Voters have come to believe that their interest lies in lowering property taxes, not raising them. Homes are the major asset for most households, and real estate remains the economy’s largest asset. Land is still its largest component – and some 80 percent of “capital” gains in the U.S. economy are land-price gains Site values are increased by public investment in streets, water and sewer facilities and transportation hubs, in school systems, by zoning restrictions, by the general level of prosperity, and most of all, by whatever bankers will lend.
Landed aristocracies no longer dominate the political system, yet fiscal favoritism for real estate has never been stronger, precisely because property ownership has been democratized – on credit. Real estate accounts for some 70 percent of bank lending in Britain and the United States, making it by far the major market for bank loans, not industry and commerce as anticipated a century ago. This explains why the financial sector now stands behind real estate interests as their major lobbyist for property tax cuts. Mortgage interest now absorbs most of the land’s “free” rental value, which is capitalized into debt overhead rather than serving as the tax base.
When such growth culminates in financial wreckage, banks demand public bailouts. They claim that this is necessary to enable them to resume lending. But they will not lend more against property already so deeply indebted that it remains in negative equity. Hoping to turn the crisis into an opportunity for further financial incursions into the industrial economy, bank lobbyists propose that governments help indebted homeowners and real estate investors avoid default by cutting property taxes yet further – shifting the fiscal burden yet more onto labor and non-financial business.
Under such conditions fortunes are made most readily not by industrial capital formation but by indebting industry, real estate, labor and governments, siphoning off the economic surplus in interest, other financial fees, bonuses, and “capital” gains. Populations willingly go into debt as it appears that gains can be made most easily by buying real estate and other assets on credit – as long as asset prices rise at a pace higher than the rate of interest.
Meanwhile, the largest sellers of stocks have been managers and venture capitalists “cashing out” by selling into a market fueled mainly by labor’s wage set-asides. Pension funds thus turn out to play a key role in enabling finance capitalists to realize their gains – only to be their fate to be left holding an empty bag in the end. Selling off stocks to pay retirees creates an outflow of funds from the stock market that reverses the initial price run-up.
Undergraduate majors control a $250,000+ stock portfolio through a , learning to make critical investment decisions in volatile markets; receive advice from professionals in the finance industry; and are provided with the skills and knowledge to value cash flows and assets, analyze the financial performance of firms, determine strategies to enhance the value of a firm, and understand financial innovations in domestic and international capital markets.
Finance deals with the exchange of assets over time: the pricing of assets, which projects firms undertake, how those projects are funded, appropriate investment strategies by individuals and institutions, how domestic and international financial markets work, and the governance of those who make financial decisions.
“Research at the intersection of economics and international affairs in developing countries is a new and very active field with many open questions. I deal with real-life issues that affect millions of people every single day, for example with whether India’s very ambitious anti-poverty schemes work in practice and where the challenges lie. This means that my research is not only purely academic, but also has policy implications that can serve as information for governments and institutions such as the World Bank. I have presented my work at workshops that bring together politicians, government program beneficiaries, NGOs and academics, which have been incredible for the exchange of ideas.”
Finance at UGA is consistently one of the largest majors on campus and the largest major in the Terry College of Business. The B.B.A. delivers an education on the theory and use of financial analysis, combining course work in financial management, investment analysis, financial institutions and markets, international finance, mergers and acquisitions, trading strategy, financial models, derivatives, and corporate finance. (Refer to the Pre-Business major for information on applying.)
Society therefore faces a choice between (1) saving the economy, by writing down debts to the ability to carry without stripping the economy; and (2) saving the financial sector, trying to preserve the fiction that debts growing at compound interest can be paid. For pensions and other public programs, for example, this means a choice between (1) paying them on a pay-as-you-go basis, out of the “real” economic surplus; and (2) the fictitious assumption that funds can earn annual returns of 8 percent or more to provide for labor’s retirement by asset-price inflation fueled by debt leveraging and purely financial maneuvering (M-M’).
Financial lobbyists have led a regressive about-face toward an economic Counter-Enlightenment. Reversing an eight-century tendency to favor debtors, the bankruptcy laws have been rewritten along creditor-oriented lines by banks, credit-card companies and other financial institutions, and put into the hands of politicians in what best may be called a financialized democracy – or as the ancients called it, oligarchy. Shifting the tax burden onto labor while using government revenue and new debt creation to bail out the banking sector has polarized the U.S. economy to the most extreme degree since statistics began to be collected.
What is irrational in this policy is the impossibility of achieving compound interest in a “real” economy whose productivity is being eroded by the expanding financial overhead raking off a rising share. Meanwhile, a fiscal sleight-of-hand has taken Social Security and Medicare out of the general budget and treated them as “user fees” rather than entitlements.