Dan O’Brien concludes the excellent Irish Times series on policies to tackle the jobs and unemployment crisis (article here). He makes substantiive proposals in each of the areas focused on over the week: activation, training, and the benefits system. Interestingly he calls for a small focused team with appropriate expertise to examine blueprints for a more effective policy regime.
Putting together a joined-up jobs policy is a big task, but blueprints are available from other small northern Europe countries. A three-person team with a remit to report on policy in three months could do this. It would require a labour market expert, an organisational change specialist and a capable former civil servant who knows the system.
The two papers referenced in the article are available here (Grubb et al (2009), “Activation Policies in Ireland”) and here (Forfas, 2010, “Review of Labour Market Programmes”).
94 replies on “Responding to the Jobs Crisis: Dan O’Brien Sums Up”
I guessed he would have something like this. W should reform our training and activation policies. However at the moment the effect will be that for every job in Tescos we will have 12 people applying rather than 10. I’m disappointed that he offers nothing on the demand side.
…if the person out of work is not providing evidence of job search regularly or turns down reasonable offers of work or training, benefits are cut. This is central to the Nordic “flexicurity” model and is not, to put it mildly, how the system works in Ireland.
I strongly disagree with this. Central to the flexicurity model is the Ghent system, which leads to union density over 70%. Workers aren’t protected so much by legislation, but by collective agreements, which can be much more flexibly amended than legislation.
But wait – there is no problem. Today’s Irish Times also reports that Ireland is 5th best place to live in the world. Better than Switzerland. No. Really. Per capita income at 33k even. BUT don’t get complacent. It seems that gender equality remains a problem. Neither the journalist, Pamela Duncan, now her editor can see any reason look underneath any of this (per capita income?? uh?) and, frankly nor can I [this post is archived under Reasons Why the Irish Times is the Worst Newspaper in the World – No. 3013355311353]
There is a world of difference between having a job and having a job that allows you to earn enough to pay the basic bills – housing, electricity, food and education. Povery traps exist not only because people are better off (in cetain circumstances) on the dole but because they need to stay on the dole to meet their basic expenses – whihc cannot be met on minimum wage. The solution lies in a mix of supplementary benefits that allow people to have a life slightly above the level of peasant which is all the minimum wage will allow
Commission a report? Excellent. That was never tried before.
Isn’t it fair to say that the Ghent system is fading as workers see less benefit in union membership and move to non union social welfare funds (e.g YTK in Finland).
In any case – at least in the previous absence of a non union insurance scheme – it sounds like a bad way of encouraging union membership. It sounds almost like a mafia-like move. “Hey, you wouldn’t want to get sick without us looking after you, would you? Anyone could get sick. Unless you have friends you wouldn’t want to get sick.” Now, that’s a cynical view, but if the choices were no insurance or union based insurance then it’s no surprise that union membership was high.
On the article itself, again perhaps the restrictions of space in the newspaper apply but I found the suggestions vague and overly holistic. Also, the practicalities of assigning case workers to several hundred thousand unemployed construction related workers don’t sound easy to manage.
@ Rory O’Farrell
I’m disappointed that he offers nothing on the demand side.
Bingo. There is at least infrastructure maintenance which at the present we struggle to do with insufficient funds and manpower. And the classroom situation nationwide is a scandal. How about putting some construction workers back to work?
The Irish government can’t afford to create either supply(training/education) or demand(capital projects) for jobs. I don’t think a triumvirate quango/think-tank recommending decisions that will never be implemented is much help to anyone; nor would it be worth the cost of the trio’s extra wages and pensions on top of their existing ones.
About the only useful thing the government can do now jobswise is to set up an emigration board to help people find and be placed in jobs abroad. True, this would be an abject admission of utter failure, but it would actually help people find real jobs. Though consider general government incompetence, it could just end up making people stay at home.
I feel as though someone has come across a car crash and starting bandage someones broken arm, ignoring that they bleeding severely.
Dan O Brien talks about welfare traps but for me one of the most illuminating points about Irish unemployment is how weak the Irish economy is when faced with an external shock. In many towns and villages in the country there are very few work options other than construction. A restructured Ireland with a second Republic requires a long term plan to change this. While the country will eventually get out of the current hole, without long term structural change the pathology of Irish unemployment will never improve.
And Irish social welfare rates are very low compared to Continental European standards. Driven in part because of the typical scale of an Irish unemployment problem- 14% versus 5% elsewhere.
I’d like to see Dan O Brien trying to live on €200 a week.
How many of the recent unemployed really don’t want to do back to work Dan? Is this not a case of first create the job and then people might apply? No need for case officers at all.
And has Lenny not patially solved for this one – he’s backing the traditional export business of forcing our young to leave – why not deal with it pragmatically and fund emigration with a grant of two years unemployment assistance. Why not frontload emigration !
Dan O Brien talks about welfare traps but for me one of the most illuminating points about Irish unemployment is how weak the Irish economy is when faced with an external shock. In many towns and villages in the country there are very few work options other than construction.
Indeed. A Dublin-centric commentariat don’t get out of the city often. For reasons that defeat me, when FDI increased after EEC accession, no one in politics or the IDA wanted to hear about clustering. Every local TD was ‘me too’ when it came to siting factories (not called this anymore – now called ‘industrial units’). The way to ‘fix’ unemployment was to bring the factories to the unemployed rather than create critical mass in mixed industries and bring the workers to the employment. It was short-sighted. I can still see a pump manufacturing plant sitting alone in a small town when many of its pharma customers were scattered up to 250Km away. There are ports in Ireland with no heavy industry, the latter being situated inland. If a submarine manufacturer came into Ireland, it would probably end up shunted down to Offaly.
Yes, training and welfare need a radical overhaul – this has been long overdue and few would disagree. But where should we be going or aiming to go? A good start would be an accurate analysis of the faults of the current system and the merits of alternate systems. Unfortunately this article does not provide these.
