Why austerity is a good idea

KyussBishop

We haven't got demand-pull inflation (in fact, our inflation rates are kept at a negligently low rate, given that we are undergoing an economic recession), we have speculative rent-seeking inflation in the oil and food markets, among many other markets (increasingly looks like practically any market you can think of, has prices being distorted by private financial interests, by controlling supply for monopoly/oligopoly profits).

We have lots of privately-led inflation, which is something all the inflation scaremongers never seem to bang on about with near the same intensity, as even the hint of overblown/exaggerated potential inflation, from government action.

It's basically:
Private inflation: Ignore, try to justify, or use every fallacious argument in existence to pin it on government.
Public inflation: Say any and every government intervention in the economy, will cause massive hyperinflation, and when pointing out existing instances of intervention not causing this, keep repeating "it's coming, it's coming - just around the corner" forever.


Again, repeating what I said earlier, there is no solution to this crisis within Ireland. Any solution has to be undertaken by Europe as a whole; the economic solutions are already known, but the political situation is impassable (and not looking likely to get any better - economics as a field, and most of politics, is infected with bad economics; led by theory that is just plain wrong, in fundamental ways).

rumour

realitykeeper wrote: »

Ireland is a high cost economy. In a high cost economy, people do not get good value for their money. This leads to other problems.

Without good value for money the dole must be high so the unemployed can make ends meet. When the dole is high the minimum wage has to be a fair bit higher as an incentive for the lowest paid to work. A high minimum wage pushes up costs for retailers and service providers making everything we buy more expensive. A high minimum wage also makes it impossible for exporters to compete with low wage economies so they close up and move their businesses to those low wage economies.

When businesses close, unemployment rises and so do taxes to pay for the new unemployed. Higher unemployment also increases the governments deficit as it has fewer workers and employers to tax. As the government`s deficit rises, it has to borrow to maintain living standards. When the government borrows the national debt rises. When the national debt rises so do the interest payments required to service the debt. When interest payments rise so does the overall cost of running the country. In a a high cost economy, people do not get value for money and like I said earlier, this leads to other problems. The simple fact is this: In a high cost economy, everyone from the government to the guy begging on the street - everyone, has to pay much more for everyday goods and services.

So what it the solution? For a start, I think it is important for everyone in the country to understand that the causes and the consequences of a high cost economy are mutually supportive so we end up in a vicious cycle of events which ultimately lead to higher debt, higher prices for everyday goods, unemployment, emigration etc.

Secondly, having recognized the problem we ought to tackle it in one of two ways. One is to reverse the sequence of events as outlined above. Another way would be a coordinated and very sudden reduction of costs across the economy. For example, if the minimum wage was cut, the dole could be simultaneously cut, as could public sector pay, VAT rates and - within days, the cost of goods and services would also plummet. This would help employers to start recruiting again. By remaining on its present path of borrowing to live beyond its means, Ireland will remain at the mercy of creditors and the interest rates they impose. Austerity can free the country all all that and ultimately enable us to save enough to care for the sick and elderly independently - without relying on others to lend us the cost of caring at interest rates we can neither afford nor control. This is why austerity is a good idea. Am I wrong?

Sum it up...we spend more than we earn.

sparksfly

OP, your opening 2 sentences are rubbish.
Have a look around and compare the high cost countries with the low cost ones.
Which ones provide the best standards of living?

Finland is a high cost country where its citizens get excellent value for money in almost every service, be it state or private.
Same for most of the worlds wealthiest countries, usually with the highest standards of living and the smallest gap between rich and poor, they are high cost countries. Eg, all of Scandinavia, Austria, Switzerland etc. The difference is that they manufacture and export high cost, high quality specialist goods and the profits are taxed sufficiently to provide excellent services while not stifling productivity, all this is helped by efficient public sectors.
Low cost countries are among the poorest and most uneven in wealth.
We are doing our best to join the latter gang.

rumour

sparksfly wrote: »

Finland is a high cost country where its citizens get excellent value for money in almost every service, be it state or private.
Same for most of the worlds wealthiest countries, usually with the highest standards of living and the smallest gap between rich and poor, they are high cost countries. Eg, all of Scandinavia, Austria, Switzerland etc. The difference is that they manufacture and export high cost, high quality specialist goods and the profits are taxed sufficiently to provide excellent services while not stifling productivity, all this is helped by efficient public sectors.
Low cost countries are among the poorest and most uneven in wealth.
We are doing our best to join the latter gang.

