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Austerity isn't really working is it?
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The point that people seem to miss the most, is that as a country on our own we have absolutely no control, all of the control is at an EU level.
We don't have control over our own currency, the ECB does (and is itself limited by EU mandates), we don't have control over our own deficits, because EU treaties restrict us in this manner, and mishandling of the crisis EU-wide thus far, means it costs us more to work with deficits.
The policies that can resolve this crisis are all known, and these recovery policies have to be implemented at an EU level, and without that there will be no real recovery in Europe, the single currency is just likely to eventually dissolve.
Austerity doesn't work, because the root problems are unemployment and lack of demand, which both cause an 'output gap' (economy is below it's full productive potential), which reduces tax intake and pushes government into a deficit.
Solving the economic crisis means solving the problems of unemployment and lack of demand, and it is then that economic recovery starts to happen, and the private sector slowly gets back on its feet, and deficits go down.
Austerity comes at this from the opposite end, knocking the deficit down now, and in the process slowing the recovery of the private economy, and making sure unemployment and lack of demand stay an issue for longer.
Ireland cannot fund a deficit though, so it is impossible for us to recover on our own inside the EU; member states in the EU need to implement EU-wide recovery policies, and it looks like this will never happen due to countries like Germany not wanting this, so we are screwed.
So it looks like the only options we have are to eat-up austerity, or the "jump off a cliff" option of exiting the single currency.
Europe on its current course, without any recovery policies, will probably cause the single currency to collapse anyway in a few years, so we will likely have to deal with that anyway; the main question remaining, is what have we got to gain waiting for that to happen, versus getting it over with now so we can start the real recovery earlier?
Also, austerity = higher taxes and government spending cuts, which we undisputably do have; it seems some want to see a particularly sadistic level of cuts and social suffering, before they will call it 'real' austerity.0 -
Three Seasons wrote: »The cost of living will come down following the abolition of the minimum wage. People will be better off, especially the poorer people in society.
Nonsense how can cost of living come down with VAT at 23% and fuel costs which have a direct impact on goods and services? General electrical and heating which government has some influence is also way too high and high commercial rates and upward only rents are a noose around our domestic economy coming out of its slump.
How exactly does reducing the poorer people's wages make them better off? Do you actually believe what your write or do you have some actual proof? Where has this precedent been set?0 -
This is not true mind, because any policy utilizing money creation will have to limit it based on an inflation target; inflation is primarily caused by resource bottlenecks (hitting a supply limit, causing prices to rise for that resource), and the most important resource is labour, so you can spend up to the point of full-employment before you have to cut back due to inflation.Anynama141 wrote: »European austerity is another matter - in theory, the ECB could start printing money and dole it out via European governments via soft loans or whatever, but this would not be painless either - you would effectively be robbing savers (usually the old) by inflating away their savings, and inflation is a terrifying phenomenon once you let the genie out of the bottle - to the extent that in most developed countries, the central bank's key role is to prevent inflation.
Since full employment is specifically what we want, this solves a huge part of the crisis.
Due to Germany and such though, there is never going to be an agreement to do this at an EU level; if/when the single currency breaks up though, this will become very important.
This is precisely what is needed (though not necessarily on that specific set of projects), with funding being the problem; and this combined with the above, would be the solution to the crisis.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.
He's talking about the New Deal; that did work, it was an enormously spectacular success, with ample historic evidence to show it.This has been tried a lot and the historical evidence is that it just doesn't work. There are really no reasons to think why it would work in Ireland.
WWII, i.e. a massive increase in government spending, bringing the economy close to full employment, got the US back on its feet.WWII was what got the US back on its feet.
It's unusual the way people recognize that military keynesianism helped resolve the last Great Depression, but don't recognize that you can put all that effort into infrastructure instead of war, and do the exact same thing, except without wasting the productive effort by killing people and destroying countries.
