ESRI Studies on Taxes and Transfers

This post was written by Seamus Coffey

Here are links to two studies released through the ESRI this week.  One chart is taken from each but there is much more detail in both particularly the second.

Distributional Impact of Tax, Welfare and Public Service Pay Policies: Budget 2014 and Budgets 2009-2014

   

Social Transfers and Poverty Alleviation in Ireland

83 Responses to “ESRI Studies on Taxes and Transfers”

  1. Ernie Ball Says:

    And of course that top chart doesn’t break out the distributional effects in the private sector as opposed to the public sector, allowing the wealthy in the private sector to piggyback on the cuts endured by high earners in the public sector: “see? we’re taking it on the chin (by proxy)!”

  2. Brian Lucey Says:

    ok I for one am actually quite shocked at that second chart. Our raw position is pretty rank

  3. Brian Lucey Says:

    Figure 5.3 Ireland has seen sharpest rise 2005-11, in EU, in % pop at risk of poverty.

  4. Kerchav Says:

    @EB

    Havana much?

  5. Joseph Ryan Says:

    @Brian Lucey

    The shocking thing about the second chart is all of it, not just Ireland as outlier.
    It appears that EU15 societies are organized in such a way that over 40% of its members are unable to derive a viable income, in their own right, from the society in which live.

  6. Ernie Ball Says:

    And that’s why we need further liberalisation and reform! Eliminate the social safety net and those people will be forced to sink or swim!

    Amiright or amiright DOCM, Hugh Sheehy, tullmcadoo, Johnny Foreigner et al.?

  7. Ernie Ball Says:

    I mean: capitalism is the best system there ever was if only government would get out of the way!

  8. Johnny Foreigner Says:

    @Ernie

    Which European social safety net do you most admire?

  9. Michael Hennigan - Finfacts Says:

    The social transfers paper says the level of household joblessness is high in Ireland by European standards, leading to a concern that this pattern may be linked to the way in which social transfers are configured.

    Last year ESRI research showed that in 2010, 22% of households in Ireland were jobless compared with an average of 11% for the EU15 and in Spain and Greece, where the rates of unemployment are the highest in the developed world, the percentage of households without a working adult stood at 10% and 7.5% respectively. The Irish rate in 2007 was 15%.

    In 2006, the peak year of the bubble, Census 2006 found that Ballina, County Mayo, had the highest unemployment rate among large Irish towns, with 15.8% of its labour force out of work. Tralee (14.2%) and Dundalk (13.9%) also had high unemployment while at the other end of the scale Malahide (4.3%) and Leixlip (4.4%) had the lowest rates.

  10. francis Says:

    Both charts are severely misleading. And I strongly suspect, intentionally.

    Chart 1

    a) 2014 numbers are projections. Why not take 2012 as an endpoint, for which there should be some real data?

    b) 2009 as a starting point, when your bubble increases were still in full swing, is misleading as well. Why not take 2002, as 10 years before the endpoint 2012 as starting point, to give a more realistic picture?

    Chart 2

    a) Germany looks here for the relevant number “after tax and transfers” pretty well as “middle of the road”, actually a little more to the “better” side, doesn’t it? Last year we got here some similar plot, which made Germany look horrific. Social injustice and increasing. Scandal !

    b) what is used here, is the “in risk of poverty” defined in Europe as “60% of median”. The definitions of real “poverty” worldwide like 2$/day/capita are meaningless for European countries. Nobody would be “poor”.

    Until recently, the common definition of “poor” in the western world was “50% of median”. Then you design your social benefits schemes, in one way or the other, via Hartz IV Aufstocker or minimum wages to provide 55% of median to the very most, therefore nobody is “poor” by definition.

    Just a few percent of freaks by accounting, like me, with a honest tax declaration, I want to stress, who would also have shown up as “dirt poor” in some measures. I can assure you, that I enjoyed life during that time.

    Well, then the “social” busy bodies need a new definition to produce sufficiently large numbers to be outraged about. Take 60%, call it first “at risk of” and then conveniently forget about this adder.

    If things do not look outrageous enough, go with national definitions (the US numbers are still derived in a different way, more like 40% of median)
    Just invent a sufficient number of different definitions (40, 50, 60%, per capita or per household, taking into account important transfers like health, or not, food stamps and EITC in the US) choose the right year, and you can make any country look good or bad, dependent on which side you are arguing.

  11. brian lucey (@brianmlucey) Says:

    Joseph
    Yes.
    Frankeen
    Back under your Bridge

  12. francis Says:

    On the light side, DOCM et al.,

    we have improved on our weapons control measures:

    http://www.spiegel.de/spam/satire-spiegel-online-leoparden-spurlos-verschwunden-a-938436.html

  13. john gallaher Says:

    @francis-they shoot pigeons don’t they:)
    http://www.nytimes.com/2013/12/12/business/international/as-bailout-chapter-closes-hardships-linger-for-irish.html?pagewanted=1&_r=0&rref=business&hpw

    http://www.ft.com/intl/cms/s/0/b510d38a-5da3-11e3-b3e8-00144feabdc0.html#slide0

  14. Johnny Foreigner Says:

    @francis
    +1

    The welfare industry is designed primarily with the needs of those who administer it in mind, much like 3rd level education and the health system. Hard to live like an emperor when you haven’t got an empire - we are learning a lot about that from the charity sector at the moment.

