You are of course right that a significant portion of the price of a car go to the exchequer and that cars result in other derived demands.

The scrappage scheme when viewed over a number of years is only going to bring forward purchases - in other words it merely brings forward the tax revenues which is of course welcome.

This scheme only makes sense if the interest we don’t have to pay (due to brought forward tax revenues) exceeds the cost of the scheme. Do you think that is likely?

In the meantime the new cars will reduce the amount of servicing needed, since by definition the scheme does not add to the total stock of cars and one can presume that a new car will need less servicing than a 10 year old one.

I’m sure someone doing the same here would notice stuff changing because if you’re away for 6 months and come back, you notice gradual changes more than those living there. Ireland 2010 is a different country to Ireland 2007.

On the politics, I’m not up to date enough, its been almost 6 months since I was there. The school situation is something I know from a friend of mine who is getting worried.

Choice is down, nervousness and fear is up. The choice (from a consumer perspective) was something I first noticed a year or so ago. It really struck me because it was the first time I ever saw it in the US.

The Wizard of Oz has no purpose if the sheep see all the strings and end up getting shafted. The social disorder is not good for government and as in WWI, they architects have miscalculated badly. The train timetables must be obeyed.

They expect to have to blow one or two of the valves to calm things down. Mobile comms may not be worth investing in until after the depression? The internet per se is less mobile and less of a threat as the impulsives will be stuck at home with all the goodies. Why did Brian O’Hanlon come to mind?
The younger, mainly male, impulsives may have to be drafted to face the new threats. And keep unemployment down and occupy them to keep out of the way. They have a few in mind to add to the war on drugs, crime, terror etc. You may think that there is a chronic lack of imagination in these and you would be correct. Predictability is sometimes a good thing. The Irish connection of these guys should buck the F$%^ up and clean the shop somewhat. But at least there may not be widescale mayhem. Too much imagination implies a lack of control.

The waste, lies and disruption suggest that more control is required. This can go badly as with Mussolini et al, or well. The sheep certainly should be frightened but most are used to it. Their venal greed has enabled this mess and as you say, “economics” has enabled it.
The remedy is more information and more truth and less lies.

The immediate future for Ireland must mean more information and the media are frankly biased or incompetent. The banks are aware of what is going to happen but are sheepish as the messenger usually gets it in the third Act. This site has a crucial role to play.

Pompous wellwishers who have no clue as to what is going to happen have to some extent taken over the NAMA debate. They can see no evil, apparently. Others are shills for the middle class dole they see as a crucial part of the package.

NAMA may be capable of being a useful part of the solution, but only if it is vigorous and transparent. The EU will ensure that happens, but we all know that it takes too long to correct the stupidity of the executive and all the time they shell out to those who are talentless, in defiance of the rhetoric about competition.

The gang that put us deeply into a pointless mess must be cut out somehow. They simply do not get it and they will be reviled for decades. They have neither shame nor legacy. They are simply dangerous to all attempts at recovery. Pension them off or otherwise. All the senior civil servants should be vetted for their competence and not for their loyalty. They are all supposed to be on temporary contracts. Revert those who do not shape up. Unless this is at least 50% of them then there has been another cover up. Assistant Secs as well. Dispense with the General part of their name. What a bunch of bankers!

Resources are not allocated, except within organisations. Everyone else has to find them, invent them, make them, fight for them or trade for them. The contributors to this website take the trouble to make their contributions broadly accesible, and long may the spirit reign.

We really need economists, but the orthodox academic curriculum is a political and institutional obstacle. Joe Stigllitz got a Nobel prize for demonstrating that central concepts of neoclassical economics are bunkum. You don’t have to follow his equations to understand that assymetric information, and therefore control of information, is a key to competitive advantage.

Michael Hudson’s 1972 ‘Trade Development and Foreign Debt’ demonstrates that the ‘techincal discipline’ of economics has, in practice, served the particular interests of international creditors. As we would seem to be headed straight for the debtor’s camp, the older science of political economy may be more useful to us.

The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. “It’s a catastrophe”, said the Schools Superintedent

A friend of mine (in another state) has a kid in school where teachers on an effective 3 days week because the money isn’t there to pay them. Anyone with a few bob is paying for teachers or scrambling to get their children into private schools…

http://www.irisheconomy.ie/index.php/2010/03/02/postbank-and-anglo-not-comparable/#comment-37980

A question I would have to ask, at the extreme opposite end of the economics policy-making production line, (from the Phd candidate in the small think tank) is the front bench in the Dail. Why does the front bench not have more speakers on economics and finance? Why don’t the various departments work, in order to foster more joined-up debate and thinking about economic and financial matters? We are only a country of 5 million people for heavens sakes. More to the point, as soon as the DDDA report hits the kerb, it is unlikely if any amount of spin-doctoring will help. Indeed, it is unlikely ever again, if a single minister for finance, will ever want to take on board, sole responsibility for decision making, ever again. BOH.

