Boosting Competitiveness to Grow Out of Debt—Can Ireland Find a Way Back to Its Future?

This post was written by Philip Lane

New IMF WP here.

38 Responses to “Boosting Competitiveness to Grow Out of Debt—Can Ireland Find a Way Back to Its Future?”

  1. David O'Donnell Says:

    “The conclusions of our analysis should be interpreted with the following caveats. First, the analysis includes financing from FDI only and not from the domestic financial sector, whose collapse was at the center of Ireland’s crisis. Second, the post-crisis environment of high household debt, high unemployment, and bank fragility presents challenges that do not feature in our analysis and merit to be researched further. Third, our analysis does not include public expenditure developments. As such, the conclusion that Ireland is poised to find the way back to its future is predicated on the assumption that public spending is kept in check to allow for improvements in government revenue to strengthen the fiscal balance and reduce public debt. These caveats notwithstanding, our expanded VAR model helps explain more than 80 percent of the variation in GDP growth.” Mwanza Nkusu

  2. John Corcoran Says:

    Would market rents for commercial property tenants be a good idea, office tenants-factory tenants-warehouse tenants and retail tenants.

  3. John Corcoran Says:

    Commercial rents are only the symptom it’s the ruinous Irish commercial lease lawi.e.upward-only rent reviews tied to long leases,is the disease. Enda Kenny and Eamon Gilmore can act tomorrow to stop this slaughter. Why are Kenny and Gilmore telling porkie pies??

    Below is a summary of the opinion of the leading constitutional lawyer in the state Gerard Hogan SC now a High Court judge; which states clearly tenants can obtain market rents today;

    There was no constitutional issue.

    “In summary, therefore, I am of the view that:
    A. Any legislation which rendered void pre-existing contractual commitments providing for upwards-only rent review would deprive the landlords of a valuable contractual right without compensation. This, however, is not a dispositive consideration, since legislative interference with contractual rights along these lines is
    not uncommon, i.e., the very point which Costello J. made in Cafolla.
    B. The critical question is rather whether such legislation would be proportionate and objectively justifiable. For the reasons set out in this opinion, there are far reaching policy reasons why the Oireachtas might think that the prohibition of such clauses is
    necessary in the public interest. Not the least of those reasons is that the Oireachtas might consider that such clauses artificially maintain unrealistically high rental levels in the retail sector, thus hindering the recovery of the retail sector. Of course, given
    the high importance of the retail sector to the volume of economic transactions and consumer confidence, the economy as a whole cannot fully recover from an economic crash without the recovery of that sector.
    C. In my view, any such proposed legislation is no different in principle from many other forms of legislation which preclude or render void pre- existing business practices provided for by contract. The proposed legislation satisfies the proportionality
    test in that –
    i. It is rationally connected to an objective of sufficient importance (i.e., recovery in the retail sector) to warrant interference with a constitutionally protected right and, given the serious social problems which they are designed to meet, they undoubtedly relate to concerns which, in a free and democratic society, should be regarded as pressing and substantial.
    ii. Such legislation would also impair those rights as little as possible and their effects on those rights are proportionate to the objectives sought to be attained in that it would simply provide a mechanism whereby rents could be assessed by reference to prevailing market conditions and deflation.
    iii. Critically, such legislation would not attack the essence of the contractual right, namely, the right to receive a market rent and, unlike cases such as Blake, it would not involve one sector of society (namely, landlords) being expected unfairly to bear the burdens from other sectors of society are exempt.
    D. No difference in principle can be drawn between the proposed legislation and the FEMPI Act. Certainly, if the Oireachtas can constitutionally take steps drastically to interfere with existing contractual rights of service providers and public servants without compensation (as the High Court has already held in the JJ Haire case), then the proposed legislation of this kind would equally seem to be constitutionally valid.

  4. Fiatluxjnr Says:

    @DOD
    I wonder if that IMF “model” is like the IMF model used that misstated the effects of austerity. It was after all only about 50% off.
    Then again, maybe vector autoregressive analysis is the bees knees.

  5. David O'Donnell Says:

    @John Corcoran

    .