    When the pre-budget submissions are prepared by interest groups (on all sides it has to be admitted) the stats are twisted and turned endlessly to get the ‘right’ result. No one expects any better, and it’s a harmless enough game as long as there are grown-ups in the room when the submissions are considered. I used to have a role in this a long time ago and my impression is that the street-smarts of those in the DoF were much better 20 years ago. They mightn’t have had the best quantitative skills, but they could see through a lot of the bs.

    Btw this is an excellent report and makes it very clear the Ireland has an excellent safety net, and that the budget adjustments have been evenly distributed across society, with a slight tendency towards taking more from the wealthy.

  15. Ernie Ball Says:

    @Johnny

    What evidence do you have that wealthy private-sector individuals have paid their share of “budget adjustments”?

  16. Johnny Foreigner Says:

    @Ernie

    I haven’t made that claim, but good question nonetheless (I always like to reward students who try hard regardless of ability).

    If you accept that the top decile have had the largest proportional drop in disposable income, and claim that this is simply a compositional issue, then are you also claiming that most of the wealthiest people in Ireland work for the public sector? Clue: it’s a lose-lose argument for you, so best to give up now.

  17. brian lucey (@brianmlucey) Says:

    JF
    Nice. Logic. We dont see enough of it….

  18. DOCM Says:

    @ francis

    You may be missing the domestic political and policy implications of the two charts. The first deals with the relative levels of pain that different pay deciles in the public sector have taken in relation to budgetary cutbacks (and which are predictable to 2014). It confirms what is by now well known; the top and bottom deciles have taken the biggest percentage hit. As the top decile was the major beneficiary of the inflation in public sector salaries during the boom, the hit is amply justified and were it not for the fact that the cuts also impact on the pay of politicians would probably have been larger. This is not, however, true of the bottom decile which had less powerful advocates or none at all.

    The bulk of the savings from the cuts, however, came from the middle incomes as these are the most numerous. They were, however, less in percentage terms as these grades also had strong trade union representation, not to mention a junior party in government with strong links to the trade union movement.

    The second chart is of interest because of the outlier situation of Ireland in terms of the percentage at risk of poverty. There is undoubtedly a link to the system of election in Ireland which is by way of single transferable vote and pure proportional representation in multi-seat constituencies. Without going into the details, this means that any politician wishing to be elected has to look after his first preference votes and those providing them know it; hence, the phenomenon of the political constituency “clinics” which politicians hold to allow their constituents tell them their ailments. The result is a wide spectrum of universal benefits designed to remedy them i.e. unrelated to income but designed to attract the votes of one sector or another but without promoting the necessary economic activity that would help pay for them.

    This is, of course, far from being phenomenon confined to Ireland - as your own election confirmed recently in relation to pensions - but it seems to have gotten out of hand here.

    In the areas where universal benefits should unequivocally apply, notably health, the same politicians have been unable to put a workable system together, largely because of the influence of many vested professional interests.

    However, as summed up by JF above, Ireland has an excellent social safety net. The question is whether it can be afforded without making the necessary changes to make it (i) more equitable e.g. in relation to the self-employed that did well during the boom but have had little social protections to fall back on and (ii) if not self-financing, not a drag on the productive capacity of the country.

  19. Johnny Foreigner Says:

    @DOCM

    The first chart is everyone, not just PS.

  20. Ernie Ball Says:

    Amazing what passes for logic at Trinity these days.

    Is it impossible for you to imagine a small number of highly-paid PS workers taking massive hits making the top decile on the whole look like it has paid it’s share. It doesn’t follow from that that “most of the wealthiest people in Ireland work in the public sector.” Not logically and not mathematically.

  21. Paul W Says:

    Presumably “social transfers” don’t include PS pensions…..the ultimate in safety netting (for a few).

  22. Johnny Foreigner Says:

    @Ernie

    This is fun.

    Let’s say 15% of the top decile are PS. Let’s say the private sector have taken no hit to disposable income. What sort of hit to the disposable income of the “small number of highly-paid PS workers” is required to make the overall hit = 15%?

    In this alternative reality (i) 15% of the wealthiest people in Ireland are PS, an outrage by any standard of what the mission of the PS should be (ii) those people have no money left at the end of the month.

  23. Ernie Ball Says:

    You can pull whatever percentages you want out of your ass. It still does not imply that for every proportion of the top decile made up of PS judges and consultants, the proposition must be lose/lose for me.

    In any case, the burning question: what have the private-sector wealthy given up during our NATIONAL CRISIS remains not only unanswered but almost entirely unasked.

  24. brian lucey (@brianmlucey) Says:

    ok : every body, lets look at the topic, not engage in PS bashing/loving? Mmmmkaaay?

  25. DOCM Says:

    @ JF

    Oops! I will go to the bottom of the class.

    However, my recollection of the relevant figures from other studies is that my conclusion is broadly correct.

  26. francis Says:

    @ Brian

    I am actually looking forward to join the huddled masses of early retirees, with their trailers under some bridges, in this city as well, Satellite TV and LTE internet, one day here, next day there, watching with mild interest their portfolio, and a Mercedes as the accompanying city car.