Three strands are identified in Dan O’Brien’s piece the Irish Times today. But there is significant misinterpretation presented in respect of each of these areas.
With reference to “countries that have thought about keeping unemployment low” reference is made to the case management approach, particularly the model of this operated in the Nordic countries. While acknowledging the limitations of a newspaper article the view of case management that is presented is at best simplistic and at worst misleading. The systems of case management operated in the EU vary significantly in terms of institutional makeup, personnel and resources, and actual delivery of services to unemployed people (see http://www.mutual-learning-employment.net and Making it Personal: Individualising Activation Services in the EU, Berkel van, R. and B Valkenburg (Eds), 2007, London, Polity Press). The “tough love” approach is not a predominant characteristic and there is little evidence that systems with higher levels of coercion (“tough love”) actually achieve better employment outcomes, though they may have effects on the numbers in receipt of unemployment related payments. Not the same thing, however.
The second strand referred to is training. I have discussed this in another thread (see Liam Delaney on Training). Central to his argument rubbishing the Irish training system is reference to the Community Employment Programme. The problem is that this is not a training programme. It is an employment programme. Also, the citing of figures on per person participation costs from the Forfás report is very misleading. The other report referred to in the article by David Grubb of the OECD provides a much more accurate assessment of the per participant costs of Community Employment (€14,600 per person per annum in 2006, see page 126). Also, these costs are largely welfare replacement income not training input costs. My point here is that if you are going to criticise the system of training for the unemployed you should at least know what it comprises and point to its critical weaknesses and not simply set up a straw man.
The third strand referred to is welfare and an implicit argument about the adverse employment effects of high levels of payment. In current labour market conditions arguments about the potentially adverse effects of replacement rates are largely irrelevant. Indeed, the levels of payment we currently have could be seen as primarily anti-poverty measures.
As for his proposals to address the crisis – the three wise men approach (assuming the unnamed is a man) – I’ll leave it for others to comment!
We live in a very strange economy and society.
We now have bigger trade surpluses per capita then Germany as JTO keeps reminding us
Until recently we had effectively a zero fiscal debt.
We had truly epic monetory flows during the boom years with their accompanying labour and dependents and now NOW they want to reduce the money supply – what games they are playing – what fun and sport to play monopoly with global capital with no control either from governmental executives or expressing a Austrian like true value of capital principle
There is something very rotten in this administrative district – being essentially a open wound – we are bleeding blood yet the patient is being kept alive with massive injections of plasma.
We are the prize bitch of the Breton Woods globalisation experiment and it appears we like the rough stuff.
Dan was on the Vincent Brown show last night and he was asked how the remaining pension fund could help the Irish economy and pay down our debt – he seemed resigned to the fact that the 20 billion or so would make little difference and indeed he would be right in that regard if it was just used to fill black holes that will no longer create credit.
But why not set up a Industrial bank with this as a deposit base and create credit that could be multiplied at least 10 fold.
This would dramatically reduce the fiscal deficit unlike the economically retarded policies of today
The sink for these funds also needs to be created so therefore the creeping privatisation strategy of the ESB and other utilities needs to be stopped and reversed.
We desperatly need capital spending in areas that have been neglected for 20 years or so such as new power stations with a high capital but low running cost and also some job creation strategies for former construction sector workers such as insulation installation etc.
We need spending in the economy that is not based on consumption but on non-oil based capital creation.
I imagine Brussels would greatly resist any Governments attempt to create a independent industrial strategy and the ECB/ BOE would flex its muscles to protect its clients from competition in the credit creation monopoly but I say to hell with these malcontents – we have nothing to lose now – lets do a post war France model of reconstruction as we too have been humbled by our own stupidity and acceptance of vested interests in the debt manufacturing industry – we need to confront these demons before we can do anything constructive with our lives and our country.
@ the alchemist
62% of children under 14 in the State live in the “home counties”- ie Dublin, Meath, Wicklow, Kildare
The latest financial crisis seems to me to be a failure too of the Dublin as centre of the universe model. All eggs in one basket. Even if the economy is eventually patched up this problem will revert again and again. The ironic thing about Ireland compared to many other European countries is that there is loads of space. There is no reason why the Dublin sprawl should eventually have 90% of all of the kids in the country. It’s a waste of energy use, a waste of diversification potential, a dangerous concentration.
For me a new paradigm came into being when they threw up a commuter housing estate in Rochfortbridge, I think it was, about 60 miles from Dublin, across the road from a Bord na Mona settlement
I don’t know of any other European country that is as centralised as Ireland. The current crisis throws up lots of interesting questions about entrenched power structures which have failed.
I see from the government’s 4 year EU blessed plan that emigration of 100,000 is expected in order to get down to a 3% deficit by 2014. This smacks of ethnic cleansing. From the late 90s on a cohort of people were priced out of the Dublin housing market at the behest of builders and driven into the arms of Westmeath, Cavan and Wexford. And now a different or perhaps overlapping cohort are now going to be driven outside the jurisdiction altogether.
The OECD review of unemployment insurance and assistance (http://www.oecd.org/dataoecd/38/16/44508994.xls , which is linked from the OECD page at http://www.oecd.org/document/3/0,3343,en_2649_34637_39617987_1_1_1_1,00.html) doesn’t seem to support the idea that Irish unemployment assistance is low, at least based on 2007 data. In fact, without doing the currency calculations for the non-Euro markets, it looks like one of the highest.
@ Hugh Sheehy
Compared to economies which seem to have much more resilience to economic shocks, Irish welfare rates are low. In Switzerland the unemployed are entitled to 80% of pre employment salary for one year. Someone else on the site quoted German terms at 70%. The Netherlands and Norway also performed well recently and also have higher benefits. I would be very interested to see a purchasing power comparison of Irish benefits with others. Perhaps Portuguese rates are lower but that isn’t really the point.
The Power of the ECB / Brussels matrix is truly staggering – they pump and dump this shit hole and yet like recovering drug addicts we blame ourselves exclusively for accepting the monetory heroin.