I understand this, and do agree; if I didn’t think economics was useful I wouldn’t be here. I simply wanted to indicate a logical result of a laissez-faire philosophy. Which, although not directly the topic under discussion here, is related and worth considering in any event.

In general, it seems clear to me that economic science gets quite messy when it starts telling people what to do and what not to do. Instead we could concentrated on showing people that what they’re already doing follows basic principles. From should a position people will naturally come to their own conclusions about what’s best to do..

Perhaps an overly microcentric solution that doesn’t give enough weight to the political forces that be, but economists can hardly be charged with controlling these. Just an opinion.

“In Alexander County, the sheriff’s patrol cars have been repossessed”

That’s a classic.

The advice to “do nothing” (when giving into the urge/desire/pressure to “do something” would be worse than doing nothing) is aimed at politicians, not economists. And, in any event, politics is a trade.

unless those making the decisions on action or inaction leave something to be desired.

As a number of people have pointed out, it is past time to do something about those who decide what “best policy” is, as I suggest in another non-economic forum here
http://www.irishtimes.com/newspaper/letters/2010/0302/1224265429948.html

Colm will recognise the argument, as it formed part of my submission to An Bord Snip Nua.

First and foremost this is based on the assumption of

a) markets tend toward general equilibrium
b) government disrupt this equilibrium when they ‘intervene’

It is premised on a the FALSE assumption that perfectly functioning markets operate in the absence of the state. The state just ‘interferes’.

The perfectly competitive market hypothesis has failed and ought o be dumped out the window along with the economic policy advise that accompanies it.

Markets are embedded in institutional arrangments. The state is but one public body that is embedded in this interactive society-economy relation.

The ‘Economics of Doing Nothing’ is a signal for ‘Market Fundametalism’.

The very same policy prescription that led to the financial crisis and the ultimate collapse of financial markets.

Market fundamentalism is the problem not state intervention.

Things are looking grim in the world’s largest and most advanced economy ……. Geee, is this a depression?

D’YA THINK?

Hear, hear!
Also, why must these schemes end up benefitting the dumber members of politicians families, as stockbrokers etc? The finance created, will allow schemes that can be useful to the economy, ie infrastructure. Direct investment in really needed projects will create employment allowing workers to pay these contibutions.

Or is the real problem that we are too wealthy? Pigs at the trough, sharing out partially, feathering our own nests at the expense of others?

Would that were the case. It would have been vastly preferable to the extremely reckless policy the government has embarked on, with widespread support here, if not the general population.

The policy is a failure even in its own terms. The OECD’s estimate of the fiscal stance is a tightening of 6.4% GDP, beginning in the autumn of 2008. However, in the 4 quarters since, net expenditure by central and local government has been €27.9bn, exactly the same as it was in the prior 4 quarters.

As fast as the government reduces the value of public sector liabilities through slash & burn, it is increasing their volume through rising unemployment and is reducing its assets via falling tax receipts. So the public sector deficit has doubled from a little over 7% of GDP to nearly 15% of GDP.

Doing nothing would have been better than this.

WELL?

Not economics, just special pleading!

“..the bulk of the papers are concerned with the analysis of resource allocation and behaviour without reference to politics, politicians, elections or parties.”

And so they should. But we have a problem when government, the “permanent government”, the quangocracy, the elites and “insiders” collectively decide, depending on circumstance or preference, to ignore or to abuse or to use selectively, but inappropriately, key elements of this analysis that relate to public policy. Different varieties of this “unholy alliance” may be observed at work in all of the established democracies. The US variety delivered the systematic de-regulation of the banking and financial sector that led to the current global crisis - and the “freshwater” economists proved to be very useful idiots.

Ireland, of course, has its own variety and it has proved more virulent than most. It is the pomps and works of Ireland’s unholy alliance that fuel much of the comment on this site.

So what should economists, with a competence in, and knowledge of, public policy analysis, do? The consensus appears to be that it is sufficient to “speak truth to power” - as this blog admirably and consistently attempts to do.

But it appears to me that this leaves a large constituency distinctly dissatisfied. Since this crisis is manifesting itself in economic, fiscal and financial terms, there is an expectation, rightly or wrongly, that the economic fraternity should be in the forefront resolving the problems.

But there seems to be a corresponding failure to recognise that the current system of democratic governance precludes the effective, widescale engagement of competent members of the economics fraternity - unless they are appointed (e.g., Patrick Honohan), retained to perform a specific task (e.g., Colm McCarthy) or retained as an advisor (e.g., Alan Ahearne).

So, should economists be actively advancing reform of the process of public policy design and implementation to ensure full use of economic theory and practice or should they remain as “hurlers on the ditch” - waiting to be called into play by government?