Leading Economists Debate Where the World Is Headed

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1. So what are these guys saying. Are we in a bubble? Is the stock market and the economy in the crapper?
2. To expand my comments to the global economy, all one needs to do is examine the degree to which land and natural resources are concentrated in a relatively small number of individuals, corporations and tax-exempt organizations. This provides a good indicator of the stress placed on the productive elements in an economy to overcome the dual costs of rents to landed interests and taxes (on earned income flows and produced assets).
   
   Japan has struggled in the late 1980s to overcome the problem of unaffordable land costs, the cause of which is an absence of any annual tax on land values.
3. Reference to GDP growth as a measure of how well a nation's economy is doing is quite misleading. Total spending tells us very little about the well-being of people. Net changes in capital goods is a better measure, as is the change in median household income.
   
   One need look no deeper than the means by which governments raise revenue to identify the systemic problems existing in every country. The differences are differences of degree only. Within the economics discipline only a small number of economists have acknowledged the degree to which entrenched privilege is nurtured by law relating to property and taxation. As Joseph Stiglitz has stated, the central problem is laws that favor rent-seeking from land, natural resources and land-like assets (e.g., the broadcast spectrum and take-off and landing slots at airports) over income earned by producing goods or providing needed services.
   
   Too many economists have accepted without critical analysis the teaching that nature has the same characteristics as goods we produce. Nature is not a form of capital. Price does not clear the market for land as it does for labor, capital goods or even credit. The reason is the very low effective rate of taxation on the potential rental value of land. The consequences of this are evident when one looks at land prices as a primary driver of what are mistakenly viewed as business cycles.
   
   Research by some economists who understand land markets (e.g., Fred Harrison in the UK, Bryan Kavanagh in Australia, Fred Foldvary and Mason Gaffney in the US)  identifies an 18-year land market cycle. The depth and duration of the inevitable crash is determined by the extent to which land prices are driven upward by credit-fueled speculation. After 2008, rather than implement regulations to prevent yet another speculation driven land market cycle, the Federal Reserve adopted policies to stimulate the increase in land prices by keeping interest rates historically low. This certainly bailed out mortgage loan investors to a degree and allowed still employed property owners to refinance out of high interest sub-prime mortgage loans. But, this did little to correct the fundamental problems associated with the nation's system of taxation.
   
   Taxing land rent in the U.S. is a responsibility of local government. And, with few exceptions local governments impose heavy tax burdens on property improvements and light tax burdens on land values. Thus, net imputed rents are capitalized by market forces into higher and higher prices until asking prices for land as so high they cannot be sustained by businesses or households. A real problem is how to get every city, town, borough, township, school district and county government to more over a short period of time to a land-only property tax base.
   
   We also tax earned income flows at a much higher rate of taxation than we tax gains from speculation. We treat such gains as "capital gains" even though actual capital goods lose exchange value from the moment produced.
   
    
4. Austerity does not work.  It's killing economies all across the world.  It's letting the 1% take all everything from the other 99% and leaving nothing for the disadvantaged.
5. Roubini - "We should think about why there has been accumulation of credit" [But we should meticulously ignore the role of the Fed in mispricing credit - it has absolutely nothing to do availability of credit.]
   
   Roubini - "The Fed should be concerned with avoiding bubbles" [With the great track record the Fed has of spotting bubbles in the rearview mirror, that will work out really well. It works especially well with experimental seat of the pant policies.]
6. excellent talk