Eh? That is a highly revisionist view on history; the US government cutting spending half way through the Great Depression, is what plunged them back into trouble (exactly the same way the US cut in spending this year, will start to slow recovery):The consensus is that the New Deal extended the effects of the Depression.
https://www.nytimes.com/2010/06/18/opinion/18krugman.html?_r=0Paul Krugman wrote:It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession.
Here also:
http://neweconomicperspectives.org/2012/12/kill-the-fiscal-cliff-instead-of-the-economy.htmlWe have known that austerity is an idiotic response to a severe crisis for 75 years. The U.S. was in the midst of a strong recovery from the Great Depression until FDR’s neo-liberal economists convinced him in 1937 that is was essential that the U.S. adopt an austerity program to reduce the federal deficit. Austerity forced our economy back into a Great Depression.
It was only the stimulus of federal spending in World War II that brought the U.S. out of the depression. During World War II and for the remainder of that decade the ratio of debt-to-GDP was at or near historically record levels. The result was the greatest industrial expansion in history, full employment (including a massive influx of women), strong economic growth, and sharply declining deficits and debt-to-GDP ratio because the growth led to large increases in revenue and the low unemployment greatly reduced spending on the unemployed.
Also, others disputing the causes of the Great Depression: It was much the same as now; reduced consumer spending and thus aggregate demand, due to unemployment and high debt-loads, as well as rising costs.
There's loads of revisionist nonsense about the Great Depression thus far in the thread; the causes of and solutions to it are not in great dispute, they were largely known and worked out at the time by economists such as Keynes/Minsky/Fisher.0 -
Three Seasons wrote: »The cost of living will come down following the abolition of the minimum wage. People will be better off, especially the poorer people in society.
When the government last cut VAT they said it would result in lower prices for goods. It didn't. And the reason the price of goods stayed the same was because businesses just saw it as another opportunity to profit and eventually the government restored the original rate. If you cut the minimum wage all that you will see is employers exploiting people even further and an even greater gap between the income of the poor and the profit garnered by those who employ them. Stating that business recovery should take place on the backs of the poorest in society is shameful.
Similarly it's a redundant point as the vast majority of workers don't even earn the minimum wage, only the lowest tier do. These also usually consist of the most vulnerable groups in our society working in industries such as hospitality and agriculture which already have a long-standing reputation of exploitation and abuse. Chopping the bar-worker's wage or the salary of a Lithuanian mushroom picker isn't going to result in recovery, it's just going to rob the poor even more in order to increase profiteering.0 -
How exactly does reducing the poorer people's wages make them better off? Do you actually believe what your write or do you have some actual proof? Where has this precedent been set?
He has already said that he doesn't have to exist on a minimum wage so how would he know? Arguments for cutting the minimum wage are pseudo-intellectual cant usually; a load of nonsense theorising divorced from the actual reality that they will plunge poor people into further poverty.0 -
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Nonsense how can cost of living come down with VAT at 23% and fuel costs which have a direct impact on goods and services? General electrical and heating which government has some influence is also way too high and high commercial rates and upward only rents are a noose around our domestic economy coming out of its slump.
How exactly does reducing the poorer people's wages make them better off? Do you actually believe what your write or do you have some actual proof? Where has this precedent been set?
It provides jobs for those who wouldn't have one otherwise as te minimum wage sucks jobs out of the economy.
Also the purchasing power per euro would increase.0 -
It's worth noting, that as usual in these threads, a great number of the posters arguing in favour of austerity have an inherent conflict of interest, where many directly work in (or are moving towards working in) banking/finance, and often otherwise have significant personal/business conflicts of interest, where they have an interest in promoting policies that benefit them, to the detriment of the rest of society.
This is why the Austrian school of economics is so prevalent with financiers: It's a framework of views, which inherently allows them to justify a huge number of socially destructive policies, and thus their paychecks.
