The Four Year Plan

question: If we need to start now bringing our spending levels back to 2007 levels, what on earth have we been doing for the last 2/2 and a half years in terms of this

Karl

At this stage income is their wealth for many people.

Karl,

Even better if someone point out that GDP is output, not income 😉

@The Alchemist:

So between 2010-2014 the plan is to recruit an extra 2000 employees to Education and reduce the number of gardai by 1500 over the same period ( p. 64).

Let’s hope they add self-defence to the teachers’ training curriculum. They’ll need it:

Boy breaks primary principal’s nose with head butt

http://www.independent.ie/national-news/boy-breaks-primary-principals-nose-with-head-butt-2433034.html

May be of interest:

Macroeconomic and fiscal deviations from plan 1985-87
Honohan, Patrick
May-1987
http://hdl.handle.net/10197/1369

Answers on a postcard …

A. Jan 01, 2011 😉

NPRF to pay €550m to install water meters.

Actually loads of interesting stuff re NPRF on pages 86, 87. Talk of purchasing existing assets rather as well as investing in new ones. Would the NPRF be purchasing from the State? Roads etc

New public service entrants to earn 10% less.

Does this mean that new TD’s coming in after the general election will be earning 10% less than they are now and existing TD’s will not have any cut?

Or are TD’s going to be exempt from all this?

I think these lads need to get a bigger kitchen

http://www.independent.ie/breaking-news/national-news/new-poor-join-food-parcels-queue-2434280.html

and it doesn’t look like the NPRF is going to be in a position to pay for it.

Suggested title for Plan-Bordering on Reality. It is clearly a damaging limitation exercise by FF for the forthcoming election. A few raids on the NPRF to cover a few holes, more soaking of the coping classes and some unrealistic growth assumptions.

NPRF investing in state infrastructure does make more sense than paying fund managers to invest in global bubble equities for a near zero % return over the last 5 years.

Rapid notes:

re Croke Park and all that:

What you gain on the Roundabouts:
(page 63) Section 4.2 — Expenditure on public sector pay bill:

The pay saving … will amount to €1.2 billion savings by 2014.

(or -8%)

You lose on the Swings:
(page 71) Section 4.7 — Public service pension reforms

Pension costs for public servants will continue to rise over the coming years […] an increase of 13% to over €3 billion is in prospect by 2014.

Net financial impact of public sector pay/pension ‘reform’ as reflected in 4-year plan: total costs up 5% by 2014.

Amen

@EB

A zero return would still be a better outcome than some of the “capital investment” undertaken by this govt. The BOI rights issue worked well, not to mention PPARs and the purchase of the e-voting machines. In addition we could throw in a few railway lines that nobody uses and a grossly overpriced airport terminal or 2.

Although maybe if you do a more holisitic cost benefit analysis to include palm greasing, corruption and wasting money by overpaying for materials the return to the economy might be a bit higher.

@Andrew S – “Where’s gambling tax? Slow removal of subs for racing / bloodstocks?”

Mr Magnier said “no”

@Michael NJ USA Says:
BAD://larouchepac.com/node/16601

Virus warning on my system (I do get false positives tho)
I’ve not heard of this crew, but major tin hats! Jeez.

And I’m feeling very “Fallout” today.

@Eoin,

When you put it like that one would be inclined to agree, but its impact (c. €500 mn) is likely to be small. The reasons given for this raid on the NPRF:

“The key attractions of the asset class [infrastructure assets] are summarised below:
– Long term horizon.
– Stable cash flows.
– Low volatility.
– Potential for inflation linked returns.
– Increased portfolio diversification.”

perfectly express the attraction of infrastructure assets in Ireland to external and domestic infrastructure and pension funds. But of course we wouldn’t want to sell any assets, build up the NPRF and reduce net debt and the debt/GDP ration.

Minister Ryan has secured the ring-fencing of the ESB and BGE to gouge consumers to finance his Green fantasies. Even if he loses his seat in January (which would be well-deserved) he will have bequeathed an onerous and unncessary burden on consumers and the economy.

The energy prices to large energy users have been reduced by ‘re-balancing’ tariffs so that households and small businesse pay more.

