The current administration has allowed a property bubble to start again in Dublin, when it first appeared Noonan welcomed it saying it was no problem. Their only concrete response was to offer reduced lending criteria for first time buyers, increasing demand and hence prices as has happened in the U.K.. Considering that a property bubble was what caused the last crash their lack of any meaningful response other than to pour petrol on the fire is mind blowing. This is all of course enabled by the labour party, why why why?.
Two years up the road prices will continue to escalate making wages more expensive and shoving the “undeserving” low paid workers and unemployed further out in the hinterlands and onto the streets or HSE funded hotels and hostels just as is currently happening in London. Eventually it will cause its own collapse under a sea of debt and increasing costs for industry and services. If this is the economic recovery the labour party is currently trying to credit for then they should have stuck with FF as at least we some us enjoyed the rise and FF was very good at looking after the pensioners and unemployed without running around with an austerity whip demanding that nearly all income tax receipts are given to the bond holders and that educational services are be dumbed down to a 24/7 Macdonalds type activity as Rory Minister for education recently suggested.
From what I can see the mainstream political parties in Ireland are pushing the centre to the right and Labour have bounded to the right of centre in most meaningful ways.
The last few years is not so much a case of being forced to implement policies they dont want to, it is a case of the leadership deciding that they are no longer as supportive of their old policies.
The reason for this is quite obvious.
From about 30 years ago the salaries of politicians have been increasing substantially out of kilter with the average industrial wage. If a politician or union leader is earning 3-5 times the average industrial wage how can he justify this to himself?
Well the only way they can do it is if they think that they think they are worth it. Even in opposition the current leadership of the labour party have been earning this kind of money for the last 15-20 years. This has to have an effect on your political outlook. You start to think that some people (including yourself) are special and are deserving of special financial treatment. It explains their acquiescence with how generous the government have been to bankers.
This isn’t a problem for FG. They are open about their political outlook. But what if you are in Labour and your reality matches the political outlook of your opponents?
The other thing that has exacerbated this is the increasing role of advisers and PR people in politics in general. Basically the reason Labour have lost their way is that they have surrounded themselves in well healed middle classes to give them advice, while at the same time they have become extremely well healed themselves.
This is very basic psychology. If your reality exceeds what is permissible in your Ideology your ideology will change.
Another question is why have labour made huge strides in their liberal agenda but gone backwards on their equality agenda?
I think the answer is simple. The leadership and their advisers care a lot more about the liberal agenda than the equality agenda.
The only time the leadership go hard on equality issues is when there is a massive immediate backlash from grass roots, other than that they are not to bothered at all about equality.
Austerity hasnt caused the labour leadership to concede on its beliefs. It has allowed the leadership to concentrate and focus on their new found beliefs.
Here are a few examples of when they let the veil slip.
Eamon Gilmore made a comment in the dail that “It is not up to Government to create jobs but to create the conditions so jobs may be create” That one is straight of the free market Milton freedman handbook.
Pat Rabbites recent comments on “middle Ireland needing a tax cut” As has been pointed out by economists such as Karl whelan actually Ireland is not a high tax economy by europena standards. Our main divergance from Europe is the lack of services. BTW when pat talks about the Middle
he is actually talking about the upper middle.
When Joan Burton halved the disability allowance she said that the reason it was done was to alow parents be the recipients rather than the disabled person themselves. (this was reversed as the disabled people fought it)
When Jobseekers was reduced from 188 to 100 for many Job seekers under 25 and they were sent job offers in Canada the minister was happy enough to let it go through under the guise of “Encouraging young people into work” or as Eamonn Gilmore put it stop watching flat screen TV’s All day. The fact that there was one job for every 30 young applicants was irrelevant to them.
Or how about Young TD from Ballymun John Lyons. When asked to justify his salary (3 times the average wages before expenses) his reply was “that if you pay peanuts you get monkeys” A huge show of Solidarity with his constituency that he obviously has a lot of respect for given that the vast majority of them would be earning half of what he does.
Not enough credit has been given to parties on the left that have imposed wage restrictions on their representatives. TD’s will always try to bite away at this principle due to human nature but abandoning it destroys the parties sole. In my view tagging salaries to those you represent is a golden rule if you wish to represent anything left of centre for the reasons I have outlined above.
AEP article is spot on.
I’ve spent time in Italy, France and Portugal over the past six months — it’s as clear as day that they should not be using the Deutschmark as their currency. Enigmatic and visionary leader required to lead one country out of the Euro shambles . . . and out of depression with it.
Europe is breaking apart. The reason is simple. European institutions have sided unequivocally with the investor and creditor classes. Low paid, no paid, and now increasing numbers of middle classes are being bled to protect the investor classes.
There is no ‘horrible twist of fate’ about Europe’s left being an enforcer for the investor classes. They are now part of that elite group in terms of income and wealth. They have been bought. Being an MEP or Euro mandarin is now akin to winning the lottery.
The unrepresented will look to left or to right, without caring much about the difference, in the search for somebody to defend them.
The latest investor scam in the bank stress tests. Investors are to be protected, even if there is another 3% rise in EU unemployment.
The bank capital will come with a high return, sucking capital away from the real economy. Alternatively bust States, and people who have never had tuppence to rub together, will be asked to provide ‘capital’ for the banks.
@Eamonn very good analysis, it is obvious when you hear Rory Quinn or Gilmore being interviewed that they view themselves as some type of elite group that we should all be taking guidance from and thanking for the current upturn (Despite the fact that all voted for the bank guarantee which transfered
50 billion to foreign bondholders).
As you also pointed out trade union general secretaries salaries should be linked to a low multiple of their members to stop this gradual decline in their ability to empathise with their members and increase in their own pomposity.
@Eamonn
+1 Precisely why Sinn Fein are becoming so attractive. There is a sense that they are somehow above the venality of the mainstream parties. The murder/torture/bank robbery business is being airbrushed out by time, which is not necessarily a bad thing. The easiest way to keep them civil and also show their policies up for the madness they are is to give them some power.
According to the European Parliament website, centrist parties of the left and right including those in S&D (Ireland: Labour), ALDE (Fianna Fail), and EPP (Fine Gael) will take more than 70% of the vote.
The left-wing anti-austerity GUE/NGL (Sinn Fein; Socialists) will take just over 6% across Europe, other hard-left coming to about 9%.