    You can meet intelligent and interesting people there, former Swiss bankers, not just some Zschäpe and Mundlos, next best thing to this irish economy blog : - )

    @ DOCM, all
    The income change distribution in Chart 1 is just noise,

    as obvious, clean as you can have it.

    On the Spiegel link:

    There was once a big German tank army, feared for good reason by so many, manned by German draftees, beating US “pros” every time. We reduced the tank count now to 10%, lending some without proper accounting.

    So, please if you have a German tank or cannon in your backyard, you don’t need anymore for some dispute with your manager or neighbor, please give it back. Our bean counters would like to do proper accounting

  27. DOCM Says:

    @ francis

    On chart 1, note my elementary error as adverted to by JF above. But the substance of my comment stands up.

  28. Johnny Foreigner Says:

    @Ernie

    I am simply showing that in order to support your claims you either have to inflate the proportion of the top decile that is PS (lose) or inflate the hit taken by the private sector (lose). If you try to maintain the claim that the private sector have contributed nothing then at least 15% of the top decile have to be PS, all of whom have to have lost 100% of their disposable income.

    If you want a list of all the tax changes that have reduced the disposable income of wealthy people in both the public and private sector just read the report - they are all in there.

    I don’t know what the actual answer is - but I am sure the study authors do, so you could contact them. My best guess is that the hit is about the same.

    Genuine question - why are you so invested in defending one group of rich people against another?

  29. Ernie Ball Says:

    Johnny,

    You’re not “showing” me anything. I’m not innumerate. Some of your claims, however, indicate that you might be.

    For example, at no point do I have to inflate the proportion of the top decile that is PS so far that, as you claimed (with an air of misplaced smug condescension), “most of the wealthiest people in Ireland work for the public sector.” If that’s logic, then call me irrational, for the claim is absurd, no matter how fervently you believe it.

    I’m not interested in defending one group of rich people against another. I am interested in basic fairness. The entire society, particularly the poor (which doesn’t seem to outrage you) has taken substantial hits, with one notable exception: the wealthy in the private sector. Why? Because (somebody else’s) redundancy is a 100% pay cut! and we can’t take any more tax increases! and we’ll go offshore! and you won’t raise any money if you tax us anyway!

    Actually, two notable exceptions: corporations being the other. The sacrosanct 12.5% rate is treated like it’s the exact point on the Laffer curve where any movement in either direction would reduce revenue. This conclusion is reached based on no study (for even to study it is to scare the horses!) and nothing other than ideology.

  30. Johnny Foreigner Says:

    @Ernie

    How about you give us the figures you believe to be correct?

    1. % of the top decile that are private sector
    2. % drop in disposable income for top decile that are private sector?
    3. % of the top decile that are public sector
    4. % drop in disposable income for top decile that are public sector?

  31. Ernie Ball Says:

    Pulling figures out of the air is your stock-in-trade, not mine.

  32. Johnny Foreigner Says:

    @Ernie

    Ok, I’ll make it easier. Assuming that those in the top decile from the private sector have had no decline in disposable income, please pick which of the following scenarios is the most plausible.

    1. 15% of top decile are PS, they had a 100% drop in disposable income
    2. 20% of top decile are PS, they had a 75% drop in disposable income
    3. 30% of top decile are PS, they had a 50% drop in disposable income
    4. 40% of top decile are PS, they had a 37.5% drop in disposable income
    5. 50% of top decile are PS, they had a 30% drop in disposable income

    Hint: it’s a trick question.

  33. Ernie Ball Says:

    I’m afraid you’re playing with yourself.

  34. francis Says:

    @ John Gallaher,

    thanks for the 2 links.

    I think some people still have to learn what it means when the reaper goes through the social fabric.

    All this commotion here about a little 1% noise in a distribution.

  35. Joseph Ryan Says:

    @ESRI authors

    A small point on a particular 2014 budget change that, as far as I can see, was not analysed. It would, I concede, probably have been very difficult to do so.

    1. This is the change in short term disability rules on sick pay, to disallow any payment in respect of the first 6 days from January 2014 (?date from), whereas as present the first 3 days are disallowed.
    It is true that some employers that do not currently pay any sick days, or up to 3 sick days, may change their position, but amongst small and medium sized employers, that is unlikely.

    There is also the general question of why income increases, or income reductions, always seem to be measured in % terms, rather than in absolute values.
    High earners have gained massively in absolute terms for the past 30 years or so, and also in % terms. [Some efforts were made in the 1980s to use a a formula that had absolute value plus a percentage, in determining wage increases. This seems to have been abandoned.]

    To measure distributional impact in % terms for the short period (2008-2014) seems to infer, however unintentionally, that at the start point of 2008, we had a ‘fair’ income distribution. Many would question such an inference.

  36. Gregory Connor Says:

    As long as “poor” is measured as a % deviation from median, then it really is true that the poor you will have with you always. The game is rigged so there is no way to win it. The only solution to this poverty problem is if the economy collapses entirely and everyone has exactly one euro annual income, then the poverty rate would also go to zero, the best possible outcome.

  37. Hugh Sheehy Says:

    Definition from the report: “A household is income poor if its equivalised income is below 60% of the median equivalised income.”

    So “risk of poverty” means there’s a chance that the household’s income is below 60% of the median equivalised income.

