Sidefact1
While thinking about the new Slovenian govt. politics, especially about taxing all what exists,proposed by the new »Freedom« And »The Left » party coalition, which, judging by names, seems a sort of a joke , Witchdoctor invented one morning this simple mechanism, a sort of a hybrid principle and a law. He did not check if this stuff exists in economic theory , he did not notice anyone using it. It is a kind of »gadget« mechanism, easy to understand a lot of moves in the current charlatan debt driven economy.
As you have read before here in this blog, The price od anything is made on the margin and even the State taxmen love this fact, especially when they decide to tax the property at the so called »market value«. But, is this value real at all?
The following simple gadget is a classic real offer and demand model. It looks simple but it needs some axioms to function.
First, is the price setting on the margin, i.e, only the stuff on sale makes the market price of the same group.
Second, there is an average time delimited Market Buying Capacity, i.e, the real amount of money put on the table in a fixed period of time, a year for example, which is the axiom of forming the price of a good.
THE MARKET BYING CAPACITY – THE REAL ESTATE EXAMPLE
Imagine Slovenia has 100 houses. Of this 100 houses, 10 houses are on sale each year for real, on the market.. So ,10 houses are sold for 1 million each, together it makes 10 millions a year. This 10 millions make and form the Market Buying Capacity.
Each time period, there are 10 millions for real,ready to buy property- houses.In the meantime 10 new houses are built.This year there are 20 houses available, 10 already built and 10 new built, all on the market, and the price of the 1house is not any more 1 million , but it is 500.000. 20 times 500.000 is 10 million, which is the amount due to be spent on buying property.
That is the market buying capacity. Market price is constrained by offer and demand and that there is a fixed market buying capacity available and the dynamics is clear.
But , lets see the reverse situation. What happens if all 100 houses in Slovenia are suddenly on sale, for REAL AND ALL IN THE SAME PERIOD OF TIME? The reason may be that Slovenians decided to vote with their feet and so, some fly away to Putin Russia, some to Thailand and some to Portugal for having a new life. Whatever the reason, the houses on sale are worth suddenly each 100. 000 Euros. Bye bye 1 million or 500.0000 price tag for each!
Because, the Market Buying Capacity is the same- 10 million euros, which makes 100 houses for 100.000 euros equal 10 million..!
Or, this year there are only 5 houses on sale and the price will be 2 millions each!.
The last example is the heaven for taxing.
And that is the proof that there is no real market price. It all depends on Market Buying Capacity and the number of goods available!
So, when Slovenia , or Italy , as it seems, want to tax properrty on the »real market » value, they are forging the terms. It is a scam, a rip off.
Sidefact2
The market price can be forged by any speculation or cartel agreement or insider trading practices, see Elon Musk and his on the limit of insider trading doings in tesla or twitter, when he manipulated the price with his actions and blah blah statements which rigged the price. Or the owners of wall street – black rock, vanguard,, etc, or any big corp steering the market price….
Sidefact3
This simple Market Buying Capacity pool/group can be used in all commodities GOODS, FINANCE, and in all offer/demand situations. States try to fix or limit the market buying capacity, like in the energy shortage, by putting people in the position of driving less, heating less or cooling less, or even eating less and so regulating the market buying capacity according to offer and demand..
By cutting the purchase power, they limit the use and lower the inflation. Simple, we all get poor and so the money keeps the value.
As you have maybe understood, the Market Buying Capacity is not the same as the purchase power. MBC is the overall amount to be spent for real and definitely in a group of goods. It can have subgroups, like in real estate,- location, type of property, type of housing, etc, but it does not change the gadget mechanism described here.
SIDEFACT 4
So, lets go back in our tale. The slovenian left and freedom party (not a joke),took the first part of the above gadget law and told people there are rich people having to much money and are buying houses for a million or even 5 millions and they should be taxed, It sounded reasonable, yes, unless you knew that the MBC is something else.
So, when they came in power, they saw that the story of taxing the 10 rich Slovenians will not produce any effect on the budget and suddenly they decided that everybody who owns more than 50. 000 euros in property, a vehicle, bank deposit, stock and funds, is rich! They started to think of taxing wealth and not only property.
See, beware when the progressives talk about taxing the rich, you vote them (not WD,anymore) and then you find out that you are rich if you own and possess more than 50.000 euros!
By the way,in Slovenia a 50 square meters flat in a 50 year old block from socialist times, 5 storeys no elevator , is now worth 200.000 euros, 5 year old car is around 12.000 euros, you have 15.000 euros in a bank deposit, 10.000 euros in some pension fund,10.000 euros in some tesla stock, and overall you are around 250.000 euros, FIVE TIMES richer than the 50.000 euros limit for being rich!