The right-wing Euroskeptics between them amount to about 9%.
“the fact that all voted for the bank guarantee which transfered
50 billion to foreign bondholders”…isn’t a fact.
Let me put it this way, the property boom (you say ‘bubble’) is not being financed by mortgage lending.
@ Be a Debaser
Did you always want to grow up to be a debaser ?
Most, possibly all, career politicians are quite simply bluffers when it comes to macroeconomics. They pick a party, learn the lines, and set about honing the skills necessary to get allocated a constituency, then those useful to garner enough votes to get elected.
Some will have done a degree course in P&E, PPE, history, or the like and picked up enough economics to write the odd essay and waffle to party foot-soldiers and voters who know almost nothing about it. One or two might have worked in finance, but few of those will have covered, or been interested in macro much.
Bluffers have to stay close to the accepted mainstream narrative about the economy when they are anywhere close to actual power because otherwise they will be challenged and exposed if necessary. The trick is to make noises that get you elected, and then fit in to the big, powerful system.
Can anyone think of a professional politician that could not, reasonably, be described as a ‘bluffer’ on economics?
The article highlights again that the EU Fiscal Compact was a dreadful move for Europe and for Ireland. Ireland voting for it on the basis that it was above our station to reject it was one of the most shameful days in the history of our political and social elites. I am proud that I voted against it, but it does not change that my country was beaten to a pulp by a shower of morons.
@grumpy
Unfortunately, your analysis of how people get ahead applies equally to our civil servants, not least in the Department of Finance.
@grumpy
“Can anyone think of a professional politician that could not, reasonably, be described as a ‘bluffer’ on economics?”
No, but this is not surprising since, apparently, a great many of our economists are also bluffers on economics.
@ Eamon Moran
Excellent post – I think it goes a long way to explaining ‘labour lost’. Even highly acocmplished filthy rich rock bands whose impoverished past is not too far in the rear view mirror can continue to make good music….but eventually as the memories start to match their prevaling reality the spark dies.
1) Fiscal prudence is neither left nor right wing, it is just good accounting
2) Ireland has not had true austerity as we still have a whopping debt funded current deficit
3) It is long past since time for the closet Keynsians in Ireland to put up or shut up. Some econometric modelling, indicating the value of the fiscal multiplier is needed. Not handwaving and references to irrelevant links
@ zhou_enlai
The fiscal compact? Andrew Smithers of the FT is expecting an upswing in the EU based on “fiscal rule-breaking”:
Then again if OMT and the prospect of ECB QE are behind current bond market quiesence, a sufficient level of rule-breaking by say Italy might call into question their access to ECB support and start the cycle all over again.
@Desmond Brennan
” Fiscal prudence is neither left nor right wing, it is just good accounting”
Fiscal prudence, on the backs of the less well off, to keep the better off in the lifestyles to which they have become accustomed, is not prudence, it is a policy choice, on behalf of the better off.
Why do all ’employees’ over 66 not pay PRSI at 4% like most other people. I can think of one or two esrtwhile luminaries that are getting a nice little break there, up to about €10,000 per year in the case of one of them, a well known public figure.
We all pay USC, right? No. There is no USC on capital gains. Why?
” Ireland has not had true austerity as we still have a whopping debt funded current deficit”
That is not logical, as it equates austerity with balancing the books, not the manner of the balancing the books. Some people are very definitely feeling ‘austerity’, others are laughing all the way to the State banks, State banks guaranteed by everybody, both haves and have-nots.
Some people in Ireland are very definitely experiencing ‘true austerity’, on behalf of people who never knew austerity in their lives.
” It is long past since time for the closet Keynsians in Ireland to put up or shut up…..
Would it not be better to channel the very apparent demand for housing, created this year by mortgages from State banks, into more new houses and employment, rather than into the pockets of existing householders.
Minister Noonan, ‘We need house prices to rise another bit’. Really?
Does a person who makes that statement know about economics of any kind, Keynesian or otherwise, except for the economics of self-interest.
@ Johnny Foreigner
Re: Sinn Fein
What policies? They don’t seem to have many, but of the ones outlined on their webpage, I’m curious, which do you see as mad?
‘Amongst our proposals are the introduction of a third rate of income tax of 48% on income over €100,000, the introduction of a 1% wealth tax on assets valued at over €1 million, the standardisation of all discretionary tax reliefs, the capping of public sector salaries at €100,000, increases of 10% in both Capital Gains and Capital Acquisitions taxes, and a cut in the salaries of government Ministers, TD’s and Senators. We completely oppose the introduction of the property tax and water charges’
@ Grumpy
Shane Ross and Vince Cable know what they are talking about.
@ All
Breaking news!
According to exit polls, there has been no breakthrough for the right-wing PVV, the extremist party of Geert Wilders. It has lost substantial support and seems likely to end up in fourth place!
Something seems to be working! What, exactly, it is hard to say but it is not any of the Armageddon scenarios.
@Eamon
great points, though to be fair Labour were the only ones who actually voted against the guarantee.
but the question we’re left with is: if left wing parties implement right wing policies, then whose left to vote for? You can be guaranteed the Shinnors would be enthusiastic auesterians, as they are in Stormont. Would the Socialists be capable of implementing anything given their lack of organisation?
@Kerchav
Hey man! U never heard of “THE STONES”?
H … one can fool a lot of the people most of the time …
‘So, if the poor economic balance of the crisis-fighting measures is so obvious, why does the German public not see through it?
One reason might be tunnel vision. The economic climate in Germany is not bad. Unemployment is at a record low and the German economy is benefiting from record-low interest rates, caused both by the ECB’s lose monetary policy and capital inflows from the periphery into the German government bond and covered bond markets. Young Germans only encounter double-digit unemployment rates in news reports.
The other reason might be German elite’s and media’s adherence to ordoliberalism – an economic policy concept that has always had an anti-empirical approach. Ordoliberals rely on principles to determine what is right and wrong, and do not rely on data from messy reality to draw conclusions. So who needs to look at GDP or unemployment data to evaluate whether a policy was good or bad? After all, Germans know, without a doubt, that they have been right about austerity. Isn’t it obvious that thrift is better than profligacy?
That is not logical, as it equates austerity with balancing the books, not the manner of the balancing the books.
