Property bubble set for three-year deflation

Access Economics Director Chris Richardson Calls on the Reserve Bank not to raise interest rates. "Australia is the most interest-rate sensitive nation in the world". The Age.

Origin of the economologist

e·con·o·my   (-kn-m) n. pl. e·con·o·mies a. The system or range of economic activity in a country, region, or community... b. A specific type of economic system... An orderly, functional arrangement of parts; an organized system: “the sense that there is a moral economy in the world, that good is rewarded and evil is punished” (George F. Will). Efficient, sparing, or conservative use....The least expensive class of accommodations... Word History: ...The word economy can be traced back to the Greek word oikonomos, ... derived from oikos, “house,” and nemein, “to manage.” From oikonomos was derived oikonom, ... “public revenue of a state.” first recorded ... 1440, is “the management of economic affairs,” ... of a monastery. Economy is later recorded in other senses shared by oikonomi in Greek, ... current sense, “the economic system of a country or an area,” seems not to have developed until the 19th or 20th century. ogy or -ology suff. Science; theory; study: ie;. dermatology. Source: The American Heritage® Dictionary of the English Language, Fourth Edition Copyright © 2000 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. a): gist   (jst)n. 1. The central idea; the essence. 2. Law. The grounds for action in a suit. [From Anglo-Norman (cest action) gist, (this action) lies, third person sing. of gesir, to lie, from Latin iacre. See y- in Indo-European Roots.] b): gist Pronunciation: 'jist Function: noun Etymology: Anglo-French, in the phrase laccion gist the action lies or is based (on), from gisir to lie (of process), from Old French gesir to lie, ultimately from Latin jacere: the ground or foundation of a legal action without which it would not be sustainable. Source: Merriam-Webster Dictionary of Law, © 1996 Merriam-Webster, Inc. c): gist n 1: the central meaning or theme of a speech or literary work [syn: effect, essence, burden, core] 2: the choicest or most essential or most vital part of some idea or experience; "the gist of the prosecutor's argument"; "the heart and soul..."; "the nub of the story" [syn: kernel, substance, core, center, essence, heart, heart and soul, inwardness, marrow, meat, nub, pith, sum, nitty-gritty] Source: WordNet ® 2.0, © 2003 Princeton University Word History: Source: Economology is a branch of economics, which theory is to determine the factual indepth delineations of site values within a municpality for rating purposes. Rather than the pooling of economically dis-similar properties that hide or mis-represent the real consequences of taxation. Economology denotes public revenue from privileges. (titles, licences, patents, copyrights, together without taxation on production consumption or employment). This absence of land price and taxation is described as a site revenue society. (Site Rating Defence. Melbourne, Australia 2004)

The US City-Its Greatness Is at Stake!

The fact that an improvement leads straight to a higher tax assessment is the reason why slum landlords find it more profitable not to improve the buildings on their overpriced, under rated land. The profit motive is harnessed backwards’ and given a tax incentive not to eradicate slums. Landlords who permit their properties to deteriorate are rewarded with lower assessments. “Rewarding also by this revenue system are the speculators who, because of low rates on land can afford to hold land out of use until the city’s growth forces up its price. This is a direct cause of ‘urban sprawl,’ as developers reach out for lower-priced land while passing idle land that is closer to the city but whose owner is not ready to sell. Urban sprawl means that the city enjoys a less than economic density of population while suburbanites have to move farther out than they should. Lower taxes (if any) on improvements and higher rates on idle land would induce a more efficient use of all urban and suburban land. ...To attract the necessary funds, we need maximum participation by private investors and private builders and operators. LIFE Magazine, Dec 24, 1965