Why the prices are so high? Read the MBC. Low offer and high MBC is the result. Not enough new housing on the market…
Anyway, thanks to the prices set on the margin, low offer and high MBC, the property tax forged as the »real market price« tax base will hit, with the stick. Considering that 80% of Slovenians own a house…. that was the real idea behind taxing the rich, because the ORDOLIBERAL calvinist or whatever charlatan economy, using war and inflation as a scaremongering, is back on the old tracks as;
SIDEFACT5
Witchdoctor has no proof, but the never dead idea of a Schwabian Housefrau economics is back.
The new finance minister of Slobenia said: » One can not spend more than one earns«
Slovenian love that, since they like their saying « who is not willing to work will not eat«, a sort of local christian tradition.
the new finance minister, formerly on a surveillance board of a big building company which went bankrupt and by defaulting defaulted thousand of small subcontractors which lost their income, a former not successful director of a bankrupted slovanian flight carrier airline, did not even notice that he:
denied bank credit as the tool for borrowing for a car,or for any good,
denied any venture capital investment,
denied credit line as capital formation,
denied even the crowd founding,
denied the credit lines for business,
denied the way how capitalism and the debt driven economy works.
He was saying that we have to move back in time, when loans and credit lines did not exist,. A few thousand years ago.
The demagogic effect sentence, even as such, was a disgrace for a finance minister and a big disgrace for us all.
They plan to live from collecting taxes. Which is a schrottcut to default.
Here is a copy paste from a previous post, a famous farting antinomy:
HOW TO HOLD YOUR BUTT TIGHT, HOLD TIGHT, AND FART AT THE SAME TIME?
“Economically” speaking, in the current mindset this antinomy was presented to the Slovenian voters by a small party lead by a woman, ex prime minister of Slovenia, who fortunately did not enter the slo parliament.
She promised this:
Bigger pensions, bigger living wages, no more over a year long waiting list for seeing the doctor in hospital, and the antinomy enters, a budget surplus and cutting drastically the slovenian debt, which is around 78%.
In plain words, she was giving money to everybody by raising all kinds of taxes to collect more taxes than needed- the budget surplus, and even more taxes to pay off the state debt.
Like , when eliminating the waiting lists for the health service, we are talking billions of euros, same goes for the wages, but how you rise wages when putting higher taxes is not known,
Billion of euros for decent pensions, billions for the budget deficit surplus, and tens of billions for eliminating the state debt. She was talking in this moment in time,with a covid pandemic not over yet and coming back in autumn, with the war and huge energy and other price hikes, of such an amount of taxation that , with this cure Slovenia would have gone into default by the first months of 2023. She was planning a complete recession and the economic breakdown.
Nobody contradicted her, no party whatever. Nobody pretended to say anything about such disgrace of a program of the current mindset of the free willing..
They are sons of a Hayek and MIlton Friedmannnn.
The famous Left party ,with the guiding hand of a famous slo and world wide philosopher self proclaimed liberal stalinist SlavioJ Zuzek, did not say a word. The slovenian left party has not reached even the right wing interpretation of MMT and we are just to witness the 21st. Century collapse !.They were and are even members of the same political coalition! It is called Kul, which is slo for cool. Yes, say this shit and be and stay cool, that is the antinomy. Now lets forget what cul means in the Italian dialect, but in this linguistic case we are deep into the above antinomy.They are all in the cul together.
You know, the famous left which claims – against the evidence of private bank money creation and of the Central Bank money creation- that the money does not “grow on trees”!
In fact it is not growing on trees, but on the computer of the legally appointed subjects for growing this money.
HOW TO HOLD YOUR BUTT TIGHT, HOLD TIGHT, AND FART AT THE SAME TIME?
They only way out is growth, bigger than interest on debt.Which is the disaster in a finite world, just before the climate crash .The next is higher productivity. The next is making more stuff out of the same amount of energy and material. This normally leads to »Crapification« as Charles Hugh Smith has put it : making crap goods which break fast in order to sell more…
But, when the most productive class of workers are highly taxed- engeeneers, scientist, tech, spin offs,, including the famous wealth bracket of 50.000, the Oligarchy sell bollocks.
This idiotic continuation of a failed economic model will cost us dearly.
SIDEFACT6
The result in making the equalitarian society by taxing, the left side proposal, brings in the famous heteronomy of the end result. The only economically competitive industry in such an environment is a labour intensive industry of very low paid semi illiterate workers . Slovenia present and future. Working for german ordovolkrule. Having low pensions due to low incomes, Bad health service due to low wages which reflect into low amount of paid insurance.
Slaves of the corporations for a pittance. The heterononomy of ends, not so much, or planned pool of low skilled labour doing cheap parts. The freedom and left party dream….
As for the solutions, MMT, or Ellen Brown last post, or Fiscal Credit Money or, a new Maastricht treaty. Which, just a few days ago ,Slovenia opposed to. So, no pooling of debt.
Eat what you get.
The new finance minister said he is very much against the »Helicopter squandering«. His curricula supports him.
So, they tell Witchdoctor they are progressive, but they are more right wing than Ben Bernanke. Holy cow, what a fun is the 21st century collapse!