  6. David O'Donnell Says:

    @Fiat

    Whereof one cannot speak or understand, thereof best to keep silent. (with apologies to Wittgenstein)

  7. DOCM Says:

    @ All

    FYI

    http://www.economist.com/news/leaders/21571136-politicians-both-right-and-left-could-learn-nordic-countries-next-supermodel

  8. DOCM Says:

    @ John Corcoran

    I think a new word may be about to enter the lexicon. UORR’s in Ireland are likely to be B & Q’d!

  9. Sporthog Says:

    Lets see now…………… hmmm.

    We have a situation where salaries are being cut and / or taxes rising. Increased costs in secondary taxes, i.e. water, property etc.

    So are we going to get growth from consumer spending???

    Ah…………….. NO.

    In addition we have increasing regulation and bureaucracy. Everything is regulated to within an inch of it’s life, laws for just about everything and anything.

    There was an article in the Irish Times a while back, where it gave the example of trying to set up some offshore industry. It named multiple departments which would have to be delt with, planning, dept of the environment, Dept of Transport and so on. Every time a new minister is appointed the names of various depts change to reflect the new fiefdom. No such thing as streamling these personal fiefdoms to reflect the reality on the ground and make dealings between private and public sector smooth and clear.

    As long as we have a bunch of goons, tick boxing beaurocrats who are incompetent as they are stupid sitting behind desks making up new laws and regulations, muddying the waters and putting as many problems in the way of the SME sector then the the recovery is going to be VERY SLOW.

    Is it any wonder the UK are questioning the purpose of staying in the EU when the EU has regulated everything to death.

    We live in a world where there are more reasons NOT TO DO SOMETHING than to actually GET SOMETHING DONE.

    Mr Colm McCarthy was right, the public sector are living in an alternative reality, unfit to meet the needs of the nation.

    The growth if any is to come, will be slow, protracted, feable and take a very long time.

  10. John Corcoran Says:

    @DOCM
    Korkie pies or Porkie pies;
    http://www.youtube.com/watch?v=p4NP4oXQp3o

  11. DOCM Says:

    @ John Corcoran

    That political parties fail to deliver on election promises is hardly new!

    It is clear that UORR’s are not being tackled because of the associated consequences for the shaky edifice of not just Irish banking but banking in general. I appreciate that for anyone directly impacted, the issue cannot be viewed in these terms. It would be asking too much.

    But the point made by a practitoner in the area on RTE today that the fact that a corporation such as B & Q is willing to take the risk of “reputational damage” by putting one of its companies in Ireland into administration is surely significant. This changes the balance of advantage between tenant and lessee and it seems to me bound to have a considerable impact (although I have no particular expertise in this area).

    As to “sovereign leases”, once the process of establishing competitive rents, hopefully on the Continental model, has started, however imperfectly, there must be some hope for a more fundamental overall change.

    @ All

    FYI

    http://ftalphaville.ft.com/2013/01/31/1361462/the-perpetualisation-of-debt/

  12. Mickey Hickey Says:

    @Sporthog

    This is Ireland all the rules, regulations, laws and policies are there for a good reason. That is so as you can get around them by making “campaign” contributions. Just a little here and there for the “cause” goes a long way Ireland. If you are a foreigner unfamiliar with the mores of the locals you hire a go between, usually a distinguished member of the profession that Shakespeare was going to deal with first.

    All the red tape might actually be beneficial since it is so easily lubricated to the point where it can become frictionless.

    I always thought this was common knowledge in Ireland.

  13. Mickey Hickey Says:

    @Sporthog

    I read your post again. You have it all wrong.

    It is a slick, intelligently designed system that was refined by Irish Americans to keep in place political systems by providing a secure and reliable stream of income. What you see is the best of a tried and true system developed on two continents.

    Our politicians have at least above average intelligence including the teachers and sportsmen among them. The Civil Servants are well educated and well connected and posses enough sense to do what the politicians want done.

    The whole thing works like a Swiss watch. Delegations are reputed to come here from abroad to see and admire what miracles the Irish have wrought for themselves. Granted fewer since 2008 but we will become a mecca again in the not too distant future. A shining paragon of prosperity, that is our natural state, the present anomaly too will pass.

