THE PSYCHOLOGIST : Labor is gearing up to go negative on housing investors

Labor is gearing up to go negative on housing investors

"Negative gearing" enables well-off people to transform more income into capital than might otherwise have been possible. And anything that rich people do is automtically suspect to Leftists.

I used negtive gearing in my time so I know exactly what it is and does. And a major effect of it is to REDUCE rents. By using other income to subsidize my property investments, I was able to accept rents that were too low to cover my mortgages and other debts.

But lower rents seem to be bad if a landlord gets some benefit out of that apparently

It’s a matter of when, and not if, Labor goes after negative gearing.

And it is the “why” that informs this view.

Labor has been historically hostile to negative gearing, and there is no evidence it has collectively changed this view.

On the contrary, the caucus is pushing hard for it.

Voters may have rejected it twice – in 2016 and 2019 when Labor first put its abolition on the table – but that hasn’t softened the party’s devotion to the principle.

Politics has remained the obstacle.

What has changed is the pressure union-dominated industry super funds have been recently applying. The industry super funds are desperate to get their claws into rental stock as a private asset class.

The best way to do that is to get mum and dad investors out of the picture.

If anything, Anthony Albanese and Jim Chalmers’ weasel words over the past week have strengthened the view that Labor is tilling the soil again to have another crack at it, at some point.

The Treasurer’s view on it is implicit in his thesis for the remaking of capitalism. He has made it his mission to leverage the wealth of superannuation to deliver on his remodelling of the economy and its institutions.

Housing is a key part of it. And having union-dominated super funds control the rental stock of the nation – which is 30 per cent of the market – fits neatly into this ideological model.

Industry funds are salivating over it because of the low-risk high-yield equation. As a private asset class, the valuations can also be manipulated.

Corporatising rental stock – quasi-nationalisation – has an obvious political attraction for Labor. The party has held a long-term aversion to mum and dad property investors, a lot of whom wouldn’t vote Labor.

The Greens understand the significance of this. It is less clear, however, why some teal independents – whose constituents are over-represented as wealthy property investors – are supportive.

Either way, this is an issue that will be revisited by Labor at some stage. This is almost a certainty.

Little that has been said over the past week should offer anyone any confidence that Albanese and Chalmers haven’t been working up options.

A question is whether it would be grandfathered – as was Bill Shorten’s model.

It is impossible to see how it could be done otherwise without forced divestiture. This would be insanity.

Grandfathering, however, produces questionable revenue gains for the government.

The motivation runs far deeper and is inherently more ideological. Labor’s inspiration is for a new class of public housing for renters. Under its model, the industry super funds would own the housing stock.

Why the Albanese government would be considering negative gearing changes in the middle of a supply crisis is confounding to industry experts.

The Henry tax review – commissioned by Wayne Swan as treasurer when Chalmers was working for him – was clear about this. It warned against any changes to taxes on housing until the supply issue was solved.

Abolishing or curbing negative gearing is an effective increase in housing tax. And if you tax something, you get less of it.

If Albanese’s aim is to not see a further two promises broken, its difficult to understand why Labor would be contemplating negative gearing changes as it seeks to build 1.2 million homes in five years.

The retail politics of negative gearing are simultaneously crude and complex. Labor seeks to sympathise with first-home buyers, using the argument that young families shouldn’t have to compete at an auction with a foreign investor or a plumber seeking to buy a 10th property.

This argument becomes impossible to sustain if the alternative is that a first-home buyer instead must compete with a pension fund seeking to buy its 10,000th home.

In the context that government on Monday reduced tax on foreign investors to help facilitate Labor’s build to rent model, which has produced close to zero new homes, it would be inconceivable they would be seeking to increase taxes on mum and dad investors.

https://www.theaustralian.com.au/nation/politics/labor-is-gearing-up-to-go-negative-on-housing-investors/news-story/d46cc77b9f793454b66188c6f0f1bf8e

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Background

The essence of conservatism is caution. The essence of Leftism is anger

This blog is written solely by John Ray, who has a Ph.D. degree in psychology and 200+ papers published in the academic journals of the social sciences. It does occasionally comment on issues in psychology but is mainly aimed at giving a conservative psychologist's view on a broad range of topics. There are very few conservative psychologists.

The blog originated in Australia and many (but not most) posts discuss Australian matters. Australians have an unusually good awareness of events outside their own country. Australian newspapers feature news from Britain and the USA not as an afterthought but as a major part of their coverage. So Australians do tend to have a truly Western heart, which is the reason behind the old name for this blog. So events in Australia, Britain and the USA all feature frequently here, plus occasional coverage of other places, particularly Israel.

A primer in American politics for non-Americans:

SCOTUS is the Supreme Court of the United States, the highest court in the land

The "GOP" stands for "Grand Old Party" and refers to the Republican party. The GOP is at present center/Right, while the Democrats have been undergoing a steady drift Leftwards and now have policies similar to mainstream European Leftist parties.

