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Why do people think austerity measures will work?
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Or, they could have used that money for welfare and not anglo-irish. I'm sure you're not happy with that either, but it doesn't seem to bother you as much since it doesn't give you an opportunity to be a dick to poor people.
I suspect and you can correct me if i'm wrong but do you know where the money comes from?
Secondly what happens when the 20-30bn gone into Anglo runs out?
Do you understand that that is about one years welfare?0 -
I find it hard to take austerity measures from brian cowan now when he was throwing money about him like confetti during his reign as finance minister. A new government would be a different story.
Particularly when he is still one of the highest paid leaders in the western world.
I suggest you review the comments from the opposition parities at the time as they were complaining the Govt wasn't spending enough
A different Government has to face the same realities. To be fair FG have advanced some real policies, unlike their potential bed fellows in Labour who are against everything and avoid any real policies on anything0 -
I cant see how there is an argument to be made against austerity measures. USA is showing the world that you cant spend your way out of recession. Their economic situation hasnt changed even after spending billions on stimulus packages. It seems they are headed for a 'double dip' recession. We have to cut back and try and balance the books as best as possible. We are currently borrowing €20bn a year, if we continue to do so we will not be able to pay it back. How do people think your economy will ever recover if our national income cant even cover the interest on our loans?0
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Join Date:Posts: 13651
What exactly do you mean by austerity measures working? Do you mean (1) will they work to reduce the deficit or do you mean they (2) will work to get us out of recession or do you mean (3) will they work to keep Ireland from becoming bankrupt and bailed out like Greece?
(1) - maybe, but not as much as they should. The problem is that we are running a deficit of over 20bn per year (up to 14% of our GDP). Each 20bn of a deficit has to be financed with borrowed money. Interest rates on Irish debt are currently averaging 3.6% but this is on short term bonds - a more permanent solution would cost approximately 5.68% for a 10 year bond. Let's say that the deficit is exactly 20bn for 2010. So to borrow this 20bn will cost between €700m and €1.1bn to finance this year. We will run the same deficit next year (2011) with cuts of c. 3bn which means that the cost of financing these two deficits increases to 1.5-2bn and the deficit is reduced to 18.5-19bn.
Now, let's look at 2012, or the year in which we were supposed to have our deficit back to 3% of GDP. We haven't been given any clear idea of what budget 2012 will look like, but several indicators suggest that it will have no further cuts or tax increases. Why? Well first and foremost 2012 is election year so the message to be put out will be that everything is fine, the country is now sorted, and no more cuts will be made. Also, the government's projection for cuts was 4bn in 2010, 3bn in 2011 and minor cuts from thereon. Their proposal to return to 3% debt/GDP was based predominantly on a rise in GDP, a rise in tax revenues and a dramatic fall in the numbers unemployed.
So what happens if we don't make any cuts or tax increases in 2012? Well, the deficit which we worked so hard to reduce to 18.5-19bn has been running for 3 years now and will add 58.5-60bn to our national debt. Let's allow for interest rates to drop to 3% short term and 5% long term. That's 1.7-3bn in extra interest that we will have to pay (nevermind principal repayments). So that reduced deficit of 18.5-19bn in 2012 will have increased back to 20.2-22bn by the year's end. At that point, we will be running to stand still. We would need to make 1.7-3bn in cuts just to keep the deficit at the same level - any less than that and we would be increasing our budget.
So, by the looks of it and the cost of financing, our measures to cut the deficit are too late and too small to have any significant impact. The cuts and increases in tax will not in themselves bring the deficit back into line, and the government in relying on some massive boost to GDP, taxes and employment that comes from some mysterious new green technology or some other thing. But those things will not just automatically happen.
