
LOW DISPOSABLE INCOMES
cost of living line
100
50
0
1290
1390
1490
1590
1690
1790
1890
71
Disposable income of English Carpenter (family
of five)


Revenue Cost of Living 100
400
380
'Merrie England'
Chart by Rev WDP Bliss, based on Thorold
Rogers? ?Six Centuries of Work andWages?
HIGH DISPOSABLE INCOMES
300
LOWER DISPOSABLE INCOMES
200
cost of living line
100
0
1290
1390
1490
1590
1690
1790
1890
72
Disposable income of English Labourer and
Carpenter (families of five)


Revenue Cost of Living 100
400
380
'Merrie England'
Chart by Rev WDP Bliss, based on Thorold
Rogers? ?Six Centuries of Work andWages?
HIGH DISPOSABLE INCOMES
300
LOWER DISPOSABLE INCOMES
200
cost of living line
100
0
1290
1390
1490
1590
1690
1790
1890
73
Labourer?s disposable income against revenue base


Revenue Cost of Living 100
300
280
'Merrie England'
Chart by Rev WDP Bliss, based on Thorold
Rogers? ?Six Centuries of Work andWages?
250
HIGH DISPOSABLE INCOMES
200
150
LOWER DISPOSABLE INCOMES
100
cost of living line
50
land rents
taxes
0
1290
1390
1490
1590
1690
1790
1890
74
Disposable income of English Labourer (family of
five)


Revenue Cost of Living 100
300
280
'Merrie England'
250
HIGH DISPOSABLE INCOMES
Chart by Rev WDP Bliss, based on Thorold Rogers
200
150
LOW DISPOSABLE INCOMES
cost of living line
100
taxes
50
land rents
Chart based on Richard Cobden 1845
0
1290
1390
1490
1590
1690
1790
1890
75
Carpenter?s disposable income against revenue base


Revenue Cost of Living 100
400
380
'Merrie England'
Chart by Rev WDP Bliss, based on Thorold
Rogers? ?Six Centuries of Work andWages?
HIGH DISPOSABLE INCOMES
300
LOWER DISPOSABLE INCOMES
200
cost of living line
100
land rents
taxes
0
1290
1390
1490
1590
1690
1790
1890
76
Homer Hoyt the bursting of land price bubbles
precede financial collapse - including Wall
Street?s in 1929
Real estate peak 1925
1929 stock market collapse
77
We remember that the OPEC oil crisis in October
1973 created worldwide recession?

78
We remember that the OPEC oil crisis in October
1973 created worldwide recession? Do we?

79
We remember that the OPEC oil crisis in October
1973 created worldwide recession? Do we? Can
we remember the land boom that preceded the OPEC
crisis?

80
We remember that the OPEC oil crisis in October
1973 created worldwide recession? Do we? Can
we remember the land boom that preceded the OPEC
crisis? Usually not. As with the 1925 land
boom, it?s almost as though it has been written
out of history

81
We remember that the OPEC oil crisis in October
1973 created worldwide recession? Do we? Who
remembers the land boom that preceded the OPEC
crisis? Usually not. As with the 1925 land
boom, it?s almost as though it has been written
out of history

82
Sir William Petty (1623-1687)

• The first thing Oliver Cromwell did after he
  conquered Ireland (1649-1652) was to have it
  valued
• William Petty won the contract using cheap labour
• Physician, inventor, economist .... duellist
• Completed his ?Down Survey? in an amazing 13
  months
• Understood theory of rent before Ricardo in 1661
  he said Ireland was ?worth but 7 years? purchase?
  (of its rents), or a yield of 14.3!

83
John Locke apostle of freedom
1632-1704
?It is in vain in a country whose great fund is
land to hope to lay the public charge on anything
else there at last it will terminate. The
merchant (do what you can) will not bear it, the
laborer cannot, and therefore the landholder
must and whether he were best to do it by laying
it directly where it will at last settle ... let
him consider.? -Some Considerations of the
Lowering of Interest
84
In the beginning ...

• - ? Put to the vote as many are of the opinion
  that a public tax upon the land ought to be
  raised to defray the public charge say ?yea?. ?
• - ? Yea! ?
• - ? Carried in the affirmative - none dissenting.
  ?
• Philadelphia's first tax law 30 January
  1693

85
Average Weekly Wages USA
workers on non-farm payrolls
Constant 1982 per week
350
315.44 (1972)
-13.8
300
271.96
-19.2
250
254.87 (1993)
Second half of Kondratieff Wave
First half of Kondratieff Wave
200
196.47
150
1947
1950
1960
1970
1980
1990
2000
Source US Bureau of Labor Statistics
86
Average Weekly Wages Australia
Constant 1983 per week
350
318.40 2004
312.60 1983
300
285 .00 1991
250
Second half of Kondratieff Wave
First half of Kondratieff Wave
200
150
1947
1950
1960
1970
1980
1990
2000
Source Australian Bureau of Statistics
87

Kondratieff Long Wave Cycles


Nikolai Kondratieff 1892-1938
1814
1873
1920
First Wave
Third Wave
Second Wave
1849
1896
1789
Smoothed - Diagrammatic only







88

Kondratieff Long Wave Cycles - the seasons


Nikolai Kondratieff 1892-1938







89

Kondratieff Long Wave Cycles - the seasons


Nikolai Kondratieff 1892-1938







90

Kondratieff Long Wave Cycles - the seasons


Nikolai Kondratieff 1892-1938







91

Kondratieff Long Wave Cycles


Nikolai Kondratieff 1892-1938







92
An impending Kondratieff ?winter? could be
allayed by switching therevenue emphasis

• ....from tax imposts upon people and businesses
  who are doing productive work ...
• ....to revenues based upon the value of privately
  held lands

93
THE RICHES OF OZ
The Economic Consequences of Bubbles

Australia A Case Study
94
Burst bubbles and rising unemployment

35

30
total real estate sale prices divided by GDP
25
?
20
15
?
10
5
unemployment
0
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004

95
Australian Land Price Indices
Five major States
3
WA
Q'ld
2.5
Vic
NSW
2
SA
1.5
1
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
Commonwealth Grants Commission
96
Sir George Edward GibbonGrey v.
Wakefield
1812-1898

1796-1862

• Characterise both sides of the battle to
  privatise rent
• Grey soldier, explorer of WA, public
  administrator
• Wakefield brat, sociopath, devised ?Wakefield
  Plan?
• Wakefield England, Canada, New Zealand
• Grey Ireland, South Australia, New Zealand,
  Cape Town
• Grey won the battle but Wakefield has won the war
  - because we have come to accept high land prices
  and taxation as the natural order of things