  14. John Corcoran Says:

    @DOCM
    “It is clear that UORR’s are not being tackled because of the associated consequences for the shaky edifice of not just Irish banking but banking in general. I appreciate that for anyone directly impacted, the issue cannot be viewed in these terms. It would be asking too much.”

    Your analysis is incorrect. The Fine Gael landlords Association made the decision –check out the directors of Property Industry Ireland, one of many lobbyists who campaigned against market rents,-they include Mark Fitgerald,Michael O’Flynn etc etc.,Fine Gael grandees and financial backers. Garret Fitzgerald’s son has enormous influence. Also the Ansbacher account holders, who still run the country, played a vital role. The Irish Times provided the propaganda and media support–their chairman ,David Went,is a former bankster who wrecked Irish Life and Permanent.

    Pat Kenny,himself a major UORR landlord, and totally conflicted,interviewed Declan Ronayne MD of PC World /Currys Ireland,for the first 14 minuties of his radio show yesterday Friday 1st of February on the B&Q examinership. Kenny was very smart and totally biased against commercial tenants. Pure propaganda from RTE.

    With the Irish Times and RTE’s propaganda and the Ansbacher mob, what chance have commercial tenants. Check out Charlie Haughey’s bagmen all massive sovereign UORRs landlords–thats the source of these ruinous leases-political corruption ,ably assisted by the Irish Times, the property whores, and largest auctioneers in the state.

    The Ansbacher Mob Rule -OK

  15. Michael Hennigan - Finfacts Says:

    ‘These findings suggest that Ireland is poised to return to its path of strong growth and low imbalances, though the road could be bumpy due to ongoing challenges.’

    It would be a good thing but unfortunately, this is a classic case of GIGO (garbage in, garbage out).

    Mwanza Nkusu, the author of the paper, can’t be really blamed for this (although it does illustrate the limitations of remote desk-bound analysis) as for example this week, Central Bank and ESRI commentary on booming services exports, avoided the truth that most of the rise can be attributed to the tax strategies of big US multinationals. I delicately term the diversion of revenues from other countries to Ireland that are unrelated to Irish economic activity, as fake exports.

    Google has 2,000 employed in Dublin from a 37,000 head count ex-Motorola but almost half global revenues are booked in Ireland.

    A few months ago, Peter Breuer, the IMF’s resident representative in Dublin, was surprised when I told him that Dell remained Ireland’s biggest merchandise exporter even though it had moved all its EMEA PC production to Poland.

    According to Conall Mac Coille, chief economist of Davy, only approximately one-third of pharmaceutical export revenues contribute to
    Irish GDP because of the corresponding costs relating to intellectual property.

    In 2011, the share of pharmaceuticals in Irish GDP was just 11%, well below exports revenues worth 30% of GDP.

    Central Bank economists, Martina Lawless, Fergal McCann and Tara McIndoe Calder, said in a 2012 paper:

    http://bit.ly/WKhlM2

    “the vast majority of indigenous employment (which makes up 78% of private sector employment) is still accounted for by traditional sectors such as Hotels & Restaurants, Wholesale & Retail, Business & Administrative services and Transport & Storage.

    These figures suggest that, while export growth and export linkages are vital to modernisation and growth strategies, the role of the typical domestic-demand driven services economy must not be overlooked when contemplating strategies for employment creation.”

    GNP in recent years has been seen as a closer approximation to reality than GDP but as was seen in quarterly account data last year, it no longer is.

    Joe Durkan and his ESRI crew said this week that the balance of payments surplus is now estimated at €7.8bn in 2012. “The surplus overstates the fundamental underlying situation as the data are distorted by the inflow of profits from overseas multinationals which relocated their Head Office to Ireland, but not any of their productive activities. Their worldwide profits are treated as an inflow of factor payments to Ireland but these firms pay no profit tax in Ireland as a result of double tax agreements with other countries where their productive activities are located. These foreign earnings are to varying extents not distributed to shareholders of the companies and the effect of this is to artificially raise GNP and also Gross National Income (GNI) – the measure which is used to determine Ireland’s payments to EU funds.”

