Public sector pay increase

07-05-2015 06:44PM

Iwasfrozen wrote: »

Do you ever think maybe government economic planners have a better grasp of this stuff than you do?

They know themselves what should be done but doing it is another issue. Integrated ticketing is probably the best and simplest example in recent times. Something that other cities far larger than Dublin have had for a decade that has been introduced in a haphazard and awkward way.

jobeenfitz · 07-05-2015 06:45PM

A payrise, Wohoo, I'm off to get a 100% mortgage and a car loan, oh ye and another credit card. Let the good times roll baby!

Iwasfrozen · 07-05-2015 06:45PM

KomradeBishop wrote: »

No we don't, as you're assuming that the bonds will automatically be reissued, an assumption based on nothing...since you admit you don't know what the rate of inflation will be, or what the growth in GDP will be (which counts as the ROI), you're pretty much admitting you haven't got a clue whether the debt will be sustainable or not.

The bonds have to be reissued, reissued or paid off.

Other posters have already pointed out, that through sectoral balances, there will automatically be a growth in GDP from government spending through debt, showing that there will automaticaly be a boost in debt sustainability through economic growth.

Without knowing what the return on investment will be, what inflation will be and what interest rates will be when the bonds have to be reissued in ten years time we don't know if borrowing will be beneficial.

Vizzy · 07-05-2015 06:46PM

bjork wrote: »

oops did I lead out the "d", cutbacks

We'll agree on "Windfall"

Yes you leaded out the "d"

KomradeBishop · 07-05-2015 06:49PM

Iwasfrozen wrote: »

The bonds have to be reissued, reissued or paid off.

Your sentence is inherently contradictory - as you say, they can be paid off in 10 years - so obviously, they don't have to be reissued.

How are you magically predicting high-interest rates in 10 years either? In 10 years, the boost in Ireland's GDP caused by debt-based-spending today, can make the debt more sustainable, so that even if interest rates rise in 10 years, we're still better off.

Iwasfrozen wrote: »

Without knowing what the return on investment will be, what inflation will be and what interest rates will be when the bonds have to be reissued in ten years time we don't know if borrowing will be beneficial.

We pretty much know with complete certainty (due to sectoral balances), that any debt-based-spending today, is going to result in a nice meaty GDP boost - so yes, we do know what the benefit will be (and we've got past historical precedent to prove it, from past worldwide governments engaging in public spending programs), and we we know that by spending like that we can actually create inflation (thus also making the debts more sustainable), and we have no reason at all to believe that in 10 years interest rates will magically be burdensome - the idea of that is just silly scaremongering.

Iwasfrozen · 07-05-2015 06:56PM

KomradeBishop wrote: »

Your sentence is inherently contradictory - as you say, they can be paid off in 10 years - so obviously, they don't have to be reissued.

How are you magically predicting high-interest rates in 10 years either? In 10 years, the boost in Ireland's GDP caused by debt-based-spending today, can make the debt more sustainable, so that even if interest rates rise in 10 years, we're still better off.

Paid off how? The only way the principal amount of the debt can be paid off is by issuing more bonds.

So the interest rates could be lower in ten years when we have to issue more bonds to pay off the principal amount, or they could be higher.

If they're higher, we're in trouble unless the increase to gdp was substantial enough to grow the economy to the point where we're still benefiting despite the higher interest rates.

We pretty much know with complete certainty (due to sectoral balances), that any debt-based-spending today, is going to result in a nice meaty GDP boost - so yes, we do know what the benefit will be (and we've got past historical precedent to prove it, from past worldwide governments engaging in public spending programs), and we we know that by spending like that we can actually create inflation (thus also making the debts more sustainable), and we have no reason at all to believe that in 10 years interest rates will magically be burdensome - the idea of that is just silly scaremongering.

The point is how substantial is the gdp boost?

What if interest rates are substantially higher in ten years time? Saying "we have no reason to believe they will be" doesn't mean anything.

bjork · 07-05-2015 07:06PM

Vizzy wrote: »

Yes you leaded out the "d"

Opps my spellchecker must be on the blink today. Those of average intelligence would be able to understand I meant "leave".

