Baltic Meltdown Avoided?

Just arrived in my inbox, a link to this IMF article, containing the following paragraph:

Meltdown avoided

It is too early to pass final judgment on the success of the Baltic strategy. Adjustment is still far from complete, and the current problems in the eurozone may yet complicate recovery. What is clear, however, is that the most dire predictions have not come true. Despite an unprecedented economic downturn―cumulatively, GDP has shrunk by about a quarter―devaluation and banking crises have been avoided.

So they’ve lost quarter of their GDP but a meltdown was avoided? I guess this shows that the definition of a meltdown is in the eye of the beholder.

118 thoughts on “Baltic Meltdown Avoided?”

  1. Meltdown really is in the eye of the beholder. Ireland has lost a quarter of its GDP and more and is still not out of the woods. The Baltics states have lost that but are now back on track to jobs and growth(albeit aided by their ability to deflate their currency).

    To Irish eyes, a 25% drop in GDP in exchange for an end to all of this would be a bargain.

  2. Isnt it really down to identifying the actual problems (as opposed to the next incoming problem) and then dealing with them…
    Us:
    Croke Park on wages
    Nama on property prices
    DOF on banking

    All fine solutions…

  3. Karl you have hit the “nail on the head”.

    All three ex-Soviet Baltic states have real unemployment north of 20% despite the fact that Ireland is playing no small role in providing an immigration safety “valve” to Latvia and Lithuania while Estonians benefit from their closeness to Finland and Sweden.

    In Northern Latvia (anecdotal evidence suggests) the generous Irish childrens allowance is a welcome monthly remittance.

    A banking crisis was avoided in the Baltics simply because most of the Banks are owned by Scandinavian (particularly Swedish) banks.

    Having survived a banking crisis (in the wake of of a real estate boom) in the late 80ś and 90ś Scandinavians have developed very strict banking rules. In Sweden, for example, bank nationalisation occurs automatically by law if capital ratios dip below 8%.

    The recent austerity which Estonia is being praised for conceals the fact that the majority of the present government (i.e Reform Party) rejected Euro entry in 2007 prcisely because it “would have to stop serving drinks.” Having said that the junior coalition party (since April 2007) is no stranger to austerity as it carried out “Tatcherite” restructuring in the 1990ś enabling a stability fund to be set up and which Estonia was able to “tap into” in 2009.

    Of the three ex Soviet Baltic states Latvia is the one that had the least share of Scandinavian owned banks. Of course we know which one has fared the worst.

    It is also worth noting that having lived through a “spate of jitters” in 08-09 Sweden had begun to calm down about exposure to the Baltic market. However after the Irish “saga” nerves have started to rattle again in Sweden.

    Apparently according to the Swedish Finance minister (as reported in media reports I have read) Swedish banks have loans equal to 3.5 times its GDP and feels this may be more than enough because Iceland had loans equal to 7 times GDP and Ireland 5 times GDP before their particular crises. A lot of these loans (again according to reported statements by the Swedish finance minister) are in the Baltic market.

    I agree 100% that “meltdown is in the eye of the beholder”. In Ireland we have a major problem but with the right approach and right people in charge it is not impossible to emerge from it.

  4. Livonian, you are living in cloud cuckoo land. The Latvian’s and Lithuanian’s all left Ireland 3 years ago, shortly before the Irish started leaving it as well. Your anecdotal evidence of Latvians claiming Irish child benefit allowance stands at stark odds with the reality that most eastern european migrant workers in Ireland were young and unmarried.

    Latvia’s has a larger unemployment rate (~20%), but note that this is only about twice its boom time unemployment rate, whereas Ireland’s 14% unemployment rate is almost three times its boom rate.

    In Ireland we have a major problem but with the right approach and right people in charge it is not impossible to emerge from it.

    Anyone would agree with that, but the trouble is we don’t have either of those things. We have the wrong people and the wrong approach. The Baltic states were in a desperate situation, but they has the right people who took the right approaches. They took the pain and their crisis is now over.

    Ireland refused to face up to difficulties and our crisis has not yet begun! It’s so large the entire Eurozone and indeed world economy is threatened! You can’t claim that about any of the Baltic states, no matter how big their meltdown appears.

  5. “devaluation and banking crises have been avoided” _ that appears to be the writer’s definition of a meltdown.

    OK there was external debt, but why would “devaluation” be included along with the more reasonable “banking crises”?

    Priorities……priorities…..

    How is Ireland’s internal devaluation going anyhow? Anyone “negotiated” any reform yet – or is everyone still at the back of the que?

  6. Obsessive
    “The Latvian’s and Lithuanian’s all left Ireland 3 years ago”
    Really? tell my nurse and the nice girl in the flower shop and the fellow that runs the coffee and cake shop here in this nice midwestern town.
    I guess we will see when the census comes out.

  7. Odd logic.
    1) It’s too early to say anything.
    2) But we are going to say it’s a success
    3) Because it has not been a complete disaster
    4) Heres how we achieved the non-disaster that’s too early to call

  8. 20% unemployment in countries with massive markets either side of them isn’t much of a success.
    All this article proves is that you can implement cuts and allow the banks to get their money back without an uprising.
    The Baltics did have to put up with Hitler and Stalin so would take alot for them to revolt.
    Note the word “experiement” too. We are all part of the Irish Experiment now my fellow labrats. Nice to know how the IMF see their interventions.

  9. I have a lot of sympathy for people in the Baltic states. Like Ireland they have been jerked around by the great powers, Germany, Russia, Poland-Lithuania, France. They bear a lot of animosity toward the Russians, to the point where it is affecting trade and cooperation of any kind. I have had many arguments with them pointing out that if the Irish can trade with the British to their benefit then the Balts should be intelligent enough to trade with the Russians. The answer is no they cannot be trusted. I also emphasized that the EU is a tough sophisticated market while the Russian market is easier to crack. They started with a lot of optimism about capitalism and the Euro sad to see their hopes were dashed. They are no strangers to tough times though and they will rise again as will we.

  10. There isn’t much point in the kettle calling the pot black arse!

    What is common in these situations is that the ‘little people’ in the private sectors of such embattled economies generally take the brunt the rolling back the feasting days.

    The current issue of The Economist has an interesting overview of the upcoming battles with the priviliged:

    http://www.economist.com/node/17851305?Story_ID=17851305

    People in the private sector are only just beginning to understand how much of a banquet public-sector unions have been having at everybody else’s expense. In many rich countries wages are on average higher in the state sector, pensions hugely better and jobs far more secure. Even if many individual state workers do magnificent jobs, their unions have blocked reform at every turn. In both America and Europe it is almost as hard to reward an outstanding teacher as it is to sack a useless one.

  11. @Eureka
    “The Baltics did have to put up with Hitler and Stalin so would take alot for them to revolt.”
    Patronising much?

    Estonia is a model for living within your means, as far as I can see. The few Estonians I know have very clear ideas on that, both personally and for the government.

    By the way, it appears to me that the Estonia unemployment rate is the equivalent to our S3 rate. Measuring unemployment as registered unemployed gives an unemployment rate of about 15%… Our unemployment rate for Q3 was 14.6% (headline) and 22.6% (S3)…

    Perhaps ‘pravda’ is another thing they don’t have time for over there.

  12. http://www.monthlyreview.org/101001onaran.php

    “The Baltic States and Bulgaria have currencies pegged to the Euro, and if they cannot maintain these pegs (which require these countries to have access to Euros with which to buy their own currencies to maintain the pegs in case of capital outflows), more devaluations will occur, and these will trigger further contagion effects in the region. For example, Swedish banks in the Baltic States and Austrian banks in Bulgaria, along with their governments, are pushing to maintain the pegs and avoid devaluation, in fear of high default rates on loans. Local governments also stand behind the pegs. However, preserving overvalued fixed exchange rates under the current policy framework will come at the cost of a very deep recession and deflation, which will create a de facto real devaluation. The mechanism for this seems to be massive wage cuts, as in Latvia.

    The consequences of an unmanaged devaluation following a market-made currency crisis might lead to very severe distributional effects, as was the case during the Asian and Latin American crises. If a nation’s currency buys less foreign currency, imports become more expensive. If the economy depends on imports, as many do, devaluation in turn leads to inflation. Workers will suffer from this inflation more than the wealthy. So far, the depreciation rate has been moderate, and inflation has been restrained by a deflationary environment and falling commodity prices. However, both can become more severe in the future.

    Unemployment in all the East European economies in the EU (New Member States) has grown significantly, with the sharpest increases taking place in the Baltic countries. Real wages have fallen in Hungary, the Baltic countries, Romania, the Czech Republic. The austerity programs in Hungary, Romania, and Latvia will further reinforce the pressures of the crisis.

    In the Eastern European economies, the record of GDP, employment, and real-wage growth over the past twenty years has been shocking: first a transition recession and then a global crisis. The gains in terms of growth and wages are far from spectacular. Employment has at best stagnated, and it has decreased in Romania, Estonia, Lithuania, and Hungary. Real wages have stagnated in Hungary and Slovenia, even fallen in Lithuania and Bulgaria. Real wage growth overall has lagged behind productivity growth. Even in Romania, where real-wage growth was maintained for a time, it never exceeded improvements in productivity. This does not look like a politically and socially viable balance sheet.”

  13. “In both America and Europe it is almost as hard to reward an outstanding teacher as it is to sack a useless one.”

    And in the US the public sector will of course be targeted by a cynical ideology that chooses to ignore the greater waste centres of the US economy. Last year the US spent USD 110 bn fighting a lost war in Afghanistan (2006 GDP USD 8.4 bn). The FT reports that North Waziristan (PPP GDP per head < USD 500 per annum) is a significant source of effective opposition to the US war machine.

    Jeff Madrick in the NYRoB defines the three drivers of the US deficit as

    1. Recession spending on unemployment
    2. “The War on terror”
    3. The Bush tax cuts

    Guess which is the only source to be be targeted for cuts by the soi disant fiscally continent Republican party.