A superficial illusion, Scandinavia exports vast quantities of raw materials. That is the only thing that supports their existence. Entitlements for citizens follow directly from the revenue that this provides. Exclude that and they are the same as us.

Switzerland is a tax haven( they produce high-quality goods but strip out banking and they are buggered), don't know about Austria other than its has a big banking sector.

Having said that, their national characteristics seem to be true in that banking in Switzerland and Austria is a solid proposition whereas banking in Ireland???
One wonders is our national characterizations true?

Jawgap

rumour wrote: »

A superficial illusion, Scandinavia exports vast quantities of raw materials. That is the only thing that supports their existence. Entitlements for citizens follow directly from the revenue that this provides. Exclude that and they are the same as us.

Switzerland is a tax haven( they produce high-quality goods but strip out banking and they are buggered), don't know about Austria other than its has a big banking sector.

Having said that, their national characteristics seem to be true in that banking in Switzerland and Austria is a solid proposition whereas banking in Ireland???
One wonders is our national characterizations true?

All the countries you cite have a number of things in common. First, they may export some significant amounts of raw materials but they are also home to some of the strongest most innovative brands in the world and they all have strong manufacturing bases - Volvo (esp Volvo trucks), Carlsberg, G4/ Falck, Nokia etc. - does Ireland have any comparable indigenous brands (aside from Ryanair)? They also all rank well ahead of Ireland in terms of exports of high tech products on a per head basis.

The Swiss also have a significant pharma and chemical industry - they export more pharma than we do.

Second, consumption by consumers is intimately linked to salary / income, not debt - which enhances income flows to the government and smooths out income / wealth inequalities.

Third, they innovate - the Scandinavian countries and Switzerland consistently feature in the top 5 in the World Economic Forum's Innovation Index - currently, for example, Finland is ranked second, Ireland is 21st.

They also spend significant amounts on R&D - Finnish companies are ranked 3rd in terms of R&D spend, Irish companies, 21st (the Swiss ranked first) - finally both in both Switzerland and Finland there are over 275 PCT patents per million of population registered each year (over twice the rate in the US) - the corresponding figure for Ireland is about 90.

Finally, I worked in Denmark for a few months and I'd say the distinguishing feature between 'them' and 'us' is cultural - as a population they are just more mature than us and better able to grasp the notion of the public good - the project I was working on at the time was government funded, and while it did have it's own inefficiencies and problems, it wasn't plagued by the parochialism and parish pump politics that retards this country.

daithicarr

rumour wrote: »

A superficial illusion, Scandinavia exports vast quantities of raw materials. That is the only thing that supports their existence.

You might want to do a bit of reading.

Denmark does not produce or export a large amount of raw materials, and neither does Finland, apart from wood, but that doesn't even come near to being the largest componenet of their economy.

Finland is a great example of how a small , under populated country is able to manage its affairs to be a world leader.

Sure its not perfect, but there really isint anyone who does it better than them.

AlekSmart

Jawgap wrote: »

Finally, I worked in Denmark for a few months and I'd say the distinguishing feature between 'them' and 'us' is cultural - as a population they are just more mature than us and better able to grasp the notion of the public good - the project I was working on at the time was government funded, and while it did have it's own inefficiencies and problems, it wasn't plagued by the parochialism and parish pump politics that retards this country.

Excellent points.....I wonder if the Danes were in charge of building the New Liffey Bridge,would it be finished by now....?

The New Liffey Bridge,once again demonstrates,so VERY publicly,the cultural divide Jawgap refers to.

Just as with the O Connell St paving and LUAS projects we watch major infrastructional works being carried out on a Monday to Friday 9-5 basis.