And I’m not sure how closely the Eurocrats read the document. BGE investment will, inter alia, continue “to build a vertically integrated energy business” (and the ESB is treated implicitly as vertically integrated business) which runs totally counter to the network unbundling requirements of primary EU legislation and the policies being pursued by DG COMP and DG ENER.

There is very little evidence of the expected imprint of the IMF or EC on this document; it just looks like the usual FF/Green attempt to suspend disbelief.

@Joseph

An average of 2.75% growth in each of the next 4 years. How realistic is that?…

This is crucial. I think it could work (for all the wrong reasons) in the American way where there’s a huge breakaway by the ‘wealthy’, re-entering the market a la Chicago School. Feudalism (dare I make that another capital F word?).

It’s the IMF. Creative destruction innit.

It’s quite vague on shaking up the professions.

the only professions they address directly are the legal practitioners. but even here, their plan amounts to a stricter Taxing Master and increased use of Alternative Dispute Procedures. Both good ideas, but hardly going to introduce “rigorous competition”.

Where is there anything about addressing the cap on places in King’s Inns? Or the monopoly on training Barristers that this August institution enjoys for no apparent reason?

Richard Tol has a new thread.

Overall, the four year plan repeats many of the things that we have seen before. It is not a new strategy. It is more of the same. Strikingly, there is no culling of quangos and no privatization.

That just about sums it up.

@Joseph
Gone over 9%.
‘Irish bonds fell today, pushing the yield on the country’s 10-year debt up 38 basis points to 9.03 percent. The premium investors charge to hold the debt over German bunds, Europe’s benchmark, widened by 28 basis points to 614 basis points. The yield premium reached a record 652 basis points on Nov. 11.’

A bit early to judge market reaction.

I have actually changed my mind on all this. I thought if we took the necessary steps, we could work our way out of this but unfortunately I have to join with the people who say that the only way for Ireland (and the Euro which in my opinion is hurtling towards self destruction) is for a major restructuring of debt. The markets are now fast moving in the direction of believing that the entire Eurozone is in danger of collapsing. This has moved past Ireland, budget deficits and the banking crisis. Europe needs to do something drastic to stop the slide. Spain is now in real danger for no logical reason as nothing has changed in the past few weeks apart from market sentiment. The market simply moved on when Ireland got the bailout. (positive sentiment lasted about 24 hours if that)

As for the four year plan, I think it is a decent attempt but I don’t think it will be enough and I think the growth assumptions as mentioned above are too optimistic.

I don’t think the growth projections are particularly realistic. Besides, I don’t think the impact on tax revenue is independent of where the growth is coming from. I’d imagine growth is most likely in the export sector which will give the country a fiscal bump of 12.5c on a euro of GDP growth, whereas “job-based growth” would take people off the dole and start paying more taxes. Does anyone know if the Department have a memo on how they deal with these issues? Does anyone (Ron Davies?) know if there’s a literature on this?

(Karl: typo in the title, I think.)

@ Karl

Hmmm, i think it rather shows the fervour in everyones comments (justified) that it took til comment#48 from Enda for anyone to spot the typo in your title!!!

@John – I could not care less about the Tory backbenchers but I very much care about what happens to my taxes. This wasteful government contunes the waste. If the Tories want to give us a present of a few billions, lets have it. If they want to give us a loan it better come at the right interest rate or else they can keep it.

Pensioners unscathed – did they not benefit from the boom?? Yes, but they vote and they whinge. Lots of whinging on RTE Radio 1 right now – minimum wage, public sector numbers, pensioners….. If the cuts are not broadly based i.e. everyone takes some hit, this is going to be incendary!! Sure, not everyone should take the same hit and those who can afford more need to shoulder more of the burdon.

@Enda F,

Agree completely. This has been my sense since market sentiment turned against Ireland. The markets are moving in for the kill. The outer perimeter formed by the peripheral countries has been breached and it’s up to the commanders in the Franco-German fortress to respond.

Suppose you have to let the government off for sticking to Croke Park and being forced to leave Irish politicians the best paid in Europe. If there had only been something in that agreement about different economic conditions, that would be different.

Oh wait…..!

OK, let’s get this over with — the facts are clear enough.