  14. @Mickey Hickey

    If you were going to list countries to choose have a prickly political past relationship with, surely the UK would be a lot higher up that list than Russia?

  15. @ brendan walsh

    good article, not sure about the cartoon in the middle though. thats hardly another public sector perk is it, they kept that one quiet.

  16. The Baltics have suffered mightily for their embrace of the market, I am sure there are a few winners and many losers. Still, the important thing is that they have avoided the disaster of devaluation and that the financial sector is intact – the preservation of the value of assets being the primary responsibility of government.

    @Michael Hennigan

    The targeting of the public sector “inefficiencies” is a perfect example of psychological displacement.

    Workers in the private sector (particularly in the US) find themselves suffering from increased working hours, alienation, the dramatic migration of rewards up the company/social hierarchy and, most crucially, job insecurity.

    Naturally rather than confronting the problem of the power imbalance between workers and corporate power they choose to blame public sector workers for not suffering as much, rather than organize themselves into a union they would deny others its advantages.

    Pathetic just about covers it. Just about.

    The targeting of teachers for the auld stick/carrot treatment is a classic rightist meme and it distracts from the main source of bad educational outcomes – poverty and inequality. Perhaps the hope is that if teaching is turned into as mercenary an occupation as stockbroking the teachers will inculcate their charges with a love of the market, low taxation and “hard work”.

  17. @ Michael H

    ‘People in the private sector are only just beginning to understand how much of a banquet public-sector unions have been having at everybody else’s expense’

    Yes, but more folk are beginning to see how much outright looting and rent seeking has been normalised in the higher echelons of the professions and the private sector. The control exerted by the financial services industry over the ‘democratic’ party political system is increasingly obvious.

  18. @ Brendan Walsh

    “Consider the case of two newly hired security guards with the same level of education who work in downtown Los Angeles for Securitas, the nation’s largest security company, with $8.7 billion in worldwide revenues in 2009. Jose and Bill work in two of L.A.’s large office buildings. Jose’s starting pay is $11.50 an hour with paid health insurance as well as two sick days, five paid holidays, five vacation days (increasing to ten days after five years), three paid bereavement days, and a uniform allowance of $2 a day. Bill starts at $8 an hour (the state minimum wage) and gets no health insurance or any other benefits. What accounts for the difference? Jose is a member of the Service Employees International Union, which has a collective-bargaining agreement with Securitas, while Bill is on his own, with no union contract.”

    Read more: http://www.utne.com/Politics/Good-Jobs-Stronger-American-Unions.aspx?page=2#ixzz1AjO2w75P

    Consider what links the US and Pakistan :

    Salmaan Taseer was assassinated by a fundamentalist.
    Gabrielle Giffords was the subject of an attempted assassination by a fundamentalist.

    In the US, union organisers are subject to violence and intimidation :

    “According to Cornell University’s Kate Bronfenbrenner, it is standard practice for corporations to subject workers to threats, interrogation, harassment, surveillance, and retaliation for union activity during organizing campaigns” (Same UTNE article)

    In Pakistan, union organisers are subject to violence and intimidation :

    “But the tea stall meetings continued and the questions kept developing: What was the law there for? Why didn’t they get their legal wages? Why would the bosses refuse to register them with the legal authorities so that they could get a pension? Why is it that the police always attack them and harm them on the behest of the owners?”

    http://www.monthlyreview.org/101201memon.php

  19. “The Baltic States and Bulgaria have currencies pegged to the Euro, and if they cannot maintain these pegs (which require these countries to have access to Euros with which to buy their own currencies to maintain the pegs in case of capital outflows), more devaluations will occur, and these will trigger further contagion effects in the region. For example, Swedish banks in the Baltic States and Austrian banks in Bulgaria, along with their governments, are pushing to maintain the pegs and avoid devaluation, in fear of high default rates on loans.”
    This is very wrong on many levels.
    First the “currency board” implemented by Bulgaria and Lithuania (Latvia is a bit different and Estonia already has the Euro) means that every lev or lita in circulation has to be backed by the respective value in euros the central bank holds in reserves. In fact these central banks hold reserves that are much larger than the currency in circulation and could, if they chose to, exchange it into euros to quasi unilaterally adopt it as a means of payment. This is a system that is fool-proof against speculation and was never tested even at the peak of the global financial crisis in late 2008/early 2009.
    Second Austrian banks are by no means dominating the Bulgarian banking sector like Swedish banks in the Baltics. The largest Bulgarian bank is owned by Italian Unicredit, followed by Hungarian OTP, a Greek bank, Austrian Raiffeisen and another Greek bank. The are no other major Austrian-owned banks active in Bulgaria.
    Third, the Bulgarian lev is by no means overvalued. Bulgarian wages are the lowest in euro terms in all of Europe as are relative unit labour costs. The Bulgarian current account deficit, which exceeded 20% of GDP in the overheated boom period up to 2008, was down to around 3% of GDP in 2010 which is easily sustainable. Bulgaria ran sizable fiscal surpluses ahead of the global financial crisis and public debt was still very low below 20% of GDP as of year end 2010.
    The bottom line is that despite prevailing risk factors, in particular the proximity and trade relations to crisis-struck Greece, Bulgaria can and should easily sustain its currency board until it joins the Eurozone.

  20. @ Shay Begorrah

    “Perhaps the hope is that if teaching is turned into as mercenary an occupation as stockbroking the teachers will inculcate their charges with a love of the market, low taxation and “hard work”.

    Test scoring in the US has already been given the neoliberal makeover

    “Scoring is particularly rushed when scorers are paid by piece-rate, as is the case when you are scoring from home, where a growing part of the industry’s work is done. At 30 to 70 cents per paper, depending on the test, the incentive, especially for a home worker, is to score as quickly as possible in order to earn any money: at 30 cents per paper, you have to score forty papers an hour to make $12 an hour, and test scoring requires a lot of mental breaks. ”

    “Usually, within a day or two, when the scores we are giving are inevitably too low (as we attempt to follow the standards laid out in training), we are told to start giving higher scores, or, in the enigmatic language of scoring directors, to “learn to see more papers as a 4.” For some mysterious reason, unbeknownst to test scorers, the scores we are giving are supposed to closely match those given in previous years. So if 40 percent of papers received 3s the previous year (on a scale of 1 to 6), then a similar percentage should receive 3s this year. Lest you think this is an isolated experience, Farley cites similar stories from his fourteen-year test-scoring career in his book, reporting instances where project managers announced that scoring would have to be changed because “our numbers don’t match up with what the psychometricians [the stats people] predicted.” Farley reports the disbelief of one employee that the stats people “know what the scores will be without reading the essays.”2

    I also question how these scores can possibly measure whether students or schools are improving. Are we just trying to match the scores from last year, or are we part of an elaborate game of “juking the stats,” as it’s called on HBO’s The Wire, when agents alter statistics to please superiors? For these companies, the ultimate goal is to present acceptable numbers to the state education departments as quickly as possible, beating their deadlines (there are, we are told, $1 million fines if they miss a deadline). Proving their reliability so they will continue to get more contracts”

    http://www.monthlyreview.org/101201dimaggio.php

  21. @ paul quigley

    In many countries including Ireland, there are also powerful combinations in the protected professional sectors, which act no differently to public sector unions. 

    Wherever on the spectrum from rest to right, vested interest groups may be, they appear to have a tacit agreement to remain silent on their respective rackets.

    @ Shay Begorrah

    Whatever about “psychological displacement,” I have no prescription for how people lead their lives, whether in the money economy or not.

    We can have a 1950s type existence with a large number emigrating or a modern private sector dominated by US companies.

    You may not have no experience of running a business are trying to get one started. In the latter situation, there is seldom a “power imbalance between workers and corporate power” but there is a daily struggle to get customers and price/cost is one of these realities that Raul Castro has twigged to, even late in the day.

  22. @Michael Hennigan

    “In many countries including Ireland, there are also powerful combinations in the protected professional sectors, which act no differently to public sector unions.”

    And nothing is changing. Letterkenny IT is set to receive a chunk of land which cost the taxpayer €6 million. No doubt the TUI are breaking down the Minister’s door pleading for special treatment.

    And while all in sundry mouth the words for reform, efficiency and ‘savings’ it’s all a laugh really at the expense of the private sector. Rory Quinn was on Drive Time awhile ago praising Labour’s commitment to Third Level and the party’s recognition that the sector has been underfunded for a a long time. My head shook in disbelief. massive unemployment and emigration and knowledge economy fantasies are still being trotted out. Oh, the political convenience of it all.

    If anything the sector is too diverse and geographically scattered but ‘reform’ would entail redundancies and no party politicians will countenance the loss of the middle class vote.

  23. Having worked for three national gov’ts (none Irish) and my wife working for a different gov’t I will give you the inside dope on pay and staffing.
    Most services performed by low skilled employees are contracted out to the lowest bidder and did not show up in the employee count except as bought services. A second category of “employees” were “agency” as in the gov’t paid the agency, these also did not show up in the employee count even though the relationship was employer/employee. A third category were “term” employees with two divisions known as “temporary term” and “fixed term” the forst retained for 90 days but cancellable on 5 days notice, the second for up to a year but cancellable on two weeks notice. term employees did not contribute to the pension plan and were not entitled to a pension. Most new entrants would start as “terms” and work for 3-5 years before becoming “permanent employees”. I have worked for 17 organizations and I have found that Gov’ts are better managed and their employees better educated than in the private sector. The Economist has a lot to learn.

    As for unions, nature abhors a vacuum and unions fill a need which is to balance the power wielded by employers and employees respectively. There is a relationship between prosperous countries and countries with healthy and active unions. Countries with weak unions are countries where the middle class is miniscule or soon will be.

  24. @ Michael H

    From your artical

    “Private-sector productivity has soared in the West over the past quarter-century, even in old industries such as steel and carmaking. Companies have achieved this because they have the freedom to manage—to experiment, to expand successful innovations, to close down bad ones, to promote talented people (see article).”

