Austerity isn't really working is it?

tolosenc

A rational thread on AH? My god...

How you know that the economic policies of our government are working: Would you prefer to be a job seeker in Athens or Dublin right now?

68Murph68

Augmerson wrote: »

I'm not going to say I'm an expert here, but, didn't the New Deal get the US back on it's feet? Or....was it the onset of WWII?

WWII was what got the US back on its feet.

The consensus is that the New Deal extended the effects of the Depression.

That's even before you go near the whole issue of the US economy in the 30s and 40s big totally different to the current Irish economy. (scale, nature, control over monetary policy, natural resources, importance of technology) All of the differences would make intervention even less likely to work in Ireland.

The fact is that in 2011 the government spent €5 for every €3 it took in.

Think about that for a while.

There's no possibility that the government could avoid cutting spending.

AlmightyCushion

Augmerson wrote: »

Well, here are my ideas, far-fetched though they may be. We could either pay everybody to emigrate to Canada, Australia or New Zealand - yes, not the nicest tactic ever employed, but desperate times call for desperate measures.

Easier said than done. How much would you pay them to go? Also, how long would they be gone for? Going for a year or two is fine if you are under 30 (35 for Canada I believe) but then they are back here after that. It's not much good spending a lot of money to ship our unemployed abroad for a year or two. The dole money they get here also acts as a sort of stimulus for the local economy. If we sent all our young unemployed abroad that's a lot less people who are renting, buying food, going to the pub/cinema etc. The money we would give them to go abroad for a year or two would have to be significantly less than what they would get on the dole for it to be worth it.


For people over 30 or people staying longer than a year will have to meet certain criteria and have certain skills to get in and stay in. So this idea doesn't really solve our unemployment issue.

Augmerson wrote: »

We could initiate a Public Works program, a sort of New Deal type product, much smaller, which could maybe get 50 to 80k working for awhile - finishing estates, upgrading roads etc. Hopefully that many people in work would have a knock on effect on the economy. People spending. Tax intake increases and so on.

The cost of this would be pretty huge. This would increase our deficit and mean we have to borrow more. Our debt to GDP ratio is already at worrying levels so this isn't an option. We need to reduce unemployment by not adding to our deficit. The best way to do this is to encourage investment by existing companies and make it easier for them to grow and expand or start up new companies. Leave job creation to businesses and employers, the government should be making it easier and facilitating them in doing this.

ilovesleep

StewartGriffin wrote: »

Understood. But the annoying part is these are the guys who ring up Joe Duffy crying that they can't put food on the table if they lose their next pay increment.

I wouldn't doubt you on that. I'd say some people who are crying the loudest on austerity and other recessionary issues are the ones who severely mismanage their money or don't want to do without a luxery of some sort.

Gambas

Gambas wrote: »

Austerity would be living within your means.

Real Austerity is when there is an actual shortage of materials and you have to make do with what's available rather the current version which is just a balance sheet austerity caused by lack of "credit" in the system. For example, in the late 1940s, many products were very basic with limited "bells & whistles" because there simply wasn't enough "stuff" available to make the fully featured model (unless you were wealthy!)

Suryavarman

Augmerson wrote: »

I'm not going to say I'm an expert here, but, didn't the New Deal get the US back on it's feet? Or....was it the onset of WWII?

Neither. It was the end of WWII and reduction in spending accompanying it that ended the Great Depression.

Suryavarman

Suryavarman wrote: »

Neither. It was the end of WWII and reduction in spending accompanying it that ended the Great Depression.

The great depression was caused by mechanisation which replaced many manual jobs, particularly in agriculture with machines. The end of the depression can mainly be attributed to the development of consumerism*.

*http://en.wikipedia.org/wiki/Consumerism

The Dagda

Augmerson wrote: »

Now, I will be the first to admit my understanding of economics and finance is not great, but these bond's, are in essence, people buying our debt. Is that right? Or am I completely wrong?

I'm afraid you are completely wrong. People buying bonds are creating more, brand new, debt for us. They give us money which we use to pay off the interest on our current debt, and we sell more, newer, debt next year to pay for this new debt.

This is the house of cards, built on a foundation of sand, that is how all countries are funded. There is more debt in the world then there is money. At some point the house will collapse...

southsiderosie

Augmerson wrote: »

Well, here are my ideas, far-fetched though they may be. We could either pay everybody to emigrate to Canada, Australia or New Zealand - yes, not the nicest tactic ever employed, but desperate times call for desperate measures.

Or...

We could initiate a Public Works program, a sort of New Deal type product, much smaller, which could maybe get 50 to 80k working for awhile - finishing estates, upgrading roads etc. Hopefully that many people in work would have a knock on effect on the economy. People spending. Tax intake increases and so on.

