Posts Tagged ‘inflation’

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Does CPI show land price declines?

April 15, 2009

Of course the consumer price index, out this morning, doesn’t show land prices or land rents.  That is, cost of getting access to land is buried in all the other figures.

Much is being made of the year-to-year decline, which is largely due to the drop in petroleum (and gasoline) prices.  Of course this is reflected in housing costs, which include an energy component.  But the main piece of housing costs is “shelter cost.”  Under this, “rent” and “owner equivalent rent” increased 3.2% and 2.1%, respectively.  Because most Americans are “homeowners,”  the latter figure has a large impact on the total CPI.  The actual cost of purchasing a house and lot may have declined, but the CPI’s housing cost is based on what you might have to pay to rent a unit like the one you are buying.

The price of used cars also dropped, probably because fewer people are interested in buying one.  But the cost of what BLS calls “education” increased 5.6%.

For some reason BLS seems not to have yet posted the sub-national data.

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Racism and land value taxation

April 5, 2008

Prosper Australia exec Gavin Putland has written an insightful analysis (“Still on the Mountaintop”) of how a policy of taxing productive activity almost guarantees, under American conditions, that blacks will suffer economic discrimination and be overrepresented among the poor and unemployed. The link is thru NAIRU, which requires a substantial level of unemployment in order to prevent ruinous inflation.

“full employment” means enough unemployment to cause enough wage restraint to give stable inflation. So we’re living in a system of enforced failure. A percentage of people have to be unemployed, and therefore, at the boundaries of unemployment, another percentage of people have to be underemployed or intermittently employed or precariously employed. In other words, the economy is being run in such a way that a certain percentage of people have to be losers.

He explains what seem logical reasons why Africian Americans, rather than other minorities or the entire labour force, bear this burden. The solution is to tax “land-like assets” instead of “house-like assets” and the work that goes to produce them, resulting in increased employment opportunities with less inflation, among other benefits. The piece includes detailed explanation of why even landowners will be better off under this reform.

Even experienced Georgists will benefit from reading Putland’s accessible explanation.