    No wonder John FitzGerald put his Hermes silk model out to grass.

    However, all the smoke and mirrors is grist for the mill, for the spinners, delusionists and vested interests.

  16. Peter Stapleton Says:

    1. The author claims that his extended VAR model ‘explains about 80% of the variation in GDP growth’. Does anyone take this sort of econometrics seriously any more?

    2. The ‘gains in competitiveness’ which he lauds owe a lot to the weakness of the euro in 2012. This has gone into reverse in recent weeks. What now?

  17. Sporthog Says:

    @ Mickey Hickey.

    Now do you have a sense of humour, or do you have a sense of humour!!!

    I just loved………

    “The whole thing works like a Swiss watch”

    You gave me a great laugh this morning!!!!

  18. Michael Hennigan - Finfacts Says:

    Ireland’s PPI has been trending down since 2002, in contrast with those of trade partners.

    The main factor in changes in monthly manufacturing prices is the USD/EUR rate as most of the the inputs of the dominant foreign sector are priced in dollars.

    But, its REER were trending up and Ireland lost share in the global market for goods and gained in the services market.

    Ireland’s trade balances for goods and services have had divergent trends, including in the run-up to the crisis.

    The real value of goods exports has been almost static in the period 2000-2011, but the real value of services exports increased by 322% and in 2011 accounted for 48% of the value of total exports.

    There was no increase in total full-time employment in the internationally tradeable sectors (indigenous and foreign-owned) between 2000 and 2012.

    The drugs sector has had big gains in ‘output’ but no need for additional staff.

    Numbers in ‘computer services’ have also been unchanged despite huge jumps in headline exports.

    Traditional analysis of Irish data leads the IMF to misleading conclusions.

    Mixed signals indeed!

  19. Eureka Says:

    Wow - this is awful rubbish.
    No wonder these guys always get it wrong.

    Ireland’s turnaround came with devaluation of currency, the growth of ICT which mitigated our geographical disadvantage, an upturn in the global economy and (unfortunately) unchecked credit flow to the periphery.

    Plan A - ie compliance has failed. No shame in it but now it’s time for plan B

  20. Tim Morrissey Says:

    @Sporthog

    +1

    You’ve described well one of the herd of grazing elephants in the room.

  21. Mickey Hickey Says:

    @Sporthog

    I am glad you saw the irony of it all.

    On the one hand I see an Ireland that has changed since entry into the EU and if it stays in the EU/EZ is likely to progress. On the other hand I see an Ireland that could very easily turn inwards as it did in response to the 1932 crisis that led to continuing poverty for the following forty years.

    A very serious problem as you pointed out is the level of graft and connections required to do anything positiive and meaningful in a business sense. In the vernacular the feckers have you coming and going. In Kerry it is widely recognised that SF have the only honest politicians left. Unfortunately their green lenses combined with their nationalist fervour do not make them suitable candidates for majority government. What raises my anxiety level is that in Kerry at least, FF is increasingly being looked upon as a positive alternative to FG. What really scares me shotless is that we could very well stumble into another fifty year run of navel gazing, self serving government that serves 40% or so of the well connected very well by comparison to the 60%. As we know now even the well connected from 1922 to 1972 were living in poverty relative to the rest of the developed world.

    The hunting around for the rabbit hole that leads to Wonderland does not become our present government. The previous and present gov’ts know that they signed binding agreements with the banks, ECB/IMF, EC and EZ. Yet they continue to raise hope that it was all a hoax and any moment now they will find a quick fix. It is time for the people at large to say in one clear voice “put up or shut up”.

    Get on with governing and stop trying to cod us.

  22. Tullmcadoo Says:

    SF and honest in the same sentence. I heard Jarry talking about tranparancy during the week..still laughing.
    Also great put down by Niall Collins to Mary Lou criticising Garda cut backs. The Shinners had their own policies for reducing Garda numbers.

  23. Brian Woods Snr Says:

    “Boosting Competitiveness” Now if only the author had included a short definition and explanation of what ‘competitiveness’ means, it might have been possible to comprehend what the objective of the article was. As it stands its incomprehensible. Perhaps the author is in sufficient naive accord with the range of economic preconceptions now in vogue - hence the article gets published.