Its truly baffling to see people beating themselves up for monetory inflation – as if they created the money themselves.
How sad to see people blaming goverment workers for chasing the almost hyperinflationary housing environment that the CBs created.
If real wages chased monetory inflation like the 70s the CBs would never have gone so far – yet their replacement of wages by credit was just too profitable for their clients.
Now that the money supply is declining the same chumps get to take the pain first.
The whole monetory system has destroyed the fabric of western civilisation yet we continue to mix up cause and effect.
This is paid for by workers and employers. That’s why it is called insurance. We pay very low premiums. We get low payouts. Do we pay premiums below the cost of payout is one question. Another is the other payouts. In Ireland, rent allowance and mortgage interest relief are paid, in other countries, accommodation costs are kept low. In Ireland free medical cards are given out which ‘private’ GPs and pharmacists recharge the state for. In other countries, medical care is basically free at point of access.
You can argue that the bills are low. You could also argue that 15% of GDP spent on welfare each year is high, whichever way it is allocated.
@ Keith Cunneen
We now have bigger trade surpluses per capita then Germany as JTO keeps reminding us
I think what is more relevant is the current account deficit, which measures how much the country as a whole (private sector plus public sector) is borrowing from abroad. We haven’t yet broken into a surplus (though I think we do just about if we add FDI to the current account). The actual trade balance is performing well. Due to all the MNCs we have to run very fast to keep still as they send their profits abroad.
I think investment can help reduce our dependence on imports such as oil, and improve our current account.
Here is the CSOs latest, which includes some nice graphs.
Well I belived we should have defaulted on the banks external obligations – given that the Euro masters dramatically increased the shadow banking sector many multiples the rise of Goverment debt.
We should have stuck it to them – it was their creation after all.
The artificial 3% deficit rule they created had the peverse effect of exploding the shadow banking sector as core European savings were directed towards dubious investments and reduced goverments sovereignty – of course that was their objective.
It also prevented any of the savings surplus going to energy utilities.
Talks about energy independence is just talk unless goverment is allowed to borrow large amounts for capital creation.
You may be referring to the unemployment insurance. That’s on the link too and was discussed also on another of the unemployment threads in the last few days.
I looked specifically at unemployment assistance (the dole). As far as I can see Ireland’s dole is very high, possibly the highest.
You can also use the OECD’s tax benefit calculator (http://stats.oecd.org/Index.aspx?DataSetCode=FIXINCLSA) to run various scenarios family. It’s got data up to 2008.
I haven’t run them all, but for the scenarios I have run Ireland’s unemployment benefits are on the top end of the range…to the extent that it’d make you reconsider career options.
Unless I’m calculating it wrong (which is possible, but you can use the tool yourself) an unemployed couple with two kids in Ireland is taking home more than the average after tax wage in most of the EU. Now, it’s hard to go whining to Europe for debt forgiveness if that’s the context.
A interesting presentation about the nature of the US / China / Europe dynamic
Besides this look at the scale of the US trade deficit with respect to Ireland – truly massive.
We are caught in a demonic web here between Anglo buccaneers who want their bounty and Continental priests who require tribute.
Let’s form the ‘Grey’ Party,
old and wise? Come and join me hearties
To create a niche of ten per cent
requires no ideology just common sense
And as a coalition minority
we’ll give real solutions priority
That future generations will be off the hook
from poor decisions that were took
In time we are hoping
that youthful eyes will open
to join us in this quest
to bring out in us the best
I find your comment very facetious and dismissive.
Yes we have a problem with reports in this country, mostly because they are never implemented – once they hit the grey grinding morasses of the public service, impervious to change as it is. What do you expect from 800 words? a detailed blueprint for change? O’Brien acknowledges that he doesn;t have the answers by calling further analysis.
Would you prefer the status quo of half-baked wasteful inadequacy? Better than letting Eddie Molly loose on the public service for a lot of people I suppose…
@ Hugh Sheehy
Take Claire X from the Irish Times. 2 kids and a mortgage and she gets €201 a week plus €29 for the kids minus €29 means testing. Where are all the other benefits you cite coming from ? Do those Euro figures take means testing into account ?
I’ve linked to the various OECD sources a couple of times.
@ hugh sheehy
As a middle class taxpayer with a mortgage I’d prefer to be unemployed in Switzerland than Ireland. As I am sure would most middle class taxpayers currently unemployed in Ireland.
Unemployment in Switzerland is one third the rate in Ireland, or less. Other than that, I don’t understand what you’re trying to say.
I agree about the banks. It seems to me that every the government does, from car scrappage schems to bank bailouts, seems to be targetted at keeping us in a current account deficit.
Any more of those and you’ll be knocking William McGonagall off his perch as the worst poet in the English Language
Keep em coming..
Yes , a strange set of circumstance – must be just a coincidence………..
I don’t know if mentioning them on this blog is a bit like mentioning Voldemort (he who cannot be named – or whatever it is they say in Harry Potter) but didn’t I hear over the summer that Sinn Fein were touting around a jobs creation policy to employers for feedback and the feedback was actually pretty damn good?
Suave and sophisticated poetry it aint!
A nice man in a suit comes into your office. A bunch of thugs with baseball bats and perhaps even some guns stays outside in the van.
The nice man asks you for feedback on his new policy for creating employment.
Guess the rest.
@ Hugh Sheehy
Did you vote FF in 2002 ?
great song for today’s government free cheese scheme.
this may cheer you up and raise your spirit.
Now I really don’t know what you’re getting at.
@ Hugh Sheehy
I usually find your views very sound, but those last comments are really not helpful. Things evolve and old prejudices need to lessen. Like it or not, Sinn Fein, is a party of government in a part of Ireland. I recommend Joe Lee’s Ireland 1912- 85 for a broader view.
Surely we need to be encouraging more people, and organisations, to be coming up with employment ideas. Especially people from the communities which are hit the hardest by the recession, and where people are liable to lose all faith in the political system.