This Plan provides a blueprint for a return to sustainable growth in our economy Flower of the mountain yes when I put the rose in my hair It sets out in detail the measures that will be taken to put our public finances in order like the Andalusian girls used or shall I wear a red It identifies the areas of economic activity which will provide growth and employment yes and how he kissed me under the Moorish wall in the next phase of our economic development just to try with that thing they have swelling up on you so hard and at the same time so soft when you touch it specifies the reforms the Government will implement and I thought well as well him as another to accelerate growth in those key sectors and then I asked him with my eyes to ask again yes and then he asked me Reducing the budget deficit will not, by itself, would I yes to say yes my mountain flower solve our economic difficulties and first I put my arms around him yes We must build on our strong export performance and drew him down to me so he could feel my breasts by improving our competitiveness all perfume yes and his heart was going like mad We must enhance our productive capacity and yes I said yes I will Yes.

THE END
BTW it was James Joyce who wrote the saucy bits.

I think this is a classic case of ignorance over malice.

Yes there was malice but there’s plenty more ignorance to go around.

@Ger – “We could very quickly see a full-scale run on the banks”

In some ways, I’m surprised that we haven’t seen any tangible signs of panic. Although we have no way of knowing of course what is really going on behind closed vaults over the past few days.

One wonders if with interweb banking more widely used these days that perhaps there is a run of some kind going on (the ‘first movers’ as it were) but we just don’t see queues of people outside the banks any more? A kind of internal bleeding that you just don’t see. I’m sure many (I was one of them) took their money out of Northern Rock online a day before it all blew up. I was in France working at the time and moved mine pretty fast as I saw the press release before 99.9% of the public picked up the story when it broke on the news. It’s more likely than not that people who use internet banking are slightly ahead of the curve anyway in comparison to others of the general public.

Alternatively, the media haven’t put that thought into the public psyche….. yet. I wouldn’t trust the Irish Star, Mail, etc. to behave responsibly at times like these.

Ironically, I just took the prudent step of moving a chunk back to that NR account today. Glad I kept it open. One never knows.

It’s going to take a bit of time to digest it all. However a few points of pain here…

1) Payments for private rental of accomodation will no longer be exempt from income tax. That is going to hurt.

2) Pension contributions will eventually drop to 20% relief rate. That is seriously gonna hurt. Might be no reason to invest in a pension after all.

Some of the suggestions are a bit wishy washy, extra hour / week for teachers in 2nd level + 3rd level. What does that mean? Patrolling the corridors at lunchtime? Well they are already doing that anyway? PTA meetings up to 9p.m. to be extended to 10p.m.??? Huh??

A lot of teachers already put in many extra hours anyway, after school sports activities come to mind, field trips and field studies etc.

It will be interesting to see how the re deployment of teaching staff comes about, will one be able to put in for milage etc?

I meant to say as well that one of the things that worried me during the whole time they were talking in the press conference, not one single mention of the banks. Scary.

@Karl Whelan
“So, if the deficit is 9% of GDP and nominal GDP growth is about 2.5% how does the debt/GDP ratio only go from 99% in 2010 to 100% in 2011?”
Postcard from Tullamory:
Cash on hand to be used now that a line of funding is secured, it makes little sense to keep it as cash.

What about the banks? Hoonose.
Does this say 5ish% rather than 7ish%?

Gotta say that on first glance some things in this seem risible. Im thinking of the debt servicing costs (p108) of between 2.5 and 5.5 %. What planet is this?

@all
Does the document propoese to
1. Cut the pay of the 600 top “civil servants” that were exempted last time?
2. How do m’lords fare in this document?

No need to panic. FG will ride to the rescue.

http://www.reuters.com/article/idUSWLA902520101124

OK It is very obvious that this 4 year plan is in fact the FF Santa Christmas list.

Their near last act in government is to bring out a totally unrealistic last ditch attempt at vote grabbing.

I bet Ollie Rehn is delighted with it, NOT!!

The lower tax rate is left untouched until 2013

Public sector pay actually goes up according to CG’s swings and round abouts.

And they are going to reduce Social welfare bill even though they are going to add Thousands of Public servants, and thousands of Financial Services workers to the Dole Queue’s.
They are obviously counting on a mass exodus.

I thought the last two budgets were rediculous because they admitted they were being optimistic (more risk on the downside, they called it) But this is 4 year plan is a work of pure fiction.