(2) will they work to get us out of recession? Not directly, but to a certain extent they will have a big indirect impact. They will show that Ireland is serious about it's economy and that encourages investment. Likewise, any cuts which improve our competitiveness by, for example, getting more people into gainful employment will directly work to get us out of recession. Finally, the current spending is already putting a stimulous of c. 20-25bn per year into the economy. That is to say, c. 35bn of government spending is from taxes so it is just redistributed, but the other 20-25bn is borrowed and pumped into the economy by means of bank bailouts, social welfare spending (note that while rates were dropped in 2010, up to that point they were increased as pointed out by donegalfella, but also the numbers have increased thus it is a greater government stimulous) and other government spending. This is helping to artificially prop up GDP.
(3) will they work to prevent Ireland becoming bankrupt and bailed out? Well it's not entirely clear and while I have had my doubts, the international media has trumpted Ireland as a great success. However, I am not so sure that this directly translates into investor confidence in Ireland, nor do I think that investors are so naieve as to think "Ah sure, look at Brian Lenihan, isn't he a grand man" and just give us the money without looking further into it.
So the current austerity programme will NOT work to fix the budget or the economy and it is not certain whether it will stave off soverign default.
Your point in the body of the OP is a bit different - you make the point that cuts only decrease domestic consumption. This is true. But, as I'm sure you're aware, making cuts and decreasing income tax is not "taking money out of the economy" it is simply putting less money in. I think it is quite clear that the levels of domestic consumption in Ireland have been excessively high over the last few years, and the cost of living has risen disproportionately to how well our economy was actually doing.
Now, it has already been pointed out that our social welfare is 3 times what it is in England, despite the fact that London has a higher cost of living than Dublin. I'm not going to repeat those arguments. But I think you are confusing cause and effect. It is not that higher cost of living results in higher social welfare, it is that higher social welfare increases the cost of living.
Finally, just to make it absolutely clear to you, our projected tax take for 2010 is roughly 12bn income tax, 10.5bn VAT, 4.7bn customs and excise, 3bn corporation tax, under 1bn for stamp duties and 0.5bn for capital gains/aquisitions. The social welfare bill is estimated in the region of 21bn and our taxes are c. 1.4% belowe estimates. We are heading for a very real situation where SW is 22bn and income tax and VAT combined are 22bn. Think about that for a minute. It means that social welfare takes up all of our two biggest taxation sources in their entirity. All the taxes you pay on work, goods and services goes directly to social welfare. Not to schools, not to hospitals etc, but to subsidise people who do not work. It also leaves the rest of the entire government with a rather paltry 9bn and shrinking to pay for, well, for everything else.
So the current levels of budget deficit really are unusutainable. A 14% deficit is madness, made even madder when the bank recaps and nama money is put in, and madder still when you compare it to GNP, a better measure of the domestic economy.
Now, do I want to see people on the dole getting less? No, of course not. But is it necessary? Yes, I'm afraid we have no choice. There have to be spending cuts and social welfare is one of the better places to make those cuts.
On a final note, I dislike the phrases used such as "the poor can't pay" or why do those on social welfare have to foot the bill etc. But they are not being asked to pay anything. Social welfare is a mandatory form of alms which passes money, like a charitable donation, from the richer members of society to the poorer ones. We are not asking people on social welfare to pay, we are asking them to accept less from us.donegalfella wrote: »This post has been deleted.
Em, IKEA?0 -
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Join Date:Posts: 13651
Count Dooku wrote: »IKEA was founded in 1943
http://en.wikipedia.org/wiki/IKEA
Yep. Welfare state started in Sweden in 19th century.0 -
Good post JohnnySkeleton.
It's hard to add to the debate here, as it has all been said already. "Austerity measures" will work in the sense that we cannot keep borrowing to fund the state. I say that not as though we have a choice, but eventually we will not be able to as nobody will lend to us.
Someone mentioned previously about leaving the euro, and devaluing our currency. If people are worried about the debt we have built up now, how do you think it will look if we did this?0 -
donegalfella wrote: »This post has been deleted.