The New Bridge site,for example ceased operations at 1600 yesterday and will not resume until 0830 on Monday.....In the meantime the longest days with best weather slip on by....what odds on us being able to watch the workforce struggling to complete it in Freezing,damp,dark conditions come November.....It's almost as if we HAVE to prove our thickness at times....

beeno67

AlekSmart wrote: »

Excellent points.....I wonder if the Danes were in charge of building the New Liffey Bridge,would it be finished by now....?

The New Liffey Bridge,once again demonstrates,so VERY publicly,the cultural divide Jawgap refers to.

Just as with the O Connell St paving and LUAS projects we watch major infrastructional works being carried out on a Monday to Friday 9-5 basis.

The New Bridge site,for example ceased operations at 1600 yesterday and will not resume until 0830 on Monday.....In the meantime the longest days with best weather slip on by....what odds on us being able to watch the workforce struggling to complete it in Freezing,damp,dark conditions come November.....It's almost as if we HAVE to prove our thickness at times....

And the reason to work evenings & weekends is????
Are we really crying out to have this bridge completed as soon as possible irrespective of the extra costs incurred. The bridge is mainly for the new Luas. Why waste money completing a bridge that won't be used?

goose2005

professore wrote: »

Young working families with big mortgages are in very many cases far worse off than unemployed families in social housing.

Look, a millionaire would be worse off than a beggar if he all of a sudden paid €20m of borrowed money to buy something that was only worth €5m. I don't see how bringing back workhouses would change that.

goose2005

beeno67 wrote: »

And the reason to work evenings & weekends is????
Are we really crying out to have this bridge completed as soon as possible irrespective of the extra costs incurred. The bridge is mainly for the new Luas. Why waste money completing a bridge that won't be used?

Why only build a bridge for 40 hrs a week and leave the site idle for 128? (The same goes even more for radiology, there's no special reason why X-rays can't be taken almost 24-7 but the HSE don't want to get round to it) And the new Luas bridge could well be one of the busiest in Ireland in terms of people crossing it per day.

beeno67

goose2005 wrote: »

Why only build a bridge for 40 hrs a week and leave the site idle for 128? (The same goes even more for radiology, there's no special reason why X-rays can't be taken almost 24-7 but the HSE don't want to get round to it) And the new Luas bridge could well be one of the busiest in Ireland in terms of people crossing it per day.

Because building at night costs a lot more, is more dangerous and creates noise pollution. Building at weekends cost more. Why rush the build at such extra cost? The bridge is for public transport & pedestrians only. Is anyone really desperate to get the bridge open at massively increased costs? I doubt many are. The bridge will be handy that's all. Certainly not worth wasting massive sums trying to get it built quicker. Anyway it may well have been stipulated in its planning permission that work could only take place at certain times of day.

AlekSmart

beeno67 wrote: »

And the reason to work evenings & weekends is????

Are we really crying out to have this bridge completed as soon as possible irrespective of the extra costs incurred. The bridge is mainly for the new Luas. Why waste money completing a bridge that won't be used?

It is perhaps,an Irish Pecularity of mind,that can regard the rapid completion of such a project as a "waste of money"...I must admit to struggling to grasp how it could be so...?

The new Liffey Bridge is First & Foremost a Public Transport bridge.

Its initial,and most important use is for Buses and Taxi's,as until it is complete and functioning,the O'Connell St/Parnell St/Marlborough St works cannot proceed.

So yes,that alone,is more than reason enough to treat the project as a major infrastructional one and proceed accordingly.

It's not that long since we had Senor Manuel Melis over from Madrid,where he had succesfully presided over the planning and construction of much of the Madrid Metro enhancements....some folks reckoned Manuel's opinions might be of assistance to the RPA...his advice was simple enough...1) Agree a Plan 2) Keep it as simple as possible 3) Commence Work on a 24/7/365 basis until complete.

Not unsurprisingly,the RPA thanked Sen. Melis,paid his fee and promptly ignored everything he said.

It's what makes us different I suppose ?