For a lot of them, it's likely cognitive dissonance rather than something they are conscious of (though I would not be surprised if many were conscious of it; god knows there are a lot of firms/people in the financial industry, who don't give a toss where the money comes from); a good quote applicable to it:
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it"0 -
Secondly ask yourself where inflation comes from? Why does the current economic system require the value of money to be always increasing?
If you believe that the current system is sound then I'm afraid it's you that lacks comprehension...
I never said that the current system was "sound". You claimed that it was bound to collapse like a house of cards, but that's not bound to happen at all. Inflation is a fall in the value of money (unlike what you said), as a result monetary policy can always be used to alleviate deficits. Debt levels naturally decrease over time because of inflation. As a result, countries can print money that will alleviate their debts (causing inflation).
A country or monetary union that prints its own money can never really go bankrupt, hence no big collapse.0 -
Three Seasons wrote: »I'd argue we should eliminate the minimum wage altogether.
That would create more jobs IMO.Three Seasons wrote: »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 wrote: »Yes they will actually, goods and services prices will fall and more business will start up and more jobs become available. No minimum wage benefits the poorer people in society.Suryavarman wrote: »Obviously it doesn't change the laws of economics. The laws of economics are just like the laws of physics. They apply to everyone and everything.
Abolishing the minimum wage will result in a greater number of jobs available, benefiting the worst off in society. Those currently unable to find work because their productivity doesn't justify €8.65 per hour will find it easier to get a job.Three Seasons wrote: »The cost of living will come down following the abolition of the minimum wage. People will be better off, especially the poorer people in society.
This is a prime example of how fervent belief in economic theory does not translate to political or social reality. Slashing the minimum wage and assuming that it will benefit the 'worst off' in society makes two key assumptions that are not acknowledged in any of these posts.
First, it assumes that there is a closed labor market, i.e. no immigration. In a closed market when the supply of labor is fixed, then we would expect wages to rise, as employers would have to somehow entice workers to take up positions with them. But that is not the case in Ireland: there a readily available pool of cheap foreign labor and therefore any pressure from rising wage demands get diluted by expanding the labor market.
Second, the assumption that the price of goods and wages will fall is so problematic as to be farcical. Prices of non-commodity goods are generally sticky upwards - what incentive do companies have to drop their prices? This is particularly true in sectors that are politically connected and protected. If barriers to entry were low, and there was no regulation and/or government involvement in the economy at all, then maybe prices could truly move freely, but this is an impossibility in a democratic society where citizens groups, unions, and business associations have the right to lobby for legislation that benefits them.
That aside, I don't think you can consider the minimum wage in a vacuum. The existence of the welfare state means that there essentially is a minimum wage: people will not take a job that pays them less that what they would get on welfare. Add in other state benefits, and you get an effective minimum wage that is going to be higher than the minimum state jobless benefit - regardless of what the official minimum wage is.
Ultimately the idea that no minimum wage will benefit everyone only makes sense if you live in a limited-to-non-democracy with minimal government and tight border controls. Hong Kong, long the prime example of this kind of setup, established a minimum wage in 2010, and is in the process of expanding the welfare state, in particular, access to government subsidized housing. But they are only able to do this because a huge percentage of their workforce are foreigners with absolutely no rights. So I don't think it is realistic in 2013 to talk about a 'no minimum wage' modern economy: 21st century social mores and political sentiments will not permit it, and historically, where this has been tried, it is not clear that a lack of minimum wage benefitted the worst off in society at all.0 -
Three Seasons wrote: »If I were on minimum wage my beliefs would remain the same. It's better for society not to have a minimum wage. It's a handicap on our economy, standards of living fall with a minimum wage.
The Nordic countries have the highest standards of living in the world. They also have minimum wages and heavily regulated labor markets. Do you have any actual empirical examples to support these claims?0 -
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KyussBishop wrote: »It's worth noting, that as usual in these threads, a great number of the posters arguing in favour of austerity have an inherent conflict of interest, where many directly work in (or are moving towards working in) banking/finance, and often otherwise have significant personal/business conflicts of interest, where they have an interest in promoting policies that benefit them, to the detriment of the rest of society.