    Any enhancement of competitiveness (make up your own definition of this term as you go along!) will not ameliorate our current economic woes. Only a sharp and rapid decline in all types of debts coupled with a strict moratorium on the fiat creation of new credit (other than for indigenous-based productive enterprises). And our local entrepreneurs will have to chuck away their ‘taxpayer incentives’ begging bowls. They either ramp up on their own, or they do not. The Irish taxpayer is no longer a captive source of ‘more gravy’ for those who already have had more than their share. That inconvenient truth might take a while to sink in.

    @ MH: “Get on with governing and stop trying to cod us.”

    If our politicians have spent the best part of the last 90 years doing the latter, it is highly improbable they will be capable of the former. We need to trash all post 1922 political parties and see if anything good might emerge. I’d prefer that uncertainty than a continuation of the current bunch of self-serving looters.

  24. Sporthog Says:

    @ Tullmcadoo,

    Jarry????????? I take it you mean Grizzly!

  25. Joseph Ryan Says:

    @DOCM
    “UORR’s in Ireland are likely to be B & Q’d!”

    The Irish connection;
    http://investing.businessweek.com/research/stocks/people/person.asp?personId=8250920&ticker=KGF:LN

    Mr. Kevin O’Byrne served as Group Finance Director of KingFisher plc since October 1, 2008. Mr. O’Byrne served as Group Finance Director of DSG International PLC from July 2004 to August 14, 2008. He served as Retail Finance Director and Finance Director of DSG International since September 2002 and July 19, 2004 respectively. Mr. O’Byrne was responsible for DSG’s Computing Division, comprising PC World, PC City and PC World Business. He was responsible for Group IT and non-merchandise purchasing. Mr. O’Byrne served as Chief Financial Officer of Hemscott PLC and Hemscott Publishing Group. He served as European Finance Director of Quaker Oats Company. He held senior finance positions in a number of companies including Arthur Andersen. He has been a Senior Independent Director of Land Securities Group PLC since April 1, 2012. He has been an Executive Director of KingFisher plc since October 1, 2008 and Non Executive Director for Land Securities Group plc since April 1, 2008. He served as an Executive Director of DSG International PLC (Dixons Group Plc) from July 19, 2004 to August 14, 2008. He qualified as Chartered Accountant in 1990.
    Mr. O’Byrne graduated from Trinity College Dublin in 1987.

    Re; Examinership;
    Regrettably, It is not only the landlord that may get in the neck. Collateral damage may be a feature unless Kingfisher is willing and legally able to step into the breach.
    In a case this week the haircuts were substantial but unsecured creditors got 2.5% of debt. At least some jobs were protected.

    I am very surprised that Kingfischer would do this. They were after all an adult professional company with sales of 12 billion and entered into leases of their own free will. Now if I were a major supplier to B&Q, I would be looking at the terms and conditions of supply more carefully.

    Nevertheless, it would be good if this is the catalyst to force landlords off the honeypot.

  26. John Corcoran Says:

    @DOCM
    @Joseph Ryan

    Excellent photo and article on page 20 of today’s Sunday Business Post.

  27. JimmyTheFish Says:

    Mr Corcoran,
    You tedious rehashing of the Upward Only Rents Issue is just that tedious.
    If you think they should be stopped, take a case to the Courts like the guy running the chipper did with the Catering Joint Labour Committee.
    The courts would then give a definitive judgement and saved the rest of us from your musings (and from the cost of taking out adds in the Business Post and the Phoenix to name 2). Would it not have been cheaper to get one of your seemingly many legal chums to take a case pro bono than shelling out the shekels to those 2 organs?

    IMO anyone who entered into an upward only rent as an individual (and gave a personal guarantee) is not the brightest even if they were qualified to wash the windows of the LSE. If they did it using a company then they should do what B and Q are doing (and are doing so with their own money).

    Me thinks that those who realise too late that the supply of idiots to pass the parcel in Irish Property has run out doth protest too much, both in print and on the tinterwed :)!!