    Excuse me for quibbling with the definition of poverty, but it seems relevant. Of course, it would be useful to talk about actual poverty, but that definition doesn’t seem enormously useful. If my mental arithmetic is good, in more normal economic times, that definition of “poverty” means approximately “what the median lived on ten years ago”.

    Meantime, did I get accused - by an anonymous poster - of supporting poverty? Sometimes, wanting to punch people really hard in the nose seems just the appropriate emotional response.

  38. John Gallaher Says:

    Hi francis indeed much ado…Mark Carney BofE was on Charlie Rose this week,asked about austerity shrugged wry smile and said they ain’t seen anything in Europe in comparison to states.
    Will provide a link a little later.
    Apols miles off topic noticed Slovanian stress tests out today quite stressful!
    Reason to ask is viz a viz Hypo Alpo anything locally on it…Some talk of exchanging voluntarily naturally some bonds ?
    Congrats on new govt.

  39. Hugh Sheehy Says:

    Is it just me or is the statistic that more than 50% of households can be at risk of being below 60% of the median not a little startling in itself? Is that not the “pre transfers” statistic?

  40. John Gallaher Says:

    @francis..here some good links in this piece.
    http://www.openeuropeblog.blogspot.co.uk/2013/12/slovenia-dodges-bailout-as-it-swallows.html
    HAA-FT had something but…
    “Austria has ruled out letting Hypo go bust, a step which would trigger an unaffordable 14 billion euros in debt guarantees by its home province of Carinthia.
    Top officials have also refused to entertain the notion of seeking a debt haircut on Carinthia-guaranteed bonds, a measure which Hypo Chairman Klaus Liebscher said would ruin Austria’s reputation as a borrower.”

    http://www.reuters.com/article/2013/12/10/austria-hypo-idUSL6N0JP3WM20131210

    Ok back to shooting pigeons…

  41. Michael Hennigan - Finfacts Says:

    Irish social protection (welfare and health) spending as ratio of economic output was the highest in the European Union in 2011 - at 37% of gross national product compared with France at 34% of GDP.

    Eurostat data published on Thursday shows that the Irish on average were poorer than the Italians in 2012. God be with those days when we were second-wealthiest after the Japanese.

    I did note in late July 2007 when Bank of Ireland Private Banking published its second annual Wealth of the Nation Report, a few days before I abandoned ship myself:

    For those who would in this grim summer of rain, cast a jaundiced eye on the glad tidings of an increase of 10% in the number of Irish millionaires (excluding principal private residence), consider the lot of the wealthiest nation - Japan.

    A recent Japanese Cabinet Office survey showed that people felt a high level of anxiety about their daily lives, the highest angst level recorded since the poll began nearly 40 years ago despite a recovery in the economy.

    Irish on average poorer than Italians; Irish prices 20% above Germany’s

  42. Ernie Ball Says:

    And now, just in time for the next election, an income tax cut!

    Yay, that’s the spirit! A homeopathic cure!

    http://www.irishtimes.com/news/politics/noonan-signals-possible-income-tax-cut-in-budget-1.1626123

  43. Brian Woods Snr. Says:

    @HS: “Sometimes, wanting to punch people really hard in the nose seems just the appropriate emotional response.”

    Indeed it is. It gets their attention - and, it marks their card. Rage (or whatever) is the normal physiological response, not restraint, which is a social/ psychological (cultural?) imposed condition. Someone who is quite prepared to thump an opponent - for good cause, has my support.

    I suppose that the new, new economic mode is that states need less tax revenue, as long as they can freely borrow more. Yes, and they then borrow the interest as well. Nice, as long as it lasts. It cannot.

    Its not the definition of poverty or its level that is the issue. Its whether or not individuals (and the State) have the appropriate income to support a family, be able to enjoy some leisure and be able to save - without fear of those savings being looted. That’s quantifiable. Many in Ireland have no such comfort. We have a long, long way to reform.

  44. John Gallaher Says:

    @Brian Woods Snr,did pigeon gate ruffle a few feathers,or like the troika is just gone…not suitable for New Yorkers ?

  45. Brian Woods II Says:

    Paul W says

    “Presumably “social transfers” don’t include PS pensions…..the ultimate in safety netting (for a few).”

    It is really unclear how pensions in general are treated. It states that “occupational pensions” are treated as social transfers. In the pensions industry this narrowly means pensions from employment in the private sector or possibly the likes of the CRC/ESB. But in this context it should include all pensions, it is not clear whether it does.

    Add to this confusion that income from investments are treated as “market income” and not social transfers. But private sector pensions are paid out of investments. It would seem to suggest that if you receive a funded pension from your employer that this is a social transfer whereas if you had funded it yourself it is market income.

    To be consistent all pension income, indeed all unearned income should be regarded as a “social transfer” in which case about 30% have absolutely nothing before these social transfers.

  46. Brian Woods Snr. Says:

    @ JG: Yeah, I wondered about that too. Kinda spooky. Like - “Not in front of the children!” Or maybe its something to do with vegetarian diets being good for you - and all. Like ‘red meat’ being likely to make you twitchy. Of course, there is always Soylent Green. That does ‘kill’ two (or more birds) with one scoop! Less revolting folk, followed shortly by revolting cookies. 8-)

  47. francis Says:

    @ John Gallaher

    Since the SPD now announced their minister placements, actually some surprises (Gabriel energy strategy, hmmm), they seem to be pretty sure that they got the members vote. Participation of over 2/3, impressive, better than US elections : - )
    It was, of course, found to be constitutional; I still hope they don’t make it a habit.