Rent would also be lower if landlords and estate agents weren't largely cowboy businessmen.
rents (private) would be lower if we did not have an idiotic goverment paying up to e1200 + per month in rent subsidy0 -
I suggest you review the comments from the opposition parities at the time as they were complaining the Govt wasn't spending enough
A different Government has to face the same realities. To be fair FG have advanced some real policies, unlike their potential bed fellows in Labour who are against everything and avoid any real policies on anything
I used to be a FF voter but lately i look at them and they disgust me.
They are still very very well paid by western standards. They had a token cut in their pay which didn't actually turn out to be as much as they tried to let on. They have no problem doling out the austerity but are not so keen of feeling its pinch themselves.
I can't accept them remaining in power and wielding the axe on ordinary people while they basicly continue as was.0 -
Rents would probably be higher if we had less "cowboy" businessmen.
How do you stop cowboys? Regulation.
What happens to regulated industries? Prices go up due to the increasing cost of meeting the regulations.
Witness child care, which used to be a "cowboy" industry, but now has inspections in place and rules on caring.
In child care this regulation was essential, mainly to keep children safe, and well looked after.
But it does increase costs, not lower them, a Landlord who does maintain his property and declares all their tax, will charge more than a Landlord who doesn't.0 -
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The cowboys would likely remain, as those following the rules end up getting hit more in the pocket by remaining compliant in all areas.0
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We have more crime in Ireland now than we did ten years ago, even though welfare spending has more than tripled since 1997. How do you explain that?
Correlation does not equal causation.
Do you really think it wouldn't get even worse if there was far less money?
The welfare has recieved some small cuts, but the crime rate has not improved accordingly.
Do you really think more welfare = more crime?'m opposed to bailing out the banks, just as I am opposed to creating welfare traps for the poor.
But you are not JUST as opposed, since you moan about poor people a lot more.Believe it or not, I would like the poor to have the opportunity to work their way out of poverty—an opportunity they will never have if we keep up your policies of so-called "social justice."
I think you're just spinning things around to make a more barbaric worldview look pleasant. What if people can't work their way out of poverty? What if they need a leg up?
All your arguments are, are slogans and a general disregard for people in different situations to your own. Nothing more.Ah, yes, blame the "cowboy businessmen" now. Let's forget about those tax breaks for buy-to-let investors sponsored by your beloved state.
I didn't say I loved the state. Obviously, the state has gotten us in a lot of trouble by making poor decisions, largely because they themselves are little different to cowboy businessmen. But that doesn't mean the state should do an even worse job by slashing welfare to please jobbos such as yourself.Can you name a successful Swedish multinational that has arisen during the era of the welfare state?
"The Welfare State" in Sweden is actually older than you might think.
I'm not actually all that familiar with swedish companies, but since the 1950s or so,
Tetra-pack
Saab
Nobel Biocare(Swedish/Swiss)
H&M
Digital Illusions are a very large and successful video game developer based in Sweden.
Also, is conditions were so harsh in Sweden wouldn't that cripple existing multinationals? Or rather, cripple them before they come multinationals?
Of course Sweden is not a very large country in of itself, so it's number of multi-nationals will obviously be insignificant compared to the US.
My main point though, is that the Nordic countries don't cripple business. In fact Denmark was rated very highly in terms of ease of doing business.
Maybe you should do some more reading up on the Noridc model?
http://en.wikipedia.org/wiki/Nordic_modelOn the Index of Economic Freedom 2008, Denmark's rating is 11th highest of 162 countries (4th in Europe), Finland's 16th, and Sweden's 27th
Not bad for socialist cesspits.Tough. Social welfare is not intended to help people pay off their car loans. If people bought loads of stuff on credit during the boom years that they now can't afford, it shouldn't be up to the taxpayer to foot the bill.
That's completely irrelevant if people have no money. Do you not understand this? You like to pull the same argument with regards the state finances, but when it comes to individuals who you supposedly prefer to the state, this doesn't fly?
If people have no money as a result of debt, and get kicked out of their homes or locked up(this is happening, which is ludicrous since it's a further drain on the system) then that is bad for the economy.
