Brian Lenihan blames euro and Eastern cheap labour for recession

asdasd

The Economist. I dont need these tutorials on correlation and causation. I understand. Well done on getting that off you chest a few times.

Your claim that Immigration reduces wages is not the same as the claim that immigration reduces inflation because other factors caused, or amplified, by immigration could swamp the reduction in wages - and those reductions would be localized to a minority of workers anyway.

I gave two examples why reductions in wage inflation, caused by immigration, would not reduce overall inflation.

1) There is a limitied supply of retail space. With larger footfall the landlords push up rent. Increasing populations would have this effect ( basic Riccardo). This wipes out the moderation of wages.
2) More speculatively i asked would a boom be fueled more by a 10% in wages across the board, or by 10% more people working at the same wages. The latter would be more inflationary if the former lead to more saving because people had more money.

There were other factors pushing inflation. Immigration on its own probably did not moderate at all.

I think 1 is very significant.

EDIT: Even in the abscence of a landlord class, 1) could just mean increase in profits. If wages are falling or static, but footfall and demand is way up on your best place on Grafton street it makes sense to make hay while the sun shines and take the profit. What didnt happen was a fall in prices.

Time Magazine

I give up.

dresden8

djpbarry wrote: »

Really?
Makes sense to me.

Yes, if you were trying to force him to make accusations against a named company whereas he was talking generally.

dresden8

The Economist wrote: »

I give up.

Good, vote no.

sink

asdasd wrote: »

1) There is a limitied supply of retail space. With larger footfall the landlords push up rent. Increasing populations would have this effect ( basic Riccardo). This wipes out the moderation of wages.

I'm sorry but that has little resemblance to reality. We just had a construction boom/bubble and the amount of retail space soared along with residential space. In the past decade shopping centres popped up in virtually every town across the country.

asdasd

I give up.

You lose. Because your strawman argument collapses.

You cant actually answer simple questions. So not being able to parrot the correlation. causation line - when given an example of cause - you avoid the issue.

I know that correlation is not causation. I have a maths degree. Well done on the economic "scientists" in coming to that simple piece of logic.

Now, answer my two questions where I clearly gave a potential cause for inflation caused by increases in population.

Both could be wrong: Neither are arguments from correlation.

asdasd

We just had a construction boom/bubble and the amount of retail space soared along with residential space. Shopping centres popped up in virtually every town across the country in the past decade.

Not much happened in terms of retail space in Dublin City centre. And pubs and restauant licences remained static. Prices increased in all of these areas.

I could do this though experiment more simply - it seems necessary.

A shop in 2004 has seen increasing wages. After 2004 wages stagnate. The shop continues to push up prices from 2004 - 2008. Why? Is it just taking profit?

Any reference to external influences ( Oil prices) should explain why this did not effect prices in Germany. If it wasn't universal through the Euro Zone it doesnt count.

molloyjh

airhorn wrote: »

In the town where i live 1200 people on the dole, one of the 3 factorys in the town employs 300 Brazilians of of a total 380 people,

Any of ye pro immagrant people like to post ye'r views on that one ?????

Is there a valid reason that those Brazilians should not be employed there? I mean a valid one now, the fact that they are Brazilian is inconsequential.

sink

asdasd wrote: »

Not much happened in terms of retail space in Dublin City centre. And pubs and restauant licences remained static. Prices increased in all of these areas.

I could do this though experiment more simply - it seems necessary.

A shop in 2004 has seen increasing wages. After 2004 wages stagnate. The shop continues to push up prices from 2004 - 2008. Why? Is it just taking profit?

Any reference to external influences ( Oil prices) should explain why this did not effect prices in Germany. If it wasn't universal through the Euro Zone it doesnt count.

You really think it was eastern European immigrants who pushed up and over inflated the demand for retail space in Dublin city centre and not property speculators and massive high street chains who were pursuing expansion which turned out to be unsustainable. It wasn't billionaire business men riding a wave of increased disposable income amongst Ireland's middle classes who were willing to pay €500,000 a year rents for prime retail space, it was in fact the Lithuanian clearer who earned €20,000 a year and shared a flat with 6 other people and sent most of her money home to support her family. She's obviously the one who splashed out €1000 on designer dresses in BT's and Arnotts followed by €8 coffees in Butlers chocolate cafe and spent €200 on her hair in peter mark's.

djpbarry

dresden8 wrote: »

Yes, if you were trying to force him to make accusations against a named company whereas he was talking generally.