No comment on the proposal to reduce tax relief on pension contributions as well as abolish PRSI and levy reliefs. I would have thought that might have provoked some ire. But then since the main beneficieries claim it is only “deferred tax” perhaps it makes little difference?

“The Plan provides for the elimination of employee PRSI and Health Levy relief on pension contributions in 2011. It also commits, among other changes in 2011, to reducing the annual earnings cap for employee/personal pension contributions by almost 25% from €150,000 to €115,000 and to reducing the SFT. These measures combined will yield approximately €200 million in a full year. Over the following 3 years of the Plan the rate of income tax relief on pension contributions will be reduced from 41% to 34% in 2012, to 27% in 2013 and 20% in 2014. This will yield an average additional €165 million in each full year giving an overall cumulative reduction in pension tax expenditures of €700 million. In addition, a consequential reduced rate of relief on the public service “pension-related deduction” will yield a further €240 million in a full year.”

@Ger
As you may guess, I have lost ALL faith in the current govt, not just most of it.

@ Seafoid

Let there be no praise of the Jes here please….

@seafoid
Go raibh maith agat

@Brian Lucey

Cutting the rate by what, 12%, the minimum wage I mean, assumes that there are loads of employers with pent up job demand that are priced out. Do we have any evidence whatsoever that there are such?

Sorry, Brian.
As you know the default hypothesis is basically the same for the ‘minimum wage’ as it is for the ‘minimum tomato price’: if you raise the price, you lower demand, and vice versa. Do we have any evidence whatsoever that establishing a minimum tomato price reduces the demand for tomatos? To ask that question is to answer it.

To be fair, that’s not really your question.

Your question is: does lowering the minimum wage by 1 euro / hour have a marginal effect on employment or does it have a sizeable effect on employment?

You seem to assume by default that the effect is marginal. But why do you try to put the burden of proof on the other side? Why is your skepticism so one-sided?

My hunch: you’re biased.

Actually, why don’t you suggest that the minimum wage should be raised by 1 euro if there is ‘no evidence whatsoever’ that reducing it by 1 euro has any effect? And if raising the minimum wage by 1 euro has no effect, why not raise it by 2 euro or by 3 euro or by 10 euro?

BTW I’m not saying that reducing the minimum wage is a ‘good thing’ in some transcendental moral sense. Obviously it’s a ‘bad thing’ for some low wage earners, and a ‘good thing’ for some unemployed on the margin.

I’m just pointing out that there is a tradeoff of some kind. Now go and do your homework.

@ Aedín Doris

11.5%, plus taxes, is an absolutely massive cut to experiment with. The last Quarterly National Household Survey shows employment in Accommodation and Food is stable, though Irish workers are displacing foreign workers.

Page 28 http://www.cso.ie/releasespublications/documents/labour_market/current/qnhs.pdf

There is zero evidence this will work. I accept that empirical evidence is mixed. But I know of no evidence of min wage cuts in a recession. The general equilibrium effects in a recession will probably further cut demand, and jobs. Low wage businesses are cutting the wages of their customers. Some income is being shifted up the distribution, where more money is sent out the economy. Its a fairly risky experiment.

Finally the report shows that they even got the basic facts wrong. Ireland doesn’t have the 2nd highest minimum wage. This is as Eurostat data is based on monthly rather than hourly wages. France has a 35 hour week, we have a 39 hour week. Then there are the Scandinavian countries that have de facto minimum wages that are higher. Finally employers don’t care so much about wages, they care about labour costs. Employer social contributions in Ireland are far lower than other countries, so the minimum labour cost in Ireland is lower than the minimum wage suggests.

I have experience in retail. Shop owners give workers hours to match demand. They won’t hire workers to serve customers that don’t exist. We need to boost demand, and increasing wage inequality achieves the opposite of this.

“So, if the deficit is 9% of GDP and nominal GDP growth is about 2.5% how does the debt/GDP ratio only go from 99% in 2010 to 100% in 2011?

Answers on a postcard ….”

Apparently the answer is that the initial debt/GDP ratio is not going to be 99% this year. I’ll put up a full post clarifying later.

@Carolus

To be entirely accurate, change any price doesn’t “change demand”. A shift in demand can change a price though.

