The difficulty is that 3 things are in play simultaneously:
* The creation and definition of the Council
* The creation of Ireland’s own Fiscal Responsibility Bill (which includes the establishment of IFAC)
* The shifting nature of Euro Fiscal agreement, which affects the new FRB.
As the IFAC exists (in as far as it does yet) to “measure the appropriateness and soundness of the government’s macroeconomic projections, budgetary projections and fiscal stance. The Council will have significant input to the forthcoming Fiscal Responsibility Bill which will define and establish national fiscal rules, and required government compliance.” Then I suggest again that the government, or IFAC of its own volition, prepare comment on the appropriateness of the new Euro fiscal compact coming up in March – as far as can assessed from the level of detail that is on the table, particularly with regard to, amongst others:
* The potentially undesirable pro-cyclical affects of the new rules
* The technical practical issues of 0.5% and 60% as raised by K Whelan and C McCarthy on this blog.
Also, it is difficult to see how fiscal debt can be considered as a stand-alone when this sits within the economic issues of combined private, corporate, financial and government debt which is noted by S Coffey below, and is central to the insights of economists such as Richard Koo.
I don’t really get what “fiscal responsibility” really means.
Do we produce all our money via credit and hope things will work out in a future that is mysteriously richer then today without any core investments ?
How does that work ?
Anyway the financial “industry” is now totally divorced from the physical economy.
It wants to peserve the value of a unit of paper as the life support / wages / communal welfare slowly dies.
This can be seen by the ECBs inflation thingy using the euro as a metric.
Wage deflation is inflation by other means.
We may get the satisfaction of being fiscally responsible but it is cold comfort if you Freeze to death.
The most important metric is if your investments are productive or extractive over the long term.
Lets look at a slightly fiscally unsound in the 70s / 80s & 90s but curiously rich countries investments.
But that does not mean you just give up & run the system down to a agrarian level of activity over the next 2 to 3 decades as that is what these fiscally neutered proposals really are.
A manifesto for Industrial collapse.
@Brian Hayes T.D.
Time to make all fiscal regressives/regressive fiscals unconstitutional.
@all
Time to make all fiscal regressives/regressive fiscals unconstitutional.
“Time to make all fiscal regressives/regressive fiscals unconstitutional.”
eh?
Many thinks for this very useful and informative link. The choice of words in the opening paragraph of the Explanatory Memorandum is, however, a classic demonstration of that strange innocent world occupied by officials in departments of finance (at least in Ireland).
“The aim of this legislation is to put in place a soft fiscal rule based
upon transparency of action on the part of the Government of the
day with respect to budgetary decisions. Fiscal rules take many
forms. In the Germany and in the US states, these rules typically are
a constitutional provision. Legislation and statutory instruments that
conform to the institutional structure of that country typically
support the constitutional provision. Since that capacity does not
exist within legislation initiated within Seanad Éireann, the fiscal rule
presented is legislative. Most of the economic analysis has a strong
preference for a fiscal rule being incorporated into the fundamental
law (constitution) of a country due to the increased transparency and
durability of the rule”.
Soft! Indeed!
@DOCM, The Bill is being proposed by Senator Sean Barrett, not the Government or the Department of Finance. Its a private members Bill.
There are several other rather ironic aspects with regard to the current situation.
The first, and the most important, is that the institutions of the EU, and the way they work together in a manner known as the Community method, will emerge greatly strengthened. The intergovernmental method is being seen for what it is; an opportunity for political grand-standing and the cause of a break-down in trust between the Member States of the EU, putting the very survival of the latter at risk. Representatives of the four main political groupings in the European Parliament will be associated with the work of the negotiating group, the threat being that, if they were not, and they viewed the result of the negotiations as in conflict with existing EU treaties, the Parliament would take the matter to the European Court of Justice. Their participation, of course, also increases the democratic legitimacy of the exercise.
The second irony is that the Sarkozy and Merkel view of the European Council as a forum where they can dominate has been called into question. The agreement to hold two meetings of the Euro Group at Heads of State and Government level adds nothing new.
The third irony is that the animated debate taking place in Ireland has been shown to be based on a false premise viz. that Ireland’s participation was a sine qua non with more than a hint that a price could be set for it.
10 replies on “Update on Fiscal Responsibility Bill”
I think it’s worth reading the Statment linked above with “About the Fiscal Council” fron its own website here:
http://www.fiscalcouncil.ie/about-the-irish-fiscal-advisory-council/
The difficulty is that 3 things are in play simultaneously:
* The creation and definition of the Council
* The creation of Ireland’s own Fiscal Responsibility Bill (which includes the establishment of IFAC)
* The shifting nature of Euro Fiscal agreement, which affects the new FRB.
