Free Labour or Free Rent ?

Another predictably monstrous shocker came out of the economy yesterday in BA asking workers to work for free. Why? They did the work didn't they. They created wealth by doing that work? So pay them their just reward for it.

You might say "but there is no income to pay for them". Really? Did they stop flying planes recently ? Did passengers start getting free rides ? Do the fly the planes empty nowadays?

This crew member quote cuts to the chase:

“A lot of people are saying if you pay off my mortgage, or pay my commuting costs, maybe we’ll consider it”

Keys to this mystery are in the paying off the mortgage bit and why on earth the crew live so far from work. But back to the main point, that BA have plenty to pay their workers. The source of this fund is in either the imputed RENT in BA land holdings or in the RENT BA pay as tennants.

If the former they are genuinely bankrupt because even after not paying rent they still cannot afford to operate. If the latter, which I suspect is the case, then I ask this big question:

In a crisis is it not economically optimal to pay RENT to landlords, only, after all wages have been paid. Wages earned in labour create wealth. Rent paid to landlords creates no wealth at all.

Wages should be paid in full! The Gov could command landlords to quit demanding rent until the crisis is over. And then get into a dialogue about policy that collects the economic rent of land for the comunity fund.

Train fare - 30% increase yesterday

I was astonished to see how my Super Off-Peak Network Railcard minimum discount fare from Wokingham to London had risen by 30% (from £10-£13) at the ticket machine yesterday! This now makes the journey more expensive, at 22p/mile (1300p/60miles), than my car (16p/mile) if you discount the congestion charge (an extra 14p/mile)

I do realise that rail is subsidised by the state to the tune of £4bn now it has been privatised compared to £1.5bn when it was not. But why the sudden increase. This is all when Network Rail are making £1.5bn in profits and giving it to shareholders.

It begs the question why do shareholders get a penny while the rails are operating at a loss. It also begs the question as to how you can make rail pay for itself. We know this is easy. Collect the economic rent the railways create in the surrounding location values. The Jubilee Line extension is a perfect example of how this would more than eliminate the need for subsidies.

Back to the question, which is skewed because it is the Train Operating Companies that are charging the railcard increase not Network Rail. Why the increase. I can only assume it is because they are attempting to reduce the use of discount rail cards. They want to get more people onto "On-Peak" trains. The TOC's claim it is because they have not increased the railcard subscription for 7 years. But it is the minimum fare we are talking about not the railcard subscription charge.

How much does a house cost ?

If you want to build a really comfortable, warm in winter, cool in summer, nicely ventilated, roomy, low energy bill home, you could build an Eco home for about £50k. It wouldn't have the Corinthian pillar look granted. So what?

If you then calculate how much that would cost to buy, over say a 20 year period:

£50,000 / 20 years /52 weeks = £48 per week !!!

So what are we all waiting for? The Economic Rent and the Speculative Rent of the land of course. A house costing £50k to build needs land. This is fully enclosed and made artificially scarce everywhere. And worse it is speculated on by :

• landowners
• buy to let landlords
• land pooling
• local authorities
• large corporations
• superstores
• freehold householders

The sum of this speculation raises the market price of the property, including the land and building by up to 5 times at the peak of a credit and housing boom.

Instead of £48 per week to get a roof, it now becomes £240 per week. See the problem now?

Where is our Dear Leader this time ?

Did you see Cameron on TV last night, going on about how he was amazed at how the members he was supposed to be leading could do such things. Wasn't it because he let them get on with it and turned a blind eye? Or was it because he really was not aware of standard member practices in his very own party? It must have been one or the other and nothing else? He is either the leader of the party or he is not the leader of the party. Which is it?

If he really is the leader surely:

1. He would have known about the expenses stuff, so why did he not nip it in the bud?
2. If he knew about it and did nothing, then tell me why he deserves to remain as leader ?
3. If he did not know about it, evidently, he cannot possibly be the party leader. Because he was the only party member who knew nothing about standard under the counter member practices.
   

Mr Cameron, are you the Leader of the Party or are you not? You cannot have it both ways. Granted either way looks bad for you as in neither way are you the sort of character the people want to run the country ? They want Leaders, not managers and followers. They want competition between ideologists not personalities.

Its all academic anyway. What has taken me 30 minutes to analyse logically was immediately apparent intuitively as I watched Cameron on TV. His body language told me he was lying.

ASET Alert: Population always outruns subsistence right?

I had a great conversation this morning with friends in Cambridge, bankers, climate gurus and economists. The Malthusian Trap reared its ugly head once again. This was a claim made 200 years ago by Parson Malthus stating that the reason there is poverty is because the planet cannot supply the food to keep it all alive and leading a full life. Eventually once the population has grown enough, food supply will become exhausted and people will starve or at least be very poor. Its a good one to use to support your pay masters who are doing all the nicking of wealth.

This morning, the usual ASET language was used with no supporting evidence. But the folks were good because they were listening and were open to suggestion. I've pointed them to Henry George's analysis Population and Subsistence in Progress and Poverty, Chapters 6 - 9, which is pretty fierce and confident in its refutation.