+1
Starve yourself fitter it is.
The problem you’ll find with the austerians is that austerity is not a policy with a measurable goal other than carrying out the policy. In the case where austerity’s failure is too obvious to deny the answer always is that it has not been tried with enough conviction. The question of how much conviction one would have to display for the gods of the market to bless you with growth is left to higher powers. Who knows the will of the market?
Austerity’s desirability to its proponents is not measured by its real world outcome any more than religious devotion is – its done because it is a moral necessity. You can talk about the paradox of thrift all you like (or the IMF’s work on the fiscal multiplier) or the comparative performance of different policy sets and all you will get is the repetition of the catechism of structural reform, budget cuts and growth just around the corner.
These are not people you can reason with or persuade.
Rising standards of living have blurred the distinctions between left and right while modern politicians in Europe tend to be career politicians like David Cameron and Ed Milliband in the UK – becoming researchers and advisers and eventually getting on party lists or being selected for safe constituencies.
The generation before them once had passion but that dissipated over time.
José Manuel Barroso (seen in a clip from 1976 below) was once a Maoist student group leader in Portugal while Pat Rabbitte and Eamonn Gilmore were radical student leaders and they then joined a Marxist (maybe Karl not Groucho) political party.
There hasn’t been much evidence of radicalism from them in recent times: Eamonn Gilmore in particular has been a blank slate since the Berlin Wall was breached.
Electoral politics and as Eamonn Moran has suggested, the comfortable middle class double-earner life have been big factors.
However, believing in an old-time religion isn’t enough according to Janan Ganesh in the FT this week:
“Why does Mr Miliband struggle? Because he almost never does anything that you would not expect a leftwing politician to do; and so his audience never grows beyond people who are already leftwing. That, in a sentence, is the sum of it.
If the Labour leader were intellectually confident he would question his views and those of his supporters. He would roam outside his ideological comfort zone and try out new ideas. He would hire advisers who, while personally loyal, are heterodox in thought.”
The response of left-wing parties in Europe to the financial crisis has been dismal as they have had little of substance to say about the status quo.
Banks have been nationalised but people generally are likely not convinced that mass nationalisation is an answer to slow economic growth.
Only half of French households have to pay income tax, but everybody pays social charges – this social contract works as long as people have good public supports including a high standard health service.
In Spain, young temporary workers, many of them immigrants, were the main victims of unemployment and a socialist government gave way to a right wing party led by a man who could be said to have a charisma deficit.
Thomas Piketty refers to the period 1945-1973 in the West as a Golden Age but exceptional.
During the recession in Europe while there has been austerity, the huge social and corporate welfare state has been largely maintained.
The biggest challenges are ahead as slow structural growth will make it difficult to maintain the lifestyles that the people the Americas call ‘baby boomers’ got spoilt on.
For most of the period since 1945, the populations of the biggest countries were not part of the international supply.
According to Richard Freeman, the Harvard economist:
“In 1980 the global workforce consisted of workers in the advanced countries, parts of Africa and most of Latin America. Approximately 960m persons worked in these economies. Population growth – largely in poorer countries – increased the number employed in these economies to about 1.46bn workers by 2000.
But in the 1980s and 1990s, workers from China, India and the former Soviet bloc entered the global labour pool. Of course, these workers had existed before then. The difference, though, was that their economies suddenly joined the global system of production and consumption.
In 2000, those countries contributed 1.47 billion workers to the global labour pool – – effectively doubling the size of the world’s now-connected workforce.”
@ SC: ” … if left wing parties implement right wing policies, then whose left to vote for?”
The political landscape has shifted – like those Tectonic plates. What was familiar to us, Left or Socialist and Right or Conservative, have sub-ducted to create a large ‘centrist’ landscape. The likelihood is that it was the Median Voter who shifted rightwards and the parliamentary parties had to follow.
This shift in the political landscape renders the conventional L-R paradigm redundant. Its the former Socialists who failed to move along with their voters, that now find themselves marooned. Something similar happened to the Irish Labour Party in 1922 – their mass electoral base in the north-east was effectively lopped off. They never have recovered.
Would the Socialists be capable of implementing anything given their lack of organization?
Again, its hardly a lack of organization, as a complete unwillingness (or incapacity) to re-evaluate what has occurred in terms of parliamentary politics since the onset of Globalization in the late 1980s. The Median Voter shifted, the parliamentary parties followed, then the organized representatives of the waged-labour population trudged happily after.
The Right (Conservatives) have no such problem. They never left home-ground and they have firmed up their occupancy and control of their territory and have established significant edged-boundaries (both political and economic) to corral their increased electoral support. The Socialists are simply wandering about, somewhat dazed, in what is for them, unfamiliar territory. All their known political landmarks are either obscured or have been demolished.
And no, a political GPS device will not suffice to re-locate themselves. They need to comprehensively plough over the parliamentary landscape, and start again. De Valera did that! Not the ILP.
@DOD
unfortunately the Stones were one of the bands i had in mind when the analogy came to mind….sorry!
@ Sarah
Re not voting for the Guarantee this was nothing more than clever political expediency. They knew it would carry regardless of their vote.
Even before the elections Joan Burton labours shadow economics representative had agreed to pay the bank debts from the national debt. Remember the Piri Paso conversations with Lenihan?
“You can be guaranteed the Shinnors would be enthusiastic auesterians, as they are in Stormont.”
You dont know that! You cant know that. It is the interest of all the middle class political media to say that, and they have been play every trick in the book to damage the SF vote from increasing (wonder why?) but people who are earning less than 50K a year see them as the only ones offering them any prospect of hope. You might be right and they might just sip the koolaide like Labour but the one thing that makes me think they might actually resist is that people who join SF do not do it to enrich themselves. Thats why the pay caps are so important. I am not a SF supporter by the way.
The other 3 FG, FF and Labour have already shown that they are going to go along with the idea that we are going to have a society with a fairly large upper, fairly large lower and a shrinking middle class. We are currently seeing a consistent policy being imposed by elites in the investor classes that is forcing an abandonment of our old social democratic norms and ever increasing inequality
Household taxes, water taxes waste disposal taxes are not introduced to primarily to broaden the tax base.
