The new CIEPR report will be launched tomorrow Wednesday. A preview is available here; you can join the live webcast of the launch here; I will talk about the report on Thursday evening in TCD – details here.
I think its sad to see the public sector pay cuts = bad for consumer spending arguement trotted out by someone like Stephen, who should know better.
Given the overall planned fiscal adjustment of €3.5bn in 2012 public sector pay cuts could be used to reduce the pace of reductions in public sector employment – and the “frontline services” they provide.
This would be positive for aggregate spending in the economy by spreading the burden of adjustment more equally across the public sector workforce.
@ JMK
A bit harsh! Stephen Kinsella has had the gumption to enter the debate.
I have never understood the reasoning used. Every cent of a public sector salary is paid by either taxes or borrowing. Public servants are taxed on their income because there is no other basis on which taxes can be raised in a non-discriminatory fashion. But the tax simply cancels out the tax raised to pay it in the first instance. Reducing public sector wages must, by definition, reduce the level to which tax has to be raised or make it available the for other uses such as “front-line services”.
There is, of course, a well-rehearsed and defensible argument for maintaining levels of consumer spending when a recession is threatened. The question is why it should be only those paid from the public purse that should benefit.
The plain people of Ireland have the wit to recognise that this is the question that is posed and they want an answer.
@ All
Back to the topic of the thread or, more accurately, the politics of it.
“The authorities must also be aware that at the level of the economy, my spending is your income. If you cut my income, you cut my spending, and if I don’t buy your products, I’ve cut your income”
If you are living in a “programme country” with no capacity to print or borrow more money, the only ways of avoiding a cut to your income are:
a) reduce numbers similarly employed in the public sector
b) make alternative savings in quality or quantity of the economically valuable services you and colleagues provide
c) reduce other peoples’ disposable income by raising new taxes
It is really, really disappointing that this is not understood.
@ All
One to watch! After all, why should anyone other than the banks clear up their mess? A bit late in Ireland’s case, however.
8 replies on “Banks and Cross-Border Capital Flows: Policy Challenges and Regulatory Responses”
Maybe the Swiss could also be invited to advise!
http://www.ft.com/intl/cms/s/0/1416bb54-06ef-11e2-92ef-00144feabdc0.html#axzz27P7uo1uV
Alphaville has the details.
Martin Hutchinson in todays Asia times extols the national interest in terms of regulation.
http://www.atimes.com/atimes/Global_Economy/NI26Dj02.html
Might be a little too Tory for some….
Stephen Kinsella seems to be losing the run of himself, and getting worried about potential pay cuts for university lecturers.
http://www.independent.ie/opinion/analysis/stephen-kinsella-whole-economy-will-feel-pinch-of-public-sector-cuts-3240315.html
I think its sad to see the public sector pay cuts = bad for consumer spending arguement trotted out by someone like Stephen, who should know better.
Given the overall planned fiscal adjustment of €3.5bn in 2012 public sector pay cuts could be used to reduce the pace of reductions in public sector employment – and the “frontline services” they provide.
This would be positive for aggregate spending in the economy by spreading the burden of adjustment more equally across the public sector workforce.
@ JMK
A bit harsh! Stephen Kinsella has had the gumption to enter the debate.
I have never understood the reasoning used. Every cent of a public sector salary is paid by either taxes or borrowing. Public servants are taxed on their income because there is no other basis on which taxes can be raised in a non-discriminatory fashion. But the tax simply cancels out the tax raised to pay it in the first instance. Reducing public sector wages must, by definition, reduce the level to which tax has to be raised or make it available the for other uses such as “front-line services”.
There is, of course, a well-rehearsed and defensible argument for maintaining levels of consumer spending when a recession is threatened. The question is why it should be only those paid from the public purse that should benefit.
The plain people of Ireland have the wit to recognise that this is the question that is posed and they want an answer.
@ All
Back to the topic of the thread or, more accurately, the politics of it.
http://www.ft.com/intl/cms/s/0/1416bb54-06ef-11e2-92ef-00144feabdc0.html#axzz27P7uo1uV
@Stephen Kinsella
“The authorities must also be aware that at the level of the economy, my spending is your income. If you cut my income, you cut my spending, and if I don’t buy your products, I’ve cut your income”
If you are living in a “programme country” with no capacity to print or borrow more money, the only ways of avoiding a cut to your income are:
a) reduce numbers similarly employed in the public sector
b) make alternative savings in quality or quantity of the economically valuable services you and colleagues provide
c) reduce other peoples’ disposable income by raising new taxes
It is really, really disappointing that this is not understood.
@ All
One to watch! After all, why should anyone other than the banks clear up their mess? A bit late in Ireland’s case, however.
http://www.thelocal.de/money/20120925-45185.html
@docm
What does “the banks” mean?
In Ireland’s case, the shareholders were wiped.
Customers have been squeezed.
Some very generous (and in some cases sort-after) redundancy packages.
What has changed, really, within the banks?