    Why has the average salary in the US stalled (or in real terms) falling in the last 30 years while productivity has soared?

    What we have seen since the rise of Neo-liberalism is transfer of power and wealth up the food chain. We now work part-time/temporary/low security jobs. While we still hope to make long term commitments in buying homes and starting familes. An increasing stressfull lifestyle that is having and will continue to have enormous effects.

    Yes, I’m open to the arguement that Unions have shot themselves in the foot by arguing for too much; but who will protect us from the vested interest of the mobile corporate entity in the new economy.

  25. @ Michael Hennigan

    People in the private sector are only just beginning to understand how much of a banquet public-sector unions have been having at everybody else’s expense.

    How long do you think you’d last working in an A&E department?

    Its perfectly ok for firms to maximise profits, but not for workers to get higher wages? Anyway, the majority of ICTU members are in the private sector. rolleyes 🙄

  26. @Rory O
    Whether or not Michael H would last in an A&E is irrelevant.

    It remains the case that public sector workers have taken advantage – consciously or not – of the fact that they are typically working in monopoly service providers and that their unions and the government can engage in self-serving and essentially corrupt deal making that suits those two vested interests and which screws private sector workers who are the ones who, Net, pay for it all. The unions and govt have been very conscious of what they’ve been doing and have even been proud of it.

    In Ireland, and in several other countries, there are also private sector sheltered industries which can get away with much the same trick. Pharmacies in Ireland were managing it until recently, as one example.

    Again, this should not be taken to mean that I’m anti-public sector, I’m not. I am anti the kind of corrupt deal making that has taken place between govt and public sector in too many countries, including Ireland.

    One place where I’d essentially disagree with the Economist is where they say “Historic liabilities have to be honoured”. This implies that young people today should start to pay taxes to pay for the results of past corruption, and to pay unfairly for the kind of benefits they’ll probably never be able to afford for themselves. This is immoral.

  27. @mickey hickey

    Re “Countries with weak unions are countries where the middle class is miniscule or soon will be.”

    “And we must look to that privileged position of the worker to explain how our own middle-class way of life can survive. Putting more money into education is a waste of effort. Putting more money into basic research is a waste of effort. We already spend enough. In fact, we have every factor of production going for us: We have more land, more labor, more capital, and higher levels of formal education. But with our flexible labor markets, we cannot develop the human capital or knowledge we need to wean ourselves away from turning out crap.

    The answer to the problems of our country is education, but not the kind we’re pursuing, that is, jamming more kids into college or even teaching practical skills; instead, it’s teaching them how, politically, to cut themselves a better deal. As long as that’s going on, it’s impossible to write off the European or, more specifically, the German model”

    http://www.utne.com/Politics/Unions-American-Working-Class-United-States-Europe.aspx?page=4

  28. @Hugh Sheehy

    What makes collective bargaining corrupt? I’ve heard many descriptions of markets and individual bargaining, but I can’t see how they can be endowed with moral authority.

  29. @ Rory

    i dont think anyone has a problem with better, more productive, harder working workers being paid more. The problem with much of the public sector pay is that they were essentially paid for by other elements of the economy completely disconnected with them, ie civil servants getting pay increases funded via stamp duty and capital gains taxes created from the housing market and construction industry. It’d be like a private sector manufacturing worker getting paid more because Google has a big year.

    Further, much of the public sector pay increases were justified because of the now ridiculously flawed benchmarking process. If a private sector worker went to his boss and said he wanted to be paid more because public sector workers had received a pay increase, what do you think the response would be?

    I don’t envy anyone working in A&E, but the process and justification behind granting pay, pay increases and associated benefits (ie pensions) are wholly out of sync with anything that operates in the private sector, or indeed anything not in the public-sector universe.

  30. @seafoid

    Just because there is a waste of money at one level of government in the USA (Federal spending on “War On Terror”) is no argument in favour of waste of money at other levels of government (State and municipal). The public-sector unions in California (where I live) have been the milking the system for years and have managed to combine great benefits and pensions with dismal productivity and a bad attitude. From the same edition of the Economist (not sure if the full briefing is online)

    Any public-sector worker can hide behind union power to game the system – 82% of California Highway Patrol officers discover a disabling injury about a year before they retire

    In 2000-10 the Los Angeles school district spent $3.5m trying to get rid of seven of its 33,000 teachers, and succeeded with only five

    In California the prison guards union has been one of the leading advocates of getting tough on crime. The result of this policy has been a dramatic increase in both the size of the state’s prison-industrial complex (from 12 prisons in 1980 to 33 in 2000) and the pay of the people who run it ($70,000 a year in base salary and $100,000 with overtime)

    Milking the system also happens at city/municipal level – see here for a list of ridiculously paid city managers, who don’t have very much to do in the first place (cities and counties have direct revenue/tax raising powers).

    I am amazed at how quickly diversionary tactics are always thrown up anytime the fact that public-sector unions can protect under-performing workers from being sacked is challenged. There is a deep-seated aversion to the concept that pay should be related to performance, since the goal is to protect the members/insiders at all costs, ignoring the cost (since someone else pays) and ignoring the impact on the quality of the service provided (since the goal is insider protection).

  31. @ Bond, Eoin Bond
    Hear what you’re saying but they’re very connected. It all boils down to goods and services. Some of these you can trust the private sector with and some of them you can’t.
    Private sector doesn’t run health any better than public sector (look at the states) – private sector doesn’t do education any better either. So private sector cannot be trusted to provide these services and that’s why the public sector steps in to provide them.
    The problem is that the public sector can’t be trusted entirely either. But it is very unlikely that if our banks were in the public sector that we would be in this mess at all.
    The solution for both is strong governance. And strong governance comes from a strong democracy. And we don’t have that in this country.
    Lack of governance has damaged both private and public sectors. The impact in the private sector has been catastrophic. But both should be fixed with a common solution.

  32. The CB taking on loans with NO discount (a mere 500m though. Lenihan could “invest” that before lunch).
    http://www.independent.ie/business/irish/banks-tried-to-avoid-haircut-on-euro1bn-loans-to-nama-2491048.html

    Cowen lost all credibility in relation to being truthful after the IMF arrived (and before that more farcically after Pontchartaingate). Everything he says should be IMF proofed. Irish Independent and reputedly Prime Time very good today.

    It is also high time he was interviewed by Gardai. If he wasn’t a government politician he would have been hauled in long ago.

    From politics.ie:
    “The investigating Gardai into Anglo should now interview Brian Cowan concerning what was said between him and Sean Fitzpatrick as this is entirely relevant to their ongoing investigations.”

    And
    “You would think that Seanie has already told the Gardai about his meetings with Cowen, as he hardly left this info out before spilling it to a journalist.

    So the question is, have the Gardai already interviewed Mr Cowen in order to corroborate Seanies story?

    If not, why not?

    And if Seanie did not tell the Gardai, will they be interviewing him again?”

  33. @Eureka,

    While I agree with the idea that strong governance (e.g. in terms of regulations, monitoring, transparency, accountability, compliance etc) is a key element of any solution, the idea that having a single government-funded, union-dominated, service delivery infrastructure (whether for education, health etc.) is part of the problem, not part of the solution. From the economist again

    The rigidity of the public sector does not merely reduce the quality of services, it also discourages innovation. In the private sector innovative firms routinely experiment with new business models, measure the success of those models and then expand successful ones. But whenever public-sector managers have tried to do the same – by establishing magnet schools that focus on certain subjects, or charter schools with longer teaching days, for example, the unions have opposed them.

    Ireland recently fell below average on a survey of OECD countries maths ability levels, and suffered a steep decline in relative literacy levels. The teacher union response? “We need more resources” or “It is only a one-time snapshot and isn’t relevant”. For all the politicians it was a “wake-up call”. Let’s see what happens. Don’t hold your breath. Perhaps it will be dealt with under the Croke Park “reform” process.

  34. @Rory O
    I have no particular problem with collective bargaining.

    I have a problem with the classic tale of two wolves and a sheep voting on what to have for dinner. In many countries the public sector unions and the government have taken on the role of the wolves. Their ability to do this, and the rewards that have come from it, need to be removed.

  35. @ Rory O’Farrell

    How long do you think you’d last working in an A&E department?

    Rory,

    Revealing question but a simple one to answer.

    Like others in the alien world of the Irish SME where the buck has to be stretched in these times, I think that I could keep pace with most of the good people who work in A&Es.

    Having had a few bad debts in the past year, at least in an A&E I could reasonably expect to be paid and I assume a set amount for every additional hour.

    I’m not easily shocked but I was last month when RTÉ disclosed to an Oireachtas committee that it employed 42 desk-bound journalists in its online division – – all working of course for the common good.

    When almost everyone who could evade tax without risk of sanction did, RTÉ used to threaten to shame people before the courts for not paying their TV tax – – all again for the common good.

    I do not advocate low pay and I always say to Asian business people who grumble about the difficulty of getting reliable staff for the buttons they pay that well-run competitive companies in the West usually are the highest payers.

    However, if we wish to have a fair society and to live in better than an extension of Sceilig Mhichíl, there are some realities that have to be faced.

    What is striking is how people who regard themselves of the Left adopt the modern equivalent mode of what Lenin or someone else called ‘useful idiots.’

    I criticisise monopolists and professional fee cartels organised by what could be termed rich trade unions as I do the defence of privilege by traditional trade unions. During the boom years I advocated a mandatory pension system for the private sector but the same leaders who amply feathered their own nests, had no interest.

    Fintan O’Toole has in the past criticised a big pay hike awarded to his own editor but while the tens of thousands of unemployed are essentially invisible, both lawyer and public sector rent-seekers should be seen as being in the same boat.