The real purpose is to damage society. Destroy the idea of a shared purpose. Destroy the idea that we pay for certain universal requirements as a community from general taxation. Individualize as much as possible so that you then have a society (much like the USA) where you are increasingly on your own and must fend for yourself or be a loser. Ayn Rands aspirations are slowly being realised step by step all over Europe and the upper echelons of the moderate social democratic parties have been bought off to allow it to happen. The politicians are no longer in charge, and they know it.
@ BWS Hard left socialism may have struggled since the wall fell but it seems that social democratic parties in Europe still garner substantial electoral support.
Ireland is a special case since the uniquely Irish FF movement has traditionally absorbed a lot of support that would otherwise have gone to social democrats. If FF disappears then the way could open for a strong center-left social democrat party to emerge. Either SF or Labour could aspire to this role, with FG holding its position on the center right. Since SF are in opposition they are well placed to beat Labour to the punch if they play their cards right.
On the other hand FF could regain its strength and push the Irish left to the margins for another generation.
Eamonn, some of your comments seem a tad ill-thought through. Maybe not, but that’s my read on them.
Sinn Fein are fascists. They spent at least 70 years using murderous terrorist tactics in order to get a significant political foothold. Please, let no one even suggest to me that they are Constitutional Republicans. They are Nationalists. I will not trust them with my liberty – and neither should anyone else, who is not yet a self-deluded, SF supporter.
Sinn Fein smell power due to the political, social and economic incompetence of the incumbent parliamentary cabals. These useful idiots have consistently put self before their voters. They have been consistently untruthful with their voters. When real and substantial economic problems arrived, they deserted their voters. So, when the voters eventually and reluctantly, copped on to this treachery – as they are now doing, what did folk expect those voters to do? Yeah, that’s exactly right – even if its bordering on the self-destructive.
The Irish Labour Party have been admitted to the ECU – they are on political life-support. Its just a matter of time before someone switches off their ventilator. And good riddance. That should clear the way for the emergence of a genuine Irish-style Social Democratic party – one that has its origins in non-violence. This may take at least three inconclusive parliamentary elections. The only problem I can foresee is another financial crisis – or worse an oil supply shock. If this latter occurs sooner than later – all bets are off the parliamentary table.
@BWS
Cheers for insulting my intelligence and the derogatory pat on the head. By the way I thought your comment was “a tad ill-thought through”. Now go sit in a corner and write the first chapter of Thomas Pikettys new book five times.
I am not saying that SF are paragons of democracy. All I am saying is that they are offering hope to people on the basis of fighting against the prevailing orthodoxy of an increasingly unequal society.
If they sip the Koolaide as Labour did voters will abandon them in droves as quickly as they joined them.
Their huge lift in support is not based on a new found respect for past SF/IRA deeds.
@John Foody
All their economic policies are daft because they all move in the wrong direction – ie more tax and spend. But just to take one example, no water charges and no property tax. One is a green consumption tax, the other a tax on wealth – ie ideas which are intrinsically progressive and would be good ideas in any fiscal context. Every other developed country has them and people understand that they are the foundation for the funding of local services. We simply don’t fund local services (and many others) at the moment, unless you count holding our a begging bowl to other countries as funding.
@Sarah Carey
“You can be guaranteed the Shinnors would be enthusiastic auesterians, as they are in Stormont. ”
One hopes their austerity options would not include, among other things;
1. Multi million euro debt forgiveness, by State controlled banks, for tax exiles who don’t want to pay tax in Ireland, but are happy to borrow money (through their companies) from Irish banks. Money that they now don’t want to pay back, and the State says OK, no problem.
[I have in mind the Independent Group and the examiner group and no doubt there are many many others. Can’t pay or won’t pay.]
2. Pay Abramovich & Co 100% on bonds he picked up for a pittance.
And to pay for the above decide to cut medical cards for Downs Syndrome children, but forget to implement a cut to ministerial bumper payments.
It is difficult for the ordinary Joe to feel represented by the people who allow this.
PS Not a member of Sinn Fein or any political party, nor affiliated to or beholden to any political party.
I think the lines of traditional Right & Left and Center are all blurred, and have been blurred for a long time.
The Irish Left is more interested in LGBT issues than dealing with the hard issues of the economy, employment, making things easier for companies to fire unemployable workers and retain employable ones.
FF who one would think was traditionally right of center… increased social welfare rates by over 6 Bn / year from 2002 to 2008.
With the exception of various external shocks… i.e. oil, or the Russians invading… there is a large problem coming down the tracks… lack of taxpayers, i.e. people who actually get out of their pajamas and hoodies and go to work.
As the population continues to age, taxes from workers will reduce… the problem of squaring the budget will get worse.. not easier.
SF has the attraction of never having exercised responsibility so they can say anything . They’ll get in and be as damaged as the rest of the parties.
None of them are interested in shaking things up. There is a lot of tough talk but the system is more or less untouched. The Executive has too much power. The CS is a mess . Legal system is not fit for purpose. Education system is mediocre. Banks are still banjaxed. Economic growth is going to be low for the foreseeable.
@ eamonn: “I,m on it!” Apologies by the way. My fault.
@Brian Woods Snr.
Sinn Fein are fascists. They spent at least 70 years using murderous terrorist tactics in order to get a significant political foothold. Please, let no one even suggest to me that they are Constitutional Republicans. They are Nationalists. I will not trust them with my liberty – and neither should anyone else, who is not yet a self-deluded, SF supporter.
Fascism is a fairly broad church but it is not one that Sinn Fein would be welcome in and it is some of ignorant, dishonest or sadly deluded to say so. They are no more fascists than the FLN was.
This is not completely off topic. Sadly in the last forty years the European left have been less occupied by the ongoing threat of imperialism, plutocracy and neoliberal managed democracy rather than the historically questionable threat of nationalism. The centre left’s confused and conflicted response to the Eurozone financial crisis is a reflection of this preoccupation with imaginary threats. The inability to accept that power structures can be impossible to change within the constraints those power structures enforce was crucial to the end of imperialism in the twentieth century, no analysis of Europe’s current plight and path makes sense without it.
Something that makes me chuckle is when people thank the EU for the last sixty years of peace in Europe – something like thanking NAFTA for the absence of war between Canada and the US in the last ten years. Liberals are such awful fools.