The Irish government can’t afford to create either supply(training/education) or demand(capital projects) for jobs.
The biggest strike against (the many) proposals which have been touted to put people to work for their dole is that the obvious smart thing for the private sector bosses to do would be to fire or impoverish their ‘regular’ employees.
This won’t happen with a public works scheme, and in the professions and trades at least there’s plenty of people who’d prefer to work. For many of them (apprentices and graduates) it’s a necessity in order to have viable future prospects.
@ Hugh Sheehy
you did vote FF, didn’t you?
Anyway it’s not a “jobs crisis”. It’s an ueber property crisis.
Again, I’m not sure what your guesses as to how I might have voted are relevant, nor what point you’re trying to make.
Other than that, did you find any error in the OECD numbers I referred to earlier on? Is Irish unemployment benefit as generous as it seems?
Let’s just say that I have certain standards, and being concerned about Sinn Fein’s attitude to democracy and violence doesn’t have to be based on old prejudices. As for people in the communities that are hit hardest by the recession, I hope that each of us can suggest that there are better ways of responding to the recession than reaching for a baseball bat.
Your attitude belongs in the Ark.
Which of my attitudes belongs in the Ark? A belief in democratic politics, equality, non-violence, rule of law, tolerance, a dislike for masked men with clubs, or maybe my feeling that hurling is the world’s greatest game?
This is a good point and related to this is the almost 40 years CAP support from Brussels to support agriculture.
Many areas would have been a wasteland without it.
@ Keith Cunneen
Do we always need an external scapegoat?
We need first to have a realistic appraisal of the challenges rather than the current obsession with spin at policy level.
If ETH Zurich, one of Europe’s top science and technology universities, can only produce less than 1,000 direct jobs in spin-outs over a decade, why are we spending billions on high tech and biotech research, when we are failing to exploit our advantages in food?
Brendan Smith may have made a fool of himself about free cheese, but even in that area, our record is poor:
Cork’s chamber of commerce held a conference last Thursday on exporting to Asia.
To me, a resident of Asia, it’s foolish to bypass the unexploited single-currency area of more than 300m people.
Besides, anyone familiar with China would say that it’s difficult to develop a presence there; a company with a compelling product would risk having it replicated in a short time.
OECD data on more developed countries than us takes no account of the lag in infrastructures investment here. Also, rates of social payments reflect vote buying and consequent price gouging.
This is a small island. The Good Friday Agreement was supported overwhelmingly and it’s good enough for me. There are no pariah parties in Dail Eireann.
I find your views generally thoughtful , but surely you can see that crime, violence and social injustice is a problem worldwide. Hundreds of prisoners are on protection in Mountjoy and many of our street are not safe. The solutions are far from obvious in many cases. Employment is critical in preserving social peace.
Looking at Johnny Giles last night reminded me of the 1966 World Cup final which I remember as a very exciting event. It struck me that only 20 years or so before that the citizens of Dresden had been incinerated en masse by the RAF. The blows in that war were hard and the populations on all sides suffered dreadfully.
The Germans came to play football in 1966 and did so in brilliant style. The human capacity for recovery, reconciliation and acceptance is impressive. You could well be be right about hurling, but please play the economic ball and not the political party.
“Max Keiser and co-host, Stacy Herbert, look at the scandals of fake judges using fake deputies to collect fake debts in fake courts and of Irish austerity under imposed under fake pretences. In the second half of the show Max talks to David McWilliams about Ireland’s first ever economics festival, Kilkenomics, and the financial and banking crisis that inspired it.”
No idea what is in this report, but someone might get a laugh from it. Debt collection agencies are apparently setting up fake courts with fake summonses for debtors in the USA.
Imagine if the executive here reverses its deindustrialisation / privatisation adgenda !
The ESB has been starved of capital to create a artificial vacuum for utility companies who wish to make a profit.
If you wish to industrialize the first thing you do is create non profit capital formatting utility companies – they ain’t any other way besides stealing capital from other jurisdictions.
Imagine a historical Ireland without the congested districts board , never built Ardnacrusha , state companies such as Board na mona never got off the ground.
We would have been still dancing at the crossroads with Joe Murphy’s ugly sister.
We have become so addicted to foregin credit in this jurisdiction that we have lost the ability to create wealth and now even the domestic credit we do produce deindustrialises us.
I mean get real – Brussels adgenda has been for many years the de industrialization of the edge via capital extraction – the mechanism is the privatisation of utilities.
Soon all the state will have left is debt owed to the CBs and their clients as all its remaining assets are being sold at a knock down price.
Anyhow why is the debate completly centered around exports to drive wealth – do exports really create wealth or does it export resourses to earn a income ?
I have nothing against earning a income but to completly ignore domestic capital creation is madness.
Davy says Ireland was never a wealthy country; High income in 2000-2008 largely wasted
Maybe a seperate thread?
@ Keith Cunneen
Hardly a good example of an efficiently run company.
Ardnacrusha and the Congested District Board investments had relevance in their day but even Raúl Castro has twigged to a reality that monopolies or almost ones, like the ESB and RTÉ primarily serve the interests of their staffs not the public.
Governments can help with incentives but having civil servants and the like picking winners isn’t a recipe for success.
As regards the “Brussels agenda,” this appears to be a figment of your imagination.
If the eurocrats have been so intrusive in setting industrial policy, it’s a pity that they didn’t save us from the property bubble.
The Good Friday Agreement was in 1998. SF members with close association with SF TDs have been convicted of various scary activities far more recently, and SF has and does still support them. So, I’m not breaching the spirit of Good Friday nor democratic principles in either this state or this island. As far as I can see Sinn Fein continues to.
As for the problems of crime, violence and social injustice around the world, that is indeed a tragedy, and one where solutions are complex and might take a while. The solution, IMHO, does not include a bunch of heavies in masks who think they’re on a mission from some 100 year old god, but who have no legal or democratic mandate.