What Brian is asking, justifiably, is whether ther is any evidence that suggests the labour market is currently constrained on the demand side.

Are there mployer willing and able to take on more labour at the margin, but can not because of the price floor.

Something to note, that even if it is the case that the labour market is demand constrained and the redcutino in the minimum wage does increase employement (a shift ALONG the demand curve), we will also witness a shift along the supply curve as well – people will drop out of the labour market, not will to work at that lowr wage.

In fact, if demand for albour is complety inelastic in the region of issue (€7-€8) and supply is elastic, then we might expect to see no change in the level of employment, but a drop in UNemployment.

Wierd huh?

@Rory O F
“This is an 11.5% cut, one of the largest pay cuts of any sector”

Of course the “cut” isn’t an actual cut – and unlikely to be imposed on most existing minimum wage earners. I believe it should be abolished. It will find a natural level.

@Brian

BTW – I am biased in this regard: 11% cut in the MW and ZERO in TD/Senior Civil Serv/M’luds ? FFS. That alone there deserves the whole thing to be flung out. We are a society. Or were, once.

Actually, I agree with you on that.

Peace be unto you…

Ollie Rehn said this plan provided the basis for the negotiations currently taking place. So i would assume the IMF/ECB have other demands to add to it. Maybe the difficult cuts listed above are just being left to the outside bodies to announce.

@ simpleton

I’m not calling for a revolution, but there will be a march to the GPO on Saturday.

A previous march to the GPO by trade unionists caused quite a stir. This one is more limited in its aims. 🙂

(I haven’t read the report in depth, just shocked at the min wage bit, but I’m happy enough with the carbon tax)

@Rory,
This is not meant to be a ‘smart’ question, but i am curious: can the minimum wage be too high? If so, what sort of level would the evidence suggest?

@BeeCeeTee

Thanks for your excellent post. But I reckon no amount of evidence will ever change the convictions of the pro minimum wage ideologists. It is an article of faith among them that even a major reduction in the minimum wage will only have a marginal effect on employment and challenging it just makes them hot and emotional.

Again, I ask: if they’re so convinced that reducing the minimum wage by 1 euro/hour will have no effect, why don’t they propose raising it by 1 euro? Ideologists just love to have their cake and eat it too.

@simpleton
I don’t have a portrait of Che on my wall.

I have quite a few pictures of my kids, which might explain my lack of patience for people (including the current govt) who seem bent on buggering up my country.

Two points:

1. Those that drafted the plan will not implement it and those that will implement it are saying they will change it. So, the plan has limited relevance.

2. The plan is silent on the banks which will throw petrol on the fire and destroy what might be left of the economy. If the 4-year plan is rejected then a plan for the banks has little prospect of success.

Back to square one.

Reuters reports on the skepticism in markets, as expressed by S&P:

“Credit rating agency Standard and Poors said Cowen’s government was too
optimistic in assuming growth and the Irish economy would struggle to expand
at all in the next two years. Dublin forecasts real GDP will grow an average 2.75 percent from 2011 to 2014. But S&P said nominal GDP — not taking inflation into account — would be close to flat in the next two years. “There is a meaningful difference,” said Frank Gill, director of S&P’s sovereigns rating group EMEA.”

This is the nub of the problem – we cannot grow enough while cutting so severely. It’s a fiction. And as a result, the debt needs to be restructured. Why are we still waiting for the endgame

Germany is actually quite an instructive example. It mostly has sectoral pay setting arrangements that operate nationally.

After reunification, unemployment in what was formerly East Germany shot up above 20%, and remained at an appallingly high level for many years. The persistence of the problem is typically blamed on nationally-set pay levels making former East German workers uncompetitive.

What finally solved the problem is that Germans have just gone through something resembling a 10 year national pay pause, which has made the Eastern part of the country competitive again. That’s a large part of why the German economy is doing well now, while large parts of the rest of the EU are ****ed.

@ All

http://www.rte.ie/news/2010/1124/economy_depts.html

Good page showing the cuts per department and what Colm n the boyas in An Bord Snip Nua had recommended.

grumpy

“Mental maths would lead us to a larger total figure for Ireland than Eur85bn once we include these missing elements.”

Mental is right.

Absolutely Radio.