This is why the Austrian school of economics is so prevalent with financiers: It's a framework of views, which inherently allows them to justify a huge number of socially destructive policies, and thus their paychecks.
For a lot of them, it's likely cognitive dissonance rather than something they are conscious of (though I would not be surprised if many were conscious of it; god knows there are a lot of firms/people in the financial industry, who don't give a toss where the money comes from); a good quote applicable to it:
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it"
This is an issue that is widespread. Some people are so obsessed with trying to decipher alterior motives of those favouring more capitalist policies that they ignore the logic of the actual argument.
I am an entry level employee in the financial sector. My opinions will never change economic policy in Ireland.
The economic opinions I hold are genuine opinions which make sense economically. You need to get the paranoid notion out of your head that those who favour policies such as removing the minimum wage are only out to fukc over the "little guy".
I want the citizens of Ireland to be as happy and well off economically as possible, and the minimum wage fukced over the so called "little guy".
But ysine people are so obsessed with who is out to get them that they miss the logic completely. It goes over their heads.0 -
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southsiderosie wrote: »The Nordic countries have the highest standards of living in the world. They also have minimum wages and heavily regulated labor markets. Do you have any actual empirical examples to support these claims?
I've seen the evidence, I'll have to find it again.
Why not increase the minimum wage to 100 euro per hour? We'd all be better off then. Can you give sound logical reasoning why we shouldn't increase the minimum wage to 100 euro per hour?0 -
Three Seasons wrote: »You need to get the paranoid notion out of your head that those who favour policies such as removing the minimum wage are only out to fukc over the "little guy".
The thing is though, they usually are. Over here the Tories recently hired a fella called Adrian Beescroft to draw up a dossier on making Britain more competitive etc and cutting the minimum wage was right up there on the top of his list. Beescroft, by the way, is a major shareholder in Wonga.com and other payday loan vultures and has made an absolute fortune off the misery of the poorest people in society.
Usually the people banging on about "competitiveness" and "flexibility" are those who have something to gain from it. Those words have almost become bywords for "cut wages to increase profits" and thankfully most working people don't buy such an argument because they know full well that dipping their pockets even further to increase profits for employers isn't in their interests no matter how much you try and dress it up with neo-liberal b*llocks.
Sometimes the "little guy" will honestly support his own exploitation (i.e. support wage cuts), that's to be expected given the level of propaganda out there at the moment. Fortunately most people aren't so stupid.0 -
Three Seasons wrote: »I've seen the evidence, I'll have to find it again.
Why not increase the minimum wage to 100 euro per hour? We'd all be better off then. Can you give sound logical reasoning why we shouldn't increase the minimum wage to 100 euro per hour?
Because you don't need to earn 100/hour to be able to afford the minimum necessities: a roof over your head and food on the table. That is the point of the minimum wage: what you need to scrape by.0 -
So take the likes of me for example, not on minimum wage anymore but was for a good four years until 2011. I suppose discounting any dissenting views is a handy way to debate...
I'm introducing reality into the debate. It's all well and good theorising how robbing the poor to increase profitability is a good idea without actually considering the effect that will have on your fellow human beings. Intellectual posturing about cutting the wages of those doing the sh*ttest jobs for the sh*ttest pay isn't going to be a great comfort to those who will have to suffer it. I recently worked minimum wage for one of the largest pub chains in Europe and after a 45 hour week I was still considered below the poverty line. Do you have any idea how frustrating that is? Meanwhile, that company still posts millions in profits and some clowns suggest that my wages should have been cut even further for my own good?
Pull the other one lad.0 -
southsiderosie wrote: »Because you don't need to earn 100/hour to be able to afford the minimum necessities: a roof over your head and food on the table. That is the point of the minimum wage: what you need to scrape by.
But why not make it 100 euro so everyone would be better off?0 -
Three Seasons wrote: »But why not make it 100 euro so everyone would be better off?