It doesn't matter what it's intended for. And again you show no consideration for being in situations that aren't yours. It is still possible to get into debt while being not completely retarded with your finances. **** happens, that's one of the reason why we have these safety nets.
Saying "Tough ****" just proves you're all about the tough guy and little about the reasoning.We can't protect the welfare of the poor by running up a national debt that will cripple this country for generations. Moribund economies impact on the poor more than anyone else.
Bad economies impact the poor more than anyone else primarily because of measures such as this which are taken out on the poor people.0 -
johnnyskeleton wrote: »What exactly do you mean by austerity measures working? Do you mean (1) will they work to reduce the deficit or do you mean they (2) will work to get us out of recession or do you mean (3) will they work to keep Ireland from becoming bankrupt and bailed out like Greece?
(1) - maybe, but not as much as they should. The problem is that we are running a deficit of over 20bn per year (up to 14% of our GDP). Each 20bn of a deficit has to be financed with borrowed money. Interest rates on Irish debt are currently averaging 3.6% but this is on short term bonds - a more permanent solution would cost approximately 5.68% for a 10 year bond. Let's say that the deficit is exactly 20bn for 2010. So to borrow this 20bn will cost between €700m and €1.1bn to finance this year. We will run the same deficit next year (2011) with cuts of c. 3bn which means that the cost of financing these two deficits increases to 1.5-2bn and the deficit is reduced to 18.5-19bn.
Now, let's look at 2012, or the year in which we were supposed to have our deficit back to 3% of GDP. We haven't been given any clear idea of what budget 2012 will look like, but several indicators suggest that it will have no further cuts or tax increases. Why? Well first and foremost 2012 is election year so the message to be put out will be that everything is fine, the country is now sorted, and no more cuts will be made. Also, the government's projection for cuts was 4bn in 2010, 3bn in 2011 and minor cuts from thereon. Their proposal to return to 3% debt/GDP was based predominantly on a rise in GDP, a rise in tax revenues and a dramatic fall in the numbers unemployed.
So what happens if we don't make any cuts or tax increases in 2012? Well, the deficit which we worked so hard to reduce to 18.5-19bn has been running for 3 years now and will add 58.5-60bn to our national debt. Let's allow for interest rates to drop to 3% short term and 5% long term. That's 1.7-3bn in extra interest that we will have to pay (nevermind principal repayments). So that reduced deficit of 18.5-19bn in 2012 will have increased back to 20.2-22bn by the year's end. At that point, we will be running to stand still. We would need to make 1.7-3bn in cuts just to keep the deficit at the same level - any less than that and we would be increasing our budget.
So, by the looks of it and the cost of financing, our measures to cut the deficit are too late and too small to have any significant impact. The cuts and increases in tax will not in themselves bring the deficit back into line, and the government in relying on some massive boost to GDP, taxes and employment that comes from some mysterious new green technology or some other thing. But those things will not just automatically happen.
(2) will they work to get us out of recession? Not directly, but to a certain extent they will have a big indirect impact. They will show that Ireland is serious about it's economy and that encourages investment. Likewise, any cuts which improve our competitiveness by, for example, getting more people into gainful employment will directly work to get us out of recession. Finally, the current spending is already putting a stimulous of c. 20-25bn per year into the economy. That is to say, c. 35bn of government spending is from taxes so it is just redistributed, but the other 20-25bn is borrowed and pumped into the economy by means of bank bailouts, social welfare spending (note that while rates were dropped in 2010, up to that point they were increased as pointed out by donegalfella, but also the numbers have increased thus it is a greater government stimulous) and other government spending. This is helping to artificially prop up GDP.
(3) will they work to prevent Ireland becoming bankrupt and bailed out? Well it's not entirely clear and while I have had my doubts, the international media has trumpted Ireland as a great success. However, I am not so sure that this directly translates into investor confidence in Ireland, nor do I think that investors are so naieve as to think "Ah sure, look at Brian Lenihan, isn't he a grand man" and just give us the money without looking further into it.