* I hope the spelling and sentence structure in this post are of a satisfactory level

Bring on decentralization Mark 2

The nurses can buy the beds and the rest of us will get a pay-rise
#

money for jam

KomradeBishop · 07-05-2015 07:09PM

Iwasfrozen wrote: »

Paid off how? The only way the principal amount of the debt can be paid off is by issuing more bonds.

So the interest rates could be lower in ten years when we have to issue more bonds to pay off the principal amount, or they could be higher.

If they're higher, we're in trouble unless the increase to gdp was substantial enough to grow the economy to the point where we're still benefiting despite the higher interest rates.

Eh? You're advocating running a surplus today to pay off debts, so it's pretty obvious how to pay them off in the future, if we want to.

We already know, thanks to sectoral balances, that increases in government spending inherently increases GDP - so if you want to argue that the increase in GDP won't be enough, you'll need to provide something to back that, as public spending programs in the past have shown more than enough economic growth to boost GDP.

Iwasfrozen wrote: »

The point is how substantial is the gdp boost?

What if interest rates are substantially higher in ten years time? Saying "we have no reason to believe they will be" doesn't mean anything.

The 'what if' is just scaremongering, which assumes:
1: We won't be paying the debt down in 10 years (which you advocate doing now anyway, so what's the difference?), and
2: Interest rates will be higher.

Neither conditions have any merit. You're just assuming worst-cast-scenario's, to try and paint your position in the most credible light.

Iwasfrozen · 07-05-2015 07:46PM

KomradeBishop wrote: »

Eh? You're advocating running a surplus today to pay off debts, so it's pretty obvious how to pay them off in the future, if we want to.

We already know, thanks to sectoral balances, that increases in government spending inherently increases GDP - so if you want to argue that the increase in GDP won't be enough, you'll need to provide something to back that, as public spending programs in the past have shown more than enough economic growth to boost GDP.

I advocate running a surplus, you advocate the opposite .

You are saying increased spending will increase GDP, I agree with that but I am pointing out that the increase to GDP may not be enough to counteract a potential increase in interest rates.

What do we do if GDP rises and increased inflation aren't sufficient to offset a potential rise in interest rates? This is a fundamental flaw in your argument.

The 'what if' is just scaremongering, which assumes:
1: We won't be paying the debt down in 10 years (which you advocate doing now anyway, so what's the difference?), and
2: Interest rates will be higher.

Neither conditions have any merit. You're just assuming worst-cast-scenario's, to try and paint your position in the most credible light.

It's not scaremongering to point out problems with your proposal. Whether you accept it or not increasing our net debt increases our exposure to interest rate rises.

ardmacha · 07-05-2015 07:55PM

seamus wrote: »

More nonsense. It doesn't have to be your fault. Companies go bust, yet their employee still lose their jobs despite it not being their fault.

The employer of the public sector saw a massive drop in its income. Like any other employer, cost cuts had to be made, one of which is usually salaries.

It's not about blame or fault, but simple economics. When your employer's in the red, your pay gets cut. The public sector is not immune to this. You were not punished or blamed, just the victim of circumstance, like the rest of the economy.

This would all be fine, expect the employer was giving its product away for nothing while cutting its employees on the basis it had no money, so water was given away free when every other country charged, universities charged one quarter of what was in the neighbouring island, and so on. The government was playing politics by not charging for these things, so the PS employees are the victim of politicians.

KomradeBishop · 07-05-2015 08:18PM

Iwasfrozen wrote: »

I advocate running a surplus, you advocate the opposite .

You're deliberately ignoring the context of what I said, as you know I was talking in the context, of debts coming due.

Iwasfrozen wrote: »

You are saying increased spending will increase GDP, I agree with that but I am pointing out that the increase to GDP may not be enough to counteract a potential increase in interest rates.

Based on what? There are more than enough past instances of a public-spending-based GDP boost, to consider a recovery from that as the most likely outcome.

Iwasfrozen wrote: »

What do we do if GDP rises and increased inflation aren't sufficient to offset a potential rise in interest rates? This is a fundamental flaw in your argument.