  36. Rent seeking is rent seeking. There are many different sorts of market distorting practices. In very brief, a few examples:

    * warfare and political subversion to gain privileged access to crucial natural resources. eg Clive’s conquest of India or the western role in the Gulf. Prosperity has some unsavoury roots.
    * building of national and international monopolies and monopsonies via regulatory capture, tax system arbitrage, transfer pricing and political graft. Think Michael Moore.
    * monopolising the supply of public goods under the flag of professional ethical standards such as medicine, accountancy or law. Tribunals, VHI fees, bank scandals etc.
    * restrictive practices within state agencies, designed to favour post holders, internal proteges and favoured contractors at the expense of agency functioning and staff productivity. Many more in the pipeline.

  37. @Bryan G

    “In California the prison guards union has been one of the leading advocates of getting tough on crime. The result of this policy has been a dramatic increase in both the size of the state’s prison-industrial complex (from 12 prisons in 1980 to 33 in 2000) and the pay of the people who run it ($70,000 a year in base salary and $100,000 with overtime) ”

    The US punishment industry has many fathers. Blaming it on the unions is very dodgy. Thanks for the other stuff.

    I think most of the US opposition to unions, unemployment benefits and healthcare is ideological rather than rational.

  38. @ Paul Quigley

    Rent seeking is only going to intensify as an out of control financial sector expands beyond the capacity of the real economy to feed it.

    “Longtime hedge fund manager Mike Masters, who has worked with WDM, said: “Because there is already much more capital available in the world than hard commodities, speculators can increase the price of consumable commodities, like foodstuffs or energy, much higher than traditional consumers and producers can react.”
    http://www.guardian.co.uk/environment/2010/oct/25/impending-global-food-crisis

    Barclays bonuses are a good example.

  39. Michael,

    One has to be careful about direct comparisons between productivity in the public and private sectors.

    The public sector exists because of identified market failure. As such, it is a second-best solution to the allocation of resources. By its nature, therefore, it will be less efficient.

    You only need to imagine what ramifications an absolute absence of public sector would have on these much-touted efficiencies in the private sector to understand that the problem is more complex than you pretend.

    Put another way, the public sector fuels efficiencies in the private sector, by providing a framework in which markets can operate without market failure. That framework, by definition, is outside the market it defines and therefore its employees must cope with the fact that they cannot “benefit” from the efficiencies which market incentives compel private sector workers to achieve.

    An analogy might be a workshop in which one man is assembling widgets and another guy is running around tightening screws on the widget machine. The assembly man says “I build 300 widgets before lunch – what did YOU contribute, buddy?!?!?”

  40. The problem with constantly decrying the public sector is that it feeds into the agenda of those who would prefer us not to have it.
    In the past there was no public sector apart from the military. There was no medical treatment for the poor and there was no universal education. States did not believe that they had a duty to provide these things.
    There are those who still believe that the state has no duty to provide these services and that’s a fairly powerful lobby.
    It was a major struggle to develop public services. They need overhaul and improvement – no doubt about it but we need to be careful. They have done some good.

  41. @ Ludwig

    “The public sector exists because of identified market failure”

    In theory you are correct, but in reality its difficult to claim that energy provision (ESB, Bord Gais, Eirgrid), airport management (DAA), or the ability to grow trees (Coillte) are areas that have suffered from large amounts of ‘market failure’.

  42. @ Eureka

    i completely agree that a strong and broad public sector, like a strong and broad social welfare system, is ultimately what is required in this country, and is ultimately what is wanted by the people of this country. However, both of these have gotten too big and too much of a burden on the overall economy, and are in dire dire need of massive reform and downsizing. Simply accepting, as many argue for, that the public sector remains more or less of a similar size and cost (a 10% reduction is a meaningless gesture) at a time of immense economic crisis, will only cause our current problems to get worse, not better. At the moment we have asked that public servants do their job better, take relatively modest paycuts, pay for their extremely attractive pension schemes, and take relatively attractive voluntary redundancy packages. Although we have termed this radical and aggressive change, private sector workers are asked to do this sort of thing all the time. In reality its not particularly radical, and is far short of what an IMF-assisted country would usually try to do with its public sector.

  43. @ Mr Bond,

    I agree with you – the task should be to identify the market failures and address them appropriately. This is not necessarily the case, as there is perhaps some scope for further privatisations in Ireland – as elsewhere.

  44. @Ludwig
    “The public sector exists because of identified market failure.”

    If there is a market failure that requires the state to provide – for instance – all medical services then how come bandages, medical oxygen, needles, hospital construction materials, uniforms, surgical instruments, etc, etc. etc. are all provided by private sector suppliers? The right to a service and even payment for a service might be state driven in response to a market failure, but the need to have state run service providers is far less clear.

    Health, education, fire services, administration of social insurance, etc,. could all be easily provided by private sector suppliers. There could even (possibly) be a couple of private sector passport offices.

    Of course, if public sector suppliers were run efficiently for the benefit of the customer and with due care for the rights of the taxpayer then there would be no need to consider such options. Public services in many countries are far from being run for the benefit of the customer or with the rights of the taxpayer in mind.

  45. Hugh,

    I don’t know about how easily it is to disentangle the various threads of a service into those that are in response to market failure and those that could be privatised.

    When you attempt to decompose integrated markets, you lose synergies and add to coordination costs.

    So I think it makes sense up to a certain point, yes, but beyond that it is often cheaper just to let the public sector provider run its own IT inhouse, for instance.

  46. “Health, education, fire services, administration of social insurance, etc,. could all be easily provided by private sector suppliers”

    So could television. You would end up with TV3. It should be noted that historically the private sector has left it to others to provide basic services. It was religious orders and not William Martin Murphy and his buddies who developed much of the State’s medical and educational infrastructure.

    The meme that the private sector is efficient while the public sector isn’t has deep roots but is highly questionable.

    Take the UK PFI industry. There is no evidence that PFI funding is more cost efficient than Government borrowing. Take the UK rail system. Private sector management has been a disaster.

    Between 1997 and 2007 the Irish private sector allocated tens of billions of Euros worth of capital in property . Where is that money now?

  47. @ EBE

    “The problem with much of the public sector pay is that they were essentially paid for by other elements of the economy completely disconnected with them, ie civil servants getting pay increases funded via stamp duty and capital gains taxes created from the housing market and construction industry.”

    Is it not a principal of the taxation system that it is paid into and out of one pot? Therefore, there is no direct link between receipts and payment (with the possible exception of PRSI – is it ring fenced?). If there was a direct link then citizens could start to make moral arguments for tax avoidance where they don’t agree with payments (e.g. abortion advice).

    The government made the decision to move the taxation system away from reliable taxes (such as income tax) to clinical sensitive taxes (such as stamp duty). How can the PS be blamed for PD/McCreevy policy.

    Throughout the boom the overall tax take remained reliable stable roughly 30% of GDP but the make-up of the tax take changed considerable with the move from realiable to boom-sensitive taxes (which fell through the floor hence the deficit)

  48. @ Bond, Eoin Bond
    Yes – small teams with clear chains of command and proper oversight.
    Does not really matter where this is achieved but there are some public services that the private sector might not be able to do as well. I’m not sure a private company providing education across the state would work as well

  49. @ Ludwig Heinrich Edler

    You only need to imagine what ramifications an absolute absence of public sector would have on these much-touted efficiencies in the private sector to understand that the problem is more complex than you pretend.

    Au contraire, to me there is little that is simple in life and this why it’s so hard to effect any change in conservative Ireland.

    Unless we want continued high long-term unemployment, emigration and some sectors enjoying legacy privileges, change will come eventually but at much human cost.

    I get the impression that unemployment is more of an issue in public debate in the US than it is in Ireland.

    Last week, it took a business failure linked to a media celebrity, Ivan Yates, to bring attention to what was experienced by more than 1,500 companies in 2010 and hundreds of sole traders.

    @ seafóid

    The meme that the private sector is efficient while the public sector isn’t has deep roots but is highly questionable.

    True.

    It’s also true that consumers and an economy generally benefit in areas where competition is feasible.

    What happens in monopolies or near monopolies such as the ESB and RTÉ is that the primary goals are determined by the wealthy insiders.

    Unregulated, they tend to expand services, not because of consumer need but to enable the senior people to earn more.

    Board members collect their fees and have no reason to rock the boat.

    In the case of the ESB, part of the public stake has been given to the employees.

  50. @Michael Hennigan

    “Unregulated, they tend to expand services, not because of consumer need but to enable the senior people to earn more.”

    Isn’t it the same with the banks (cf Bob Diamond yesterday) , the Big 4 accountancy firms, the hospital consultants, the lawyers ? Gouging works across the spectrum and regardless of ownership structure. Modern professionals are, on the whole, shameless.

  51. @ Niall

    yes, of course it is paid out of the same pot. However, the problem was that the pot growing ever larger become the main reason and justification for increases in pay, social welfare and level of services. There was never much actual debate (ignoring the foolish benchmarking process) on the actual merits of either increased pay or increased level of services. It was basically a “can we afford it” debate, which at the time we thought we could, and which we now rapidly realise we cannot, as you noted.

    People, in general, and myself included, do not have all that much problem with increased public sector services and use of taxes to fund this, when there is a genuine need for such an increase or provision. What we do have a problem with is when an increased cost of services does not actually create more or better services, and purely goes into the salaries being paid to those providing them. This is why there has been much annoyance that the recent cuts in public sector expenditure have chiefly affected the provision of services, rather than the cost of providing them.

    (note that i am not saying that simply cutting wages is an easy task, or one that does not throw up obvious debates on fairness etc. But looking at it coldly, as usually happens in private sector rationalisation, that is what is exactly what is required).

  52. @Hugh Sheehy

    Do you really think that this is the decade to talk about the efficiencies of the market in providing services and how what we really all need is a bigger private sector and a “freer” market?

    We have just had the most significant failure of capitalism in eighty years, a failure that occurred in a fully privatized sector open to the so called “rigours of the market”, a failure that has had astonishing negative consequences for the wealth and well being of the nation (and indeed the world).

    So what better time to suggest privatizing the fire service? It is bound to work out well.

    Faith in the efficiencies of the market and the superiority of private sector solutions is just that – faith.