The ideological identity of both parties has however been very fluid -- almost reversing itself over time. In the mid 19th century, the GOP was the party of big government and concern for minorities while the Democrats advertised themselves as "The party of the white man" -- an orientation that lasted into the mid 20th century in the South. The Democrats are still obsessed with race but have now flipped into support for discrimination AGAINST whites.

Was Pope Urban VIII the first Warmist? Below we see him refusing to look through Galileo's telescope. People tend to refuse to consider evidence— if what they might discover contradicts what they believe.

Global warming

Calibrated in whole degrees. Larger graph here

Climate scientist Lennart Bengtsson said. “The warming we have had the last 100 years is so small that if we didn’t have meteorologists and climatologists to measure it we wouldn’t have noticed it at all.”

The term "Fascism" is mostly used by the Left as a brainless term of abuse. But when they do make a serious attempt to define it, they produce very complex and elaborate definitions -- e.g. here and here. In fact, Fascism is simply extreme socialism plus nationalism. But great gyrations are needed to avoid mentioning the first part of that recipe, of course.

Two examples of Leftist racism below (much more here and here):

Beatrice Webb, a founder of the London School of Economics and the Fabian Society, and married to a Labour MP, mused in 1922 on whether when English children were "dying from lack of milk", one should extend "the charitable impulse" to Russian and Chinese children who, if saved this year, might anyway die next. Besides, she continued, there was "the larger question of whether those races are desirable inhabitants" and "obviously" one wouldn't "spend one's available income" on "a Central African negro".

Hugh Dalton, offered the Colonial Office during Attlee's 1945-51 Labour government, turned it down because "I had a horrid vision of pullulating, poverty stricken, diseased nigger communities, for whom one can do nothing in the short run and who, the more one tries to help them, are querulous and ungrateful."

Defensible and indefensible usages of the term "racism"

The book, The authoritarian personality, authored by T.W. Adorno et al. in 1950, has been massively popular among psychologists. It claims that a set of ideas that were popular in the "Progressive"-dominated America of the prewar era were "authoritarian". Leftist regimes always are authoritarian so that claim was not a big problem. What was quite amazing however is that Adorno et al. identified such ideas as "conservative". They were in fact simply popular ideas of the day but ones that had been most heavily promoted by the Left right up until the then-recent WWII. See here for details of prewar "Progressive" thinking.

R.I.P. Augusto Pinochet. Pinochet deposed a law-defying Marxist President at the express and desperate invitation of the Chilean parliament. He pioneered the free-market reforms which Reagan and Thatcher later unleashed to world-changing effect. That he used far-Leftist methods to suppress far-Leftist violence is reasonable if not ideal. The Leftist view that they should have a monopoly of violence and that others should follow the law is a total absurdity which shows only that their hate overcomes their reason

Franklin Delano Roosevelt was a war criminal. Both British and American codebreakers had cracked the Japanese naval code so FDR knew what was coming at Pearl Harbor. But for his own political reasons he warned no-one there. So responsibility for the civilian and military deaths at Pearl Harbor lies with FDR as well as with the Japanese. The huge firepower available at Pearl Harbor, both aboard ship and on land, could have largely neutered the attack. Can you imagine 8 battleships and various lesser craft firing all their AA batteries as the Japanese came in? The Japanese naval airforce would have been annihilated and the war would have been over before it began.

FDR prolonged the Depression. He certainly didn't cure it.

WWII did NOT end the Great Depression. It just concealed it. It in fact made living standards worse

Joe McCarthy was eventually proved right after the fall of the Soviet Union. To accuse anyone of McCarthyism is to accuse them of accuracy!

The KKK was intimately associated with the Democratic party. They ATTACKED Republicans!

People who mention differences in black vs. white IQ are these days almost universally howled down and subjected to the most extreme abuse. I am a psychometrician, however, so I feel obliged to defend the scientific truth of the matter:

The average African adult has about the same IQ as an average white 11-year-old and African Americans (who are partly white in ancestry) average out at a mental age of 14. The American Psychological Association is generally Left-leaning but it is the world's most prestigious body of academic psychologists. And even they have had to concede that sort of gap (one SD) in black vs. white average IQ. 11-year olds can do a lot of things but they also have their limits and there are times when such limits need to be allowed for.

America's uncivil war was caused by trade protectionism. The slavery issue was just camouflage, as Abraham Lincoln himself admitted. See also here

Did William Zantzinger kill poor Hattie Carroll?

Did Bismarck predict where WWI would start or was it just a "free" translation by Churchill?

Leftist psychologists have an amusingly simplistic conception of military organizations and military men. They seem to base it on occasions they have seen troops marching together on parade rather than any real knowledge of military men and the military life. They think that military men are "rigid" -- automatons who are unable to adjust to new challenges or think for themselves. What is incomprehensible to them is that being kadaver gehorsam (to use the extreme Prussian term for following orders) actually requires great flexibility -- enough flexibility to put your own ideas and wishes aside and do something very difficult. Ask any soldier if all commands are easy to obey.

A good article on Leftist hate

The real history of social Darwinism

Some personal memoirs

Memoir highlights

THE PSYCHOLOGIST

Labor is gearing up to go negative on housing investors

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