It's not scaremongering to point out problems with your proposal. Whether you accept it or not increasing our net debt increases our exposure to interest rate rises.

You're just displaying here, that you don't have any idea how interest rates work - the better our economy is doing in the present (note: in the present, so you can't magically shift that forward 10 years went the debts come due), the better our interest rates will be, since markets will be more confident in our economic stability then - allowing us to rollover debts if we want in the future, or to pay them down with a surplus.

Again, you're magically assuming that interest rates will shoot up the sky-high levels, just to suit your argument - and are clinging on to that.

What, exactly, is going to shoot up interest rates? If your answer is just "I don't know" or "we can't know that" - then you're just spouting nonsense, and making scaremongering/doomsday predictions.

We know the benefit of a spending boost today, you're spouting a totally speculative doomsday scenario in the future - with nothing to back it.

Pocoyo · 07-05-2015 09:04PM

I support pay rises for nurses,As for the gardai no,I believe the money could be used for better training,Their conflict resolution skills are disgraceful.

lubie76 · 07-05-2015 09:14PM

About bloody time, I'm on less money now than what I started on in 2007. I'm working an extra 2.5 hours a week with twice as much work due to non replacement of staff and also get 3 days less annual leave. Bring it on, I say, we have done our time!

MonkeyTennis · 07-05-2015 09:18PM

Pocoyo wrote: »

I support pay rises for nurses,As for the gardai no,I believe the money could be used for better training,Their conflict resolution skills are disgraceful.

Bitter?

Dan_Solo · 07-05-2015 09:54PM

MonkeyTennis wrote: »

Bitter?

Have they not updated the Templemore phrasebook to "chip on your shoulder" or "had a run in" in the more recent editions?

Iwasfrozen · 07-05-2015 10:04PM

KomradeBishop wrote: »

Based on what? There are more than enough past instances of a public-spending-based GDP boost, to consider a recovery from that as the most likely outcome.

What is based on what? Once again I'm pointing out that the increase to GDP may not be enough to counteract a potential increase in interest rates.

I'm underlining the word potential because you seem to skip over it and assume I am assuming an increase, I'm not but we have to consider the possibility.

You're just displaying here, that you don't have any idea how interest rates work - the better our economy is doing in the present (note: in the present, so you can't magically shift that forward 10 years went the debts come due), the better our interest rates will be, since markets will be more confident in our economic stability then - allowing us to rollover debts if we want in the future, or to pay them down with a surplus.

Again, you're magically assuming that interest rates will shoot up the sky-high levels, just to suit your argument - and are clinging on to that.

What, exactly, is going to shoot up interest rates? If your answer is just "I don't know" or "we can't know that" - then you're just spouting nonsense, and making scaremongering/doomsday predictions.

We know the benefit of a spending boost today, you're spouting a totally speculative doomsday scenario in the future - with nothing to back it.

When you can't argue with someone throw out the old "you don't understand it as well as I do."

The burden of proof in any discussion is on the person making the proposition, I'm the one pointing out a major flaw in your argument.

Now to answer your question what causes interest rates to rise? Well, yield, maturity and credit rating.

So what happens if there's a hit to Ireland's credit rating? What then? We've taken all this money out, we didn't build any infrastructure btw, we spend it on public sector wage increases, and we can't pay it off.

The higher your debt to gdp ratio, which btw is used to calculate credit ratings, the more exposed you are to interest rate volatilities.

Geuze · 07-05-2015 11:28PM

KomradeBishop wrote: »

Yea anyone with knowledge of how debt works, knows that an interest rate of 0.66% - one of the lowest interest rates ever - gives us extensive room for sustainable debt-based spending. Do the math.

This would be true if we didn't already have a mountain of public debt.

I would be the first to call for fiscal stimulus based on borrowing at 1%, if our debt was 60% of GDP, maybe even 80%.

But it's not, it's much higher.

Now, Germany, with a more reasonable public debt, and 0.5% 10yr bond yields, should be planning large capital spending.

