The pretense is that privatization is more efficient. But privatizers add on interest and financial fees, high executive salaries and bonuses, and turn the roads into toll roads and other infrastructure into neofeudal fiefdoms to charge monopolistic access fees for people to use. …. So the financial sector first creates a problem by loading the economy down with debt, and then “solves” it by demanding privatization sell-offs under distress conditions.
Michael Hudson
On finance, real estate and the powers of neoliberalism
Search for land value tax
Iceland's Fair Value Vultures
The New Bank Disaster Olafur Arnarson, Michael Hudson and Gunnar Tomasson* The problem of bank loans gone bad, especially those with government-guarantees such as U.S. student loans and Fannie Mae mortgages, has thrown into question just what should be a “fair value” for these debt obligations. Should “fair value” reflect what debtors can pay – that is, pay without going bankrupt? Or is it fair for banks and even vulture funds to get whatever they can squeeze out of debtors? The answer will depend largely on the degree to which governments back the claims of creditors. The legal definition of how much can be squeezed out is becoming a political issue pulling national governments, the IMF, ECB and other financial agencies into a conflict pitting banks, vulture funds and debt-strapped populations ...
The Land-Residual vs. Building-Residual Methods of Real Estate Valuation
Some Prefatory Remarks to the N.Y.U. Real Estate Institute discussion, Oct. 25, 2001 Economic theory focuses on labor and capital, yet the largest category of tangible assets is not industrial plant and machinery earning profits, but real estate, and its primary objective is to make capital gains. Most new entries into the Forbes or Fortune lists of the richest men consist of real estate billionaires, or similar individuals coming from the fuels and minerals industries or natural monopolies. Those who have not simply inherited long-standing family fortunes have gained their wealth by borrowing money to buy assets that have soared in value. The Federal Reserve Board publishes an annual balance sheet of the economy’s assets and liabilities showing real estate to comprise two-thirds of America’s tangible assets. Land represents most of this ...
Gordon Brown spills the beans on the IMF: Make Iceland pay for Incompetent British Bank Deregulation
Counterpunch Last month the G-20 authorized the International Monetary Fund to increase its loan resources to $1 trillion. It’s not hard to see why. Weakening currencies in the post-Soviet states threaten to raise default rates on foreign-currency mortgages as collapse of the Baltic real estate bubble drags down Swedish banks, while the Hungarian property plunge threatens Austrian banks. It seems reasonable to infer that creditor-nation banks hope to be bailed out. The IMF is expected to lend the Baltic, central European and other debtor-country governments money to pay them. These hapless debtor economies are then to follow IMF “conditionalities” to squeeze enough money out of their populations to pay foreign creditors – and repay the Fund by imposing yet more onerous taxes on their labor and industry, making them even more ...
A Tax Program for U.S. Economic Recovery
interview with ITulip. Janszen: How do we fix this mess? Hudson: Debt service is the major charge that is institutional rather than “real” and technologically necessary. Our tax system favors debt rather than equity financing. By encouraging debt it has prompted a tax shift onto the “real” economy’s labor and capital. The resulting interest charge and tax shift mean that we’re not as efficient and low-cost producers as we used to be. This makes it hard to work out way out of our foreign debt. You want to phase out the “tollbooth” economy that adds unnecessary charges to the cost of living and doing business – charges that have no counterpart in actual necessary cost of production. You want to avoid monopoly rent of the sort that Mexicans have to pay Telmex. And ...
The Methodology of Real Estate Appraisal: Land-Residual or Building-Residual, and their Social Implications
NYU Real Estate Institute's Round Table Discussion of Land- and Building-Price Indices A meeting was held at New York University’s Real Estate Institute on October 25 to discuss the virtues and pitfalls of constructing a land-price index to distinguish between land and building values. The Institute’s Associate Dean Ken Patton had invited Michael Hudson and the Robert Schalkenbach Foundation to assemble an economic team to discuss the pros and cons of the Georgist position regarding land-values with the Institute’s faculty and real estate industry representatives. The discussion was moderated by Schalkenbach’s Executive Director, Christopher Williams. Prior to the meeting, Dr. Hudson, President of the Institute for the Study of Long-term Economic Trends (ISLET) had circulated a discussion paper spelling out the statistical problems of constructing real estate value indices at the macroeconomic ...
The Land-Residual vs. Building-Residual: Methods of Real Estate Valuation
Some Prefatory Remarks to the N.Y.U. Real Estate Institute discussion, Oct. 25, 2001 Economic theory focuses on labor and capital, yet the largest category of tangible assets is not industrial plant and machinery earning profits, but real estate, and its primary objective is to make capital gains. Most new entries into the Forbes or Fortune lists of the richest men consist of real estate billionaires, or similar individuals coming from the fuels and minerals industries or natural monopolies. Those who have not simply inherited long-standing family fortunes have gained their wealth by borrowing money to buy assets that have soared in value. The Federal Reserve Board publishes an annual balance sheet of the economy’s assets and liabilities showing real estate to comprise two-thirds of America’s tangible assets. Land represents most of this ...
Where Did All the Land Go?
- The Fed’s New Balance Sheet Calculations A Critique of Land Value Statistics The most comprehensive official statistics on nationwide real estate values are those published by the Federal Reserve Board (FRB) in its annual “Balance Sheets of the American Economy.” As part of its Z.1 statistical release the FRB compiles annual balance sheets of seven sectors which, taken together, make up the U.S. economy. These are the B-series tables near the end of the quarterly flow of funds reports. (The “B” stands for “Balance sheets.”) The Fed’s purpose of compiling these balance sheets is to track changes in the net worth of seven sectors: households, non-profit institutions, farms, non-financial non-corporate business, non-financial corporate business, and financial institutions. These estimates include the market value of real estate, as well as other assets, while ...
How Large is Russia's Land Rent, and How Will it be Used?
In June, I travelled to Russia with Nicolaus Tideman to meet with some of our Georgist counterparts and help create a program for local communities to collect land rent. We also wanted to spell out the alternative. What would happen if the land were privatized in such a way as to let its rent and price gains be taken by absentee speculators (and the mortgage bankers lining up behind them) to load this property down with debt? Our first task was to estimate the magnitude of local rental and land values. However, it soon became apparent that trying to determine an economic price for Russian real estate was premature. Security of ownership is unclear in a political environment that continues to be marked by corruption. Real-estate taxes are ...
An Autobiographical on Economic Rent and Exploitation
Settle in for this interview. Michael Hudson, Shepheard Walwyn recording May 23, 2022 Part one https://www.youtube.com/watch?v=XDo7HykYN9k Part two here. https://www.youtube.com/watch?v=I-xWgLertkg Jonathan Brown Michael, welcome to the podcast. Michael Hudson It's good to be here. I'm looking forward to it. Jonathan Brown Michael, I think you have one the most extraordinary upbringings and journeys into economics. And I just wanted to give our listeners just some sense of how you got from being the godson of Leon Trotsky all the way to what I consider to be probably the most important economist in the world today. Michael Hudson 00:23 There’s no direct causality there that could have been anticipated. I never studied economics in college, because I went to school at the University of Chicago. We know that there were some students at the university who were at that business school. ...