Augmerson wrote: »

I'm not going to say I'm an expert here, but, didn't the New Deal get the US back on it's feet? Or....was it the onset of WWII?

I don't think you can compare Ireland to the US - or Iceland for that matter - the primary reason being that Ireland doesn't control its own currency. So the government can't print more money to fund stimulus packages.

That said, aversion to inflation is more of an issue in Europe (due to the German experience in the inter-war period) than in the United States, where the Fed has always been more mindful of employment levels than inflation (due to the experience of the Depression).

With that in mind, I think every country's response to economic crisis is going to be shaped by its own history. In Ireland, emigration has always been the safety valve. But that valve is partially clogged because many of the potential labor emigrants are migrant workers in the now-defunct construction industry who make more on the dole in Ireland than they would in their home countries. And Ireland can't devalue its way out of the crisis. So it is stuck with a 'sticky' unemployed workforce and no control over monetary (and increasingly, fiscal) policy - not a nice place to be.

Suryavarman

Deleted User wrote: »

The great depression was caused by mechanisation which replaced many manual jobs, particularly in agriculture with machines. The end of the depression can mainly be attributed to the development of consumerism*.

*http://en.wikipedia.org/wiki/Consumerism

Utter rubbish.

The Great Depression was caused by the bursting of the unsustainable bubble economy of the 1920s. This was brought about by a change in monetary policy.

The Dagda

Suryavarman wrote: »

Neither. It was the end of WWII and reduction in spending accompanying it that ended the Great Depression.

Eh no he's right, the massive spending of WW2 ended the depression. Reduced spending is what caused it in the first place.

Suryavarman

The Dagda wrote: »

Eh no he's right, the massive spending of WW2 ended the depression. Reduced spending is what caused it in the first place.

The reduction in spending from 1920-1922 caused the Great Depression (began in 1929)?

If you were to ask people living in America during WWII if their living standards were rising, the answer would be a resounding no.

The Dagda

Suryavarman wrote: »

The reduction in spending from 1920-1922 caused the Great Depression (began in 1929)?

If you were to ask people living in America during WWII if their living standards were rising, the answer would be a resounding no.

Why are you bringing 1920-22 into the discussion? Everyone was talking about the great depression...?

Forgive me if i don't take your word for what someone living in America during that time would say in answer to your imaginary questions!

A simple look at the figures from this time, which show the huge growth the US economy experienced, and how much unemployment was reduced by, will contradict your assertions...

I agree that reduced spending caused the great depression but it most certainly was not further reduction of spending, which you're suggesting above, that caused it to end. That makes no sense.

Firefox11

Austerity my ass. half of the polulation of this planet live on live on less than $2.50 a day.

southsiderosie

Firefox11 wrote: »

Austerity my ass. half of the polulation of this planet live on live on less than $2.50 a day.

But they don't live in countries where a liter of petrol costs twice that amount, or where people pay 200 quid/week in rent. You can't compare a country like, say, Bangladesh to Ireland.

Amirani

The Dagda wrote: »

I'm afraid you are completely wrong. People buying bonds are creating more, brand new, debt for us.

Not necessarily the case, so it's a bit harsh to be claiming that the poster is "completely wrong". The majority of buying and selling on bond markets is of second-hand bonds. Hence private investors selling bonds to other private investors at some point past the issuance date.

The Dagda wrote: »

This is the house of cards, built on a foundation of sand, that is how all countries are funded. There is more debt in the world then there is money. At some point the house will collapse...

You obviously have little comprehension of economics if you believe this to be the case.

Technically because we are borrowing and spending more than we make we ARE doing Keynesian stimulus right now.
Real austerity would be if we cut back to breakeven or reduce the debt.

Augmerson

Augmerson wrote: »

Well, here are my ideas, far-fetched though they may be. We could either pay everybody to emigrate to Canada, Australia or New Zealand - yes, not the nicest tactic ever employed, but desperate times call for desperate measures.

Or...

We could initiate a Public Works program, a sort of New Deal type product, much smaller, which could maybe get 50 to 80k working for awhile - finishing estates, upgrading roads etc. Hopefully that many people in work would have a knock on effect on the economy. People spending. Tax intake increases and so on.

Before you ship everyone off or start a gulag we could instead deal with the root problems that are KNOWN to be hindering job creation in Ireland. Companies that relocated to Eastern Europe cited the following reasons for leaving:

High Rents
High Insurance Costs
High Electricity Costs
High Wage Costs

Some Solutions then are:
Eliminate upward only rents & have NAMA flood the market with commercial property.
Murder the insurance oligopolies like Quinn etc total disgrace
Eliminate minimum wages for professions - this is seperate to the minimum wage. The labour court sets the minimum pay per hour you can pay someone to say do a plumbing/electrical/other trades job in your house. So you can`t negotiate. This drives a black market of people working for less and often claiming the dole.
Also have NAMA totally release its stock onto the market - if rents are ultra cheap and purchasing prices are ultra cheap then workers can have the same or better standard of living on less pay.