@ JF
‘But just to take one example, no water charges and no property tax. One is a green consumption tax, the other a tax on wealth – ie ideas which are intrinsically progressive and would be good ideas in any fiscal context. Every other developed country has them and people understand that they are the foundation for the funding of local services.’
Yes, water tax is as about a green a tax as the PRSI I pay. The environment is just the excuse to make people accept more and more taxes and charges on their after tax income. I pay for water already in the tax I pay each month/year and in the VAT rate that is applied to the goods and services I buy. As for LPT being a tax on wealth, it is missing the point, my home is just that, a home. It creates no wealth for me or my family. It actually costs me a lot to up keep, i.e. heat and light not to mention fixing things when they break. When rates and water charges were done away with the last time they increased vat and tax to cover the cost.
Also the reason that ‘others do it’ so we should too is just pure rubbish. In some countries they chop the hands off people who steal. should we introduce that while we are at it because others do it.
When bin charges were introduced in 98/99 they started at 1.50 for a bin tag, by 2003 they were 3.00 now they are 9.00 plus a charge of 110.00 per year. Water and LPT will go the same way.
@paulr
“I pay for water already in the tax I pay each month/year”
Really? Where does it say that on your pay slip? Your taxes go into a bowl. The food in the bowl gets eaten by a voracious State by about August. Then we take the pot on a world tour and hope that it gets replenished enough to tide us over till Christmas. Ireland does not pay for what it spends at the moment, hence the need (absent real efficiency reforms) to raise more revenue.
Water and sewage treatment is one of the useful things that the State spends money on, along with schools, health services, roads, pensions and employment insurance (not the same thing as dole). In a sane world all those services would have dedicated funding streams (e.g. local property taxes, social health insurance) and ringfenced budgets, protected from the all the other rubbish that Governments like to buy elections with.
@paulr
With respect to bin charges – you created the waste, you pay for its disposal. Why should we socialise your wastefulness?
Friends, if I am elected as your representative I solemnly promise that I will arrange for FREE WATER … to fall down out of the sky on the heads of every voter in Ireland
@ skeptic01: Great! You now have my No.1! cf: below!
@ Shay: Thanks. You and I will just have to accept that we disagree on the nature of SF.
Will a term in Gov here make any difference? Maybe. But I have deep concerns. Its always a successful electoral ploy to promise voters what you know is impossible in practice.
@BWS
Thanks. No hard feelings.
BTW I dont think SF will get in next time.
IT will be FG and FF. Put a Monkey on it.
Maybe we like water as much as alcohol but at more than double the per capita consumption of some other European countries suggests that it’s because it’s “free.”
Most water per person per year (more than 125 m3) was consumed in Ireland (141 m3), followed by Cyprus, Latvia and the United Kingdom (between 101 m3and 125 m3). Between 76 m3 and 100 m3 of water per person per year was consumed in France, Latvia, Spain and Sweden, while in most Member States (including Slovenia) between 51 m3 and 75 m3 of water per person per year is consumed.
The lowest consumption (0-50 m3 per person per year) is recorded in the Czech Republic, Estonia, Lithuania, Hungary, Poland and Romania. In 2009 on average 58 m3 of water per person per year was consumed in Slovenia.
I used the html tags and for the “3” cubic measure but it didn’t work.
@JF
Yes and that is why I and all other working people in this country pay taxes for, for the provision of the services you list. It is not for fun. When water and rate were scraped the last time 2% was added to VAT and 1% to tax to pay for these basic services. Those increases have never come off. So yes I do pay for water, in general taxation and by having even a basic economic life.
And just because you don’t seem that clever my point is that since bin charges have been introduced they have risen hugely in cost and water and property tax will follow the same path. The environment is the excuse and only fools cannot see that.
@ paulr,
You are leaving stuff out….
Remember Ms Mary Harney’s health levy???? That was increased, then rolled into the USC, and effectively is permanent.
Anybody remember “de Bert” declaring
“I am one of the few socialist’s in politics”
The sad thing is the HSE is still a mess, even if the USC was increased a thousand fold, it would still be a mess.
Anybody remember the Public Service Obligation levy on electricity meters…
Each year steadily increasing…. in fact went up 54% in the Autumn… to 42.87 per year per domestic customer.
Of course we have to make electricity expensive… to attract outsiders in to make electricity cheaper. This ideology has been undermining our competitiveness for the last 10 years now.
And yes you hit the nail on the head….we are being taxed TWICE for lots of stuff… and still the population cannot see it.
The point about the most recent exchanges above IMHO is that both sides are right but simply addressing different aspects of the problem. We do not know who is paying and who is benefiting and, most importantly, we seem not to be interested in finding out; as long as whoever is representing us brings home the bacon!
An egregious example is the recent saga of the benevolence of the departed minister for justice in handing over €70,000 of the taxpayer’s money, to which he was clearly not entitled (confirmed by his own participation in a government decision to abolish such payments) to a deserving charity (with the head of which he happened to be personally close). Only Miriam Lord seems to have twigged the implications of this or, rather, to be alone in being willing to address them.
Whether the Portuguese have taken the advice on board or not, I do not know.
From the Swedish paper;
“The basic idea behind the trust towards independent fiscal councils is that fiscal policy councils will reduce the deficit bias characterizing economic policies in many countries. In short, the tendency of democratic societies to run persistent budget deficits, creating rising public debt, and in some cases leading to unsustainable debt levels may be dampened by independent fiscal authorities. At this stage, it is an open question to what extent such institutional arrangements will be successful.”
In Ireland’s case, the answer is almost certainly no! At least on the basis of the current pre-election performance of the government. It seems that, as in the case of Sweden, a change will be a rather long drawn-out affair, if it happens at all.
As to Portugal, Stephen Kinsella thinks that our economies and experiences are not that different!
Some interesting paradoxes in the Stephen Kinsella Independent article.
“In the grand experiment that is the European project, the imposition of austerity on the peripheral countries is one of the most costly, and potentially, the most destabilising.”
O.K…. but previously….Stephen writes….
“Mario Draghi’s now famous, game-changing “whatever it takes” speech in July 2012 was what gave the markets confidence they would not lose money if they bet on peripheral European states like Ireland and Portugal, so, rather than the Portuguese austerity programme delivering confidence, really, it was Mario Draghi and the ECB’s credibility that compressed peripheral yields”
The fact that the ECB has allowed breathing room to emerge so that Portugal can now carry out a slower adjustment.