The Profitable Slums

...these tax policies make slums the most profitable of all housing investments; they often make it more profitable to let property decay than to keep it up or improve it; they often make it more profitable to misuse or under-use land than to put land to its optimum use; they give speculation in vacant land such preferential tax treatment that they set apart from the market action of supply and demand. ..ours is a tax-activated, tax-accelerated, tax-directed, tax-dominated economy. Every business decision has to be checked against its tax consequences; and when property owners check the tax consequences of using land better versus using land worse, or spending money for improvements versus letting properties decay, they find, too often, that our tax system penalises what is socially desirable and susidizes what is socially undesirable. ...here is the two-fold way our tax system harness the profit motive backwards in the building industry: The first way is that our system taxes the value of unimproved or under improved land so lightly that land owners are under no pressure to sell until they are offered many times what the land is worth; and so lightly that there is no tax restraint on its price. So the price of the land- which reflects the capitalised difference between the rent the land can be expected to earn and the taxes it must expect to pay-has soared clear through the roof. The home builders have voted three to one that this land price inflation is their number one problem in trying to meet this country’s need for better housing. ...the second way our tax system operates against our best interests is the manner in which it taxes improvements. Our system taxes improvements so heavily that it makes slums the most profitable of all real estate investments. And so our slums are still spreading faster than urban redevelopment can clear them out. Mayor’s Special Committee on Housing in New York. “The seemingly unstoppable spread of slums has confronted the great cities of the nation with chronic financial crises... The $2 billion public housing program has not made any appreciable dent in the number of slum dwellings... No amount of code enforcement until and unless the profit is taken out of slums by taxation. Architectural Forum Nov,1965

Origin of Site Value Rating:Australia

Site Value Rating was first raised in the 1901 Legislative Assembly by Arthur Robinson, the Member for Dundas, but frustrated by the Upper House opposition. Resurrected three times over the next twelve years, a bill giving municipalities the option of site value rating was finally passed in the Upper House in November, 1913, by a sixteen to six vote. A few extracts from the debate are worth quoting: Mr Hagelthorin, Minister for Public Works: “This proposal is widely supported by the A.N.A., the Chamber of Manufactures and the Rating Reform League.” William Angliss: “My firm will lose more than it will gain from this Bill, because it is compelled to keep vacant land on which to run stock; but I am voting for it in the interest of the people of Victoria.”

Red Tape Addiction

Written by Elma Lia Nascimento    Luís Carlos Ewald, a professor of Economics at PUC-Rio (Pontifícia Universidade Católica -- Pontifical Catholic University, wrote recently in Rio's daily Jornal do Brasil: "How many opportunities of generating new jobs were lost due to the discouragement of heroic entrepreneurs who gave up due to the unnecessary documents, negative or positive certificates, marriage and death certificates, medical and dental certificates, police clearance, vaccinations, pedigrees, CGCs (Cadastro Geral de Contribuintes -- Taxpayers' General Register), IPTUs (Imposto Predial e Territorial Urbano -- Urban Building and Land Tax), alvarás (licenses), permits, authorizations, collateral signatures, cadasters, criminal records, X-rays, insurance, paternity DNA, certified signatures, certificate of occupancy, proof of residence, IPVA (Imposto sobre Propriedade de Veículos Automotores -- Tax on Ownership of Automotive Vehicles), blood group, Rh factor, and so many more, all with certified photocopies." To start a sole ownership company, the individual faces a via Dolorosa of different places and assorted lines. He has to present a $35 Registro de Declaração de Firma (Business Declaration Record) obtained at the Junta Comercial (Board of Trade), a Fire Department Approval Certificate ($37), and a $208 Alvará de Localização (Localization License) issued by City Hall. For a business corporation, these documents must be accompanied by a certificate showing that the specific business name is not in use, as well as a Registro do Contrato Social (Certificate of Incorporation Registration). In 1995 alone, IOB, a publication of business tax information, published 3,800 pages related to changes made during the year in the rules for payment of taxes to the Union, the state, and the municipalities. This amounts to 15 changes per day! And while in the U.S. or Europe a person is able to start a business in as little as two days, in Brazil this process takes at least 40 days. Up to 96% of small businesses are not able to deal with the company's accounting without hiring an accountant. And business people spend 26% of their time dealing with official bureaucracy, according to a study conducted by CNI (Confederação Nacional da Indústria -- National Confederation of the Industry). With globalization, the Brazilian bureaucracy has become a turnoff for foreign companies looking to invest in the country. A just-released World Bank's comparative study between Chile, Peru and Brazil shows that in Chile a private firm's worker spends 0.5% of his time dealing with governmental bureaucracy, in Peru 4%, and in Brazil 5%. http://www.brazzil.com/content/view/9242/0/