Because that isn't the point of the minimum wage - it isn't there to make everyone well off.0 -
The logic behind cutting the minimum wage is that at €9.01 - €9.57 per hour
(8.65 + employer prsi) a lot of retail and manufacturing cannot pay it's way, so the shops / factories stay shut.
50 full-time employees need to produce €2+ millions in gross profit.
What I'd like to see from the minimum wage cut proponents is a list of the projects that it would enable.
Otherwise it's just the lower paid being ordered to share the pain with the unemployed. The top 80% of earners reject reducing their pay to German levels to 'put the economy on track', so it should not be a responsibility dumped on lower earners.
It really should only be considered if the social welfare would be in place to make up the difference with an expanded Family Income Supplement.
Yeah it'd be a subsidy to private business.
Like the IDA subsidies and tax breaks, the jobsbridge theft, FAS courses, Enterprise Ireland, public / private consultancy setups, excessively priced restricted contracts to the pharma and computer industries, private education and the transport and communications network.0 -
I'm not really interested in decyphering ulterior motives, because I already know the unstated conflicts of interest, and think they speak for themselves.Three Seasons wrote: »This is an issue that is widespread. Some people are so obsessed with trying to decipher alterior motives of those favouring more capitalist policies that they ignore the logic of the actual argument.
I am an entry level employee in the financial sector. My opinions will never change economic policy in Ireland.
The economic opinions I hold are genuine opinions which make sense economically. You need to get the paranoid notion out of your head that those who favour policies such as removing the minimum wage are only out to fukc over the "little guy".
I want the citizens of Ireland to be as happy and well off economically as possible, and the minimum wage fukced over the so called "little guy".
But ysine people are so obsessed with who is out to get them that they miss the logic completely. It goes over their heads.
It's not a coincidence that a huge number of the people espousing these views happen to (surprise surprise) have a serious conflict of interest; that doesn't mean that is consciously driving their views, but it's sure worth noting.
Also, if you didn't notice, I made two whole posts before that one, presenting my counter-arguments; my observation of this conflict of interest, was not put forward to the exception of actual argument.0 -
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I'm introducing reality into the debate. It's all well and good theorising how robbing the poor to increase profitability is a good idea without actually considering the effect that will have on your fellow human beings. Intellectual posturing about cutting the wages of those doing the sh*ttest jobs for the sh*ttest pay isn't going to be a great comfort to those who will have to suffer it. I recently worked minimum wage for one of the largest pub chains in Europe and after a 45 hour week I was still considered below the poverty line. Do you have any idea how frustrating that is? Meanwhile, that company still posts millions in profits and some clowns suggest that my wages should have been cut even further for my own good?
Pull the other one lad.
It is a companies goal to maximise profits and so it should be with the laws of the land.
Employees who charge more for their labour than they are worth are exploiting the company and exploiting the "little guy" ie the consumer who has to pay extra or can't afford the product.
Prices come down without a minimum wage, you get more value per euro.
Why are you concerned with the profits a pub makes, that's none of your business. The owners took the risk to set up the business so they are entitled earn as much as they can. They OWE YOU NOTHING. If you don't like what they are willing to pay you then find somewhere else to work or open up your own pub.0 -
Three Seasons wrote: »It is a companies goal to maximise profits and so it should be with the laws of the land.
Employees who charge more for their labour than they are worth are exploiting the company and exploiting the "little guy" ie the consumer who has to pay extra or can't afford the product.
Prices come down without a minimum wage, you get more value per euro.
Why are you concerned with the profits a pub makes, that's none of your business. The owners took the risk to set up the business so they are entitled earn as much as they can. They OWE YOU NOTHING. If you don't like what they are willing to pay you then find somewhere else to work or open up your own pub.