I have no great idea who Brian Hayes nor Judge Hardiman are, but I agree with their sentiments as reported here (http://www.independent.ie/national-news/outrage-at-sinn-fein-call-to-free-terrorists-linked-to-td-spy-ring-138107.html) in 2006. Has Sinn Fein since decided to condemn such activities and to condemn these people? If so, I hadn’t noticed. Unless they do then I interpret all the rest of the things they say as calculated hypocrisy. Like a courteous hyena waiting for you to face the other way. Call me a values voter.
Of course this isn’t the forum for discussing Sinn Fein, and the solution to Ireland’s problems almost certainly shouldn’t include most of the plonkers sitting in the Dail either, but at least they’re mostly merely incompetent and irrelevant.
Meantime, did you have a look at the OECD numbers on unemployment benefit. Are they mistaken or correct? If they’re correct then Irish benefits seem to me to be high enough that other EU countries would surely be as loath to give us their money as they were to give it to the Greeks.
Just think about where we are now and why and then consider Dan O’Brien’s statement.
“It would require a labour market expert, an organisational change specialist and a capable former civil servant who knows the system.”
I can think of several former civil servants. Capable is the last word you would apply to them.
We need a complete cleanout.
The Greatest Bank Heist in Irish History is a Fianna Fail/PD construction ….. and they dropped the sovereign ball on the way out, and the Foreign Ferengi picked up all the loot – as the serfs starved …. get real!
Sinn Féin’s Pre-Budget 2010 Submission below:
It is a common misconception that capital investment and high capital ratios for utilities is somehow a leftist idea.
What are utilities really – they are the ecosystem of a Industrial society where both labour and profit seeking entities can engage in economic activity.
If there is a sparse utility ecosystem such as 19th century Ireland then economic activity is chiefly confined to agrarian roles.
However all utilties are bureaucratic in nature as they benefit from a concentration of mass.
One utility that is not questioned is the commercial bank and its protector the central bank – this provider of credit and store of savings is given free rein to both inflate and deflate a economy at will.
Should it not be compelled to store sufficient capital in the event of catastrophic loss ? – another utility that is expected to provide a capital cushion are electricity providers – these however through the insistence of banks have reduced their capacity and redundency to increase their efficiency which of course is a illusion of credit.
There are other utilities but the most intertwined relationship is between banks and energy providers – banks express this energy extraction through credit creation yet have recently reduced their capital to minute levels until the system broke after energy providers could not supply the needed energy to sustain credit – the symbolic nature of this relationship is indeed as one.
So therefore the question is not how much banks extract through profit or interest or energy companies extract through wages or profit but the ratio of capital they are willing to invest – in the short run banks can indeed achieve high profits via capital rundown or state energy providers can give their surplus back to the state or indeed their workers but who creates and nurtures capital creation ?
Getting back to the ESB it can be argued that it gives a disproportionate share of its surplus to its workers and management because it is not allowed to invest in capital creation – the gas powered power plants of today are not very capital intensive although expensive to fuel.
The similarties between both the banking and energy crisis is now striking when you look at it in this light, indeed I believe it is a mirror crisis
However ESB engineers preform vital services although exploit their monopoly postion not unlike bankers.
However bankers have the advantage of creating their own wages and the role of vast sections of banking activity in the credit creation sphere could be preformed quite easily by a few dozen men behind a governmental treasury.
To repeat this is a question of capital wether it is the amount of deposit relative to credit or energy capacity and redundencey relative to future demand.
Profits via interest and wages needs to be reduced to rebuild equity capital in the physical world.
To reduce wages and not interest charges will not rebuild capital – it will merely transfer consumption elsewhere leaving us with the same and indeed bigger problem as by then even more capital will have been run down.
The recent economic collapse and ongoing disaster can certainly be laid at the Irish govt since 2002 or so, but since you’re in a mood to forgive and forget why not let them have another go?
Oh, you wouldn’t trust them with pocket money let alone the Department of Finance? I’d be inclined to agree, but it’s funny…I have a similar problem with SF except it involves violence instead of maladministration.
Ireland has suffered from a particularly low grade of politician for a long time. We should have ambitions to improve the standard not to lower it. As Joseph Ryan said, we need a complete cleanout. Clean.
Your final sentence reinforces my point – ever since the days of Jacques Delors and certainly since the creation of the euro the EC has changed its objectives.
Can you remember when Albert Reynolds came back like a Irish redneck version of Neville Chamberlain waving a cheque in his hand.
You get nothing for nothing in this world – there is always a price.
The regional funds coming from Brussels had a objective – they needed to both weaken the core French and German goverments at that time by transferring economic dynamism to the periphery and also they needed to separate the peripheral nations peoples loyality from their state.
Now I believe Albert was/is a decent man but he was swimming with sharks and the attitude of that time proved to the eurocrats that the Irish could be bought – indeed they bought the farmers in the 70s fueling the first land bubble.
Now since the creation of the Euro the power dynamics have certainly changed in Europe’s favour as we now have little or no sovereignty.
There is now little need to industrialise this region withen the eurozone when the same amount of production can be accomplished more efficiently in a central region.
A more extreme example of this would be the thought of Alaska supplying the lower states with manufactured goods – not likely – indeed the America China relationship is deteriorating because the Chinese are effectively pegged to the dollar unlike Japan.
Anyhow I digress – once we were in the euro there was no incentive to increase fiscal transfers to us from the core and so they decided to give us the coup de grace – a massive monetory injection of shadow bank heroin – knowing that the Irish or indeed anybody but the Germans could be destroyed by this unearned money they sanctioned us.
As long as we continue to honour these unrepeatable debts we are the ECBs bitch.
The money masters play a long game and their patience is rewarded.
You can do a lot better than calling TDs plonkers. One of the excellent things about Joe Lee is that he recognises the systemic faults in our society. He also tries to give an accurate assessment of the contribution made by the various parties and the individuals within them. And he puts the work into referencing all of his opinions.