(S)he wasn't speaking generally - (s)he specifically mentioned Irish Ferries.

dresden8

djpbarry wrote: »

(S)he wasn't speaking generally - (s)he specifically mentioned Irish Ferries.

In the point you quoted s/he said there was a danger of it happening and specifically went onto mention the restaurant sector. No mention of Irish Ferries in that post.

Scofflaw

asdasd wrote: »

Not much happened in terms of retail space in Dublin City centre. And pubs and restauant licences remained static. Prices increased in all of these areas.

I could do this though experiment more simply - it seems necessary.

A shop in 2004 has seen increasing wages. After 2004 wages stagnate. The shop continues to push up prices from 2004 - 2008. Why? Is it just taking profit?

Any reference to external influences ( Oil prices) should explain why this did not effect prices in Germany. If it wasn't universal through the Euro Zone it doesnt count.

Rent rises may have had something to do with it.

It all comes back to property - in Ireland, at least.

cordially,
Scofflaw

Tchaikovsky

Interesting to read these quotes in hindsight, and how each politician quoted is still in a job.

QUOTES ON EAST EUROPEAN IMMIGRATION FROM THE 2002 NICE TREATY REFERENDUM:

" There is no reason to believe ... that large numbers of workers will
wish to come" [Minister for Europe Dick Roche, I.T. Letters, 12/7/2002 ]

_______

"Mr. X also repeats the line propagated by the No to Nice campaign that
only four countries are to permit immigration after enlargement. This
statement grossly misrepresents the position of the other member states."
[Dick Roche, I.T.Letters, Aug/Sept. 2002]

_______

"Ireland will be in precisely the same position as all other member states
on the question of free movement following any enlargement of the
Community." [Dick Roche, as reported in the Irish Times, September 2002)

__________

"It is the view of the Irish Government and a number of other governments
that this idea that there is going to be a huge influx of immigrants is
just not supported. The evidence is just not there for it. They are not
going to flood to the west. The same rules are going to apply in all 15
states. There is no evidence to suggest that the people of the Czech
Republic or Poland are less anxious to stay in their home as (sic) we are.
[ Dick Roche, transcript of interview with The Irish Catholic, 19/9/2002.]

___________

" It is a deliberate misrepresentation to suggest that tens of thousands
will suddenly descend en masse on Ireland." [Proinsias De Rossa, I.T.
Letters, 20/8/2002 ]

____________

" The expected trickle of immigration to Ireland will on balance benefit the
Irish economy." [P. De Rossa, I.T. Letters,20/8/2002

___________

" I estimate that fewer than 2,000 will choose our distant shores each
year." [P.De Rossa, I.T. Letters, 20/8/2002 ]

____________

"There is no evidence there would be a problem with free movement of
workers on accession." [Taoiseach Bertie Ahern, Dail Eireann,10/9/2002 ]

____________

"Efforts have been made to foment fears that migrants from the new member
states could flock to Ireland. This is not only unpleasant but plainly
wrong." [Brian Cowen, Sunday Business Post, 7/7/2002 ]

____________

"Ireland is already benefiting from the skills and energy of workers from
the applicant states, about 7,000 of whom received work permits last year.
There is no basis whatever for expecting a huge upsurge in these numbers."
[Brian Cowen, Sunday Business Post, 7/7/2002 ]

---

" The second myth is that the Nice Treaty will mean mass immigration from
the new EU member countries in Eastern Europe. This is probably the most
odious of the myths propagated by some in the "No" campaign." [Minister
Willie O'Dea, Sunday Independent,Summer 2002]

Martin 2

The immigration discussion is taking its oh so predictable path so I hope people don’t mind if I bring the thread back to the Euro, if just to diffuse some of the anger.
I’m going put forward a more folksy reason why we won’t drop the euro and I know before posting this it’s going to get me a lot of heat.