“By 2014, net pay for a single person on €55,000 will be reduced by €1,860 per annum (€36 per week) or 4.8%. The net pay for a married one-income family on €55,000 will be reduced by €2,310 per annum (€44 per week) or 5.4%.”

p102.

I see Barrier Reef has noted already that they can’t do their sums.

I don’t see any reference to double-income couples.

@Eoin,

A useful tally-card – and will continue to be useful when FG comes up with its take (reported to be next week). Labour will probably be forced to be a bit specific as well.

But I think the game has moved on. The market isn’t really bothered about this. This Government won’t be in power to implement it. FG and Labour are signed up to the big numbers and the time-scale – even if the compositions are different. This must be causing a bit of concern to the markets, but reality should prevent a repeat of the ’80s.

The Irish banks have now become an Irish and an EZ/EU problem, rather than just an Irish problem – which is where the EU would like to keep it, but it seems the markets aren’t buying it. This is the end-game, which shouldn’t take long to play out, as Ireland can’t take all the pain.

It would make sense to call a general election now and let the people decide on the Govt’s current effort and on what the opposition parties will produce as alternatives.

@Eoin
Shame they didn’t do the same with the commission on taxation. I could have sworn they said that it was anomalous that the self-employed paid PRSI and Health levy on pension contributions and deposit income and that that should be removed… not sure they said put it back onto the PAYE worker…

Still, you can’t fault them for spotting an anomaly to iron out in their favour…

tull mcadoo

“You have consistently decried the lack of brain power in the DOF yet mirabile dictu these dunces have produced a coherent plan. Is it a coherent plan..hell no”

But it’s more choherenter that their usual guff.

They had help though. IMF?

@Greg,

There’s a melting iceberg for your polar bear over on Richard Tol’s thread on environment and energy.

Paul Hunt

“There’s a melting iceberg for your polar bear over on Richard Tol’s thread on environment and energy.”

I might pay a visit.

But Richard doesn’t like me.

I use harsh words like EcoFascist.

And make statements like,

“Catastrophic Anthropogenic Global Warming is a scam”

😆

@BeeCeeTee

Pay adjustments must start at the top and work downwards rather than be confined (as to date) to the very lowest level. Indeed, if pay levels are compressed from the top down, there might be no need to cut the minimum wage by much in order to restore national competitiveness.

BTW. Assuming that some people working in the public sector are on the minimum wage, does the €1 cut not breach the Croke Park Agreement? Or is it that the CPA is only intended to protect the better paid ranks?

@ Gregory

i think people see this plan as FF taking the easy way out, whacking the easy low hanging fruit, but making little or no attempt to tackle the genuine problem areas which may have actually required p1ssing influential people off (hello Croke Park Agreement). We’re supposed to be a country on the brink, and this is the best they could do? It’s depressing. Biffo, i believe, remains the highest paid politician in the EU…

@ Greg

How do you do the rolly eyes thing?

@ Rory,

since we’re taking 6bn out of the economy this year, I imagine the GE effects of cutting the MW will be overwhelmed by other matters.

I don’t expect the wages of many workers currently working at or near the MW to be cut in any case. My hope would be that young workers whose best available alternative is an early and extremely damaging long-term spell of unemployment might be taken now.

@ Carolus,

it’s not necessarily the case that you can think of a minimum wage like a minimum price for a tomato. There’s increasing evidence that employers have monopsony power, and if that’s true, (small) rises in the minimum wage cause employment to increase – counterintuitive, but it’s been found in some empirical studies. No ideological bent is required to be in favour of the minimum wage in this case. However, when demand for labour is falling because of falling demand for goods/services, even in the monopsony model that is most favourable to the minimum wage, the minimum wage will cause employment falls in affected industries to be higher than otherwise. And cutting it will cause employment to be higher than otherwise.

There may well be other things that should have been done too. But that doesn’t make the MW cut a bad idea.

@Eoin
I don’t know. Maybe it is elastic by design? So as not to trammel a future government too much or provide bullets for a new government? Not much point in FF saying “introduce universal health care”, the government changing, the opposition doing it and it turns out to be a disaster.

So by just doing the usual ad-hoc measures, there is sufficient room for future governments to meet the fiscal targets, but change the specifics (since ad-hoc measures aren’t all that important, except in the costs they save).