    By the way I realise(d) the day that FX Kelly sold out in Grafton Street to Vodafone that the game was up in Irish Property and that isn’t today or yesterday.
    JTF

  28. John Corcoran Says:

    @JTF
    Many thanks for your kind advice Mr Fish.
    Fish rots from the head down. It was Taoiseach Kenny who said there were constitutional issue. Below is the opinion of the leading constitutional lawyer in the state Gerard Hogan SC;

    “In summary, therefore, I am of the view that:
    A. Any legislation which rendered void pre-existing contractual commitments providing for upwards-only rent review would deprive the landlords of a valuable contractual right without compensation. This, however, is not a dispositive consideration, since legislative interference with contractual rights along these lines is
    not uncommon, i.e., the very point which Costello J. made in Cafolla.
    B. The critical question is rather whether such legislation would be proportionate and objectively justifiable. For the reasons set out in this opinion, there are far reaching policy reasons why the Oireachtas might think that the prohibition of such clauses is
    necessary in the public interest. Not the least of those reasons is that the Oireachtas might consider that such clauses artificially maintain unrealistically high rental levels in the retail sector, thus hindering the recovery of the retail sector. Of course, given
    the high importance of the retail sector to the volume of economic transactions and consumer confidence, the economy as a whole cannot fully recover from an economic crash without the recovery of that sector.
    C. In my view, any such proposed legislation is no different in principle from many other forms of legislation which preclude or render void pre- existing business practices provided for by contract. The proposed legislation satisfies the proportionality
    test in that –
    i. It is rationally connected to an objective of sufficient importance (i.e., recovery in the retail sector) to warrant interference with a constitutionally protected right and, given the serious social problems which they are designed to meet, they undoubtedly relate to concerns which, in a free and democratic society, should be regarded as pressing and substantial.
    ii. Such legislation would also impair those rights as little as possible and their effects on those rights are proportionate to the objectives sought to be attained in that it would simply provide a mechanism whereby rents could be assessed by reference to prevailing market conditions and deflation.
    iii. Critically, such legislation would not attack the essence of the contractual right, namely, the right to receive a market rent and, unlike cases such as Blake, it would not involve one sector of society (namely, landlords) being expected unfairly to bear the burdens from other sectors of society are exempt.
    D. No difference in principle can be drawn between the proposed legislation and the FEMPI Act. Certainly, if the Oireachtas can constitutionally take steps drastically to interfere with existing contractual rights of service providers and public servants without compensation (as the High Court has already held in the JJ Haire case), then the proposed legislation of this kind would equally seem to be constitutionally valid.

  29. John Corcoran Says:

    @Joseph Ryan
    @JimmyTheFish

    Why did no other eurozone country have a massive commercial property bubble?

    The eurozone is a group of seventeen countries with a combined
    population of three hundred and thirty million citizens. All member
    countries have the same currency,the same central bank,the same
    interest rates and the same commercial property lease law except one,—Ireland.
    Ireland has very different commercial property lease law to all other eurozone
    countries. The three components of all countries commercial lease law
    is the length of the lease,the rent determination process and lease exit
    strategies/break clauses. In all other eurozone countries lease lengths
    are short,say three to ten years,with break clauses and rents are
    indexed annually to changes in the consumer price index. In Ireland
    lease lengths are long,say twenty five years,with no break clauses and
    rents are reviewed every five years using the ratchet upward-only rent
    review process. This review process used the highest rent as evidence
    against all tenants and was open to malpractice and corruption.

    Irish commercial lease law was a twin headed monster which incentivised
    the over-renting of tenants and more damaging,it was the rocket fuel
    for the commercial property valuation model which created the monster
    commercial property bubble. When this bubble burst it destroyed the
    entire Irish banking sector. Reckless Irish banks lent tens of billions
    against these ruinous leases,not against the properties. If Ireland
    had had regular eurozone commercial lease law it would have been almost
    impossible to have had a commercial property bubble.

    The only reason Ireland had these feudal leases was,because the state signed them for the politicians major donors/bagmen.

