More on competitiveness

Since Brendan and Philip have both posted on competitiveness in the past couple of days, I thought I’d follow up with a link to the following piece by Gaulier, Taglioni and Vicard.

7 replies on “More on competitiveness”

On competitiveness

The Irish upper deciles are more competitive in fighting for a greater volume of crumbs from the cakes than the lower deciles ….

Let’s take a look at how the cake is distributed …

In a previous post we looked at how our rich are richer than the rich of other European countries. Our rich grab a higher proportion of disposable income. That’s one side of the coin. Let’s look at the other side: that our ‘poor’ take a lower proportion of disposable income than the poor of other countries. This issue, finally, is gaining some currency. Social Justice Ireland has pointed out that inequality in Ireland is rising under current Government policy, while Vincent Browne wrote on the same theme yesterday.

In every decile in the lower half, the take of national income is less than the EU-average (for an explanation of equivalised income, see the post on high incomes). The difference in the numbers may seem merely fractional, but they add up at the national economic level (and don’t forget – the top decile, the top 10 percent, take over 26 percent of all national income).

Follow the links to see distribution for upper deciles ….

The competitiveness issue always stops me in my tracks. I can be very competitive if I shackle myself and work for bread and water and live in constant fear of what tomorrow might bring. What is the price and what is the reward for me? Where lies the balance which I want to achieve through my democratic rights? These are massive issues which I am told I cannot consider because I do not have the expertise to understand the optimal solution for all. It is terribly demeaning to have to view oneself in this way, ignorant to the fundamental issue of how one’s existence and environment should be managed.


As a lay-man struggling against the terror of my ignorance, I find that there are a number of ways of looking at this debate.

1. It is an dispute amongst experts which advocating austerity and experts advocating stimulus. Such important debate has been corrupted by those on both sides who are rehearsing old disputes and old views on a quasi-ideological basis.

2. It is a mis-guided political debate based on narratives and morality plays. Such debate is the falling victim to those with myopic points of view, short-termism and to those with narrow agendas.

3. It is a problem which is highly sensitive to judgment, timing and sentiment where the major protagonists must operate within uncertain bounds and others are subject to strict limitations. As such it is a debate where many may agree on a correct course of action but they are limited by [deteriorating] market sentiment, legal constraints, mathematical constraints as to funding and political constraints. Judgments as to critical issues such as what might cause systemic banking or currency failure affect us profoundly.

4. It is a problem which is affected by institutional, organisational and class biases and perspectives, e.g. the bias towards incrementalism in the EU, the bias towards consensual politics, the bias towards electoral cycles in countries, the bias towards competitiveness amongst corporations, the Central Bank bias towards conservatism and currency protection, the bias towards survival amongst corporations, the bias towards forcible wealth distribution amongst the poor, the bias towards individualism amongst the middle classes, the bias against reform amongst people who stand to lose their source of income.

(3 & 4 – The bias towards inaction and the influence of fear and conservatism are paramount. The time discount possible future catastrophe against pain now is a major issue.)

5. It is a problem affected profoundly affected by game theory. The ability to supra-national organisations to ameliorate the negative aspects are critical but uncertain.

6. It is a problem of the ability of humans to operate within complex interconnected systems. Is there a level of complexity beyond which we cannot safely or effectively operate?

7. It is a technological problem. The market-ideology, the design of the EU/EZ, financial regulation, the financial system and other technologies are in need of reform. Will these entities sustain themselves and reform or will they break?

8. It is a spiritual and ideological debate. What do we want to be and how does consumption, competitiveness and the market fit into this? What are our responsibilities to our fellow man, at home and abroad?


Are you sure that the top decile is the same top decile now as in 2007. I know it is in your imagination but a little evidence would be welcome. I know of a few billionaries that will drop out of the top decile.
Also how can our poor be poorer than other people’s poor when tranfer payments are higher here.
Pardon me if I do not believe everything spun to me by the largely state funded poverty industry.

The paper is dross. It competley fails to mention the economic Model-in-Use those three critters are using. Like they might have mentioned that:-

“We have this model of economic activity which will always exhibit a geometric uptrend (except for 1873, and 1902 and 1933 and 1970 and 1980 and 1992 and 2000 and now). However these instances were/are merely temporary economic ‘blips’. It will be business as usual once someone, anyone, everyone gets their economic s**t together”.

When will an ‘economist of record’ pull the plug on Permagrowth. Not that it will make a blind bit of difference to policy-making. But you never can be sure until it happens.

Per Ardua Ad Astra as the man said.

At least zhou (above) has a decent grasp on reality.

Eurostat data for the private economy shows average labour cost per hour (including employer social security) in 2011 at €17.50 in Greece (2010), €20.1 in the UK; €20.6 in Spain; €26.8 in Italy; €27.40 in Ireland; €30.1 in Germany and France at €34.2.

The foregoing is different to unit labour costs but it gives an idea of the range of costs.

The authors say: “In the run-up to the crisis, exporters from these countries could perform well on the international markets despite the rise in their countries’ adjusted wage costs, because the bulk of the rise in wage costs occurred in the non-traded sector.”

In 2010 the following were the export/GDP ratios: Germany 47%; UK 29%; Italy 27%; France 25%; Spain 26%; Greece 22%; US 13% and Ireland’s was 99%.

In 1980 when Greek debt to GDP ratio was at 30% (just before the decade when it went crazy), trade was almost in balance. Since then the value of German imports from Greece hardly changed until 2005 while exports from Germany quadrupled.

In 1980, Germany’s exports to Italy as a ratio of imports was 111%; in 2010, it was 130%.

Greece’s ratio in 2010 was low for a small economy and while tourism is important, it is also usually a low-pay sector.

It should also be noted in respect of Greece that its inward FDI performance has been very poor compared with regional neighbours.

Italy has run a current-account deficit every year since 1999 and a trade deficit since 2005.

The Bank of Italy has said that an impressive number of mid-sized companies have turned themselves into what Italians now call pocket multinationals. In 2008 Italy had 21,000 such companies operating in 150 countries. Two-fifths of them expected their business abroad to grow more than at home, compared with one-fifth who expected the opposite.
However, in the World Bank’s ease of doing business rankings, Italy ranks with Papua New Guinea and Mongolia.

@ David O’Donnell / tullmcadoo

The inequality data ignores some important issues.

Unemployment and the fear of it compared with State guaranteed employment. Pension coverage also makes a big difference for people at the same income level.

‘In short, our high income groups take more from the economy than high income groups of any other EU-15 country.

The top Irish 1 percent takes over 6 percent of total income here. Throughout Europe, the top 1 percent take less – 4.6 percent; while in more egalitarian Sweden, the elite 1 percent takes only 3.7 percent of total income there.

The story is similar for the top Irish 5 percent and 10 percent. Our high income groups take up more of the national income pie than their counterparts throughout the EU-15.

To put this in perspective, the top 10 percent in Ireland take in almost as much income as the lowest half of the entire population. The lowest half takes in less than 28 percent, while the top 10 percent takes in 26.6 percent.

Data from EuroStat; Analysis by Michael Taft who is generally very sound on this stuff.

@ Al

“In the run-up to the crisis, exporters from these countries could perform well on the international markets despite the rise in their countries’ adjusted wage costs, because the bulk of the rise in wage costs occurred in the non-traded sector.”

Eurostat as quoted by MH.

There are issues of equity which need to be addressed but the reality of the non-traded sectors enjoying boom time improvements which they now refuse to relinquish cannot be avoided.

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