Geuze · 07-05-2015 11:32PM

KomradeBishop wrote: »

Other posters have already pointed out, that through sectoral balances, there will automatically be a growth in GDP from government spending through debt, showing that there will automaticaly be a boost in debt sustainability through economic growth.

You are suggesting here that the fiscal stimulus multiplier is well above 1, i.e. that 100m of extra Govt spending will lead to a rise in GDP of much more than 100m.

Note that due to a lot of leakages, the fiscal multiplier may not be high in Ireland.

See here:

http://www.irisheconomy.ie/index.php/tag/fiscal-multipliers/

KomradeBishop · 07-05-2015 11:51PM

Iwasfrozen wrote: »

What is based on what? Once again I'm pointing out that the increase to GDP may not be enough to counteract a potential increase in interest rates.

I'm underlining the word potential because you seem to skip over it and assume I am assuming an increase, I'm not but we have to consider the possibility.

An increase in GDP automatically reduces our 'public debt vs GDP' and 'interest paid on debt vs GDP' - so you'd need a ridiculously high interest rate, to counteract the GDP growth.

Iwasfrozen wrote: »

When you can't argue with someone throw out the old "you don't understand it as well as I do."

The burden of proof in any discussion is on the person making the proposition, I'm the one pointing out a major flaw in your argument.

Now to answer your question what causes interest rates to rise? Well, yield, maturity and credit rating.

So what happens if there's a hit to Ireland's credit rating? What then? We've taken all this money out, we didn't build any infrastructure btw, we spend it on public sector wage increases, and we can't pay it off.

The higher your debt to gdp ratio, which btw is used to calculate credit ratings, the more exposed you are to interest rate volatilities.

You haven't spotted a flaw, you're just assuming high interest rates because it suits your argument.

You're just switching to assuming a hit on Ireland's credit rating now - where from, exactly, since we'll be more economically stable due to the increase in GDP caused by public spending?

You're assuming a whole bunch of other silly things there as well - in a typical doomsday/scaremongering fashion - that immediately after taking out the loan and before we've built any infrastructure, the rates go sky high :rolleyes:
Demonstrating in the process that you're blind to the fact that debts taken out today aren't up for being rolled over for 10 years (or 30 years if we opt to issue long-term debt) - which is plenty of time to engage in spending.

You're also choosing to ignore the rather obvious tactic of:
Spending while interest rates are at their lowest point ever, and running a surplus if interest rates get high - which should be blindingly obvious to anyone, that it's a sensible way to go about running public finances.

KomradeBishop · 07-05-2015 11:54PM

Geuze wrote: »

This would be true if we didn't already have a mountain of public debt.

I would be the first to call for fiscal stimulus based on borrowing at 1%, if our debt was 60% of GDP, maybe even 80%.

But it's not, it's much higher.

Now, Germany, with a more reasonable public debt, and 0.5% 10yr bond yields, should be planning large capital spending.

It's the 'interest payments vs GDP' that determines debt sustainability, not the overall level of public debt - and you don't reduce 'public debt vs GDP' by focusing monomaniacally on paying down the debt, you do it by growing GDP to its maximum growth potential first - which restores the private sector to full economic capacity in the process, helping to pay off all debts (public and private) faster once GDP is at its maximum growth potential.

KomradeBishop · 07-05-2015 11:58PM

Geuze wrote: »

You are suggesting here that the fiscal stimulus multiplier is well above 1, i.e. that 100m of extra Govt spending will lead to a rise in GDP of much more than 100m.

Note that due to a lot of leakages, the fiscal multiplier may not be high in Ireland.

See here:

http://www.irisheconomy.ie/index.php/tag/fiscal-multipliers/

Standard economic models say that the fiscal multiplier will be below 1 - largely the same economic models that led us into the crisis in the first place, and which should be thrown out.

Even the IMF admits that their models are completely wrong, and fiscal multipliers are likely well above 1 - in research put out long after the last such blog entry on your link above:
https://en.wikipedia.org/wiki/Fiscal_multiplier#IMF

The IMF and other major economic institutions, have been getting their forecasts wrong ever since the crisis began, because they are still using broken models, which seem more suited to serving an ideological goal rather than an economic one (really, read up on the utterly terrible accuracy of their forecasts - they are consistently wrong by a very large degree).