@Brian, it’s a peculiar idea that reductions in pay should have to take place in descending order of existing pay. But there are quite a lot of relatively well paid paople (including most of the maligned public service and many in your own profession) who have already suffered reductions in pay in excess of 11.5%.

I suspect that there are not that many people in the public service on the minimum wage. Even if there are a few, I think you will find that their pay does not follow the minimum wage down, so there will be no breach of the Croke Park agreement in this respect.

Wow, did Colm McCarthy just send out a b1tchslap to some of his academic breathren on PrimeTime?

When several contributors to a once serious blog suggest that the nutcase , ex-con, and anti-Semite Lyndon LaRouche has any insight for Ireland’s future I’m tuning out for good. I found some of the material posted here over the past few months useful and helpful, but this blog has imploded into drivel.

@Aedin Doris

There’s increasing evidence that employers have monopsony power, and if that’s true, (small) rises in the minimum wage cause employment to increase – counterintuitive, but it’s been found in some empirical studies.

That New Jersey phone survey of MacDonald staff or sumthin?

Sure, there are always exceptions. Nothing is ‘counterintuitive’ if the circumstances are such that it is consistent with the data.

@ Greg

Do you not have access during the daytime?
Is it those derivatives ?

Colm McCarthy V Brian Lucey…where, I will bring the popcorn

@BeeCeeTee
@Rory O’Farrell

If there are very few people on the NMW in the public sector, why was the €1 reduction included in the 4-year plan at all, at all. Its inclusion in a 4-year plan for national competitiveness (like those produced by Forfas) might make some sense alongside proposals on utility charges, rates etc.. If wage levels had to be addressed, surely the starting point would be the introduction of a competitve national maximum wage for the PS?

I wonder if the NMW was included because reducing wages is one of the key items on the IMF’s standard checklist.

Conor McC said tonite that only 4% of the workforce was on the minimum wage which confirms that the targeting of these people is virtually irrelevant in the context of improving national competitiveness.

@AMcGrath

Thanks. I hope you are right. Well, no, I hope that I am right and that I can gloat: I told you so.

@Eoin
“We’re supposed to be a country on the brink, and this is the best they could do? It’s depressing. Biffo, i believe, remains the highest paid politician in the EU”

Truly depressing.

How do they justify hitting the lowest paid whilst leaving politicians and the senior civil servants intact.
Every major move is long fingered.
The markets and S&P won’t buy this plan.

@Joseph

An elegant solution. Simple yet brilliant.

Recent Market and narrative trend points to austerity drives including this 4 year plan being sidelined by bigger concerns re scale of bank losses and capacity of States to absorb these. If default happens and risk / logic of this is simply increasing, do we know what the likely consequences are for (a) immediate financing of deficit (b) the euro and wider real economy (c) remaining solvent EU states?

As I mentioned in another thread discussions about minimum wage comparisons between countries are not too meaningful without similar comparisons of the cost of living and the distribution of income levels; again cutting pay for the low paid reduces demand more than cuts on the better off.

A cut in the minimum wage seems to be mainly favoured by those who having a sneaking regard for Thatcher, “revelling in inequality” and all that. I assume it is also potentially a vote haemorrhage stauncher for FF as their main constituency is now those who blame school teachers, immigrants and the long term unemployed for the crisis in the financial sector.

Remember, the falsehoods of the trickle down school? One is that decreasing taxes increases revenue. Only if the banks are blowing a bubble and their borrowing is made into income for someone! Anyone agree or are you all ??????

Raising taxes raises revenue for government use. Always has. Always will, suckers!

Four plan
Fore play

I spotted it str off …

Carolus
Very entertaining. This crisis is driving many of us mad! Welcome to the club!

Again, folks, most comments betray no sense of history? This is standard. We have many stages to get through yet. As costs and prices fall, then Croke Park may be revisited. That only happens if the depression deepens, as it will! Think of trickle down!!! This is not the disease, it is the cure. Borrowing, and intending to repay, is the disease.