    With the Hypo Alpe Adria, Bavarian and Austrian politicians are involved. Everybody is suing each other, but carefully keeping some stuff under the rug. This is somehow connected to the Mollath case, something pretty bizarre, a guy kept in a psychiatric ward, being now out, but not really talking. His wife, running illegal transfers for politicians to Switzerland, at the Hypo, brought him into the ward on drummed up charges, but kept pretty interesting documents with names for him? Pretty weird story.
    But as long as the Austrians and Slovenian pay for it by themselves, I do not really care.

  48. john gallaher Says:

    @BWSNR,Marco Pierre White is a genius and one his fav. dishes is Pigeonneau en croute de sel, by Roger Verge at Le Moulin de Mougins.But agreed needs to be hung for a few days,we have lots wild turkeys out in Eastern Long Island,quite a clever bird tough to hunt:)
    Given you now have ‘dog food’ in the meat/food supply chain..i was wondering if the visit to japan was to study abeeconomics or more apro the lost decade but appears it was all about the beef!

    @francis,yes i like the australian system where one is fined for not voting.
    Regarding HAA should be interesting,who’s paying oh its early days yet,keep your checkbook handy though…..

    “Dec 13 (Reuters) - Nationalised Austrian lender Hypo Alpe Adria got a green light for 800 million euros ($1.1 billion) in more state aid on Friday when its board approved issuing more non-voting shares that the state will buy within days, it said on Friday.
    http://www.reuters.com/article/2013/12/13/austria-hypoalpeadria-idUSL6N0JS24I20131213

    Charlie Rose thing,link should work.
    http://www.bloomberg.com/video/boe-s-mark-carney-charlie-rose-12-10-JbioeO9TTwaSsnrFbsQ5Kw.html

    The well-flagged move brings to 4.8 billion euros the amount of capital, direct cash infusions and guarantees that taxpayers have provided since 2008.
    Austria had to take over Hypo from German landesbank BayernLB in 2009 to rescue a bank that had used guarantees from its home province of Carinthia to fuel unbridled expansion that drove it to the brink of insolvency.”

  49. Gregory Connor Says:

    @Hugh Sheedy — You are correct that 50% of the population having incomes 60% below the median income is a real strange population distribution. Sounds like Lake Wobegon (where all the children are above average) in reverse. Median income is defined as the income with 50% of the population having higher incomes. Something is wrong with my understanding of these graphs?

  50. francis Says:

    @ John G

    Charlie Rose, a Bilderberger.

    5 b is not chicken sh*t for Austria, but they could do about 20x without losing their AAA rating.

    It is still a nation, with the power to tax and to use force, which is the only real LOLR.

  51. Brian Woods II Says:

    @ GC, HS

    The median obviously refers to the post transfer distribution in which case as a statistic there is nothing especially bizarre about the graphs.

    Nonetheless it is very difficult to know what messages can actually be inferred from these figures and I think the treatment of pensions is particularly questionable.

  52. john gallaher Says:

    @francis danke just an fyi. as you have an interest,later:)
    http://www.imf.org/external/np/sec/pr/2013/pr13507.htm

  53. francis Says:

    John, good point:

    Congratulations to Ireland !

    The IMF has released you now formally from probation.

    IMF programs are not meant to be a pleasant experience, but something you want to get rid off as fast as you can.

    Ireland off first, Spain next,

    and in true fashion, the financial horde acknowledges the defeat:

    with the Irish 10-yr bond risk premium now at a mere 0.60% compared to the US !!!!

    Bloomberg stopped this week to post the irish rates for free to the public, just like the US unemployment rates a year ago

    A good time for victory square dance

  54. Gregory Connor Says:

    @Brian Woods II — Interpreting the percent of the pre-transfer distribution that is 60% below the post-transfer median is maybe not “bizarre” but a very difficult task. How is such a strange statistic affected by the transfer system? It means that having a transfer system always increases the poverty rate, by construction. For a given pre-transfer distribution, the bigger the transfer amount the larger the at-risk-of-poverty proportion, since it increases the post-transfer median which provides the benchmark. So social transfers always by construction increase the poverty rate. That is a strange feature of this odd statistic.

  55. francis Says:

    The Focus made an interesting point:

    NK Kim now eliminated all other of the 8 coffin carriers. Stalin and Adolf would be proud of him.

    http://www.focus.de/politik/ausland/interview-nordkorea-experte-kim-jong-un-diktator-nordkorea-hinrichtung-onkel-jang-ri_id_3480169.html

  56. Paul W Says:

    @BW Snr
    “Spooky”…..clearly this site has been subjected to some orchestrated “propaganda” for some time…..Some are volunteers but I suspect there is an Irish govt engineered PR thing in the equation. It is a widely followed e-site….even Krugman checks in occasionally.

    Ireland’s economic story is being actively managed…that’s clear. Nothing particularly wrong with that, but it’s not the “real story”.

  57. Hugh Sheehy Says:

    @Greg.

    Well done sir. You win the prize.

    While Brian Lucey’s reaction was the same as mine, perhaps he’ll have another look. Maybe even a column in the Examiner!