Vizzy · 08-05-2015 12:33AM

bjork wrote: »

Opps my spellchecker must be on the blink today. Those of average intelligence would be able to understand I meant spell "leave".

* I hope the spelling and sentence structure in this post are of a satisfactory level

Bring on decentralization Mark 2

The nurses can buy the beds and the rest of us will get a pay-rise
#

money for jam

Fixed that for you

Bowlardo · 08-05-2015 12:49AM

I'd prefer if they held their wages but hired more nurse ,garda, & teachers to alleviate the pressure they are on in their jobs. I would hope the reduction in the usc would provide an initial bit of cash for the people currently in the public sector with a view to a 5 % increase in the next three year(at some stage)
The people on the front line are on the knees working as hard as possible but I think it would be better benefit to the country and the front line public sector if there was a dramatic increase on front line employees to help them out at the minute

jimmy2pens · 08-05-2015 12:58AM

stimpson wrote: »

My pay was unilaterally cut by a lot more when I was made redundant. How many PS workers were made redundant?

Ya same here, got a 100 percent pay cut. I Got off my arse and spent four years in college on a pretty poor back to education allowance,had to deal with a lot of public servants to get it, such a lot of bullxxxt, giving the same info to several govt dept, don't need all the staff, most of them are part timers and job sharing - no continuity of work. now that's my rant over. Any way got a job after the college in my new qualification.

darkpagandeath · 08-05-2015 03:25AM

Bowlardo wrote: »

I'd prefer if they held their wages but hired more nurse ,garda, & teachers to alleviate the pressure they are on in their jobs. I would hope the reduction in the usc would provide an initial bit of cash for the people currently in the public sector with a view to a 5 % increase in the next three year(at some stage)
The people on the front line are on the knees working as hard as possible but I think it would be better benefit to the country and the front line public sector if there was a dramatic increase on front line employees to help them out at the minute

The hse is well over staffed even with nurses. it's not how many it's quality and budget spending that's the problem. we have one of the highest staffed hospital systems in the EU do we not ?

jank · 08-05-2015 08:00AM

iba wrote: »

Thanks for that: 'Public servants pay tax but payroll for public services comes from private wealth and capital. One should remember that' - I did not know this.

Can you tell me then what do the taxes that Public servants go on then please?

Productivity has increased because less people are doing more work and working longer hours for less money = xyz

So you admit that the PS was over bloated to begin with?

PS paying tax is a mis-nomer as the difference has to be made by either borrowing or private wealth. Given that logic you are trying to follow, we should double PS pay as they will pay more tax!

Dozen Wicked Words · 08-05-2015 08:05AM

darkpagandeath wrote: »

The hse is well over staffed even with nurses. it's not how many it's quality and budget spending that's the problem. we have one of the highest staffed hospital systems in the EU do we not ?

So you want less nurses but higher quality ones? How do you quantify the quality of the nurse?

08-05-2015 09:02AM

jank wrote: »

PS paying tax is a mis-nomer as the difference has to be made by either borrowing or private wealth. Given that logic you are trying to follow, we should double PS pay as they will pay more tax!

You do realise those in the public service spend a large portion of their money in the private sector thus keeping people in jobs and generating company profits which in turn feed back into the government. Pay them more and they will spend more, despite their salary's being drastically (and wrongly) cut its the public servants that worked hard through the recession and basically kept the country afloat.

Mr. teddywinkles · 08-05-2015 10:10AM

Yara Old Backyard wrote: »

You do realise those in the public service spend a large portion of their money in the private sector thus keeping people in jobs and generating company profits which in turn feed back into the government. Pay them more and they will spend more, despite their salary's being drastically (and wrongly) cut its the public servants that worked hard through the recession and basically kept the country afloat.

Must say that to my employer

So on this basis give welfare an increase too.

08-05-2015 10:50AM

Mr. teddywinkles wrote: »

Must say that to my employer So on this basis give welfare an increase too.

People on welfare are not working or earning money so why should they get an increase.

Public sector pay increase

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