Why pick on one or two incidents to demonise Sinn Fein ?. It remains to be seen whether that party will grow in the south of Ireland, but they currently represent many good Ulster people. On that nieghbourly basis alone, their economic views are surely entitled to a fair hearing.
I can do a lot better than “plonker”, but I was trying to be polite.
As for Sinn Fein, I owe them nothing and they are entitled to nothing, nor are their “views”. Conversely, they owe lots of people an explanation, an apology and their retirement from public life.
People are entitled to that, North and South. Whatever good people they represent in Northern Ireland, the Republic offers no excuse for them to have existed.
You can’t talk about responsibility and accountability in Irish political life but then add the exemption “unless it’s Sinn Fein”.
Rarely has so much hot air been expended on so important a problem; rarely has anything so straightforward been so over-elaborated;rarely has so much complexity been injected into a plain vanilla issue.
Give or take, unemployment is up by 200,000. Of which 120,000 are contstruction workers. The other 80,000 probably include a lot of architects, civil engineers and jobs who depended on the incomes of construction and construction related workers. Even the numbers of people working in banking and finance has stayed stable.
Guys, Ireland has not got an economic problem (this is where I most whole-heartedly agree with JtO). It has a SECTORAL problem. It is secular, because very few of these construction related jobs are likely to return for many years.
This debate does not survive first contact with the data.
What sort of mindless activities would you suggest the vast majority of us do to recycle the dollar multinational and euro transfers back into the domestic economy.
Shall we construct a Giant pyramid of peat sods in the midlands somewhere ?
The metrics in this economy are so schizophrenic that if it were a mental patient I would recommend a lobotomy.
Lets face it – we are a strange mixture of the Cayman islands, Haiti and Andorra that happens to be in the eurozone.
Not sure what point you are trying to make. If you work for a soulness multinational and just push paper all day you have my sympathies but you do have a job. If you are an unemployed construction worker I would say this:
1. The key trend facing all Western economies for years has been the accelerating disappearance of unskilled jobs. Cheap imports = no more domestic unskilled jobs (nobody knows how to join dots, they used to teach it in economics classes, now they do stochastic calculus so that they can manipulate Dynamic Stochastic general Equilibrium Models).
2. Not all construction jobs are unskilled but constaruction jobs, for the most part, have gone and gone for a long time
3. The rest of the economy is struggling, yes, but is doing much better than realised when it comes to jobs.
4. We had 3 inetr-related bubbles which is why it feels so bad. Most economies only managed one or two bubbles. We inflated, to an incredible degreee, bank balance sheets, construction and the public sector. We are living with consequences of the bursting of the first two bubbles. But, I repeat, the rest of the economy is doing much better than is commonly supposed, particulalry by the contributors to this blog who spoot on about things like a crisis in global capitalism. Sorry my pink friends, sorry Fintan, capitlism is actually in fine shape.
5. The next bubble to burst, under any government of any shirt colour, default or no default, recourse or not to the EFSF, is the public sector bubble. This is not a forecast, it is a done deal. It is as certian as death or taxes.
6.The consequences of mopping up after these three bubbles will be grim. But not nearly as apocalyptic as most commenters would seem to want. Yes, want – ever noticed the relish with which you lot seem to greet the apocalypse? I’ll bet you all also think global warming will destroy us by Christmas. Sorry, but life will go on. And neither the economy nor the weather will destroy us.
I can only refer again to Joe Lee’s Ireland 1912-85 for a magisterial history of the Irish party political system. He is not the only informed commentator, and we are generally blessed with our historians.
You don’t have to be a republican to recognise that the border is, and always has been, porous. What happens in Belfast affects Dublin and vice versa. We are close cousins, in world terms.
You concede that Sinn Fein has a significant electoral mandate in the north. Do you think there might be even the slightest possibility that there might be something to be learned by comparing economic problems and economic systems ?
Bitterness is satisfying in its own way , but we can’t live on it. People change and and institutions evolve. If we all start from the presupposition that the other guy is a plonker, a liar or a hyena, how can we construct anything together ?
“If we all start from the presupposition that the other guy is a plonker, a liar or a hyena, how can we construct anything together?”
If the other chap is an effing effer, he is quite likely to be one of those three things, in which case I won’t want to construct anything with him.
This is not, of course, to suggest that members of other political parties may not also fall into the same categories. But an honest shinner who had put aside the baseball bat might be more clubbable (comme on dit) than a hairy-arsed FF member.
Agree with a lot of that, but perhaps you are dismissing the problems in the global economy. While there is no serious alternative to the capitalist system, I doubt that any serious commentator will claim that it is in fine shape. Stagflation here we come.
“The consequences of mopping up after these three bubbles will be grim. But not nearly as apocalyptic as most commenters would seem to want. Yes, want – ever noticed the relish with which you lot seem to greet the apocalypse?”
If “you lot” is the set of all readers of this blog minus your good self, then I cannot comment: I know few of those readers and the others’ relishes are beyond my ken.
But it is possible to welcome the idea of apocalypse: it seems unlikely that anything less will allow escape from the ghastly mess that Our Glorious Leaders have made of this state. Reform is not enough.
Sorry : Link not working
How Ben Bernanke Sentenced The Poorest 20% Of The Population To A Cold, Hungry Winter
I certainly did not want to give the impression that all is well with what we call global capitalism, just that the disease isn’t necessarily terminal as many seem to want (See BJ Goggin’s honesty on this, above).
What passes for commentary rarely survives any kind of contact with data. Anybody looking for evidence that our teaching of maths is in trouble should just read these pages.
One key number is that the world economy will grow by around 5%, in real terms, this year. Another is that the UK is growing at its fastest rate since 2000. Germany is booming. Another is that the US economy is showing signs, yet again, of defying all those who have been hoping for its immediate demise. But these are boring old facts, one’s that get in the way of Apocalypse Now.