The evidence needs no statistics or complex maths. Nor does it require weeks of study and analysis to tell you what your intuition knows immediately. It just needs some deep thought and analysis of what is really going on. That is, unjust social institutions and failed governments are making things essential to a functioning society scarce and limited to more powerful classes. (land tenure, money created as debt and other such monopolies) This is still happening today and I'm soon going to undertake an analysis into how these social failings might be the root cause of climate change too, the modern day crises of failing society. Rather than the common scapegoats in SUV drivers, flying, mobile phone chargers and all that nonsense.

One of my friends came up with the classic ASET supporting evidence of the Irish potato famine and how that proves the Malthusian Trap is valid. Red rag to a bull!!!. I wonder if Gerry Adams knows this? Here's some quoted text from the above chapter laid before us 130 years ago. Amazing people still believe this "apparently self evident truth". Well not really, cos it allows us to ignore the imperative for change and keep taking the free lunches right?

"Even under these conditions, it is a matter of fact that Ireland did support eight million plus. For when her population was at its highest, Ireland was still a food exporting country. Even during the famine, grain, meat, butter, and cheese destined for export were carted past trenches piled with the dead. So far as the people of Ireland were concerned, this food might as well have been burned or never even produced. It went not as an exchange, but as a tribute. The rent of absentee landlords was wrung from the producers by those who in no way contributed to production."

"What if this food had been left to those who raised it? What if they were able to keep and use the capital produced by their labor? What if security had stimulated industry and more economical production? There would have been enough to support the largest population Ireland ever had, and in bounteous comfort. The potato blight might have come and gone without depriving even a single human being of a full meal."

"Writing this chapter, I have been looking over the literature of Irish misery. It is difficult to speak in civil terms about the complacency with which Irish want and suffering is attributed to overpopulation. I know of nothing to make the blood boil more than the grasping, grinding tyranny to which the Irish people have been subjected. It is this, not any inability of the land to support its population, that caused Irish poverty and famine."

Bankers, MP's... Have YOU looked in the mirror lately?

Veblen said the problem with economics is we all have or aspire to get our noses in the trough of free lunches. Unearned incomes. Transfers of wealth from someone who has worked to me. So in the end this is why we accept our leaders doing it. We want to do it too... eventually

But Bankers, MP's and numerous others yet to be uncovered are currently under intense scrutiny. We told you so say the people. But what about the people themselves. Are they in fact grabbing free lunches too? Yup!

Prices of owner occupied housing, 70% of the housing stock, comprised about 75% of free lunch in economic rent at the end of 2007. They did nothing to earn this yet still took it like a big bonus or expense claim. Its way higher in aggregate than bankers or MP's free lunches.

OK its not against the law, but neither were expenses nor bonuses. Likewise it certainly is not in the spirit of a functioning society . We are mostly all at it! Its hypocrisy to blame a few perpetrators. We are all complicit mostly, just some are much worse than others. And boy, don't we all want to be like them?

Except the poor tenants,who are paying the full economic rent.

Apparently Self Evident Truths (ASET's) of Mainstream Economics

I've been struggling to get coherence from some very smart people lately. And I believe this is due to these "ASET's". These ASET's are claimed axioms of economics that are accepted as truths. They are neither questioned nor reasoned out during enquiry. Even when it is clear there is no other pathway to reason, their validity is accepted without question.

They are the law apparently. The law laid down by Smith, through Ricardo, Marx and Keynes. ASET's fall into the same category of thought as Received Wisdoms and Divine Revelations. They must therefore lie on the bed of the Sea of Confusion in modern economic thinking. Hence the apparently unresolvable economic paradigm.

I assert that the current economic paradigm is entirely resolvable... if only we would start thinking more carefully and ask if what we think is the truth, really is the truth. Some examples of ASET's include:

1. Capital is apparently Money. This is indeed a strange one. Since when can you use money in any shape or form to produce, say, a factory? Unless of course you build it from paper notes, coins or bytes from inside a computer. Even then the Money would have ceased to be Money once used as a building material. Absurd.
   
2. Capital is apparently the starting point in any economic process. That is, before any work can be done, Capital must be made available. Strange this, as I would have thought you need land before any natural resource can be shaped or moved by labour into some form of wealth in more Capital or consumption goods?
3. Wages are apparently drawn from Capital. That is, before you can employ workers, you need a stock of Capital a priori. I would have thought the worker was alive long before the factory was built?
   
4. Land, Money or Monopoly are all apparently Wealth. In personal economy of course any of these things are claims on wealth or the power to command wealth, so all have real value to the individual. But in political economy they can not possibly be wealth because adding or taking from them neither increases nor decreases the common stock of wealth. These things have no value in exchange from production. Are they not just privileges or access to unearned incomes to the owner?
   
5. When interest rates are high wages are always low. Really?
   

I'd welcome any further additions to this list... or of course any objections. But you must promise to be coherent and honest with your reasoning. No jumping to conclusions, no creation of new and confusing economic terminology to make your case, and of course in your reasoning, please avoid the use of ASET's!