immigrationreformandotherpolicy

Claim one: “LVT is a very silly idea because you can’t assign a value to the land without knowing what the value of the denomination you are using is. That ends up being a circular argument.” Set one price JG hour unskilled labour. LVT needs JG. Claim two: Argument against land value tax “If you try to tax land, then the rich just put the price up, which will then get paid because of the government injections the land tax is trying to fund.” True but land value goes up based on rent as they charge more. In reality LVT is matched with corresponding tax cuts on output and employment, tenants’ net incomes will increase, which will increase rental values and hence rents; so it looks as if landlords are ‘passing on’ the LVT when actually they are just increasing the rent in line with what tenants are willing and able to pay. But even if LVT is a replacement tax, it bring a flood of homes onto the market when people “right-size” (be that up- or down-sizing), which will tend to level rental v...

A  guy called JB Clark and his accomplices have eliminated from (neoclassical) Economics the concept of “land” as a particular type of capital, with a “fertility” and thus a “rent”. This was done to counter arguments that “land” generates “rent” thanks to its natural, intrinsic “fertility” and this windfall should therefore be specially taxed. Also JB Clark and his accomplices have this reduced all “capital” to a single “jelly”, that is to dollars in practice, by using delusional handwaving called the “Cobb-Douglas production function”, in order to “prove” the central truthiness of neoclassical Economics, that absent government regulation income is uniquely determined to productivity, which cannot be proven if there are even just 2 different types of “capital”. This makes contemporary Economists pretty much blind to the economics of mined energy, and of the unique advantages of extracting it in nearly ready-made form from mineral sources. For example R Gordon’s argument (of which I...

💣 The Loanable Funds Fallacy: Why the Economy Doesn’t Work Like Economists Think It Does Mainstream economics has a comforting fairy tale at its core: that before anyone can borrow, someone else must first save. This idea is formalized in the loanable funds model, and it underpins much of modern macroeconomic thought, from the Chicago School to ECB policy memos. It paints a world of order and thrift: savers forgo spending, banks collect those savings, and only then can others invest. It’s a Newtonian clockwork version of the economy. But it is empirically false, logically incoherent, and operationally useless. Worse — it’s actively harmful. It misguides policy, misreads financial crises, and props up an entire scaffolding of broken assumptions: from crowding-out theory to natural interest rates to the fantasy of money neutrality. This post is a long-form demolition of that myth. 🧩 What the Loanable Funds Model Claims In the basic loanable funds story: People save by d...