Capitalism, for the pink voyeurs who typically inhabit sites such as these, is like a skimpy bikini: it gets stared at, a fall is much hoped for but somehow it stays up against all the odds. Leaving the Fintans very frustrated.
Ardnacrusha and the Congested District Board investments had relevance in their day but even Raúl Castro has twigged to a reality that monopolies or almost ones, like the ESB and RTÉ primarily serve the interests of their staffs not the public.
It’s funny how many people make this argument, yet turn about when it’s the generous remuneration of the glorious capitalist class being criticised.
The downfall of capitalism is for another day; I and, I suspect, some other folks may be thinking more about radical change to the Irish power system rather than to changing capitalism. The Irish system may indeed be closer to feudalism than to capitalism; the occasional outcropping of a free market in Ireland might be welcomed.
What if capital was grossly undervalued in a supposedly capitalistic system – the whole Breton woods system may be a artifact of a global accounting mistake – this wage arbitrage model is I suspect very ill and is in need of repair.
Capitlism is a human invention – the acceptance of such dogmas is as real as all human inventions even if more efficient in the distribution and production of goods over anything else.
That does not stop it from collapsing on itself from the weight of its own gravity.
Easter Island I imagine was a tolerable place until resourse depletion reached its final stage , entropy is a bitch for the final generation.
Economics as I have said before, is a study of shortages and investment to avoid them.
Eventually, as population increase tails off, it will become obvious that we have scarcities only in local control. Globalization has a positive and negative aspect. When prices fall, this simply means more produced from the same resources. But locally, there may be complete absence of essentials, and control of living is passed to others. Banana republics, anyone?
Eventually, there are no shortages and the need to control will have passed. Unless steps are taken to reassert that control, all in the best possible taste! Those who insist on diversity to lord it over others, may find it necessary to cause shortages, say in security? Protection scams abound already. Education may help those who have such issues, but human weakness is part of Adam Smith’s invisible hand.
Capitalism is allowed as the best method of allocating resources. But only while scarcities exist. If we can prohibit alcohol, we create a need for capitalism and the study of markets etc. Toil not nor do they spin!
Think ahead people! How will you stroke then? Egos of course…..
I appreciate your point of view. It is practical and spirituality is not for everyone. But the need for such massive money flows as I refer to (see Hansard ref in thread on research papers) is dubious. Eventually, capitalism is less about allocation of scarce resources as it is about manipulation of human beings for base purpose.
The Romans took over christianity, as it was a hippy type threat to what Europe and America eventually have achieved. If it had not done so, we might have India in Europe: a spiritual place where gross material ambition thrives alongside purity of purpose. The food shortages might have been addressed and the absurd caste abuses might have been avoided. A better likelihood would be a poorer Switzerland, where few actually work but concnetrate on the happiness of their neighbour?
Is Ireland a capitalist material nation or a christian one? I think we know the answer to that, but what happens when we all have our basic needs met?
Some people look at issues in black and white terms; I try to avoid that approach.
I would hate to work for Ryanair or to travel on the airline as I would hate to see a return to pre-competition State airline domination.
American provides rich examples of the positives and negatives of the market economy but few command economies, which also by default are brutal tyrannies, are left e.g. North Korea and maybe Belarus.
Over payment in the US, is a form of legalised larceny and on Saturday, Nicholas Kristof’s NYT column on the issue was headed ‘Our Banana Republic.’
I have also covered the issue here:
America: A country you cannot tell a lie about:
We can abloish want now were we so inclined and liuved up to our hypocrisy.
The balck box solution: design and produce a black box, which can replicate itself and make various items useful to humans. Then allow it access to the raw materials. Maunfacturing becomes automated with automated maintenance and replacement with recycling automated also. This has to be done somewhere, now, on a pilot basis. This will cause massive unemployment. Can our ability to construct cultural concepts cope? Our inability to free ourselves to trust each other, slightly shunning those who are insane and harmful to others, is core to keeping the corruption of a false scarcity operative in this world.
Core to economics and to capitalism and politics. Barring catastrophe, for which planning is possible, we can do this now and reconstruct our world to enable all to live with dignity and peace.
Do we want to do this? Do we prefer to game each other and whatever system we try? How do we institutionalize a recognition of the maturity that this new system requires?
I’m not bitter, I’m fussy.
And there’s still a qualitative difference between people I’d describe in a polite moment as plonkers, e.g. those whose political history includes maladministration corruption and general idiocy, and those whose political history includes actively and carefully planning and implementing murder of fellow Irishmen over differences in political point of view or religious belief.
See, I see lots of calls for accountability and responsibility. Cowen should go because of his role as Finance Minister in getting us into all these money troubles. O’Donoghue should resign because of fiddling expenses. Mary Harney has “blood on her hands”. (oh the irony)
Here’s another call. SF’s leadership should take accountability and responsibility for their past actions in planning and assisting murder and should depart from public life (or certainly political life). They have disqualified themselves from leadership roles in any peaceful democracy. Whatever about NI or Ireland in the 1920s, the Republic is and has long been a peaceful democracy.
BTW, I love the way that you suggest I should consider SF’s views on grounds that I should be “neighbourly”. Apart from wondering whether neighbourlyness ever occurred to SF as a value proposition (I think not), should I consider Ian’s views on the same grounds? Or the BNP? Or Hamza?
I’ll pass, thanks. I’m a bit too fussy. I like my chocolate bitter. I like my politicians unstained, and whatever about ink stains then certainly at least by the blood or viscera of their neighbours.
Since you’re back on the thread, did you look at the OECD data?
@ Hugh Sheehy
Many thanks for clarifying your position, but, with respects, your concept of accountability for violence seems a bit selective. The ‘bad guys’ don’t all wear masks. More people have been killed in this century than any before, and a lot of the killing was, and is, carried out by democratic states. ‘Collateral’ civilian casualties are enormous and there is little or no redress.