I remember we were so proud when we met the euro criteria and then we boasted about how we were one of the fastest countries in Europe to make the euro changeover; we never felt the same attachment to the Punt that the Germans felt to the D-Mark or the French to the Franc. For the first time in our history we had something tangible that connected us with the rest of Europe, that gave us a sense of belonging to the European family, the coins in our pockets were the same as those in the pockets of the Germans, the French, the Luxembourgers, the Italians etc. It simplified travel within the EU, we didn’t have to book our foreign currency in advance, we didn’t have to do mental arithmetic. Germans wanted to swap their Euros for ours so that their children would have another euro coin to add to their collections of lesser known euros; it’s nice to occasionally find a coin from Luxembourg or the Netherlands, sometimes we just keep it that little bit longer. The fact is we’ve become attached to the Euro, we don’t want to go back to the punt, we don’t want to go searching behind chairs and sofas, under beds and wardrobes looking for stray coins and then queue outside the bank to exchange them back into punts, that’s the past. Sure there are problems with interest rates but the government has to put fiscal control tools in place, other countries can do it and so can we because we’re not going back and we all know it.

Do you remember the free calculator that every household got from the Euro Changeover Board, with its big blue buttons and yellow letters and the two yellow buttons at the top, one to convert to euros and one to Irish pounds. I’ve got one in front me now and believe it or not the battery still works, 1 pound = 1.27 euros, 1 Euro = 0.79 pounds.

Martin.

Tchaikovsky

I'd love to know how much we were really ripped-off when prices changed from punts to euros

Martin 2

Tchaikovsky wrote: »

I'd love to know how much we were really ripped-off when prices changed from punts to euros

there was that of course, it's because we didn't bring our Euro calculators around with us

Zuiderzee

djpbarry wrote: »

Are Irish Ferries exploiting workers at this point in time?

Minimum wage, short term contracts, no retirement contributions, limited further training opportunities, less leave for time served etc. In comparison with what had been hard won over years by Irish workers, yes.

Shipping is a race to the bottom at this stage.

sink

Zuiderzee wrote: »

Minimum wage, short term contracts, no retirement contributions, limited further training opportunities, less leave for time served etc. In comparison with what had been hard won over years by Irish workers, yes.

Shipping is a race to the bottom at this stage.

People forget there would be no Irish ferries if they hadn't taken drastic action and nobody would have a job.

P. Breathnach

Zuiderzee wrote: »

Minimum wage, short term contracts, no retirement contributions, limited further training opportunities, less leave for time served etc. In comparison with what had been hard won over years by Irish workers, yes.

I think they get less than minimum wage -- thay are not subject to Irish labour law. Very short contracts without holiday entitlements. Long hours.

Shipping is a race to the bottom at this stage.

Perhaps not the best metaphor.

P. Breathnach

sink wrote: »

People forget there would be no Irish ferries if they hadn't taken drastic action and nobody would have a job.

Other operators can manage.

View

Martin 2 wrote: »

there was that of course, it's because we didn't bring our Euro calculators around with us

More like, we didn't use our brains. I remember being in one store in Dublin, where unusually an item of children's clothing had a MRSP (Manufacturer's Recommended Selling Price) on it in 5 currencies (Euro, Sterling, Swiss Francs, Danish and Swedish Kronor). The MRSP in Euro was 20 Euro if I remember correctly. The store price on it was 32 Euro and it did't even cover the MRSP price.

It was a nice item and in the time I was there I saw several people just pick it up and buy it without checking the price. I was astonished that no one spotted the price difference. So astonished, that I took the item to the cash desk and pointed it out only to receive the explanation about the MRSP "Ah, that's the price in the other Euro countries, not in Ireland", all said without even the slightest embarrasment.

For the record, I did not purchase the item.

P. Breathnach

View wrote: »

... For the record, I did not purchase the item.

You would have undermined the point of your post if you had said otherwise.

A lack of attention to prices in some areas was a characteristic of the Celtic Tomcat (RIP).

djpbarry

Zuiderzee wrote: »

Minimum wage, short term contracts, no retirement contributions, limited further training opportunities, less leave for time served etc. In comparison with what had been hard won over years by Irish workers, yes.

Were these revisions not agreed with trade union representatives? Are businesses not allowed to engage in cost-cutting exercises?

