There is no international standard for the reporting of property price indices. However, it is still very welcome that the BIS has now made public its database on property prices for 37 countries. Details (and spreadsheet) available here.
Month: August 2010
Paul Sweeney criticises the idea of selling State-owned entities in today’s Irish Times: you can read his article here. Paul Sweeney’s contribution is incomplete. In particular, he does not fully address some key issues (I raise these points as questions, without having answers)
- Liquidity. If a government faces funding risk, selling valuable-but-illiquid assets may reduce the risk of a funding crisis.
- Ownership and firm performance. While Paul Sweeney highlights the potential inefficiencies of privatised firms, he does not have much to say about the possible inefficiencies of State-owned firms where the management or workforce may have objectives that are not fully aligned with the common good.
- Regulation. Where monopoly power is a severe problem, regulation is necessary. Can the Irish regulatory system be made more effective to ensure that sectors inhabited by monopoly-type firms deliver efficient outcomes? Does the identity of owners affect the effectiveness of regulation?
Paul Sweeney also highlights the increasing importance of State-owned firms in Asia, Russia and Latin America. It would be good to know the exact lessons to be drawn for countries such as Ireland from this development.
Barry Eichengreen and Peter Temin have written classic accounts of the Great Depression. If you haven’t read Golden Fetters, and Lessons from the Great Depression, you should.
But if you don’t have time for that, they have a piece on Vox which reprises the main conclusion of their work:
an international monetary system is .. a system in which countries on both sides of the exchange rate contribute to its smooth operation. Actions by surplus countries, and not just their deficit counterparts, have systemic implications. They cannot realistically assign all responsibility for adjustment to their deficit counterparts.
This is as true for EMU and “Bretton Woods II” as it was for Bretton Woods, or the Gold Standard, but it is a lesson that at times seems to have been completely forgotten.
I wrote a couple of posts (here and here) earlier this year about a Department of Finance release that discusses the impact of restrictions on the use of tax breaks for higher earners via the imposition of a minimum effective tax rate. I pointed out that the document is very poorly worded and leaves itself open to being misinterpreted.
Well, the latest edition of this release is out and it’s still got the same poor wording and it’s still being misinterpreted. I had missed the release when it came out but realised that the DoF’s poor wording had struck again when I heard contributors to Sam Smyth’s Sunday morning radio show discussing the report and saying how puzzled they were at how few people seemed to be earning large salaries (e.g. puzzlement at the idea that only 23 people earned over €2 million in 2008).
Let’s recap on this report. The report does not purport to be a full accounting of the tax paid by rich people in Ireland. Rather, it only covers those who would have paid less than the minimum effective tax rates that have been introduced. So, the whole report relates only to the 423 people who earned over €500,000 and were subject to the minimum effective tax restriction.
The document should emphasise throughout that these 423 people represent only a small subset of those earning over half a million euros in 2008: Unpublished information from the Revenue Commissioners published in the Irish Times last year (nice table here) showed that there were 5,393 cases of people earning over that amount. However, the report does very little to emphasise this point, leaving itself open to misinterpretation.
Sure enough, many people reading the Sunday Tribune today would have been apalled to read this piece about the Department’s “analysis of high-income earners” informing them the report showed “most of those earning more than €500,000 paid tax at a rate between 15% and 20%” and also providing other estimated tax rates that are not at all representative of the rates being paid by average high earners. For example, the figures in the Irish Times table show that the correct figure for the average tax rate paid by those earning over half a million is 32%. Remember also that this doesn’t include PRSI and that these individuals are now paying an additional 6 percent levy on income over €175,000.
I’m not saying there isn’t room to raise more tax from the rich or that tax reliefs shouldn’t be closed but it hardly helps public debate about this issue when the Department issues documents that are so easily misinterpreted.
Update: Ian Guider who wrote the piece for the Tribune linked to above has written to me to point out that the piece mentions 423 individuals and so he reckons it should be clear that all subsequent statements in his article refer only to a small subset of high earning individuals.
Edward Luce has a really good piece on this much-studied phenomenon here.