As the IFAC exists (in as far as it does yet) to “measure the appropriateness and soundness of the government’s macroeconomic projections, budgetary projections and fiscal stance. The Council will have significant input to the forthcoming Fiscal Responsibility Bill which will define and establish national fiscal rules, and required government compliance.” Then I suggest again that the government, or IFAC of its own volition, prepare comment on the appropriateness of the new Euro fiscal compact coming up in March – as far as can assessed from the level of detail that is on the table, particularly with regard to, amongst others:
* The potentially undesirable pro-cyclical affects of the new rules
* The technical practical issues of 0.5% and 60% as raised by K Whelan and C McCarthy on this blog.
Also, it is difficult to see how fiscal debt can be considered as a stand-alone when this sits within the economic issues of combined private, corporate, financial and government debt which is noted by S Coffey below, and is central to the insights of economists such as Richard Koo.
I don’t really get what “fiscal responsibility” really means.
Do we produce all our money via credit and hope things will work out in a future that is mysteriously richer then today without any core investments ?
How does that work ?
Anyway the financial “industry” is now totally divorced from the physical economy.
It wants to peserve the value of a unit of paper as the life support / wages / communal welfare slowly dies.
This can be seen by the ECBs inflation thingy using the euro as a metric.
Wage deflation is inflation by other means.
We may get the satisfaction of being fiscally responsible but it is cold comfort if you Freeze to death.
The most important metric is if your investments are productive or extractive over the long term.
Lets look at a slightly fiscally unsound in the 70s / 80s & 90s but curiously rich countries investments.
http://www.iea.org/stats/pdf_graphs/FRELEC.pdf
http://www.iea.org/stats/pdf_graphs/FRTPES.pdf
Now a country in trouble I am afraid – why ? – because it is exporting / running down its capital base.
Now you can be a well governed country and yet make bad investments perhaps taken in good faith from knowledgeable advisors
http://www.iea.org/stats/pdf_graphs/DKELEC.pdf
http://www.iea.org/stats/pdf_graphs/DKTPES.pdf
But that does not mean you just give up & run the system down to a agrarian level of activity over the next 2 to 3 decades as that is what these fiscally neutered proposals really are.
A manifesto for Industrial collapse.
@Brian Hayes T.D.
Time to make all fiscal regressives/regressive fiscals unconstitutional.
@all
Time to make all fiscal regressives/regressive fiscals unconstitutional.
“Time to make all fiscal regressives/regressive fiscals unconstitutional.”
eh?
Many thinks for this very useful and informative link. The choice of words in the opening paragraph of the Explanatory Memorandum is, however, a classic demonstration of that strange innocent world occupied by officials in departments of finance (at least in Ireland).
“The aim of this legislation is to put in place a soft fiscal rule based
upon transparency of action on the part of the Government of the
day with respect to budgetary decisions. Fiscal rules take many
forms. In the Germany and in the US states, these rules typically are
a constitutional provision. Legislation and statutory instruments that
conform to the institutional structure of that country typically
support the constitutional provision. Since that capacity does not
exist within legislation initiated within Seanad Éireann, the fiscal rule
presented is legislative. Most of the economic analysis has a strong
preference for a fiscal rule being incorporated into the fundamental
law (constitution) of a country due to the increased transparency and
durability of the rule”.
Soft! Indeed!
@DOCM, The Bill is being proposed by Senator Sean Barrett, not the Government or the Department of Finance. Its a private members Bill.
@ Joseph O’Toole
I am immensely relieved!
@ All
FYI
http://www.europeanvoice.com/GED/00020000/28000/28035.pdf
They are throwing an austerity party in Europe and they do not care whether we come or not. It seems rather unfair as we know all about it.
@ All
http://www.telegraph.co.uk/news/matt/
There are several other rather ironic aspects with regard to the current situation.
The first, and the most important, is that the institutions of the EU, and the way they work together in a manner known as the Community method, will emerge greatly strengthened. The intergovernmental method is being seen for what it is; an opportunity for political grand-standing and the cause of a break-down in trust between the Member States of the EU, putting the very survival of the latter at risk. Representatives of the four main political groupings in the European Parliament will be associated with the work of the negotiating group, the threat being that, if they were not, and they viewed the result of the negotiations as in conflict with existing EU treaties, the Parliament would take the matter to the European Court of Justice. Their participation, of course, also increases the democratic legitimacy of the exercise.
The second irony is that the Sarkozy and Merkel view of the European Council as a forum where they can dominate has been called into question. The agreement to hold two meetings of the Euro Group at Heads of State and Government level adds nothing new.
The third irony is that the animated debate taking place in Ireland has been shown to be based on a false premise viz. that Ireland’s participation was a sine qua non with more than a hint that a price could be set for it.