So the current austerity programme will NOT work to fix the budget or the economy and it is not certain whether it will stave off soverign default.
Your point in the body of the OP is a bit different - you make the point that cuts only decrease domestic consumption. This is true. But, as I'm sure you're aware, making cuts and decreasing income tax is not "taking money out of the economy" it is simply putting less money in. I think it is quite clear that the levels of domestic consumption in Ireland have been excessively high over the last few years, and the cost of living has risen disproportionately to how well our economy was actually doing.
Now, it has already been pointed out that our social welfare is 3 times what it is in England, despite the fact that London has a higher cost of living than Dublin. I'm not going to repeat those arguments. But I think you are confusing cause and effect. It is not that higher cost of living results in higher social welfare, it is that higher social welfare increases the cost of living.
Finally, just to make it absolutely clear to you, our projected tax take for 2010 is roughly 12bn income tax, 10.5bn VAT, 4.7bn customs and excise, 3bn corporation tax, under 1bn for stamp duties and 0.5bn for capital gains/aquisitions. The social welfare bill is estimated in the region of 21bn and our taxes are c. 1.4% belowe estimates. We are heading for a very real situation where SW is 22bn and income tax and VAT combined are 22bn. Think about that for a minute. It means that social welfare takes up all of our two biggest taxation sources in their entirity. All the taxes you pay on work, goods and services goes directly to social welfare. Not to schools, not to hospitals etc, but to subsidise people who do not work. It also leaves the rest of the entire government with a rather paltry 9bn and shrinking to pay for, well, for everything else.
So the current levels of budget deficit really are unusutainable. A 14% deficit is madness, made even madder when the bank recaps and nama money is put in, and madder still when you compare it to GNP, a better measure of the domestic economy.
Now, do I want to see people on the dole getting less? No, of course not. But is it necessary? Yes, I'm afraid we have no choice. There have to be spending cuts and social welfare is one of the better places to make those cuts.
On a final note, I dislike the phrases used such as "the poor can't pay" or why do those on social welfare have to foot the bill etc. But they are not being asked to pay anything. Social welfare is a mandatory form of alms which passes money, like a charitable donation, from the richer members of society to the poorer ones. We are not asking people on social welfare to pay, we are asking them to accept less from us.
Em, IKEA?
That's putting it much better than the donegalfellas of the world would put it, but I still think the way you phrase it is unfair.
The "poor" are literally paying in some cases with the loss of their jobs. While welfare may be a "generous donation", it's also one that's only rational and fair and in many cases they have themselves paid their PRSI and you are now asking them to take a hit when they were expecting a return on investment.
When you look at those figures, it really is ludicrous that we bailed out and continue to bail out the banks. I think that could be what's destroyed us as a country; let's put things in perspective, we've currently spent more on bailing out one bank than is projected for social welfare at crazy levels of unemployment for a whole year.
What needs to be done is that employment needs to be created so the government are dishing out less dole and taking more in.
How to do that, I don't know. But I doubt nobody knows, we just need to get the gombeens we have currently out and find someone who does. Or more than likely, have the europeans come in and show us how to keep our **** in order.0 -
Pete_Cavan wrote: »I cant see how there is an argument to be made against austerity measures. USA is showing the world that you cant spend your way out of recession. Their economic situation hasnt changed even after spending billions on stimulus packages. It seems they are headed for a 'double dip' recession. We have to cut back and try and balance the books as best as possible. We are currently borrowing €20bn a year, if we continue to do so we will not be able to pay it back. How do people think your economy will ever recover if our national income cant even cover the interest on our loans?
Actually, you can spend your way out of a recession. You just need to have the money to do it. Keynesian economics only works when you don't piss away all your money first and are prepared to suck up a large national debt for a while.0 -
I think the key point is that austerity measures are not about stimulating the economy, creating jobs, fairness or any of that stuff. They are about paying back money or keeping down the cost of borrowing, things like that. If austerity measures "work" they work in terms of paying back money or putting off the day of default for as long as possible. Ideally they should be done as fairly as possible but fairness is not the goal of austerity measures.What needs to be done is that employment needs to be created so the government are dishing out less dole and taking more in.