    Faith that seems misplaced right now.

  53. Wouldn’t it be nice if someone in the political firmament could make the connection between wage cuts and debt restructuring!
    At an individual level an option to extend mortgage terms by 20% (this could be very impractical – I cede to those with more knowledge on it – but you get the general idea) would make a cut of 15% much more palatable

  54. @ Shay

    do you think that the efficiencies of the market have worked in technology, for instance? Or would government involvement there have helped with technological development?

  55. @ B-EB

    Many of the greatest technical advances have been linked to state programmes, especially those conducted in wartime. Notwithstanding the pedigree of Apple and Microsoft, the reality is that much ‘western’ IT orginated in state-sponsored weapons technology. Economies of scale matter and sometimes only the state has the muscle to carry it off.

    There will always be individal success stories, but, pace the MNCs and their 100k employees, Ireland is still a poorly industrialised country. The history of semi-state development here is well covered by Joe Lee and others. Energy industries had to be built from scratch because neither domestic or British investment was forthcoming. It wasn’t worth their while.

    The fact the semi states have become something of a burden is not cause to decry what was done, or to laud private initiatives uncritically. Privatisation may have benefits, but the telecoms story should be enough to illustrate the number of sharks in these waters.

  56. @ Paul Quigley

    the telecoms policy in this country was, is, awful. But you could argue that a primary reason for that was the slow pace of unbundling of the telecoms network, rather than just the sale of Eircom. Selling Eircom off in pieces, rather than as a dominant monopoly, would probably have been a much better decision in hindsight. It wasn’t the concept of privatisation that failed, but the execution of it.

    Re the govt investment in technology – agreed that sometimes a large scale govt investment is required to get a project properly up and running. But generally the actual role-out and applied usage of such technologies are best managed by the private sector. The internet is a prime example of that. And, as you noted, most government created research and technology was a spin off, rather than the primary reason, of other projects (ie NASA, US military). We have neither of these sort of organisations in this country. Its possible you could argue for an agricultural-based (or fisheries?) R&D operation in this country that would merit large levels of government financing and which could create spin-offs, but aside from that i don’t see what role the government should, or could, have in that regard.

  57. @ Bond Eoin Bond

    “What we do have a problem with is when an increased cost of services does not actually create more or better services, and purely goes into the salaries being paid to those providing them. ”

    Surely that also goes for lawyers, bankers, Davy employees….
    What benefits have pension fund investors had from private sector price gouging in the companies whose shares they hold ? AIB top level salaries rose by how much between 1997 and 2007 ? And delivered what exactly ?

    Regarding the efficiency of the free market in the US , here’s Detroit :

    ttp://www.guardian.co.uk/artanddesign/gallery/2011/jan/02/photography-detroit?INTCMP=SRCH

  58. @ Seafoid

    i completely agree that their rates of pay are too high as well. But at least you generally have some option of not using their services. As far as i’m aware i can’t use another public sector provider. Didn’t a lot of the county councils try to very aggressively stop the likes of Greenstar from providing waste collection services?

  59. @Eoin Bond

    > do you think that the efficiencies of the market have worked in technology, for instance?

    That is a reasonable question and without dismissing the idea of markets as a way of choosing who to buy things from I am going to say that the efficiencies of the market have not been the major driver of technological progress.

    > Or would government involvement there have helped with technological development?

    The Internet, MRI scanners, velcro, lasers, the integrated circuit.

    Looking back at the twentieth century you could be forgiven for thinking that all the inventions that make our high technology existence possible were produced as the result of government funded research (or academic study just for the sake of it).

    These developments did not benefit from the market and they were not intended, in any meaningful way, to meet the needs of the market. Now the market did benefit hugely from them because there were new things to sell and new ways in which to sell them but it is questionable how significant the contribution of the market (and indeed competition) is to technological development.

    Many would argue that technological advance is first and foremost an example of human progress in science and engineering, something ongoing for quite a while without the direction of the market. Things have gotten better because we have gotten better at doing them, and we have gotten better at doing things because we are driven to do so by human nature.

    Not let me ask you two questions.

    How much of our current economic and societal malaise is related to the poor allocation of resources enabled, if not caused directly, by insufficient market regulation?

    Do you think that the way capitalism gradually reallocates resources to the wealthiest is making the world a better or a worse place?

  60. @Shay Begorrah

    Capitalism doesn’t gradually reallocate resources to the wealthiest.

    Inter generational wealth accumulation/maintenance is surprisingly low and the variance of incomes among children of the wealthy is surprisingly high.

    There are many reasons to believe that capitalism ought to lead poor countries to grow faster than rich countries. China, India and Brazil are examples of this process. To the extent that some poor countries do not grow faster than rich countries there are reasons to believe that this is caused by political failures in these countries.

    Furthermore, and more fundamentally, we are not dealing with a zero sum game. Higher income or wealth for one person need not imply lower income or wealth for someone else.

  61. @ Christy

    I don’t buy that.

    58% of all income growth in the US between the 1976 and 2007 went to the top 1% of the population. The top 0.01% or 15000 households had 1.7% of all income in 1976 and 6.04% by 2007. By 2004 the top 1% of wealth holders in the US held 42% of all financial and real assets, the most unequal distribution since the 20s. The top 20% held 93% of such assets

    The total wealth of Indian billionaires is more than a fifth of the nation’s GDP, equalled only by Russia.

  62. @Christy

    While wealth is not a zero sum game, influence most definitely is.

    The increasingly unequal distribution of income leads naturally to a more unequal distribution of power – it’s one of the drivers of modern alienation, the feeling that our increasing material wealth is coupled with diminishing status.

    Anyway, how about those Baltic states? Someone educate me before I start boring myself too.

  63. @Christy
    “Higher income or wealth for one person need not imply lower income or wealth for someone else.”

    Wealth is a relative measure you can only be wealthy if someone else is poor. If everybody on the planet was given €1m would we all be wealthly?

    @EBE

    I can’t disagree that we should aim for value for money in public spending. Austerity should be a permanent feature of the budget i.e. they should justify every pound spend.

    @ Michael H

    Agreeed that monopolies are a problem, however I’d sooner have a state owned monoploy than a private owned one. I’d like to see a free market in Adam Smith’s design with multipy buyers and sellers as opposed to the oligopoly power that exits today with MNCs (and the resulting race to the bottom in employee rights etc)

    It is often forgotten by free marketers that Smith mentioned the “helping hand” as least as often as the “invisible hand” – he only mentioned the latter once.

  64. @Paul Quigley
    “the reality is that much ‘western’ IT orginated in state-sponsored weapons technology.”

    While it may be true for technology as such, it is largely not true for IT (Information Technology). Aside from the initial bump that cryptography provided, the main developments have been and are largely driven by the private sector. Governments are usually playing catch-up.

  65. @seafoid

    While I accept that recent decades have witnessed increased income inequality in western countries, a much broader view is required when determining whether capitalism as a system of organisation leads to gradually increasing wealth inequality.

    The capitalist age could be argued to have started at the end of the middle ages and income and wealth are less unequal now then they were then.

    Moreover, whether or not someone is well off is more related to their effort and ability than it was in the past and then it was or is in non capitalist countries.

    More fundamentally, these households don’t hold on to their wealth through the generations to an extent that would raise concerns about the development of elite class or form of modern nobility. A large chunk of the wealth of the super wealthy is given away to charity or not invested wisely enough to maintain levels of wealth.

    @Shay

    “The increasingly unequal distribution of income leads naturally to a more unequal distribution of power – it’s one of the drivers of modern alienation, the feeling that our increasing material wealth is coupled with diminishing status.”

    I’m not sure what specific power(s) you are getting at here -In any event, how big a concern is this? some people “feel” “alienated” because they think their relative lack of wealth gives them a lower “status”. I mean what percentage of a drop in people’s income would they accept in order to get rid of this “feeling” of “alienation”. I’d say f**k all. That this “feeling” of “alienation” is essentially not very important. (to the extent that it really exists at all)

    Also, right thinking members of society don’t believe that the value of someone is determined by their wealth.

    Second, a world where the rich are powerful is still a better world than one where the only way to become rich is to be powerful.

    @Niall

    I would measure wealth in euros / purchasing power

  66. @ Christy

    I think the last 30 years have accelerated the concentration of wealth in Western societies. You have a case where the Walton family owns more than the bottom 40% of US citizens. Median wages have been stagnant since the 1970s. This feeds through to widening mortality differentials. So people are literally dying because of this.

    And how about this ?

    ” For every 1 percent rise in the unemployment rate (about 1.5 million more people out of work), society can anticipate 47,000 more deaths, including 26,000 fatal heart attacks, 1,200 suicides, 831 murders, and 635 related to alcohol consumption. ”
    http://www.prospect.org/cs/articles?article=the_path_to_a_high_wage_society

    It’s part of the system as is. Bob Diamond earned £70m in 4 years at BarCap. There is no limit to the greed of his caste. Maybe 2011 is better than 1463 but it’s worse than 1963.

  67. @ Shay Begorrah

    Faith in the efficiencies of the market and the superiority of private sector solutions is just that – faith.

    Places like Utopia and Heaven are for dreamers and faith in communism cost many millions of lives and related misery.

    North Korea is the remaining remnant of this failed experiment; I can understand why it was alluring for people who had little.

    How could capitalism be perfect? It can’t of course but there are plenty examples which still inspire optimism.

    http://www.finfacts-blog.com/2008/02/irish-journalist-tom-mcgurk-pays.html

  68. seafoid

    I think the question of causation is far more complicated than these stats suggest. Whenever I hear Vincent Browne going on about this I am suspicious.

    For instance, unemployment doesn’t cause death by alcohol – drinking too much does.

    In the quote I see the guy is more careful – he says “society can expect” – but the difference seems to be lost on many.

    Moreover, life expectancy is increasing over time. I don’t have the figures at hand, but I would guess that the people in the bottom 10% of the income distribution live longer today than people in the bottom 10% of the income distribution in 1970 and that is the key comparison.

