http://www.prosper.org.au/progresspdf/Progress1062_JulAug2004.pdf

TWO-COW ECONOMICS!
Karl Williams


Forget all those esoteric formulae and supply & demand curves! Here I’ve adapted an old tale to explain the world of 15 economic theories and practices in more earthy terms. Make sure you get to the final two, which starkly contrast neoclassical and geoclassical economics.

WELL-MEANING (BUT IGNORANT) REFORMER
You have two cows.
Your neighbour has none.
You feel guilty for being successful. So instead of giving your neighbour one of your cows, you write to your local M.P. demanding that he pass legislation for more government programs to help your neighbour get a cow.
You arrange for Midnight Oil to do a gig for the cowless, who couldn't attend because ticket prices are so expensive that only people with 3 or 4 cows can afford to attend. You wear an angry badge that signifies that you care about cowless people.

CONSERVATIVE
You have two cows.
Your neighbour has none.
So?

COMMUNIST
You have two cows.
The government claims ownership of the cows, giving you no incentive to work efficiently. You are supposed to be issued milk coupons, no matter how much is produced. The coupons rarely actually reach those who are not party of the party elite. You finally get a coupon and wait in line for hours to get a litre of milk, but by then it’s turned to
yoghurt.

CAPITALISM (according to the obscuring MYTH)
You have two cows.
You sell one, buy a bull, and build a herd of cows.

CAPITALISM (closer to the REAL story)
You have two cows.
You sell one, buy a bull, and build a herd of cows. You put your cows on your previously-acquired piece of choice real estate and take a tax write-off for agricultural land. You sell some of your land (the rest you keep for speculation) to middle class working people who are now mortgaged for life and you put your profits into offshore accounts, further avoiding taxes.

You lobby for a bigger military budget and a national policy of ignoring the U.N. so that you and other bullish elites can grab other people’s land and natural resources all over the planet.

CAPITALISM, SCANDINAVIAN STYLE
You have two cows.
The government taxes you to the point where you have to sell both to support foreign aid in the form of developmental infrastructure, which means the Third World landowning elite can consequently charge the landless peasants more rent.

CAPITALISM WITH AGRICULTURAL SUBSIDIES
You have two cows.
Taxpayers are bled so that you can be paid huge sums to underproduce, which induces others to get in on the subsidy racket. So, while the desperate Third World is locked out of our markets, the government pays you for the milk and then pours half of it down the drain.

SLASH & BURN CORPORATION
You have two cows.
You issue a dodgy prospectus to attract a group of shareholders to buy into the public company which owns the cows. You sell the cows for peanuts to one of your own private companies, then lease them back to the public company at exorbitant rates. The public company must then force the two cows to produce the milk of four cows.
You are surprised when one cow drops dead. You spin an announcement to financial analysts stating you have downsized and are reducing expenses.

FRENCH CORPORATION
You have two cows.
You go on strike because you want three cows and more subsidies. You go to lunch and drink wine. Life is good.

RUSSIAN CORPORATION
You have two cows.
You have some vodka. You count the cows again and learn you now have four cows. The mafia shows up and take all four.

SAUDI CORPORATION
You have two cows.
You don't milk them because you cannot touch any creature's private parts.

AL QAIDA CORPORATION
You have two cows.
You go into hiding with your cows. Al Jazeera is sent audio tapes of their mooing. Then you kill them and claim a U.S. bomb blew them up while they were in hospital.

SENSITIVE NEW AGE COOPERATIVE
You have a cow and a bull.
The bull is depressed. It has spent its life living a lie. It goes away for two weeks and comes back after a sex-change operation.
You now have two cows - one makes milk, the other doesn't. You try to sell the transgender cow, but its lawyer sues you for discrimination. You lose in court. You sell the milk-generating cow to pay the damages.
You now have one rich, transgender, non-milk-producing cow. You change your business to beef. Animal Liberation pickets your farm.

NEOCLASSICAL LAND-MONOPOLY CAPITALIST
You have two cows and several hectares of land.

Your neighbour is a single mother, has no cows, no land and works a part-time job.

You tell her that if she works longer and harder she could buy one of your cows and become an enterprising capitalist. So she takes on full-time work so that, after 3 months, she has saved enough money to buy one of your cows.

But what use is a cow (or anything, for that matter) without a plot of your land, which is now worth $20,000?

So your neighbour takes on a night shift in addition to her day job, leaving for work after the kids are in bed and arriving home just in time to get them dressed for school.

After a year she has saved enough money to buy that land.

Expressing great regret you explain that, in the meantime, the taxes on her income have paid for the infrastructure that have boosted the value of your land, so that the current market price for that plot is now worth $30,000. Back to the grindstone, baby!

Another year of sweat and toil follows, after which she returns with the money. But, with hand on heart, you break the news that economic circumstances have recently driven most single and married mothers to bring in an extra income in order to save for the ever-escalating price of land. As no-one’s making any more land, the greater number of bidders has pushed up the price of the fixed amount of land (this is called a “healthy, buoyant property market”). It’s now worth $40,000 but it would be a lot easier if she just got a bank loan, you tell her. However, all those eager bidders for land have also bid up the rate of interest they’re prepared to suffer, so that interest rates are now prohibitive. Your neighbour collapses in tears at your feet, but what can you do? – you didn’t invent the system! Just as our poor mum relents and considers taking out a mortgage, she finally gets some good news – in a surprise move, the Reserve Bank has decided to make it easier on prospective home-owners by reducing interest rates. However, this has had the effect of making the owning of property more attractive, so – immediately the interest rate decision is announced – landowners raise the selling price of land. The “fair market price” of that plot is now $50,000.

However, under political pressure because of the unaffordability of property, the federal government announce that it will institute a First Home Owners’ grant of $7,000. Suddenly that plot is selling for $57,000.

GEOIST
You have two cows and several acres of land.

Your neighbour is a single mother, has no cows, no land and works a minimum wage job.

You’ve had an amazing vision wherein you see the geoist paradigm in all its glory and realise that all other reforms are just band-aids, so you become an activist with ProsperAustralia. You share your insight with your neighbour and so everyone pulls together to successfully reform our insane tax laws and system of land tenure. As a result:
(1) your neighbour can keep all of her hard-earned income, and
(2) those who have enclosed substantial amounts of the Common Wealth for their own private domain now pay fair land value taxation (LVT) to society.

Your LVT bill arrives and you realise you have been holding more land than you really need, so auction off the title to your land and the improvements on it. Because of genuine tax relief, your neighbour can now afford to buy the property.

And so - with LVT and trust and angel dust - they all live happily ever after.