AlekSmart

beeno67 wrote: »

Because building at night costs a lot more, is more dangerous and creates noise pollution. Building at weekends cost more. Why rush the build at such extra cost? The bridge is for public transport & pedestrians only. Is anyone really desperate to get the bridge open at massively increased costs? I doubt many are. The bridge will be handy that's all. Certainly not worth wasting massive sums trying to get it built quicker. Anyway it may well have been stipulated in its planning permission that work could only take place at certain times of day.

Of course building at night costs more,but it's all perfectly normal methodology in many,if not most major urban infrastructural projects.

The issues tend to revolve around efficiencies and operational judgements whereby a mix of such work is allowed for.

For example,with in excess of 12 hours,of daylight during the summer period it behoves the Project Engineers to utilize this fully.

Instead we see,not for the first time in such projects,a fallow site with the longest days of the year ignored,whilst the same engineers will happily sign-off on a requestition for Generator Powered Flood-Lights come October....(The brother in-law has an oul plant-hire company y'see..nudge nudge..wink wink...)

It's not even about efficiency or engineering any more,it's about common-sense !

Doubtless too,the planning-conditions specified reduced hours of work,in order to reduce the impact on the centre city residents......of whom there are many,all crammed into the over-the-shop accomodation so very popular in Dublin City Centre....:rolleyes:

However,this is only using the New Bridge as an example,as the country appears full of such stuff....witness yesterday's lonnng awaited opening of the Road to Hansfield Railway Station,which finally allowed potential passengers to access the Trains passing through it....how many years did that take..???..George Orwell himself might have used it as an alternative to Wigan Pier

Austerity may yet prove to be the very best thing we could endure,as it will force us all into looking at more effective,efficient and FASTER ways of doing stuff....or perhaps we are grand as we are ???

beeno67

AlekSmart wrote: »

Of course building at night costs more,but it's all perfectly normal methodology in many,if not most major urban infrastructural projects.

The issues tend to revolve around efficiencies and operational judgements whereby a mix of such work is allowed for.

For example,with in excess of 12 hours,of daylight during the summer period it behoves the Project Engineers to utilize this fully.

Instead we see,not for the first time in such projects,a fallow site with the longest days of the year ignored,whilst the same engineers will happily sign-off on a requestition for Generator Powered Flood-Lights come October....(The brother in-law has an oul plant-hire company y'see..nudge nudge..wink wink...)

It's not even about efficiency or engineering any more,it's about common-sense !

Doubtless too,the planning-conditions specified reduced hours of work,in order to reduce the impact on the centre city residents......of whom there are many,all crammed into the over-the-shop accomodation so very popular in Dublin City Centre....:rolleyes:

However,this is only using the New Bridge as an example,as the country appears full of such stuff....witness yesterday's lonnng awaited opening of the Road to Hansfield Railway Station,which finally allowed potential passengers to access the Trains passing through it....how many years did that take..???..George Orwell himself might have used it as an alternative to Wigan Pier

Austerity may yet prove to be the very best thing we could endure,as it will force us all into looking at more effective,efficient and FASTER ways of doing stuff....or perhaps we are grand as we are ???

Still the same question. Why spend a huge amount more money getting this bridge built faster?

ardmacha

Austerity may yet prove to be the very best thing we could endure,as it will force us all into looking at more effective,efficient and FASTER ways of doing stuff....or perhaps we are grand as we are ???

You would think it would. But despite this there is no emphasis whatsoever on productivity, the concept seems unknown in government. Nothing is measured in productivity terms, only in total "budget". If your budget is limited you need more bang for your buck.

Jawgap

goose2005 wrote: »

Why only build a bridge for 40 hrs a week and leave the site idle for 128? (The same goes even more for radiology, there's no special reason why X-rays can't be taken almost 24-7 but the HSE don't want to get round to it) And the new Luas bridge could well be one of the busiest in Ireland in terms of people crossing it per day.

There's a 24/7 demand for radiology services in large hospitals with A&E departments - there's no urgency in having the bridge built, nor is there any huge demand for the labour and equipment being used to construct it - other projects are not being delayed because of this work.