  58. Hugh Sheehy Says:

    The real headline is “Generous Irish social transfers put more people at risk of poverty”

  59. Ernie Ball Says:

    And to think, a minute ago, you wanted to punch anyone who suggested you believe such a thing.

  60. Brian Woods Snr. Says:

    @ Paul W: Got that. Though I would opine that attempting to ‘engineer’ something needs a level of intellectual imagination, knowledge, guile and management that is only found in Deighton and Le Carré. Maybe.

    And it might be somewhat comforting to believe that such folk were actually looking out for us plebs. I sleep with one eye open! 8-)

    @jg: “Marco Pierre White”. Superb cookware.

  61. Hugh Sheehy Says:

    @Ernie. No. I felt tempted to punch you in the nose. Not anyone. You. And for suggesting something quite different. For suggesting something unsupported, inaccurate, and offensive. But you’re hiding behind your anonymity again.

    The simple fact is that the charts and the report perfectly well mean the headline that I’ve suggested above.

    Meantime, if there’s real data out there on real poverty we should discuss it. But this report ain’t it.

  62. Brian Woods II Says:

    @ GC

    Three people in population one earns 1, another earns 2 and the third earns 9.

    After transfers they all earn 4 so the post transfer median is 4 and 60% of it is 2.4.

    Pre transfer 66% of population earn less than 2.4. After transfer 0% earn less than 2.4.

  63. Seamus Coffey Says:

    @ BW 11,

    The point Greg was making was that the transfer system increases the median so increases the pre-transfer AROP rate as currently constituted.

    In your 3-person example the pre-transfer median is 2.0 and 60% of that is 1.2. One person has an income below that so the AROP rate without any transfers is 33%.

    When you introduce transfers the median changes to 4.0 with 60% of that 2.4 as you outline. The AROP rate before transfers is now 66%. The presence of transfers has increases the no- transfer/pre-transfer AROP rate on the same income distribution from 33% to 66%.

    An interesting complement to the second chart above would be a cross-country comparison of the proportion of people aged 65 and younger who have an equivalised market income less than 60% of the median market income in the same group. That would give a better insight into the distribution of market income rather than one which is affected by the inclusion of transfers which leads to “bizarre” statistical outcomes including figures saying that more than 50% of some group are below 60% of the median.

  64. Brian Woods II Says:

    @ SC

    I see the mathematical quirkiness but it is merely that.

    Clearly what is being attempted is to define some measure of “relative” property i.e. relative to one’s society. Only the post transfer world is relevant to that concept. The concept of AROP calculated by reference to the theoretical world of no transfers has no substantive meaning as nobody lives in that world.

    I suppose what the statistic is saying is as follows:

    “Post transfer, i.e. in the real world, X% are below 60% of the median and reckon themselves to be AROP. However if the Transfers were suddenly turned off the percentage who would reckon themselves to be AROP by the same absolute standard would increase to Y%.”

    Having said that, it is still somewhat difficult to take this statistic seriously.

  65. DOCM Says:

    @ All

    This comment by Chris Johns is of interest.

    http://www.irishtimes.com/business/economy/exploding-the-myth-of-the-squeezed-middle-1.1625897

  66. Brian Woods II Says:

    “poverty” not “property”

    @ GC, SC

    GC’s paradox is of course a correct mathematical interpretation.

    In a transfer regime where everybody was living on the breadline except one there would be nobody AROP by this measure. But this certainly does not imply that it is superior to some other transfer system of the same overall income which does give rise to positive AROP.

  67. John Gallaher Says:

    @BWSSNR,back in the day he was quite handy with it himself.Looks like that story is flying along with the late late fella wading in over at the Indo.Somewhat ironic having a go at the NYT given that Pravda sorry RTE is nothing but a mouthpiece for whoever is subsiding its outrageos deficit and overpaid cosseted hacks.

    http://www.independent.ie/entertainment/ryan-tubridy-blasts-new-york-times-pigeon-article-as-shoddy-journalism-29835406.html

    @DOCM,the print edition of US FT has a rather startling story about “tax breaks” followed with an editorial,nice CJ article.Kinda says it all.

    “For the eurozone, Ireland’s graduation is a reminder of the importance of breaking the lethal embrace that still exists between the banks and the sovereigns. In 2010, Dublin’s fiscal position was manageable. What brought the Celtic tiger to its knees was the decision that the government should bail out its lenders, paying back the creditors in full.”

    http://www.ft.com/intl/cms/s/0/676ad044-63fd-11e3-98e2-00144feabdc0.html?siteedition=intl#axzz2nSrKG6RM

  68. John Gallaher Says:

    The CBO or Congressional Budget Office recently released a report,may be off some interest as a comp. fortunately we don’t have as many math challenged whinny bleeding hearts over here:)

    “CNBC ran a story yesterday with the headline “The rich do not pay the most taxes, they pay ALL the taxes.”
    http://www.businessinsider.com/no-the-rich-do-not-pay-all-the-taxes-2013-12

    CBO cheat sheet-link to report here too.
    “The average federal tax rate for all households in 2010—that is, tax liabilities divided by income (including government transfer payments) before taxes—was 18.1 percent. To examine the effect of taxes on households with different amounts of income, CBO divided the nation’s households into five groups of equal size, arrayed by before-tax income. In 2010, the federal tax rate for the bottom quintile of the income distribution was 1.5 percent and that for the top quintile was 24.0 percent (see the figure below). The top 1 percent of all households in the United States had an average federal tax rate of 29.4 percent in 2010.
    Higher-income households pay much more in federal taxes than do their lower-income counterparts: They have a much greater share of the nation’s before-tax income, and they pay a much larger proportion of that income in taxes. Households in the top quintile (including the top percentile) paid 68.8 percent of all federal taxes, households in the middle quintile paid 9.1 percent, and those in the bottom quintile paid 0.4 percent of federal taxes.”
    http://www.cbo.gov/publication/44604

  69. Ernie Ball Says:

    And if Federal income taxes were the only taxes, that CNBC claim (which is meant to mollify its rich viewership) might even be close to true.