So it is for Ireland…… our bond yields are now low….
If it was not for our membership of the euro… the austerity adjustment would have been much faster… and much more severe.
And before everybody gets on their high horse and starts blaming the euro for Ireland’s crash and burn….
There were many warnings from Brussels about Irish Property prices getting out of control back in the early noughties. I think it was Romano Prodi who came to Ireland to see why the Irish rejected one of the treaties.
But as usual… it is always somebody else’s fault!!!
@Sporthog,
The problem is that there is so much that we pay for on the double that I don’t have enough fingers and toes to count them all.
Ireland wears blinkers that severely restricts the field of vision when it comes to ensuring a reliable flow of income that allows government to meet its obligations over decades. We are the land of one trick hobby horses which we beat to death with regularity.
Corporate taxes, how low can we go <2%.
Property taxes =0%
Water taxes =0. Now to become a National Water Authority. Big is the latest fad. Water is local and always has been local. Nobody in Gov’t has heard of watersheds. Water Authorities have to be designed to fit watersheds. There are no economies of scale from fitting the River Feale to the River Liffey watershed. In Ireland we have a problem in that our perception of water is formed at a young age. At 8-14 yrs of age we dug holes deep enough (ground water 0.5 to 5 ft. down) to drown toddlers if they crawled into one. It is hard to believe that any house in Ireland could not drill a hole up to 20 metres deep and not have a reliable source of water. Only Dublin city would have to import water from other Water Authorities. People have to keep an eye on their water authorities. I remember looking into a an in ground holding tank surrounded by metal mesh and razor wire 8 ft high and seeing a rotting dog in the water. This was water pumped out of a pristine pure aquifer beside the river Galey. Clearly the dog did not scale the fence, some amadan threw it in there. The polluted tank fed a village of 600 4 miles away, we alerted a few militant women in that community. Nothing like Irish women in high dudgeon berating public officials. Pizenin our children, spreadin disays……
We knew where water came from and where it was consumed. What kind of results would you expect from a bunch of employees in a protected Quango.
Power is a sick joke in Ireland. Electricity and NG cannot be distributed by the state because we cannot trust the politicians to run an efficient operation. We cannot trust them to run a central procurement agency or to build nuclear power plants. Engineers who work for gov’t threw up their hands in horror when I suggested that the Irish Gov’t could future proof what is promising to become an expensive problem, namely electricity and gas. We cannot trust them to regulate private sector generators or gas procurement companies. Distribution which breaks down to back bone and local, national and county levels seems to be too complex for FF or FG to understand.
VAT/ Sales taxes/ duties seem to be in the ball park.
Income taxes are too high to enable Irish companies to compete effectively.
High property prices in Ireland added to high income taxes doubly ensure that wages in industry have to be higher than allows companies to compete effectively. We have no golden mile in Dublin or Russian and third world oligarchs to prop up Dublin property prices on the London model. The Irish are stuck with the age old situation of having to work for a living.
The management of the Health Care System is an expensive overconsulted joke.
The legal system is another protected expensive enclave.
As John Corcoran has mentioned on occasion, commercial lease laws were written by landlords for landlords, the gov’t was an innocent bystander.
The safety valve of emigration allows the politicians to continue milking the system without provoking widespread backlash.
I am sure some of you could do much better than this.
I am just comparing well functioning countries I have lived in with Ireland 98 years after independence, that is four generations.
@ Mickey H: Now and again someone makes the valid point that many of us on this site (me too!) are ‘fence sitters’. We know with great certainty what ails us, and make all sorts of proposals, some good, some bad, some decidedly dangerous. That’s the way these things go.
If we could all arrive at the consensus that our society is headed into some real bad political, social and economic troubles – that would be a start.
If we could agree that many of our current political and economic practices have, and will continue to, make our situation worse (more intractable) – that would be a start also.
But us human folk are irrational – despite the best efforts of some economists to convince us of the opposite, hence we will doggedly persist with what we are doing. Only some cataclysmic event or events will halt us and make us reconsider.
We are doggedly awaiting those events – knowing with great certainty that they will not happen! How could they? We are so intelligent. We have such sophisticated technology at our disposal. So, let’s just “Carry on regardless!” “Ignore all those dopey doomers”.
Those legion of leaks in our potable water pipes? Fixing a leaky pipe is straightforward. Its the mental effort needed to recognize the problem, (not just acknowledge that it exists), gird your loins, hoist your administrative arse out of your office chair and hit the street with your equipment, is the problem. Lots of folk do not like getting dirt under their fingernails. Its ‘someone’ else’s job. That may indeed be correct, but …
I’d opine that the element of ‘fear’ may be absent. The fear of being shamed in public. Or better, fear of being chucked out of office.
@ Paulr
Tax in Ireland goes into one big pot and it’s not allocated specifically to anything. So while you may be told you’re paying for x, it’s going into the same pot as everything else. And the pot doesn’t have enough money to cover expenditure since the funding model broke down a few years ago. Many taxpayers who could have helped plug the gap have emigrated.
Everything is run centrally because they know how to do things best in Dublin.
Voila.
The FT, a fat-cat rag, accuses Piketty of having a “fat finger problem”.
According to the FT, the excel entry for Sweden for 1920 is, horror of horrors, the 1908 Sweden figure.
The FT know who side of the fence it is on, and it sure as hell is not the 99%. http://www.ft.com/home/europe
Note the headline and note how Piketty’s response is suitably downstated.
@John Foody: Thanks for above links.
@ Sporthog
What you say is true. However, there is more at play IMHO than the actions of the ECB as the behaviour of Irish bond yields in recent days reveal.
The Club Med economies have lagged other member countries from the beginning of their respective memberships of the EU (Italy being a founding member). The question for Ireland has always been whether the country could detach itself from honorary northern membership. It was well on its way to doing so when FF blew it in style. It is on its way back provided, and it is a big proviso, that it can make the necessary radical shift in culture that is required.
Oddly enough, the two legacies that the Troika has left that are most likely to make the biggest contribution to achieving this are the property tax and water charges. No party can go into the next election promising to abolish them. Their key feature is their universality. (This also hold true of the USC, introduced as a last gap measure to steady the budgetary ship).