  30. John Corcoran Says:

    http://www.irishexaminer.com/opinion/editorial/rents-impasse–u-turn-on-rent-reviews-unacceptable-221525.html

  31. Brian Woods Snr Says:

    The title above is:

    “Boosting Competitiveness to Grow Out of Debt—Can Ireland Find a Way Back to Its Future?”

    Upward-only rent reviews have almost nothing to do with productivity in the indigenous non-traded sectors. They are a cost - which was entered into voluntarily by consenting adults (though perhaps adult is not the correct term here - perhaps dopey persons). There is a way to extract oneself from an onerous contract. DO NOT get into one in the first instance. However, once you’re in one you have the option of either clenching teeth, or suing. Its make-up-your-mind time! Finis.

    There was little positive commentary about our productive predicament (the article was drivel) or any suggestions about how productive employments can be re-instated through the initiatives of private individuals (governments cannot create jobs) - without any recourse to ‘taxpayer incentives’. The lack of commentary on this last point is somewhat puzzling. Is it the case, that modern Irish productive enterprises cannot either initialize nor be maintained without a main-line, intravenous feed of taxpayers taxes? If this is so, then we are in for a very hard time indeed. Like, every begging ass want’s to suck on the taxpayer teat. So when does the teat stop lactating then? Some unthinking folk may be in for an unpleasant surprise in a year or two.

  32. seafóid Says:

    “Boosting Competitiveness to Grow Out of Debt—Can Ireland Find a Way Back to Its Future?”

    Prices would need to come down. Rents would too. The PS would need to be
    revamped.
    You could probably do it with a population swap .

  33. JimmyTheFish Says:

    Mr Cororan,
    You still persist in the tedious rehash.
    The problem is you have legal advice, government has legal advice. Solution go to Court and seek a definite decision from the Supreme Court (as B & Q more than likely will).
    This is what was done by a humble fast food vendor who disagreed with the wages in his sector.
    The template of a solution exists. It’s been done before, remember rates on land was declared unconstitutional by the courts.

    BW Senior wrote
    “Upward-only rent reviews have almost nothing to do with productivity in the indigenous non-traded sectors. They are a cost - which was entered into voluntarily by consenting adults (though perhaps adult is not the correct term here - perhaps dopey persons). There is a way to extract oneself from an onerous contract. DO NOT get into one in the first instance. However, once you’re in one you have the option of either clenching teeth, or suing. Its make-up-your-mind time! Finis.”

    BWS I agree entirely, a solution exists and is clear, however, there’s no so blind who cannot see.
    However, we (you and me) may be overlooking the vanity aspect of business sector who holler about the fact that they’re paying the highest rent on Grafton Street or elsewhere without asking the obvious question, “Have I been had?”.

  34. Shay Begorrah Says:

    @JimmyTheFish

    The problem is you have legal advice, government has legal advice.

    You would not by any chance be associated with individuals or companies involved in the renting of commercial property?

    John Corcoran may be one of the repeat post offenders here (though not the worst one) but he has the excuse of being right on an important issue that the government refuses to tackle. The existence of upward only rent reviews speaks to a country where the interests of commercial property owners are put above the interests of the people. It is a serious detriment to the productive elements of the economy that has not been tackled as yet another sop to the leech like financial sector.

    It is a bizarre country where a section of the political spectrum bandy about the terms “rent seekers” or “rentiers” to describe those lower down on the “access to capital” scale trying to protect their incomes while finding themselves completely comfortable with the states continued coddling of those actually receiving large rents for doing nothing.

    Shame is not in great supply in the capitalist classes, because their is no demand for it.

  35. Brian Woods Snr Says:

    @ SB: Shay, the ‘victims’ of the UORRs are either well-informed, consenting adults - or they are dopey, foolish twits. Whichever, in no way excuses what is in effect a rent-looters charter. And the abject cowardice of our elected representatives to face-up to a problem of their own creation. But that is it. Redress (costly, I presume) is available, and will be obtained if the case is a sustainable one. The affected individuals need to, “suck it and see!” In the meantime, “stick a cork in it!”

    “Shame is not in great supply in the capitalist classes, because there is no demand for it.” Nicely put.