  70. John Gallaher Says:

    There’s always one,everyone having a great time celebrations high fives,tax cuts,then along comes The Economist to ruin the party…jay….sus!

    “What is painfully clear, for the all optimism and brave faces Ireland’s political and economic elites have put on, the Celtic Tiger is now dead. Ireland’s banking crisis saw to that during the financial crisis, and its consequences are still crushing it today. The Irish government could introduce structural reforms to boost the country’s growth, but its politicians have more often sought to block, rather than support, such measures. With very little in terms of political will to force through such reforms on the horizon, it will be many years until Irish eyes smile once again.”
    http://www.economist.com/blogs/freeexchange/2013/12/irish-economy

  71. John Gallaher Says:

    Hi Ernie oh no one watches CNBC these days,the money honey has moved,its wall to wall Fox these days…scary huh.
    http://www.theguardian.com/commentisfree/2013/nov/25/maria-bartiromo-cnbc-money-honey-fox

  72. DOCM Says:

    @ jg

    I would not be as pessimistic as the Economist. As usual in Ireland, one situation segues into another, without anyone really noticing or, rather, pretending not to. Who would have thought, for example, that Ireland would set the example for banning smoking in pubs!

    The interesting aspect of the Chris Johns coverage is the reference to the extraordinary number of people who pay no income taxes. This can be traced back to the halcyon days when every time a FF finance minister stood up to present the budget, he loudly declared the number of people who had been “taken out of the tax net” i.e. implying that paying tax was not a social duty but a trap laid for the unwary citizen. Fast forward to today! Incomes above €10,000 are liable to the Universal Social Charge (levied on gross income) and anyone with a property is being caught for property tax. We may even get to the stage where it may be possible politically that the principle that every able-bodied adult who is not in full-time education must be assessed for tax may be openly accepted.

    It is also emerging what an incredible spending can of worms the health sector represents. As it looms so large in the budgetary arithmetic, regaining financial control of it is essential.

    http://www.imn.ie/index.php?option=com_content&view=article&id=5461:hse-rolls-out-new-financial-management-system&catid=61:news&Itemid=28

  73. John Gallaher Says:

    @DOCM agreed about the smoking ban,plastic bags too:)
    But this week I was reminded off what makes Ireland great..it’s people,the strikers from Dunnes Stores,who boycotted SA goods.

    Taxes not really my area,I left Canada over the grab,moved south to NY like quite a lot of high skilled Canadians and Europeans.For me the bite on income almost irrelevant,I make it on the gain from putting my b**s on the line!
    If the deal works out,I get paid if it doesn’t nada,zilch but if it does, I have the choice to do a 1031 with Uncle Sam as my partner or pay the CGT.

    The whole health thing is always a mess,despite what people think lots lots high net worth Canadians head straight to states with even a mildly high temp.

    I though the IMF parting shot quite accurate-link above.

    “Yet Ireland still faces significant economic challenges. Unemployment is too high, public debt sustainability remains fragile, and heavy private sector debts and banks’ slow progress in resolving nonperforming loans weigh on domestic demand. Continued concerted policy implementation is therefore necessary for Ireland to recover fully from the crisis.
    “Steady fiscal consolidation has been a hallmark of Ireland’s program with deficit targets again expected to be met in 2013. Budget 2014 sets out a balanced pace of adjustment in coming years, as needed to put public debt on a declining trajectory. To limit the drag on growth, revenue increases should focus on further broadening the tax base, and reforms of health, education, and social protection spending should be undertaken while protecting core public services and the most vulnerable.
    “To help revive lending and sustain a recovery in demand, efforts to resolve mortgages in arrears should be intensified. The recent bank balance sheet assessment—an intensive analysis conducted by the Central Bank—found additional provisioning to be appropriate. Results should inform banking supervision and banks’ preparations for the Comprehensive Assessment in 2014, for which an ESM recapitalization backstop is desirable.”

  74. DOCM Says:

    @ jg

    Your comment about wealthy Canadians heading for the top private health facilities in the US sums up the central point that I am trying to make; things are seldom what they appear to be on the surface. The “vicious circle” in Ireland is between clientilist politicians and the voters. The majority of the latter - i.e. those that are actually paying income taxes - have finally twigged that they are being taken for a ride. As a result, there is much talk now by the former, the politicians that is, of protecting the “public purse”.

    By the way, thanks for the link to the Bloomberg interview with Mark Carney. A very impressive performer!