The plan was always only going to be a start, despite the rhetoric about front loading. Many commentators still do not appreciate that the banks are really, really, insolvent and have been for a long time. Their costs are too high and they are making no net lending. The longer this continues, the more you and I will pay. Their borrowing now is paying staff costs! Theyu publish a profit by funny accounting. The exact figures are frightening, but have started to come out recently. They are all estimates, but the longer this goes on, the worse it gets. The taxes should be far higher and will be in the next budget, probably in June 2011.

All in all, a good start, but it will not be seen to be front loaded in a year or so’s time? You really have to look at what has happened to realize that tax rates of 50% for all are in the cards if we want to settle this quickly. As no one will do that straight off, we will be faffing about for a few years more. Think 70’s rates. Interestrates were high then and came down. Now they are low and heading up! Which do you prefer?

People have been irrational for a long time, fooled by nlp in advertizing which then leaked into rights. We are entitled to …… Well guess what? It eventually has to be paid for by producing something! Finance, Insurance, Real Estate produce nothing, but convert capital into income!

Some of our most eminent economists have still not acknowledged this, but they do not deny it either! Thier pension funds are paid up now!!!!

Everyone who comments has a bias! I’ve identified mine. Most commentators have not. I am tryiong to convince you that I know what is going down, but idiots are saying “no one knows…..” Idiots never listen. Never learn. Many of us, in a TV age, have been programmed to make up minds in less than a second. That is not thinking!!!

Arbeit macht frei!

Pat Donnelly Says:

“November 25th, 2010 at 3:28 am
LaRouche are a little extreme, but they are not for common folk. They are well into the elites that exist. The rich and the mega rich are their concern and they analyse their methods fairly well. They have been active for over a decade and have been on the money for much of it, ”

LaRouche is well and truly a complete and utter NUT. An ex-con, a lunatic and an anti-Semite from way way back. Any support of his utter nonsense is simply pathetic.

Pat Donnelly: You are a ridiculous fool.

@Brian Flanagan

If there are very few people on the NMW in the public sector, why was the €1 reduction included in the 4-year plan at all

That’s why I’m so surprised it was included.

@Aedín Dorris
You’re argument for younger workers is only an argument for cutting the wage of younger workers. I still strongly doubt it will increase employment. How can someone support a family on €15,514 a year, because that is the situation people will be put in. Why not just increase inheritance tax and create jobs by building schools?

@ Niall

Technically its Capital Acquisition Tax which might be why people don’t talk about inheritance tax, but yes I would use it to tackle structural inequality. It would help overcome the inbred nature of company boards, which I think was one of the causes of our problems.

@Eamonn Moran:
“That we as a society have to make massive adjustments is obvious.
The only choice we have is whether to do it in a way that leaves us with a more or less equal society.”

Not so: we have other choices. In particular, we have a choice between making adjustments that might convince the bond markets and choices that might keep Irish rent-seekers quiet (and willing to resume voting for FF after a while).

I’m not commenting on whether those whose interests you defend are amongst the rent-seekers; if they are, they’re certainly not alone. But it seems to me that the choice of more or less equality is, at this moment, of less importance than the other choice … especially if the government has chosen the wrong option.

bjg

Our dynastic form of democracy has bred a political product which has no academic or intellectual pedigree.
Mammy /Daddywas a TD therefore the party must select the son/daughter to follow in the parent’s foot steps etc.

In commerce, banking, insurance and in toe civil service this family is extended to cover relatives and associates, party hacks and insiders of many hues.
Follow this into the advisers selected , many are family and friends … that is the primary 9 probably the only qualification).

On then to the quangos, state boards etc.More friends etc remote family and associates are dumped here.

This gives the irish nation politicians and bankers etc which have a political incestuous relationship.
Not good breeding stock for the development of sound independent thought.
Look at the party whipping systems in the dail, deaf, mute , clones of party policy and rhetoric.

Such inadequate issue has to defer to some one with a brain to shore up every piece of flawed rhetoric.

hence the era of the academic Prof this and economist that has said that I the finance minister am right.

School can never be out for these brainless wonders.

Politicians are supposed to take advice( in private) and then pronounce in rhetoric and policy as a decisive political act on behalf of the electorate.

These clowns need a ring master to defer to in all things.

There should be no ring masters volunteering for clown support.
It is a sure end to any academis’s crewdibility.

Honohan and Elderfield have taken a seat with our Mr P Neary.

Their Sept “final figures” have made them look very foolish.