The other key must be a proper system of government accounts with dedicated revenue-streams where possible (the point made by JF above) and removal from ministers of the power to adapt expenditures for electoral advantage. This can only be achieved by changing the budgetary procedure to allow detailed prior consideration by the Dáil of spending plans within tight legislative parameters (as adopted by Sweden and other countries). The system of nods and winks from a self-appointed arbiter in the person of the MOF – and rabbits pulled out of hats on budget day – should end.
Whether this will happen is very much open to doubt. The current government is not even thinking along these lines. The one thing that might force the change is the EU budgetary corset to which the country is now signed up. The Med countries – France included on this occasion – are endeavouring to loosen it and I fear that we will follow them rather than the more responsible path of the successful Northern economies.
Remember when plucky Iceland was seen as being in a better place than Ireland within the straitjacket of the euro?
In a recent paper, Prof Thorvaldur Gylfason of the University of Iceland, presents a picture of an economy that remains in a limbo with no visibility on when capital controls can be ended as an impasse continues with hedge funds that own most of the foreign assets of the collapsed banks.
Despite big loan write-offs, loans in the surviving domestic banks amount to a quarter of assets; “despite deleveraging through repayment, write-offs, and significant government help to distressed households, many households and firms remain in dire straits.”
For many small and medium-sized firms the problem is that they are effectively bankrupt despite considerable debt restructuring. For the government the problem is that allowing moderate inflation to deflate debts is a sensitive issue in a high-inflation country that introduced financial indexation some 30 years ago in reaction to the inequitable consequences of high inflation for borrowers and lenders…from 2005 to 2012, prices in Iceland rose by 58% compared with 17% in Denmark.
Membership for Ireland has been more important than for the UK since 1973 and the Irish shouldn’t allow the events of recent years to poison a significant portion of the public’s view similar to what has happened in the UK.
In the UK in the 1970s it was the left that opposed the EEC and a decade later the left saw the benefits of membership with EU rights legislation countering the increasingly eurosceptic Tory Party.
In 1984, Antony Jay & Jonathan Lynn, the excellent script writers of the ‘Yes Minister’ series has Jim Hacker, the useless minister, becoming PM on a campaign to save the British sausage from the EEC – not much has changed since.
In Ireland some of the left have been consistent opponents of membership and the Green Party first supported a related referendum when it was in government.
This has been strange as EU social, labour and environmental legislation was years ahead of what would have been introduced locally.
It had taken a brave woman from Cork to challenge the ban on the importation of contraceptives, which the Supreme Court declared unconstitutional in 1973, our year of joining. It took two decades more of tomfoolery and fears of ‘floodgates’ being opened, to modernise the law.
Coincidentally, on the conditions under which OMT might actually happen, the FAZ is running with a video clip from Schaeuble where he links approval of an ESM programme (on which Germany holds an effective veto) to any actual action by the ECB.
The FAZ is not, of course, a fan of Draghi. What is, however, intriguing is that it does not draw attention to the obvious point viz. that Schauble in his intervention was clearly indicating that Germany has no intention of allowing any softening by any party with regard to the obligations that all have signed up to under the Fiscal Pact. Ireland, take note!
@ MH
Hair-raising article by Gylfason! Appropriate bed-time reading for fans of “the Icelandic way” who, I think, also include Fintan O’Toole.
@ MH, DOCM,
Many thanks for the links and in particular the Gylfason article… very insightful.
I read recently (two weeks ago perhaps) a article in one of the mainstream Irish papers… might have been the SBP…
The Arthur mentioned that a 20% discount should apply to Irish assets, due to the uncertainty of the elections in 2016.
The demise of the mainstream political parties, the rise of SF, and independent flaky socialists being the main reason.
I thought it was most interesting… pity I don’t remember the link.
On the subject of property…whilst property is relatively cheap… affordability in a era of high personal income taxes pushes property out of reach again.
@DOCM
Prof Sinn on Thursday praised Shauble’s comments on OMT:
“Officially the recession’s over – isn’t it? Which doesn’t mean an awful lot. We’re told now that things are ‘picking up’. Which doesn’t mean an awful lot to most people, either”
Re right wing policy that doesn’t work :
I think this is one of my favourite EZ crisis quotes, from Sarko in 2011
“Pledging to exercise control over France’s own debt, he said: “I wasn’t elected so that France would experience the agony of Greece, Ireland and Portugal”
Very interesting discussion for the day that’s in it. While our national political scene has its own unique characteristics, it’s also part of a broader transformation underway in western democracies over a prolonged period.
Driven by pressures of increased global economic integration, communication technology changes and increasing political and economic interdependence, the era of ‘mass party democracy’ is passing. Politics based on class identity, and perceptions of national self-determination operating within the territorial and cultural boundaries of your typical liberal democratic nation-state are giving way to a more individualistic, cosmopolitan outlook on the relationship between the state and the individual and society at large that in a negative sense finds expression in a regressive nationalism or more general disengagement from the national party-based system. To sum up the vast and continuously emerging literature on the subject, what is in crisis is not the concept of democracy, per se, but the continuing erosion of public trust in the current party-based system of representative democracy.
Politics is increasingly framed by political actors themselves as being about operational transparency, rather than electoral accountability (even though the former remains as elusive as the latter). Democratic politics, as we all know, is also an expensive business. So the dominant mainstream parties have, whether unwittingly or deliberately, stumbled across a means of ensuring their own preservation – what the late Peter Mair referred to as party ‘cartel’ formations – in terms of state-funding arrangements, the thrust of which works to prevent the emergence of any viable challenger parties.
The net result is a frustrated popular vote splintering in all directions, towards independents, or extremists of various hues, none of which challengers – with the exception of Sinn Fein, which has its own peculiarities – appear likely to achieve any threshold of long-term political sustainability.
Further, large ‘catch-all’ parties with a broader electoral base are, in government, less at risk of diminishing their support to critical survival levels than ‘niche’ parties aligned with a particular class (which may ultimately disappear due to the dynamics of the economy/society) or a specific ideological platform (witness the fate of the PDs, then the Greens, and now Labour, hanging on by its fingernails). The transformation to a ‘God knows what’ version of democracy appears irreversible. It also looks likely to be long-drawn out. It will advance incrementally, but in the meantime giving rise to increased political fragmentation and political instability.