How to do that, I don't know. But I doubt nobody knows, we just need to get the gombeens we have currently out and find someone who does. Or more than likely, have the europeans come in and show us how to keep our **** in order.
You ask in the opening post, why do people think austerity measures will work? Who are these people? What do you think they mean by "work"?
I think the key question with regards to the bailout is whether they will cause the economy to contract to such an extent that the deficit increases and further austerity measures then become necessary. The country enters a downward spiral. Some commentators notably David McWilliams have suggested that this is a possibility given our situation of not being able to devalue the currency.
If this downward spiral is going to happen then we would be better off defaulting now as there is nothing to be achieved by putting it off.0 -
I mean for the long term survival as Ireland, straight up austerity measures would do more harm than good.
People forget that it's not just our government that's in debt - we have crazy levels of unemployment and our economy is in the ****ter.
If you take more money out of a dying economy, what's going to happen?
I think Ireland as a country right now is ****ed and we should stop kidding ourselves. However, we should also perhaps stop kidding ourselves that that's such a bad thing. I think sooner or later the Germans or someone are going to come in.0 -
@SandvichIf you take more money out of a dying economy, what's going to happen?
Probably nothing much more worse than piling up debt on a dying economy.
The amount of cuts so far barely amount to austerity measures given the scale of the problem. Weve got a small bit of time to play with given the NTMA dont have to go back to the market for a while, we could attempt to get the house in order by taking some proper steps to get control of the budget but it seems Fianna Fail are paralysed by the thought of the cliff the country is racing towards. For the next budget, touching the public sector wage bill is out, university fees are out, property taxes are out, water charges are out. So all that leaves is cuts to investment and actual services. Theres nobody to respresent taxpayers in this carve up.
The Croke Park deal is looking stupider by the day - whilst it contains the get out clause for declining economic circumstances (look around) thats hardly going to do anything for relations with the unions. Theyll feel they were deceived. In reality they deceived themselves.0 -
@Sandvich
Probably nothing much more worse than piling up debt on a dying economy.
The amount of cuts so far barely amount to austerity measures given the scale of the problem. Weve got a small bit of time to play with given the NTMA dont have to go back to the market for a while, we could attempt to get the house in order by taking some proper steps to get control of the budget but it seems Fianna Fail are paralysed by the thought of the cliff the country is racing towards. For the next budget, touching the public sector wage bill is out, university fees are out, property taxes are out, water charges are out. So all that leaves is cuts to investment and actual services. Theres nobody to respresent taxpayers in this carve up.
The Croke Park deal is looking stupider by the day - whilst it contains the get out clause for declining economic circumstances (look around) thats hardly going to do anything for relations with the unions. Theyll feel they were deceived. In reality they deceived themselves.
Fianna Fail are paralysed by the thought of the cliff the country is racing towards
somehow i doubt that , paralyesd with fear yes ,but for their own hides not the future of the country0 -
@Sandvich
Probably nothing much more worse than piling up debt on a dying economy.
The amount of cuts so far barely amount to austerity measures given the scale of the problem. Weve got a small bit of time to play with given the NTMA dont have to go back to the market for a while, we could attempt to get the house in order by taking some proper steps to get control of the budget but it seems Fianna Fail are paralysed by the thought of the cliff the country is racing towards. For the next budget, touching the public sector wage bill is out, university fees are out, property taxes are out, water charges are out. So all that leaves is cuts to investment and actual services. Theres nobody to respresent taxpayers in this carve up.