  69. @ Michael Hennigan

    laces like Utopia and Heaven are for dreamers and faith in communism cost many millions of lives and related misery.

    Well luckily for us in Europe those vested interest trade unionists in Solidarnosc brought down communism.

    They didn’t like the idea that somehow an all encompassing Party could have the true interests of the people at heart, doing away with the need for freedom of association or groupings.

  70. @Christy

    I was looking at some stats from the US today. Cardiovascular deaths are down compared to 1980 but obesity and diabetes related deaths are up by 7% and 10% respectively. Amongst the poorest 10%, smoker incidence is higher so that wouldn’t be improving much. Cancer deaths are less common if cancers are detected earlier and one has access to decent healthcare, which millions of Americans don’t. Chronic disease incidence in the US is up significantly for stroke, diabetes and cancer and worse than in 1980 and will feed through to higher mortality rates. Those already retired have significantly better mortality than the cohort in their 50s which is highly significant. Comparing the US to the Netherlands shows a big divergence since morning in America. It’s the economy, stupid.

    And don’t forget the 1.1 million Americans who have run out of unemployment benefits and have to live off their savings. They would have been better off in the 70s.

  71. @Christy

    I’m not sure what specific power(s) you are getting at here -In any event, how big a concern is this? some people “feel” “alienated” because they think their relative lack of wealth gives them a lower “status”. I mean what percentage of a drop in people’s income would they accept in order to get rid of this “feeling” of “alienation”. I’d say f**k all. That this “feeling” of “alienation” is essentially not very important. (to the extent that it really exists at all)

    Eh – power? Well lets say its the ability to effect change in society or government or to capture limited resources (like land or licenses or what have you).

    It is a huge concern because inequality and the alienation it fuels undermines democracy and also the cohesion of society. The Spirit Level (which has been discussed here before) deals with many of these issues in depth and it is an easy read.

    The factor which I suspect you disagree with me most on is that the “standard of living” has components other than income in it and at some level you think that purchasing power is the primary component in well being.

  72. @ Shay Begorrah ( great handle BTW)

    ‘Many would argue that technological advance is first and foremost an example of human progress in science and engineering, something ongoing for quite a while without the direction of the market. Things have gotten better because we have gotten better at doing them, and we have gotten better at doing things because we are driven to do so by human nature’

    The biosphere operates by competition/co-operation. Competition for dominant position is of course part of life. One of the advantages of civilisation is the capacity to reflect at individual and collective level. How much competition do we want ?

    I strongly recommend the work of the late Pierre Bourdieu, sociologist.
    In the course of his many theoretical and empirical studies, the established the principles by which society works. In this context, he demonstrated that the scientific fields consitute intellectual marketplaces, in which the protagonists compete for status, honour and renown. The struggle, as he puts it, is conducted within the rules of the field, and the audience is one’s own competitors. Homo Academicus is one of the relevant studies.

    Bourdieu’s point is that there is just as much competition in science, sport, religion, politics, as there is in the market economy. The rewards may be diffferent but these are real autonomous markets, which direct themsleves in many ways. As many of the skills for successful competition are generic, the dominant and the outstanding recognise each other across fields.

  73. @Shay

    “It is a huge concern because inequality and the alienation it fuels undermines democracy and also the cohesion of society. The Spirit Level (which has been discussed here) deals with many of these issues in depth and it is an easy read.”

    Where is this undermining of democracy that you see?

    What you are saying appears to be that inequality causes people on low incomes to feel they have low status. This makes them feel alienated from society and that this feeling (a little mysteriously) “undermines democracy and social cohesion”.

    I would say that to the extent that this alienation exists it is not caused by a feeling of “low status”. I would say it is caused by a potentially justified concern that they are not getting a fair and/or adequate share. This talk of “low status” is a red herring.

    Its the same sort of argument that rolled out in support of universal child benefit, something like, “Every family ought to feel like they are receiving from the state … because this is important for social cohesion”.

    What annoys me about this is not just that I think that this benefit is unlikely to be realised but that the arguer often does not then proceed to consider the cost of this approach, i.e. hundreds of millions of euros. How much social cohesion does this policy buy? It better be a hell of alot at that price! I mean could we not just send out a few candles to each household, like we did for the millennium, and get everybody to light them at the same time, (perhaps we could all sing), and then spend the millions left over on other social programs.

    ” The factor which I suspect you disagree with me most on is that the “standard of living” has components other than income in it and at some level you think that purchasing power is the primary component in well being.”

    I do think that material living standards are a valid and important goal for the state to pursue, while individuals, of course, ought to be more concerned with other goals. Material living standards are correlated with many things that really do matter like infant mortality, education and longevity and are associated with greater opportunities for more people.

  74. @ Michael H

    ‘Places like Utopia and Heaven are for dreamers and faith in communism cost many millions of lives and related misery’

    Hollywood doesn’t sell dreams ?
    There are no Ponzi schemes ?
    Brands don’t matter ?
    The MNCs don’t hire top directors to make their commercials ?
    Nobody is suffering because of the credit bubble ?
    Private enterprise is always real thoughtful about native peoples ?

  75. @Karl Whelan
    re
    So they’ve lost quarter of their GDP but a meltdown was avoided? I guess this shows that the definition of a meltdown is in the eye of the beholder.

    A 25% reduction would be and indeed may need to be quite doable in Ireland. The question is how to distribute the 25%.
    From my perspective the real failure in Ireland has been the failure to distribute the pain to those who can bear it. There is still extraordinary rent seeking amongst the elite and professional classes mostly in the public sector, led at all times by a corrupt and clientelist political class.
    There have been few commentators who have put their names to radical proposals to reduce rent seeking.

    I do not know why Latvia seems to be emerging from crisis but suspect that the the principle reason is a national solidarity and honesty that is totally absent Ireland.

    discussion on who should bear the pain.

  76. @ Michael H

    For the avoidance of confusion.

    ‘Places like Utopia and Heaven are for dreamers and faith in communism cost many millions of lives and related misery’

    Of course. But I don’t believe anyone on irisheconomy.ie is naive about communism. I would say, however, that idealists should be respected, even if their programme has to be resisted in large part. Commitment to the common good is scarce enough.

  77. It’s weird how the US measures economic recovery in terms of unemployment. Europe measures it in terms of GDP.
    Wonder why

  78. @ Christy

    ‘For instance, unemployment doesn’t cause death by alcohol – drinking too much does’

    That’s the argument about agency vs structure. Do we locate the problem in the individual drinker or do we look at the environment ? Everyone will agree that the individual has some responsibility. The question is how much.

    When you work as I do, with addiction problems, you can’t help but take account of environmental factors. Many young people from the slums drink too much because they are utterly bored and alienated. They feel like sh***e a lot of the time.

    People drink less dangerously when they have hope and meaning in their lives. That’s one reason why unemployment is such a disaster for them, and us.

  79. @paul

    I agree but I think sometimes people are too willing to impose causality where in reality there is only correlation.

    For instance, to what extent is a person’s family life influencing both how much they drink and whether they are unemployed?

    Also, I wonder about the extrapolations from existing figures that may be been used when people discuss the effects of unemployment. People who were long term unemployed during the boom may not be representative of how people who are long term unemployed now will behave.

    Also, above, people suggested that inequality was causing deaths. I remember hearing this regularly on Vincent Browne. Extra stress was put forward as the link between the two. This seems a tenuous link to me although I have not seen the studies etc.

    Also, saying young people drink because they are bored is probably true – but studying for school exams is boring – listening in class can be boring – working can be boring. Drinking is not boring. Saying that people drink too much because they are bored, and then trying to blame society for that, well it just doesn’t really make too much sense to me.

  80. @ Christy
    There is a lot of relevant research. For example:

    ‘Although both material and social influences contribute to inequalities in health, the importance of relative standards implies that psychosocial pathways may be particularly influential’

    http://www.bmj.com/content/314/7080/591.extract

    With the greatest of respect for your thoughtful and considered views, there is a difference between ordinary boredom and chronic under-stimulation. Boring, poorly planned, under-resourced environments destroy lives.

    Junk Culture is as big a hazard as Junk Food. No wonder the consumers develop mental and physical disorders. It may be very profitable to feed it to people at the bottom of the pile, but, as Michael Moore rightly points out, it sure ain’t right.

  81. Christy

    Mortality in Ireland is directly linked to income levels. It is the same in the US. You seem to imply that the economic model has nothing to do with any of this. Dutch mortality is projected to improve significantly over the next 20 years and US mortality is not. What is the difference between the Dutch and the Yanks . Ultimately it comes down to what resources are made available across a society. The lack of a social security net is a political choice, as is the lack of affordable health care for people on low incomes.

    The least rich decile of Irish people will die earlier than the least rich decile in Denmark. That comes back to questions of taxation, economic policy and so on.

    You’ll never die like common people .

  82. @Seafoid.
    re: You’ll never die like common people .

    It is rather hard that an old workman should have to find
    his way to the gates of the tomb, bleeding and footsore, through the
    brambles and thorns of poverty. We cut a new path for him, an easier
    one, a pleasanter one, through fields of waving corn. We are raising
    money to pay for the new road, aye, and to widen it, so that 200,000
    paupers shall be able to join in the march. There are so many in the
    country blessed by Providence with great wealth, and if there are
    amongst them men who grudge out of their riches a fair contribution
    towards the less fortunate of their fellow-countrymen they are very
    shabby rich men.
    Lloyd George –Limehouse speech.

    The shabby rich men have not gone away, you know!!

  83. @Paul

    Cant see more than the first page…

    “That mortality in developed countries is affected more by relative than absolute living standards is shown by three pieces of evidence.”

    Why has he limited his study to developed countries? I would strongly suspect that what he would see is that mortality is closely linked to absolute living standards if he extended his study to developing countries. He has cut his number of observations and only selected rich countries.