  75. John Gallaher Says:

    @DOCM-he’s terrific but keep in mind Canada and Toronto had the mother of all hangovers after the prior boom/bust cycle.
    As the saying goes the people elect the govt. they deserve,hence the massive current brain drain,NY is packed with smart extremely well educated Irish grads,tks.
    As we are miles and miles off tread already a good read with “Irish Mark”.
    http://www.bloomberg.com/news/2013-12-12/irish-mix-charm-with-bar-diplomacy-as-german-love-ends-bailout.html

  76. DOCM Says:

    @ jg

    To be frank, I find it difficult to take this kind of reporting seriously. It is looking at the issues from the wrong end of the telescope. It is not all about Ireland. What motivates states to act is never based on sentiment although the human relations aspect of it is obviously a vital ingredient. Nothing that has been done for Ireland has been based on anything other than financial and/or political calculation, including by US investors.

    There has also been a strong element of luck as events dictated action in relation to Greece and Portugal which could not be denied to Ireland.

    The luck of the Irish is till holding. The SPD members have voted by 76% in favour of the grand coalition, the new German government should be in place on Tuesday and it is difficult to see any outcome to next week’s European Council other than resounding success “in the spirit of the season” to quote Carney.

  77. DOCM Says:

    @ jg

    One attendee at the European Council that may not much enjoy the experience is David Cameron.

    http://www.dailymail.co.uk/news/article-2523220/Migrants-poorer-countries-banned-Britain-curb-benefits-tourism.html

    The UK is not alone in giving public expression to political disquiet at home with regard to the implications of enlarging the EU to Romania and Bulgaria (of which the UK was an enthusiastic proponent). The others are the Netherlands, Austria and Germany. One may expect some soothing language to help Cameron’s domestic situation. However, he must be learning that there is simply no way of assuaging the relevant element of UK opinion, whether in UKIP or the Conservative party.

  78. John Gallaher Says:

    @DOCM you make your own luck,there’s no denying that sentiment has definetly changed towards Irl.
    You have to give some credit to the minister,yeah he’s a bit bombastic wouldn’t be my style and agreed the victory lap is rather tiresome but still…
    The US investors are simply opportunistic,they feel more comfortable in Irl. it’s awfully welcoming to anyone with a few bob.
    Trick will be what happens to the profits,some have already exited-Kennedy Wilson for example with BofI.
    The rubber hits the road with the awfully stressful stress tests coming,yeah keeping up speed on the new irish govt. in Berlin:)

  79. DOCM Says:

    @ jg

    It is a popular saying but it does not happen to be true. A better way of putting it is that one seeks to try and take advantage of the situation as it develops which is what the Irish representatives succeeded in doing after the initial “Gallic spat” with Sarkozy. I would not take away from the performance of the minister in this regard.

  80. John Gallaher Says:

    @DOCM on the UK,the man himself,he also has quite perspective recent article on Ireland.

    The public is happy great poll numbers,bond markets benign who cares about growth.

    “Britain’s hand in Europe has never been as strong as it is right now. This should not be abused. But it can be celebrated gracefully. We may be moving into a Europe of “multiple geometry” where integrationist elites no longer hold the whip hand, different groups of states cohere as they see fit, power flows both ways, and perhaps even where can take charge our own fisheries and farm. If that is so, it is surely an EU we can live with. I have never felt as cheerful before about our role in Europe.”

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10512188/Britains-negotiating-hand-in-Europe-has-never-been-as-strong-before.html

  81. DOCM Says:

    @ jg

    If the ineffable AEP says that Britain’s hand has never been stronger, you may be assured that it has never been weaker.

    The UK does not even have to leave the EU. The EU - or rather the EA - is leaving the UK.

    http://www.eurozone.europa.eu/eurogroup?lang=en

    This raises some rather interesting questions for Ireland, especially in the context of free movement of labour.

  82. Finbar Lehane Says:

    Our high raw “risk of poverty” figure in the second table seems fairly consistent with GINI coefficients I’ve seen for income inequality. Two or three years back (haven’t seen any more recent figures) we ended up being mid-table in the OECD rankings (after social transfers were added in). However, we’re definitely an outlier in terms of raw income inequality (before the tax system and transfers are taken into account). We were actually easily number one for raw income inequality out of the entire OECD. But we’ve also one of the most progressive income tax systems and a fairly decent social net (unlike most of the other PIGS). But perhaps we shouldn’t be too proud of that, given our rather unique and somewhat schizophrenic approach to income inequality. We lurch in an extreme manner in one direction only just to immediately lurch back again the other way to, in the end, only to end up in an unspectacular middle-of-the-road position in the income inequality league.

    There certainly seems to be quite a substantial minority of our workforce on fairly low incomes. IIRC full-time income distribution quartiles for the private sector were around €20k or thereabouts for the first quartile, €29k for the median and €41k for the third quartile. So evidently there’s a lot of people (full-time too) below or only slightly above the €20k mark and, therefore, would certainly fall into the “at risk of poverty” categorization, 60% of median, without any social transfers (BTW, for completeness, the first quartile for the public sector was around about €30k, median at €45k and the third quartile at €56k).

  83. francis Says:

    just for reference,

    how this is played in German media:

    http://www.focus.de/finanzen/news/armutsreport-l-armut-in-deutschland-erreicht-dramatisches-rekordhoch-regionen-droht-veroedung_id_3494264.html

    dramatic increase of poverty, poverty death spiral, whole regions devastated

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