Three Seasons

[Deleted User] wrote: »

Or we deal with the root problems that are KNOWN to be hindering job creation in Ireland. Companies that relocated to Eastern Europe cited the following reasons for leaving:

High Rents
High Insurance Costs
High Electricity Costs
High Wage Costs

Some Solutions then are:
Eliminate upward only rents & have NAMA flood the market with commercial property.
Murder the insurance oligopolies like Quinn etc total disgrace
Eliminate minimum wages for professions - this is seperate to the minimum wage. The labour court sets the minimum pay per hour you can pay someone to say do a plumbing/electrical/other trades job in your house. So you can`t negotiate. This drives a black market of people working for less and often claiming the dole.
Also have NAMA totally release its stock onto the market - if rents are ultra cheap and purchasing prices are ultra cheap then workers can have the same or better standard of living on less pay.

I'd argue we should eliminate the minimum wage altogether.

That would create more jobs IMO.

Three Seasons

Three Seasons wrote: »

I'd argue we should eliminate the minimum wage altogether.

That would create more jobs IMO.

and a lot of unfilled jobs as the pay will be below what people need to earn to live, unless you want people to live like migrant workers!

Anynama141

[Deleted User] wrote: »

and a lot of unfilled jobs as the pay will be below what people need to earn to live, unless you want people to live like migrant workers!

If the jobs are real, they won't be unfilled as the employer will pay the amount it requires to fill them.

speedboatchase

Gambas wrote: »

You have 250k people - mostly men with limited or no qualifications who worked in an unsustainably bloated construction industry. Construction will come back, but not bring 250k jobs back. Maybe 50k. So what are the other 200k going to do?

Retrain. As you said, they have 'limited or no qualifications'. Up to them to fix that.

coffee_cake

Deleted User wrote: »

and a lot of unfilled jobs as the pay will be below what people need to earn to live, unless you want people to live like migrant workers!

We didn't have min wage til 2000, I don't think the above was true either

Three Seasons

[Deleted User] wrote: »

and a lot of unfilled jobs as the pay will be below what people need to earn to live, unless you want people to live like migrant workers!

Employers will raise wages if no one is willing to fill the roles.

Removing the minimum wage makes it easier to start businesses and create more jobs, it also allows goods and services to be priced more cheaply.

mikemac1

Three Seasons wrote: »

Employers will raise wages if no one is willing to fill the roles.

No they won't.

Even during the boom experienced hotel staff got little over minimum wage as employers would use agencies to hire staff from Poland and other countries.

Good for them, jobs lined up before they arrived but they still undercut Irish staff who had years of experience.

dark crystal

Three Seasons wrote: »

Employers will raise wages if no one is willing to fill the roles.

Removing the minimum wage makes it easier to start businesses and create more jobs, it also allows goods and services to be priced more cheaply.

Do you have to live on minimum wage yourself at the moment?

Three Seasons

mikemac1 wrote: »

No they won't.

Even during the boom experienced hotel staff got little over minimum wage as employers would use agencies to hire staff from Poland and other countries.

Good for them, jobs lined up before they arrived but they still undercut Irish staff who had years of experience.

Then they simply weren't worth much more than the minimum wage. Their experience obviously wasn't worth much then.

Clarkes shoe shop pay entry level employes significantly over minimum wage.

Why is that if they don't have to?

Three Seasons

dark crystal wrote: »

Do you have to live on minimum wage yourself at the moment?

I don't have to live on minimum wage.

norrie rugger

Gbear wrote: »

It's always more difficult to cut spending than it is to never have set the spending level so high.

Whatever about the current goverment, they inherited a nonviable spending structure when they took over.

Unfortunately, it's never a case of making the most logical cuts but the cuts that you can get away with - hit front line staff because they can rather than tackling the hole hierarchy and general public service wastefulness that exists on a systematic level.

I'm sure if the government could act unilaterally they might fancy doing things a bit differently.

They could act unilaterally but, as FG votes come from the hierarchy, that's not gonna happen.

suicide_circus

Three Seasons wrote: »

Employers will raise wages if no one is willing to fill the roles.

Removing the minimum wage makes it easier to start businesses and create more jobs, it also allows goods and services to be priced more cheaply.

I agree with this theoretically and ideologically however Irish businesses have a history of pocketing everything and not passing savings on to the customer. Prices were rounded up when the € came in. Job-bridge appears to be little more than a free labour source. Retailers routinely use VAT increases to sneak in their own price hikes.
€8.65 per hour full time is what per week? €350? Hardly extravagant.