The Croke Park deal is looking stupider by the day - whilst it contains the get out clause for declining economic circumstances (look around) thats hardly going to do anything for relations with the unions. Theyll feel they were deceived. In reality they deceived themselves.
bad as the unions are , they were offered this croke park deal by the goverment , the goverment could have told the unions to get lost on any deals or promises of no pay cuts and they would have had the support of the majority of voters , were the goverment to renague on its terms now , i would almost support the unions in whatever stance they took as it might be what is needed to get rid of brian cowen as leader , any man who believed this jones road contract could last untill 2014 deserves to be sent back to offaly pronto0 -
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irishh_bob wrote: »bad as the unions are , they were offered this croke park deal by the goverment , the goverment could have told the unions to get lost on any deals or promises of no pay cuts and they would have had the support of the majority of voters , were the goverment to renague on its terms now , i would almost support the unions in whatever stance they took as it might be what is needed to get rid of brian cowen as leader , any man who believed this jones road contract could last untill 2014 deserves to be sent back to offaly pronto
Isnt that a bit unfair and simplistic?
I have never voted FF in my life, but they had a gun to their heads.. Pre CP deal, finance info was not being passed so we had no idea what was being spent, phone's were not being answered, work to rule was in place..etc.. and meanwhile the worlds bonds markets were watching.. decisions had to be made at a critical time for Ireland
The deal was brokered between a weak government and a self serving union..they rest of us get to pay for it..at least there was an economic climate clause..
the unions are hardly innocent in this fiasco...0 -
Why do people think austerity measures will work?
Why do people think there is any other option than austerity. We are in the red for ten of billions. There is simply no other option than to cut!
Best thing the government could do is to take on the unions since its gonna be nigh on impossible for them to get into government at the next election. Saying that though the alternatives aren't any better.
Labour would completly ruin the country in a week and FG wouldn't want to ruffle any feathers seeing as its their first time in power for well over a decade.0 -
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The "poor" are literally paying in some cases with the loss of their jobs. While welfare may be a "generous donation", it's also one that's only rational and fair and in many cases they have themselves paid their PRSI and you are now asking them to take a hit when they were expecting a return on investment.
The self employed also paid PRSI (there's even monkey talk about making self employed pay as much (and then more, presumably) than PAYE workers) and get nothing for it. Not a saussage. How is that fair? I'd be in favour of getting rid of PRSI altogether and replacing it with straightforward increased taxes. Then everyone gets the same. But the self employed pay three times - less tax credits, paye and then they have to make their own provision for god forbit they are sick or work declines or customers don't pay their bills.
Besides, I'm not coming at it from the point of view of who takes what hit; if I were then clearly the recently unemployed should be least hit and those with recession proof jobs should be most hit. I don't want to go down that road because talking of economics is not talking about people taking hits. It's about where the government can cut money and sad as it is, social welfare is the biggest target to hit and it is also the easiest to justify because it only really becomes inhumane to cut it below the level at which people can buy food, shelter, electricity and basic clothes. IMO €100pw plus a proper rent allowance system would suffice, with additional fuel payments for winter.When you look at those figures, it really is ludicrous that we bailed out and continue to bail out the banks. I think that could be what's destroyed us as a country; let's put things in perspective, we've currently spent more on bailing out one bank than is projected for social welfare at crazy levels of unemployment for a whole year.
I agree and I still think that even now, letting the banks fail is the "least worst option" to quote the fella. But coming back to the thread, the bank bailouts are at least going to end by 2012, but the budget deficit is not going to cure itself. The government is waiting on new companies to come in, pay tax and create jobs but I'm skeptical of this - I don't believe in waiting for the miracle.What needs to be done is that employment needs to be created so the government are dishing out less dole and taking more in.
Yes, but regrettably employment costs are too high and if we want to create jobs we need to reduce these. Not everyone can or wants to be an expert computer designer setting up their own company and making millions with new and exciting products - a lot of people only want to do unskilled or semi skilled manual labour. There is a great market for exports in machine tools, energy generators and other manufactured goods. But the Germans, Japanese and even the Italians do that better than us and for less money. So we have a long way to go to get that competitive edge.