Yes, it is a company's goal to maximize profits. Most workers, particularly those at the lower end of the pay scale, understand this, which is exactly why claiming that having no minimum wage would somehow magically lead to an explosion of jobs and an increase in the standards of living is complete and utter nonsense. If you (correctly) assume that the primary goal of a company is to make money, then you should also (correctly) assume that they are not going to pass wage savings onto consumers: they will pay employees as little as possible, and charge consumers as much as possible.0 -
KyussBishop wrote: »I'm not really interested in decyphering ulterior motives, because I already know the unstated conflicts of interest, and think they speak for themselves.
It's not a coincidence that a huge number of the people espousing these views happen to (surprise surprise) have a serious conflict of interest; that doesn't mean that is consciously driving their views, but it's sure worth noting.
Also, if you didn't notice, I made two whole posts before that one, presenting my counter-arguments; my observation of this conflict of interest, was not put forward to the exception of actual argument.
That's ridiculous. Do you think I'm against the minimum wage because I will somehow take in the money if its gone?
You're paranoid.
I have plenty of friends and family on minimum wage and want nothing but the best for them. A fully functioning economy is what they need with more oppurtunities. Minimum wage will advance those goals.0 -
southsiderosie wrote: »Because that isn't the point of the minimum wage - it isn't there to make everyone well off.
But why not make everyone well off with 100 euro minimum wage?0 -
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Three Seasons wrote: »But why not make everyone well off with 100 euro minimum wage?
Did you not read the multiple responses to you already? The point of the minimum wage is to set a floor given the general economic conditions - hence why it generally varies by country. In an economy where the average hourly wage was $350/hour, maybe a $100/hour minimum wage would make sense. But it doesn't, so I don't understand why you keep belaboring this point: 100/hour is far beyond what you need to survive in the 2013 Irish economy, and the minimum wage exists in order to have a survival-wage in a market economy. Conversations about everyone being 'well off' aren't congruent with having a fundamentally capitalist system.0 -
Minimum wage was never a problem here in this country until the unions used it for bench marking and with that then the economy inflated.
We then joined the euro currency and that was a whole new ball game, right there.
As it stands, I think a small drop in minimum wage would be beneficial but it should also happen all across the board on all levels and not just minimum wage jobs.0 -
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Employees who charge more for their labour than they are worth are exploiting the company and exploiting the "little guy" ie the consumer who has to pay extra or can't afford the product.
This is too funny like. So take some poor bastard living in London struggling to exist on £6.08 an hour, if he/she asks for an extra £1.50 an hour from a company earning millions in profit off his/her sweat; that's exploitation?
Exploitation is paying a wage that a full-time worker can't hope to live on while earning obscene amounts of money. You stating anything different is laughable, and frankly an insult to those struggling at the bottom of the economic ladder.Why are you concerned with the profits a pub makes, that's none of your business.
It is really because businesses make their profit due to the labour of ordinary working people. It doesn't come out of thin air. Similarly those telling us that a cut in the minimum wage is necessary often do so because they argue that businesses are "struggling". Half the bastards paying minimum wage aren't struggling at all. Thus the notion of massive profits is very relevant to discussions about low wages.0 -
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I don't care why you hold these views, I'm noting the conflict of interest, where many of the people supporting abolition of the minimum wage, are in an industry or position that stands to gain from it.Three Seasons wrote: »That's ridiculous. Do you think I'm against the minimum wage because I will somehow take in the money if its gone?
You're paranoid.
I have plenty of friends and family on minimum wage and want nothing but the best for them. A fully functioning economy is what they need with more oppurtunities. Minimum wage will advance those goals.
It's pretty obvious how abolition of the minimum wage, would be beneficial to the entire finance industry: Company profits soar at the cost of society, and thus so do the profits of financiers with investments in those companies, and the finance industry as a whole.
The story people with such conflicts of interest would try and have us then believe (utilizing either Austrian or Neoliberal economic theory), is that this won't happen, and that abolition of the minimum wage (or 'insert socially destructive policy here') would be good for us instead.0
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