    The current equine v bovine protein controversy raises an interesting issue with respect to modern food processing, wholesaling and retailing in Ireland. Why on God’s earth do Irish food processors need to import a single microgram of animal protein that will end up in Irish manufactured food products. Is there another ‘rentier scandal’ behind this? This is not the tread to discuss this issue, but it appears to be just another episode in a long, sorry saga of sticking the Irish Consuming Sheeple with supra-economic rents. We’ve no real protection - other than keeping our wallets shut. If we do this, and we get to like it: well now, that just might prove to be a tad uncomfortable. At least we may be spared the melamine in the baby-food formulations. But what else may be lurking?

  36. MRRM Says:

    “They are a cost - which was entered into voluntarily by consenting adults (though perhaps adult is not the correct term here - perhaps dopey persons).”

    Can anyone suggest how people were supposed to lease or rent a building from which to trade prior to the 2010 ban on UORR? Are you seriously suggesting that a tenant chose this clause? There WAS no other lease available - and not all businesses want or need to own property.

    Commercial property should be there to service industrial, retail & commercial activity. Instead, the way it is in this country, it stymies all activity with it’s cartels. Shame on any of you who have never had to face this situation and yet have the gall to slag off others who got up off their butts and created business & jobs…

  37. John Corcoran Says:

    @JTF
    Dear Mr Fish,
    These were the “standard” leases which all commercial tenants were obliged to sign, and which the sovereign had copperfastened and legitimised.. It was an organised criminal cartel,which the Irish state colluded with ,and the corrupt politicians organised for their bagmen. Commercial property lease law is meant to be a service to enterprise trade and employment,with this feudal lease law it destroyed all three. Fine/Fianna Follow the money -it always leads to Leinster house.

  38. Rob O'Connell Says:

    @David O’Donnell

    ‘ Whereof one cannot speak or understand, thereof best to keep silent.’

    @ Michael Henningan of Finfacts

    After reading some of the comments posted here, I told myself that I should read the IMF paper in question but did not have a time until yesterday. I think it is an impressive, well researched and well crafted piece of work. Kudos to the IMF economist even if some of his conclusions are debattable.

    Dear Mr. Henningan (Finfacts)

    My reading of the imf paper and your comments left me perplex. To substantiate your claim that some of the reported export of services used in the paper are fake, you point to the ‘fact’ that “In 2011, the share of pharmaceuticals in Irish GDP was just 11%, well below exports revenues worth 30% of GDP.” There is absolutely nothing wrong with the figures you point to. Those trained in economics or finance or those who have taken a basic economics course would recall that the contribution to GDP from the supply side is computed from the value added (excluding raw material costs, wages, and other production expenses), which in your example would be 11%. Exports revenues in contrast refer to the overall value of exported goods at the time of exportation. If it is 30% of GDP while the value added is 11%, the difference of 19% makes perfect sense as covering material used, wages, other expenses, and the producers’ margins.

    In your comments of Feb 2, you claim that the main factor behind the decline in Ireland’s PPI index since 2002 ‘is the USD/EUR rate as most of the inputs of the dominant foreign sector are priced in dollars’. If that was the main reason, the PPI of all eurozone countries should have been trending down as well, right?

    Are you suggesting that exports of services cannot grow if employment in the sector does not? In this era? Come on! Are you aware of workers’ complaintsthat employers have cut the workforce or the number of hours per worker while expecting high productivity from those employed? This has been the case in many countries.

    You can elevate the discussion and help advance research by making available time series on the “reliable” data that you seem to have. Share it with the central bank or other institutions that can scrutinize the compilation and reliability. You state that “traditional analysis of Irish data leads the IMF to misleading conclusions.” It is not only the imf, it is all of us interested in the Irish economy, it is the central bank of Ireland, the european institutions that use official data from the central bank of ireland and other irish institutions. As a concerned citizen or institution, if you have better data, put it forth so that it can be used in analyses that can benefit policymaking. people will thank you and respect you for that. In commenting, here and on Finfacts, you belittled most people from the imf economist who wrote the paper in question, the imf representative in Dublin, to staff of the central bank of Ireland, even governor Honohan, a well respected figure in the economics and finance profession.

    I often read finfacts postings but the apparent mix-up in your comments puts me off.

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