Re: how does economics explain stagflation?


<royls@xxxxxxxxx> wrote in message news:426de7dd.53814717@xxxxxxxxxxxxxxxxx
> On Mon, 25 Apr 2005 18:47:52 -0400, "anon" <me@xxxxxxxxxxx> wrote:
>
>>land rent can be seen of as a private tax.
>
> But it's not a tax like other taxes, because it's voluntary.
>
it is voluntary to a particular landlord. however a tenant
has to pay rent in one form or another (unless he inherited land),
whether or not he has income. in that sense it is similar to
a poll tax, since it is a payment for existence.

>>firms which can will relocate to places with lower rent to escape this
>>tax.
>
> They have no reason to try to escape it, only to find the most
> suitable location. Firms will relocate to where the location best
> suits their operations, even if that is the highest-rent location in
> the country. Moving a business to a low-rent location would often be
> a recipe for failure: customers don't want to do business in a
> low-rent location.
>
firms which can relocate "production" (work) to reduce costs, whether
labour, or land will do so. that is what all the outsourcing is about.

>>it is in the interest of labourers to ensure land rent does not make them
>>uncompetitive.
>
> ?? It can't.
>

a typical worker (earning 4000) where i live spends 40% in rent , 20% in
tax,
7.5% in social sec, and 10% in health insurance. if you add
the employer's contribution he is more expensive. i'm leaving aside
smaller taxes.

a typical house costs 500k. land for which costs 300k. approx 24%
of income thus goes to land rent.

these are all making the worker uncompetitive. even though his
discretionary income is not much, the workers in India or
wherever can easily work for much less while getting almost the
same discretionary income. because the rents there are much less
than $1600. and healthcare, etc (because the rest of the population
cannot afford such high rents).

>>same applies to other taxes like social security, healthcare
>>costs etc. as it is most of their income is going to service the mortgage.
>
> No. You fundamentally misunderstand the difference between a land
> rent tax and other taxes. Land rent is paid, whether to a private or
> a public landlord, _for_benefits_received_. The only difference is
> that the benefits are not being provided by the private landowner, but
> almost always by the public. That is very much the point.
>

yes, the land is being auctioned to the bidder, but, the reality here is
that
there is hardly any new supply of housing, while around 500,000
new immigrants are moving into the city. the number of bidders is
being increased by the system, mainly to keep land prices high,
and wages low.

the rents over the last 4 years have gove up some 50% (non-rent-control)
while wages have risen maybe 10% if lucky.

the services available around that land have hardly improved. they may
have worsened (subways, schools etc). the only reason for the rise
of rent is excess competition among labour for a place to exist.

this will asymptotically reach almost all the income of labourers, till
it becomes like the feudal days and the lord shall be waiting outside
the bank to take the paycheck.


.

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