They say history is witten by the winners. Since our ‘national question’ seems to have ended in a kind of a draw, I suppose there will be legitimate disagreements over political legitimacy itself. The Hope of the Good Friday Agreement is that these will be peaceful, politically literate disputes.
Sorry. I meant to say since the beginning of the 20th century.
Sorry for delayed response to your question.
We need to remind ourselves of two things. First, whatever the context, the mere mention of the possibility of reduced welfare benefits will elicit sufficient opprobium to destroy what little faith you have left in human nature – or any belief that you may have in evidence based debate. But you are right, our benfits are high and have actually risen in real terms recently with doemstic price deflation.
Second, as any parent knows, taking something away from anyone is so hard as to be next to impossible. This debate has been conducted entirely in terms of us all agreeing to cut benefits, so long as they belong to somebody else, and to raise taxes, but not mine.
From the 600 senior civil servants who immediately nixed any idea that there pay would be cut last time to the multiple salaries, directors fees and pensions of our trade union leaders and TDs: all revelas a systemic collpase in anything resemblic good governance.
If we think about, it is such an appalling vista, staring us straight in the face, it is a wonder that there is not a revolution. But wait, i am wrong: ‘systemic collapse’ implies we once had a working governance structure. Of course, we never did. Like i said, many times, a system based on winning the T-shirt that says ‘biggest cute hoor in town’ can hardly be based on principles of good governance. But it is the systen that we have sustained for generations.
I should be soothed to my sleep after reading your statistic above ie “One key number is that the world economy will grow by around 5%, in real terms, this year.
Still in my dreams I will wonder who in the world economy will be 5% better off this year? Will that person be Chinese, Japanese, African, Haitian or even Irish.
I might wake up in the night to find myself filling out an application form for a job in an assembly line in Quangdong only to find it wasn’t in English and then be escorted to the lunch room for the daily bowl of rice on offer.
In order to sleep again, I know that all I have to do is repeat the growth mantra of 5% to reassure myself that it is all for a better world.
That’s our problem: we take offence quickly and numbers annoy us more than words.
Health savings require innovation. Are the Irish up to it?
I hope I didn’t seem too insistent. The reason I was pursuing the point was that you seemed to be saying you had reasonable knowledge of the Irish welfare system and I wondered if you could contradict the OECD numbers. I had found those numbers startling in the extreme but hadn’t had enough detailed knowledge of Ireland’s system to challenge them. If the numbers are real, then I shudder to imagine the discussions in the EU backrooms when Ireland is on the agenda.
@Paul Quigley (previous comment got truncated somewhere)
You say “with respect” and then accuse me of having a selective memory. Nice.
My memory is not selective. There are many people around the world that I would not consider fit to act in any role in Irish politics. However, since they’re neither eligible nor interested I don’t worry about it too much. I do concern myself with domestic people and organisations that I regard as manifestly unfit to take any political role in a peaceful democratic Irish state.
Anyone who used to wander around planning to kill their fellow Irishmen is eminently disqualified, whether or not you take the view that their activities ended in a draw or you take the view that their activities were a contributory part of a totally wasteful multi decade disaster for our country and island.
So, not bitter, not selective, just fussy.
@ Hugh Sheehy
I am certainly not accusing you of anything, or asking you to change your values. Most of them seem sensible to me.
There was mass disaster and destruction, but we can only try to prevent the same or similar from happening again. Surely the way to do that is to learn how the Troubles came about, and try do so in a reasonably open minded way. These matters are of course contentious, but they are not necessarily insoluble, or incapable of reasoned resolution.
As on so many others, the best of scholars, or citizens, may respectfully disagree. I suppose that only the passage of time can provide objectivtiy. Regards.
I suspect that time will heal many wounds, but as long as SF are still wandering around with a leadership that includes convicted terrorists and people who advocate release of “characters” like those associated with the Dublin SF organisation or the McCabe murders, they’ll find that memories are very long and forgiveness requires more repentance and confession than they’ve yet shown.
It’d be a brave party that went into alliance with them in Govt in the Republic while they still carry that baggage. Colour pictures are more compelling than financial statistics and some of those pictures are nasty in the extreme.
As for the origin of the troubles, those are well understood, many are highly valid, and none are an excuse for much or most of what was done. (Eniskillen, etc., etc., etc., etc., etc.) Attacking buildings or soldiers is one thing. Much of what went on could never qualify as legitimate struggle any more than the Shankhill Butchers could legitimately call what they did political or that the Greysteel massacre was anything more than mass murder.
The sight of SF TDs calling for responsibility and accountability is many things, but it’s certainly hypocrisy.
Let them stand up and say “I fought for what I believed in. I was prepared to kill and die for it even though the majority of the people of Ireland wanted peace and peaceful solutions. We made terrible mistakes but we have peace now and people of peace should run a peaceful country.”
I won’t hold my breath. I will maintain my idea of what Ireland should be.
That Ireland doesn’t include a government with narrow minded thugs who really only stopped killing because they got old and started to understand what everyone else already knew.
It will be a long day before we eliminate hypocrisy from political life. There is something called human nature. As the native Americans said, don’t judge anyone until you have walked a mile in his mocassins.
We can aim to eliminate hypocrisy, not to tolerate it.
Many people North and South walked in the same mocassins. Most didn’t do the same things. Some did other things.
Most religious or humanist value systems make a distinction and prefer the non-bombing-and-shooting-your-neighbour option. The SF guys preferred the bombing and shooting your neighbour option.
Again, whatever about political corruption or incompetence, planning to blow up people with whom you disagree on political points is a fairly significant disqualifier for calling yourself a politician.
By Jaysus. You are a fit man. Ever heard of Menachem Begin ? Or Winston Churchill ?
I heard of them. They were men of their time, lousy times. In any case they’re unlikely to run for the Dail, which is probably a good thing on balance.
I also heard of Jean McConville, and Peter Wilson, and Jerry McCabe and Eniskillen and Tullyhommon.
I heard of John Hume too, and a bunch of other people North and South who never tried to kill their neighbours.