Zuiderzee wrote: »

Shipping is a race to the bottom at this stage.

Would that have anything to do with declining passenger numbers?

djpbarry

P. Breathnach wrote: »

I think they get less than minimum wage -- thay are not subject to Irish labour law.

They must be subject to EU law?

P. Breathnach wrote: »

Other operators can manage.

Can they? I would have thought the whole industry is struggling to compete with the aviation sector. In fact, I’d imagine freight is the only thing that’s propping up many ferry operators, which is likely to take a hit in the current economic climate.

solice

djpbarry wrote: »

They must be subject to EU law?

I think the company is registered somewhere out East where minimum wage is a lot less than in Ireland so they only have to pay them the minimum from that country...?

Is this another reason why we should reduce our minimum wage?

Zuiderzee

djpbarry wrote: »

Suppose the cheaper workers were Irish; would that be ok?
I’m not nit-picking, I’m challenging this ridiculous idea that any company that hires “cheap”, foreign employees is inherently evil.

Suppose I require a plumber. Suppose that there are two plumbers available to me. Suppose plumber ‘A’ wants to charge me €250 for the job and plumber ‘B’ is prepared to do the job for €200. If I hire plumber ‘B’, am I guilty of exploitation?

No, thats the market.

However, if you import plumber Tovarich C to replace Mr's A&B - pay him €20, and unlike Mr A and Herr B, do not need to observe employment regulations in Ireland because you put a flag on the roof and say you are now part of Liberia - even though you or your house will never go there, or pay tax there

In the case of Mr C - unlike A&B you do not pay PRSI, medical insurance, pension contribution, provide a stable contract or a contract from inside the EU for that matter, that you bar Mr C from joining a Union, ban him on threat of dsmissal from contacting authorities with regards to unsafe practices or excessive hours of work - you blacklist him if he does, deduct from his wages the cost of his safety working gear etc. and if he is let go for any reason of your chosing, like being replaced by Mr D or poor C needs to go home for an emergency you deduct his travel costs, and the cost of his replacement from wages that you hold until the end of his contract then, yes, you are exploiting him.

djpbarry

Zuiderzee wrote: »

However, if you import plumber Tovarich C to replace Mr's A&B - pay him €20, and unlike Mr A and Herr B, do not need to observe employment regulations in Ireland because you put a flag on the roof and say you are now part of Liberia…

Which is meaningless, because I’m still based in Ireland and, as such, am subject to Irish (and EU) employment law.

So, to summarise, as long as I obey the law, then nobody is being exploited? Because that was pretty much the point I was trying to make.

professore

asdasd wrote: »

Oh for FFS. We are talking about the clear increases in inflation in every single economy when immigration is running full tilt. The rest of your argument is a Just So story. Inflation has now fallen, along with immigration.

Correlation is not causation, but your claim - that inflation is higher without immigration - has been disproven because negative correlation precludes causation. Clearly wage inflation has little effect on inflation these days.

Try not to lecture me on this. Again. And read my post. Even if wage inflation decreased during the time of immigration, inflaition increased. I gave two mechanisms. The other mechanisms you gave ( price of oil etc.) are disconnected with immigration, and can be ruled out.

what we know is, in ireland, the UK, the US etc. - high levels of immigration are correlatative with high inflation. If immigration casues wage deflation, the that high level of inflation makes the working classes even poorer than they would otherwise be.

The main cause of inflation in the boom was that the country was awash with credit and therefore money. This attracted immigrants. Now there is no credit, therefore less money, therefore less immigrants, hence deflation.

asdasd wrote: »

Correlation is not causation, but your claim - that inflation is higher without immigration - has been disproven because negative correlation precludes causation.

That's quite a mouthful there - if I get the gist of what you are saying, positive correlation does not necessarily prove anything but negative correlation does ???? Interesting.

professore

solice wrote: »

I think the company is registered somewhere out East where minimum wage is a lot less than in Ireland so they only have to pay them the minimum from that country...?

Is this another reason why we should reduce our minimum wage?

Only if we reduce the price of everything else to match.

PopeBuckfastXVI

professore wrote: »

Only if we reduce the price of everything else to match.

Bit of a chicken and egg scenario unfortunately, merchants will charge what they think the market will bear...