    What he may be seeing here is that the small differences in per capita income between developed countries don’t make much of a difference to health outcomes while simultaneously picking up the fact that more equal societies spend more on healthcare – this would not imply that inequality itself is what is driving mortality.

    Moreover, would it not be a corrolory of this theory that healthcare outcomes in Ireland should be getting better as our society gets more equal as a result of the recession (or at least there should be pressure this way caused by this, perhaps to be set off against the effect of lower incomes) This would seem a perverse result.

    What appears to be lacking is an explanation as to why relative poverty improves health outcomes that is not dependent on healthcare spending etc

    “Firstly, mortality is related more closely to relative income within countries than to differences in absolute income between them. Secondly, national mortality rates tend to be lowest in countries that have smaller income differences and thus have lower levels of relative deprivation. Thirdly, most of the long term rise in life expectancy seems unrelated to long term economic growth rates. Although both material and social influences contribute to inequalities in health, the importance of relative standards implies that psychosocial pathways may be particularly influential.”

    pychosocial pathways! don’t know what they are, but I cant remember ever hearing of them being the cause of a heart attack!

    “During the 1980s income differences widened more rapidly in Britain than in other countries; almost a quarter of the population now lives in relative poverty. The effects of higher levels of relative deprivation and lower social cohesion may already be visible in mortality trends among young adults.”

    Explain the theory behind the correlation!

  84. @Eureka

    “It’s weird how the US measures economic recovery in terms of unemployment. Europe measures it in terms of GDP.
    Wonder why”

    Lack of automatic safety net I would suggest.

    In Europe the automaticity makes recession more of a national problem. In the US, the fact that so many safety nets are either time limited, disccretionary, or non-existant, makes unemployment (a more individual experience) resonate more.

    It is also a reason why many countries have high savings rates and I am surprised that the possibility of the US becoming a high savings rate economy for this reason has not been raised by the left in the US. Maybe it hasn’t occurred to Paul Krugman yet.

  85. @Paul & seafroid

    Lets think about this abit

    Am i right in saying that this theory suggests that if the top 1000 people in the country lose all their wealth tomorrow – making this a more equal society – that this theory would appear to suggest that there would be meaningful reasons why mortality would improve in the country (perhaps to be offset by falling incomes). What would be the process by which this would happen?

  86. @ christy

    Fair play to you for sticking with this, even if it is not necessarily the thread:

    ‘ pychosocial pathways! don’t know what they are, but I cant remember ever hearing of them being the cause of a heart attack! ‘

    There is a lot of research. Genuinely. Google health inequaltiies. My take is that too many of our young ( and not so young) people people feel that their lives are empty and worthless. Why take care of your health if you don’t value yourself ?. That hopelessness eventuallly adds up to a huge economic and social cost for everyone, so we need to tackle it.

    BTW heart attacks are not the most expensive problem, especially if you are obliging enough to pop your clogs early doors. It’s the stuff that leaves people in wheelchairs or needing massively expensive repeat treatments which is busting the healthcare budget.

  87. @ Grumpy
    Thanks for that.
    Would that hold true for the Baltics?
    Was trying to figure it out and it seems Latvias unemployment insurance is for 9 months with a meager allowance after that – but not clear on it.
    If they are similar to the US model then unemployment is the parameter that should be focused on, in which case (comparing like with like) the IMF bailout is a failure

  88. I haven’t the slightest idea how a thread on the Baltic countries avoiding economic meltdown has turned into a discussion on mortality rates. However, if we are going to touch on the subject, we might as well get a few facts correct. One of the best reports on the subject of mortality in Ireland was produced by Professor Brendan Walsh. Here is the link.

    http://www.comharsdc.ie/blog/?p=209

    I hate to intrude on the discussion with facts. I know how much many people on this site hate them when they fail to support their prejudices. But, here are a few:

    (a) Between 1997 and 2008, Ireland recorded the largest fall in mortality (age-standardised) in the OECD.

    (b) In 1997, the mortality rate (age-standardised) in Ireland was 15 per cent above the EU27 average. By, 2008 it was lower than the EU27 average.

    (c) In 1997, the mortality rate (age-standardised) in Republic of Ireland was 6 per cent above that in Northern Ireland. By 2008, it was lower in Republic of Ireland than in Northern Ireland.

    (d) Denmark, mentioned by one of the posters above as a shining example of the beneficial effects of high taxation, has the highest mortality rate (age-standardised) in the EU15, about 10 per cent higher than in Ireland. Note: Scotland’s rate is higher than Denmark’s, but it isn’t yet a separate country.

    (e) One of the factors that Professor Walsh gives for the dramatic fall in Ireland’s mortality rate (age-standardised) is the huge improvement in housing conditions. Those wicked FF/developers again: they’ll stop at nothing to get votes, including building modern houses for people so that they live longer.

  89. @ Christy

    “Am i right in saying that this theory suggests that if the top 1000 people in the country lose all their wealth tomorrow -”

    They could lose all of their wealth tomorrow but they would still have all of the benefits of their life experience up to that point which is what ultimately drives mortality. You would need to brutalise them over a long period of time to get them to the point where their mortality would come to a similar level of that of the lowest decile. Take away their expectations and hope , maybe have some kind of torture based on sensory deprivation that would wipe out their years of reading. It would be crucial to break all links they have with other prosperous people and compel them to mix only with people on restricted incomes, ideally who don’t read. You would need 2 generations to see the full flowering. A similar project based on previously well earning working class employees can be seen in action in Middlesbrough.

    “Wally Taylor has powerful memories of the picket line his father helped to man outside the steelworks that used to stand behind the estate where he grew up. The protest failed and the South Bank branch of the Dorman Long steelworks shut down. Some time later the owners began to demolish the site where his father, Walter, had worked. Wally, now 42, and the eighth of 10 children, doesn’t remember his father ever talking about how he felt about losing his job, but he sensed that something devastating had happened. “You pick things up, don’t you? I think he was mortified. He had that job until the steelyards closed down and he never got another job after that.

    Walter’s wife Winnie, 75 and no longer inclined or able to string together more than the occasional sentence, still lives in South Bank, in a two-storey brick house overlooked by the looming grey silhouettes of now-redundant industrial architecture. Most of her large and tight-knit family live in the area, a network of sons and daughters, grandchildren and great-grandchildren all within walking distance. Among her 10 children, only two have work; the rest long ago adapted themselves to a lifetime of unemployment. Of the grandchildren who are on the estate, none has managed to find a permanent job, and most have given up looking. The vast majority of her neighbours have no work”

    http://www.guardian.co.uk/society/2010/oct/23/britain-not-working-unemployment-middlesbrough?INTCMP=SRCH

  90. @ JTO

    The EU didn’t have 27 members in 1997.

    Prof Walsh notes that “In Ireland, non-capital public expenditure on healthcare per head of population increased by 72 per cent between 1997 and 2006, and is continuing to grow”

    It will be interesting to see the trend over the next 5 years.

    I suspect that debt growth supporting lifestyles that weren’t possible in the absence of debt helped mortality to improve for those who had access to debt but wonder now how the stalling of the debt machine will play out. €200 per week dole doesn’t buy much access to a healthier lifestyle either.

    The FF model would have been wonderful if it had been sustainable. But it wasn’t.

  91. @seafoid

    The EU didn’t have 27 members in 1997.

    JTO again:

    I am well aware of that. It is totally irrelevant. Data for the EU27 can easily be and often is calculated retrospectively for the full set of EU27 countries, even prior to when they joined the EU. The latest figures for Ireland, up to 2010 Q1, show the mortality rate (age-standardised) continuing to fall.

  92. @JTO.

    Perhaps the lower Irish mortality rates that you refer to are a result of the wave of emigration in late 40’s and 50’s rather than any improvement in the general well being of the Irish.

    Perhaps we should be grateful to the “wicked FF developers” who so generously built ” modern houses for people so that they live longer”.
    Come to think of it WE are being grateful. We are paying the banks for the mortgages, we are paying the banks for their money they gave away to their FF friends and we are bankrolling NAMA for the billions they are paying the banks for bogholes that the FF developers wanted to build on.
    Sure if the Irish start to live any longer, they will end up supporting the world banking system as well as the FF developers.

  93. @JtO – “I haven’t the slightest idea how a thread on the Baltic countries avoiding economic meltdown has turned into a discussion on mortality rates. ”

    Erm, too many actuaries with too little to do? Life and pensions sales obviously not what they used to be…. but no doubt you will be able to ‘frame’ an argument to dispute that.

  94. @ JTO
    “I haven’t the slightest idea how a thread on the Baltic countries avoiding economic meltdown has turned into a discussion on mortality rates”
    There is a logic. Economies can be judged on the welfare of the people in them. Mortality can be a measure of that.
    There’s no doubt that we have made great advances in the past several decades.
    Emigration, closed A and E’s, underfunded schools – all of these things have an impact on wellbeing and mortality. So it’s important

  95. @Joseph Ryan

    Perhaps the lower Irish mortality rates that you refer to are a result of the wave of emigration in late 40’s and 50’s rather than any improvement in the general well being of the Irish.

    JTO again:

    Your ‘explanation’ is so pathetically ludicrous, so laughable to anyone who knows anything about how (age-standardised) mortality rates are calculated that I am reluctant to waste time refuting it. Suffice to say, the fall in mortality rates in Ireland since 1997 has been across all age-groups, including infant mortality, which has fallen from being one of the highest in the EU in 1997 to one of the lowest now. How emigration in the 1940s is responsible for the fall in infant mortality between 1997 and 2008 is beyond me. Why don’t you simply admit that you know nothing about the calculation of (age-standardised) mortality rates and leave it at that?

  96. @ Christy
    “Also, above, people suggested that inequality was causing deaths. I remember hearing this regularly on Vincent Browne. Extra stress was put forward as the link between the two. This seems a tenuous link to me although I have not seen the studies etc.”