In short, there's no imperative to rush ahead. On most projects, including construction ones, it's a case of balancing quality, financing and time - you prioritise one at the expense of the other two - in this case time is not important, but financing and quality are.......

.......saying that , given our tradition of poor project management, it will probable be slightly late, over budget, but adequately constructed:)

Chinasea

But, one of the main problems I see in this country is that we only cut our cloth to fit, when we as individuals or made pay for it.

Many of the Scandinavian, Baltic countries, and for all I know Asian countries would be horrified, absolutely horrified if they were to see the needless waste that we live by in Ireland.

i.e: was leaving someone into admissions in the hospital this week and the clerk printed off pages of labels for the patient and put in their folder. Max 10 labels would have been enough. Prescription at €1.50 written out for said patient with a supply of 60 tablets, when one months supply would have easily sufficed. And so on and so forth.

So for the wrong reasons OP, it would seem that austerity could be a good idea because of the needless waste and lack of collective innate foresight.

What I find jarring is that we continue to waste so much needlessly despite a full on recession..

AlekSmart

beeno67 wrote: »

Still the same question. Why spend a huge amount more money getting this bridge built faster?

Still the same answer,this particular bridge is of significant strategic importance to the greater Luas BXD programme,it is also of similar importance to Dublin's Public Transport on a broader scale,so why NOT ensure that it's construction and completion is expedited ?

Theres no evidence that a "huge amount more" would have to be spent at all,but rather the tender specifications need to be far more robust when it comes to duration of construction.

I am not suggesting this as a cost increasing measure at all,rather one of why the contracts are not drawn-up with efficiency and better scheduling as basic elements.

The current norms in these type of projects would appear to suggest a Manana answer to the question,when will it be finished....

realitykeeper

AlekSmart wrote: »

Quite the most incredible aspect for me,is how significant elements of our National Administration see a kick-starting of the "Property Market" as being just what's needed to get the ball rolling again.

The exact same movers n shakers who got us into the present mess are being facilitated to create another mess to ensnare the next generation of savvy-investors.

Are we mad or wha..?

This is true. What Ireland needs is to get back to manufacturing and not just value added goods but common everyday items which require cheap labour and assembly lines. Unfortunately two many young people ignored the advice of industry over the past decade and instead of focusing on maths, science and languages they wasted their time on social studies, the humanities and that type of quackery. Ireland can`t afford social workers. To balance the books the government has to abolish the minimum wage and encourage the manufacturing sector.

Farmer Pudsey

I do not think that we are a high cost economy any longer. Was in France was supprised at supermarket prices there across all supermarkets they are now as expensive if not more expensive than Ireland. 10 years ago they were way cheaper. Fuel is the same price as Ireland 10 years ago it was 15% more expensive however car costs are higher here. Agree about utilities energy is more expensive but was supprised that prepay mobile top up were 30 and 40 euro over there in the only shop I saw. We are not charge for water and there will more than likely be a pull back from continue austerity over the next two years.

Housing was way more expensive past a few auctioneers windows and any decent house was over 200K. I know that this was a holiday area however nothing was cheap. With internet shopping a lot of the price difference has been equalised. The UK supermarkets has sheltered it consumers from food inflation but this will change over the next while as food is increasing in price. 2 burgers were over 3 euro in French Supermarkets milk about 1.1/litre, cooked meats were more expensive as was fresh meat, fruit and veg was as expensive if not more so.

I think the biggest mistake we are making at present is our failure to put in place low skill employment. High cost in government supplied services has killed this sector. Another thing I saw was that we have gone completely over board on the H&S lark. Now France is the other extreme but there has to be a happy medium. Restarting the building sector as it getting it functioning and back to 10-12% of the economy from 6% will not cure our issue but it will help. there is no quick fix but instead a number of changes with in the economy could get it moving. Tourism is the same if we could increase this sector it would also help.

This idea that the private sector is filled with greedy business people is a bit of an urban legend rather it is filled with business some of which are just surviving other that are doing well and a lot that are going out of business.