Again, two factors keeping wages high are high taxes and also social welfare. It really is horrible to be earning around minimum wage and just managing to pay the bills to see friends and relations out of work with enough money for entertainment that you cannot afford. But there's something more fundamental there too - if you have 450k people getting €200 each week that is a huge amount of purchasing power that is not backed by equivalent production i.e. it is like creating money for nothing. This money is then spent on basic items and it puts massive inflationary pressure (inflation is caused by too much money chasing too few goods which is what social welfare does because *oversimplified* they are not putting goods back into the economy for the money they take out) on goods at the basic end of the scale. This causes prices to rise and means that people who are on minimum wage are competiting with them and find it difficult.
A good example of this is rent allowance, which sets rents at an artificially high level. Your average low income worker can't afford to rent a house/apartment in Dublin by himself and has to share but someone on benefits often can.How to do that, I don't know. But I doubt nobody knows, we just need to get the gombeens we have currently out and find someone who does. Or more than likely, have the europeans come in and show us how to keep our **** in order.
Getting the current government out is a good start, but they will only be replaced by a similar bunch. However, the trick is not to keep the crooks away from the till which is impossible but merely to move them so that no one of them spends too long digging into it.
As for how jobs will be created, the general way to do it is to find a way to produce something that is worth more than what you want to be paid to do it. Currently most products can be made for less than the Irish people are prepared to make them for.0 -
Join Date:Posts: 13651
If you take more money out of a dying economy, what's going to happen?
It needs to be said, over and over again, we are not taking money out of the economy, we are simply putting less in. It's a HUGE distinction.
It's like what's happening in the US. Their stimulus package is coming to an end and it didn't have particularly great results. As it is withdrawn their economy will go down again. But the end of the stimulus is not taking money out of the economy. The economy will fall back to it's natural pre-stimulus level and if in so doing the GDP falls, so be it. They can't keep stimulatifying the economy forever.
What we need to do is stop our stimulus, but unlike the US stimulus which takes place at the banking level and can be turned off almost like a tap, our stimulus comes in the form of overly generous promises made to people and contracts entered into which we cannot afford, which are not so easy to cease. But cease they must.0 -
Actually, you can spend your way out of a recession. You just need to have the money to do it. Keynesian economics only works when you don't piss away all your money first and are prepared to suck up a large national debt for a while.
Keynesian fud and theory, now proceed to illustrate with a historic example of such events actually happening0 -
Isnt that a bit unfair and simplistic?
I have never voted FF in my life, but they had a gun to their heads.. Pre CP deal, finance info was not being passed so we had no idea what was being spent, phone's were not being answered, work to rule was in place..etc.. and meanwhile the worlds bonds markets were watching.. decisions had to be made at a critical time for Ireland
The deal was brokered between a weak government and a self serving union..they rest of us get to pay for it..at least there was an economic climate clause..
the unions are hardly innocent in this fiasco...
that the goverment folded under pressure from unions ( with such small support from the majority of the public ) shows they havent got what it takes to lead at this crucial period in our history , the goverment could have fired those civil servants who were refusing to answer phones , they could have fired the passport workers , bar public sector workers and the liberal media , the goverment would have had the support of the electorate , the croke park deal is not realistic so thier will have to be more pay cuts and job losses at some stage , better have a goverment who are up to the task0 -
It needs to be said, over and over again, we are not taking money out of the economy, we are simply putting less in. It's a HUGE distinction.
That's... effectively the same thing. Less money in an economy that was already in the ****ter. That's not a good thing.0 -
Join Date:Posts: 13651
That's... effectively the same thing. Less money in an economy that was already in the ****ter. That's not a good thing.
The point I want to emphasise is that it is not the same thing. People need to realise that the deficit is borrowed money. It is not money that we have earned, but an advance on the money that we (meaning most likely our children) will earn in the future.
To refuse to reduce borrowing because we have become accustomed to our higher, unsustainable standard of living doesn't make any sense.0 -
You won't be poor if you can provide a product or service to Asia..just needs people to retool.0
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