    The most surprising finding for me in The Spirt Level was that people at all levels of income do worst in more unequal contries (when compared to people at similar social gradiants in more equal countries) not just those at the lowest level. The risks associcated with failure with are higher in more unequal countires as usually they don’t have the same safety nets. A surprising finding for Socal Darwins is that Denmark has the highest number of patents per capita – the fear of failure is less.

    Why has he limited his study to developed countries?

    The Authors have responded to many critisms:
    http://www.equalitytrust.org.uk/docs/responses-to-all-critics.pdf

    “It has been suggested that we should have included more, and poorer, countries in our analyses. We
    aimed to examine only those countries where population health is no longer linked to average levels of
    income – those on the upper flat part of the curve in figure 1.1 in The Spirit Level . Clearly poorer
    countries need economic growth to provide their citizens with adequate material resources.
    We selected our countries according to a strict set of rules – with no departures or exceptions. We
    took the richest 50 countries ranked by wealth according to the Atlas method, which the World Bank
    uses to classify countries into Low, Medium and High Income categories. Our source was the World
    Development Indicators Database, World Bank, April 2004. From the richest 50 countries we excluded
    those with populations of less than 3 million to exclude tax havens, and then used all the remaining
    countries for which a comparable income distribution measure was available in the United Nations
    Human Development Reports.
    Rather than ‘cherry-picking’ the data and counting countries in or out according to whether they did or
    did not fit our thesis, we included them ‘warts and all’. For example, we include Singapore in our
    analysis of income inequality and infant mortality although it is a very significant outlier, claiming the
    lowest infant mortality in the world despite being the most unequal country in our dataset (see Fig 6.4
    http://www.equalitytrust.org.uk
    in The Spirit Level). This is the exact opposite of our critics’ tactics of looking at the data in each
    relationship and selectively adding or removing countries, in an attempt to make the relationships go
    away. Our aim was to see if there was a consistent tendency among these countries for health and
    social problems with social gradients to be more common in societies with bigger income differences.
    And to double check that our findings were not just due to chance we repeated all the analyses among
    the 50 states of the USA.”

  97. Before all this gets too fractious I think we need to realise that many sensible and useful things were done during the last decade that will stand Ireland in good stead and that many stupid things were done whose baleful impacts will take a long time to unwind. The challenge is to build on the achievements and to minimse the damage of the disasters. Perhaps too much commentary here focuses on the disasters and too little on the achievements.

    This:
    http://www.europeanvoice.com/article/2011/january/the-japan-myth/69887.aspx
    relates to JtO’s oft-expressed views on the decline and stagnation of the big, developed economies.

    Ireland’s ‘export platform’ model thrived on the perceived, credit-fuelled vigour of the US and UK economies during the ‘Great Moderation’, but it was starting to run out of steam and will struggle now in the ‘Age of Deleveraging’. Can Ireland position itself strategically to benefit from the apparent global strategy of Germany (and its economically-aligned neighbours)? For good or ill, this seems to the locomotive to which Estonia is hitching its wagon.

  98. Denmark-bashing is good fun but I think Ireland should be careful in doing so.

    Denmark is funding their state themselves, Ireland is running record levels of deficit. It is definitely easier to provide services if cost is not an issue. Now cost will be an issue & whether or not Irish public services can be maintained on current levels remains to be seen.

  99. @JTO
    re Why don’t you simply admit that you know nothing about the calculation of (age-standardised) mortality rates and leave it at that?

    I may have to go back to school to learn about (age-standardised) mortality rates.
    I could well meet your out of a job FF friends there, learning addition and going to civic classes.

  100. @Paul Hunt

    This:
    http://www.europeanvoice.com/article/2011/january/the-japan-myth/69887.aspx
    relates to JtO’s oft-expressed views on the decline and stagnation of the big, developed economies.

    JTO again:

    Excellent link. Will you be standing in the election whenever it comes? I suggest that you consider it.

    The article is very similar to what I posted on this site in summer 2009 and several times since. Namely:

    (a) Comparisons between Ireland and Japan, which many ill-informed people make in relation to forecasts of a ‘lost decade’ in Ireland, are completely bonkers. Ireland and Japan are at the opposite ends of the demographic spectrum. As I have pointed out repeatedly on this site, Japan’s ‘lost decade’ is primarily due to its abysmal demographics: stagnant to falling population, rapidly-ageing population, more people dying than are being born, over-65s proportion of the population increasing dramatically. The author of this article is making exactly the same point.

    (b) Thanks partly to industrialised abortion, Germany and many other continental countries are clearly heading down the same route as Japan. Germany’s population will soon start falling. But worse, it is rapidly-ageing and its population under 30 has been falling for several decades, while its over-65s proportion of the population will soon reach 25% (just under 11% currently in Ireland). With this demographic background, economists who are pinning their hopes on ageing Germany being the dynamic locomotive for European economic growth in the next decade are deluding themselves. It is the economic equivalent of the Irish rugby selectors pinning their hopes on ageing Sir Tony O’Reilly being the dynamic locomotive for the Irish rugby team in the next decade.

    (c) The English-speaking countries are much better off demographically, with rapidly-growing populations and ageing at a far slower rate. And, although not included in the article, Ireland’s demographics are the best of all. That is why there was a housing boom in Ireland, the UK and the US, and not one in Germany. The population of the UK (now 60m) was forecast in a recent report to overtake that of Germany (now 82m) by 2050. I think myself it will be 2055, because the report failed to take into account the UK’s loss of 2m population when the North of Ireland exits the UK, but I digress. Even McWilliams touched on the matter in his Irish Independent article yesterday. Apparently, he’s in Austria and, in one of his rare perceptive moments, he wrote that one of the first things that he noticed in Austria was the huge absence of young people compared with Ireland. A couple of brownie points awarded for that. However, he wasn’t bright enough to work it out that that is the reason why Ireland needs to build a lot more houses than Austria.

  101. sorry to keep going on about this off thread stuff

    Could it be that income inequality does not matter, but that the per capita incomes of, for example, the lowest 10% do?

    So that in countries with high levels of inequality, the lowest 10% have low incomes, in absolute terms, and this is what is driving the higher mortality figures.

    I know it sounds presumptuous to question a load of research without knowing anything about it but the idea that lowering the income and wealth of a small group of high earners at the top of the income distribution could significantly improve the mortality rates of a country seems unsustainable

  102. The Latvians and Estonians are our competition now. We have to do better than them.
    We are a low crime, low pop density, picturesque, politically stable, English speaking hospitable island close to Europe.
    Continental Europe is overpopulated with old people and lacks libido.
    Ehy not set up a scheme to encourage migration to here. The migrants apply to live here. They are given serious tax relief on their earnings so long as they stay for 10 years.
    I’m not sure if I’m serious about this proposal yet but the more I think about it the more sense it makes.

  103. @ Christy

    The Authors do say that relationship between inequality and mortality has one of the lowest correlations in their study but that it does have a correlation none the less.

    The effects on the lowest 10% can’t explain the morality rates as the study shows that these rates are worse at all levels of social gradiant.

    I think you made the point earlier on the on correlation being mistaking for causeation – I’ve included the authors response to this question below.

    I’d suggest you read The Spirt Level – Since you are obvousily interested the subject area.

    “Indeed, correlation is not necessarily proof of causation. However, as epidemiologists,
    we are trained in researching causal relationships within an observational framework.
    One of our critics has admitted that “sociology has been remarkably inept at providing us
    with the evidence and tools to create a better society”. We agree, but epidemiology has
    been much more successful in uncovering causal influences on population health and in
    pointing the way to effective public health policy. Epidemiologists have been able, within
    an observational framework, to show that: smoking causes lung cancer; sleep position
    affects babies’ risk of dying; social status and social networks have a profound impact of
    on people’s risk of chronic disease, etc., etc..
    We discuss the epidemiological criteria for the establishment of causality in our book. One
    example might strike readers as a useful illustration. At the end of the Second World War,
    the USA was a very equal country, and ranked high on population health; Japan was a very
    unequal country and ranked very poorly on population health. Since then, these two
    countries have switched their relative positions: the USA is now very unequal and ranks
    very low on health; Japan became much more equal and its life expectancy increased
    faster than any other developed country till it had the highest life expectancy in the world.
    See also the study by Clarkwest et al referenced in point 4 below 18. There are a number of
    papers dealing with changes over time, with path analysis, and with causal ordering. In
    addition, a number of the associations found in observational studies of humans, including
    biological measurements, have been supported by experiments on non-human primates
    where social status can be manipulated while material standards are kept constant”

  104. Your ‘explanation’ is so pathetically ludicrous, so laughable to anyone who knows anything about how (age-standardised) mortality rates are calculated that I am reluctant to waste time refuting it. Suffice to say, the fall in mortality rates in Ireland since 1997 has been across all age-groups, including infant mortality, which has fallen from being one of the highest in the EU in 1997 to one of the lowest now. How emigration in the 1940s is responsible for the fall in infant mortality between 1997 and 2008 is beyond me. Why don’t you simply admit that you know nothing about the calculation of (age-standardised) mortality rates and leave it at that?

    I’m just going to leave this right here.

  105. @Shay Begorrah
    In answer to your question, I think this is the decade to make public services paid for by the taxpayer be run as if they are for the benefit of the public and paid for by the taxpayer.

    It is far too accurate to characterise the current situation in many of our public services by saying that they are run for the benefit of the staff and the pay is set by the government of the day as a bribe for political peace.

    Now that is not uniformly true for all types of public servant (before someone hauls out the troika of teachers nurses and guards again), but Ireland’s public sector pay is generally high on international benchmarks – which is weird for a country in receipt of IMF bailouts and suffering from crippling debt – and the quality of service provided is far from where it should be on international benchmarks.

    As for Ireland versus the Baltics, our government and parties are determined to ensure that we do not get to the same extreme point that the Baltic states have – having a positive future. On current borrowing trajectories it’ll be a LONG time before we can view the future positively.

  106. @Niall

    They still don’t tell me WHY inequality is linked to health outcomes. Without an explanation of that fact there seems to be too many imponderables to say one causes the other

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