Jawgap

Whether we are high cost or not can depend on how you define cost.

In my experience of working in a few countries, our unit labour costs compare well to other countries - and on that basis we're actually cheaper than Denmark (based on personal experience) and probably some of the other Scandinavian countries.

Costs mount up because of the length of time taken to get things done - the bureaucracy in this country is unreal - and I say that working as a public servant.

The project I was involved in, in Denmark (an IT installation in a science park / campus) took three months. I reckon to do the same installation here would take twice as long, because I reckon you'd need to deal with half a dozen different agencies / government departments - whereas in Denmark you dealt with one.

draiochtanois

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ardmacha

Cut VAT from 23% to 15%
Instead of everyone buying from the North, the internet etc people would buy from here. It would help with tourism, transportation, etc
Yield would go up so it would be at worst revenue neutral at best would generate additional tax revenue.

Quite apart from the fact that many things bought in the Internet attract the Irihs rate of VAT and many things bought in the North are food etc with no vat, this would require a 50% increase in sales volume to be revenue neutral. How likely is that?

Cut TDS from 166 to 100 and pay them the average industrial wage

I'd like TDs to be above average people. In any case this saves a negligible amount of money.

Make minister for Finance an appointee rather than an elected official. someone like the head of the central bank - get a top CFO from industry and get them to sort out the whole budgeting function

This one has potential.

draiochtanois

This post has been deleted.

realitykeeper

Noreen1 wrote: »

If competition were all it took to have prices reduced, then I'd expect to see the prices of non-luxury goods reduced since the downturn.

Incomes have dropped, but the price of energy, rents, etc. have increased, or stayed the same.

If the aforementioned measures required to make Ireland a low cost economy were taken, then prices would be forced to drop. Competition would be a very small part of this downward pressure on prices but even if you were part of a cartel Noreen1, your cartel would quickly realize the futility of trying to defy gravity.

The simple fact is that if enough money is taken out of the economy people will not be able to buy at current prices. Lets say a particular shop is part of a cartel and their prices are fixed at a high level - all of a sudden they would find their clientele dwindle to nothing. Perishable goods in the shop would have to be dumped and what you would probably find is a sharp rise in shoplifting.

I am not saying that businesses do not have a legal and moral right to make a profit. Of course they do, but in a low cost economy the customer base is more suited to non value added products. For example, raw unwashed/unpackaged spuds from a local farmer would be more appropriate than washed and packaged mini spuds from Dutch factory farms.

I know that if a shop sells lower value goods, their profit will be smaller and so they will be only able to pay less rent and not more. Therefore they can do a deal with their landlord or if that can`t be done they can go out of business.

It is also true that many of these shops are now owned by NAMA and without rental income NAMA will incur bigger losses than would otherwise be the case and this is another reason for the government to re-privatize the zombie banks along with their toxic assets. If the international lenders cut Ireland off from credit as a result, the country can respond by redoubling its efforts to drive down costs to the point where it has a budget surplus which in turn can be used as a promotional selling point for Ireland Inc.

Noreen1

beeno67 wrote: »

I am certainly paying less for groceries than 2008. It seems I'm not alone.
http://www.businessandleadership.com/small-business/item/39572-food-price-inflation-low-in

In addition our inflation rate for the last 5 years is very low. We have become substantially more competitive than we used to as a country compared to the rest of Europe.
http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&language=en&pcode=tec00118&tableSelection=1&footnotes=yes&labeling=labels&plugin=1

Now, there's an interesting difference of opinion.

http://www.independent.ie/opinion/columnists/david-mcwilliams/what-new-property-bubble-tells-us-about-inequality-29390814.html

In the 12 weeks to June, food price inflation was running at above 5pc, this is 10 times the rate of inflation, which was only 0.5pc last month.

Whereas I've been known to question McWilliams in the past, in this instance, I'd say his figures are more impartial than IBEC.

Geuze

Inflation rates are published by the CSO.

www.cso.ie

Food and non-alcohol beverage inflation is 1.5%:

http://www.cso.ie/en/media/csoie/releasespublications/documents/prices/2013/prices/cpisubindices/pic_may2013.pdf

Noreen1

realitykeeper wrote: »

If the aforementioned measures required to make Ireland a low cost economy were taken, then prices would be forced to drop. Competition would be a very small part of this downward pressure on prices but even if you were part of a cartel Noreen1, your cartel would quickly realize the futility of trying to defy gravity.

The simple fact is that if enough money is taken out of the economy people will not be able to buy at current prices. Lets say a particular shop is part of a cartel and their prices are fixed at a high level - all of a sudden they would find their clientele dwindle to nothing. Perishable goods in the shop would have to be dumped and what you would probably find is a sharp rise in shoplifting.

I am not saying that businesses do not have a legal and moral right to make a profit. Of course they do, but in a low cost economy the customer base is more suited to non value added products. For example, raw unwashed/unpackaged spuds from a local farmer would be more appropriate than washed and packaged mini spuds from Dutch factory farms.

I know that if a shop sells lower value goods, their profit will be smaller and so they will be only able to pay less rent and not more. Therefore they can do a deal with their landlord or if that can`t be done they can go out of business.

It is also true that many of these shops are now owned by NAMA and without rental income NAMA will incur bigger losses than would otherwise be the case and this is another reason for the government to re-privatize the zombie banks along with their toxic assets. If the international lenders cut Ireland off from credit as a result, the country can respond by redoubling its efforts to drive down costs to the point where it has a budget surplus which in turn can be used as a promotional selling point for Ireland Inc.

All true - if we were self-sufficient.

Since we're not, your theory doesn't work, in the real world.

If we can't afford oil, for instance, it doesn't matter if consumption drops.
We're too small to make any difference in World markets.

What about the shops that are not owned by NAMA? What is the percentage of shops owned by NAMA, anyway? Have rents in NAMA owned properties actually dropped since the crises began? What about upward-only rent reviews? Do you think that these issues have any bearing on actual rents being paid?

As to unwashed spuds bought from a local farmer? Are you aware that the local farmer cannot sell you these spuds without a licence? One which is prohibitively expensive for small producers, and that's before you count the man hours required for actually selling the product?

How do we drive down the cost of imported products? Again, the market is too small for Ireland inc. to make any difference to the price of items such as vehicles, or "white goods".
We need the vehicles, refrigeration etc, but the amount that prices will realistically fall is limited.

Unfortunately, there doesn't appear to be any such limits on the degree to which consumers income can drop - as many people who have become unemployed, or have experienced a loss of income through wage decreases and an increase in taxes can verify.

In short, austerity might work, in a self-sufficient economy, where decreases in the cost of living could be matched to a decrease in income. (If that were possible, which I doubt!)

However, for a small open-market economy, the only effect austerity has is to decrease disposable income, which in turn, ensures the failure of the SMEs, which (combined) are actually the biggest employers in the state, causing a tremendous increase in social welfare costs.
That is precisely what has happened, so far, despite the mass exodus of emigrants.

Geomy

I hadn't time to go back through the post's so not sure if the damp cold winter months were mentioned.

We also have to spend a lot of money on washing, drying, heating, and warm clothes etc

Warming up the house so that the kids and vulnerable people are not too cold or damp, its a vicious circle.

Couldn't there be community days out cutting back overgrown forests and invasive shrubs etc
Loading up the cutbacks according to grades from kindling to log size's and distribution of them to the families who helped out and to the vulnerable etc

Vulnerable as in sick, elderly, and genuinely disabled people.

beeno67

Noreen1 wrote: »

Now, there's an interesting difference of opinion.

http://www.independent.ie/opinion/columnists/david-mcwilliams/what-new-property-bubble-tells-us-about-inequality-29390814.html
Whereas I've been known to question McWilliams in the past, in this instance, I'd say his figures are more impartial than IBEC.

I quoted inflation rates for 5 years back up by Eurostat. McWilliams talks about food inflation over a 12 week period and compares it to overall inflation over a month.
Typical McWilliams rubbish.