Here we might also usefully revive a discussion, extensive among political scientists some thirty years ago, as to how the ‘political elite’ of society is formed and sustains itself. The theory generally runs that irrespective of ideological leanings, or whose interests they primarily claim to represent, those who achieve representative status de facto become part of a general political elite and ultimately, on attaining office, set about establishing their own variety of elitist hierarchy.
The political elite of any society extends well beyond its immediately visible top- tier party leadership. It has several tiers that filter through in networks of activity, contact and patronage across the media, institutional and civil society (as recently became so apparent, for example, in our own ‘charity’ sector). In the current environment, it is the unwillingness of that top level political elite to reform its own workings, to respond to the needs of society and to take seriously their status as representatives – in our case as the people’s ‘messengers’ to parliament – that contributes to widespread disaffection and disillusionment with conventional politics among the electorate. The main trouble with the broader political elite, as has long been pointed out, is that its cohorts communicate more with one another, and seeking to influence each other, than engaging with the general public.
Pat Rabbitte said on radio this morning that: “If John the Baptist was leading the Labour Party coming into this election, it wouldn’t make any difference.” Kerry TD, Arthur Spring later suggested the being led by God Almighty wouldn’t have helped much either. But it’s not about leadership, or better communication with the electorate, or any of the other solutions that parties invoke when things go badly for them at the polls. The real question is, and not just for the Labour Party : are you relevant any more?
@veronica
Yeah, that’s all a brilliant theory except for the fact that Labour would now be over 50% in the polls if they had only done the obviously intelligent thing and gone into opposition in 2011. It is not lost on the electorate that their presence in government has not moderated Fine Gael at all and has instead been used to provide cover for them. Their oblivion is of their own making, not some sort of pre-ordained symptom of broader phenomena.
Great post, Veronica. UKIP are shaking up the status quo in the UK too. John Harris had an article on the theme yesterday .
I havent read the link in the OP or most of the comments yet(not a good start I know!) but this idea of ‘why dont left wing parties implement left wing policies’ annoys me. Leaving aside what we mean by ‘left wing policies’, a juniour (left wing ) partner in Govt will only have (1) so much legitimacy from the electorate to follow a LW policy plan (2) so much influence in government to implement such a plan. It’s as though people become amazed that politics exists when a party (like Labour) which is relatively left wing, gets into power and doesnt immediatly start developing soviet councils around the country.
If someone wants to have left wing politics in this country (which here, for the sake of simplicity, we’ll say is pro working class policies) then you have to organise society around that goal. Which would mean strenghtening a working class voice in the political process (for a vague definition of the working class) Whether that’s through stronger private sector unions, more empahsis on local/community politics, or more representation in working class communities is a matter of opinion, but it wont come solely by electing Labour as a juniour partner. If you want left wing politics, then you are probably going to get some degree of class politics, and divisive politics. Do people here want ‘divisive’ class based politics ? I’d assume most wouldnt.(jesus, i probably wouldnt either) But thats what you’d have to do, rather than just moan at Labour.
This is also a standard *only* left wing parties are held to. If they dont have a mandate to implement far reaching leftists policies, then that’s their fault. If they have to function in a society where civil society is not ordered to push for ideological leftist positions, then that’s also their fault. If they have to compromise and work with the banal incompetence of FG and FF, then that’s also their fault.
There’s much too much emphasis on personalities and parties and the election cycle in general in this country, imagining that every 4 years we’re going to have the opportunity to elect someone to swoop in and save the day, rather than just another slobbering imbecile who will do pretty much what the person before did. Politics doesnt change through elections, it changes through organising people, demographic and larger socio economic changes.
Back to the Crimea! [h/t Blind Biddy .. out an about ..
‘Putin certainly isn’t the greatest European strategist since Bismarck. But it doesn’t take much to win when opposed by dumb, ultra-greedy opponents guided by the arrogance of ignorance. All Putin needed was seeing one tiny move further ahead.
The only thing dumber than the transparent US-EU-Exxon moves was the American and European media’s slavish coverage of the same.’
Labour might deserve to be above 50% in the polls if they had gone into opposition. As it is, they deserve to be obliterated politically, and there is a chance that this will happen. At the last general election, they positioned themselves both against capitulation to the ECB and against austerity. They completely failed to pursue the first of these in government and were perceived by the electorate to have failed to pursue the second too. Whether or not they were right in thinking the choices they actually made were good for the country, there is no good reason why the electorate should ever trust them again.
@one of the best left boots in the business
Johnny Wilkinson
Great exit!
@ BeeCeeTee,
“Labour’s way not Frankfurt’s way”
Publicly making promises which were impossible to deliver on was foolish, if not downright stupid.
E.Gilmore must think the public have a I.Q. of a grasshopper if he thought he could get away with that one.
But forget the economy…. or the increasing deficit, or the unemployed, it’s the LGBT issues which matter.
@ veronica
I regret to have to say it, but your analysis simply does not wash in the present European context, as evidenced by the outcome of the Dutch European elections. The dividing line is one of perception of social justice which has a price that can be costed and made acceptable to all if there is a commitment to it. That commitment simply does not exist in Ireland. The two-tier system of health coverage, for example, would be unthinkable in the Northern tier of European countries. The Dutch simply did not want a large party in their political spectrum that could be identified with the policies of Le Pen or Farage.
The Labour Party in Ireland has no understanding of what a commitment to social justice means. If it did, it would not have questioned the underlying logic of the approach by Minister Reilly to health care reform, even if it questioned the detail. It was simply pandering to that sector of the electorate from which it thought it could draw support.
This approach is true of all political parties in Ireland where politics is seen as a profession, not in any way action in pursuit of an ideal.
The victory won by Labour in the last election was attributable largely to the fact that public service employees realised that they needed a friend at court and voted accordingly. The friend simply could not deliver. More importantly, there is a splintering in the electorate with regard to who is benefiting and who is paying. This explains the fragmentation. If clarity emerges on this question, the larger political groupings will reconstitute themselves. That is Labour’s only hope.
“But forget the economy…. or the increasing deficit, or the unemployed, it’s the LGBT issues which matter.”
Having a vote on gay marriage does absolutely no work against any of those other problems, but does make life substantially better for a significant amount of people. What does this even mean though, that labour have become the party of the gays ? Because of one policy concern?
@Veronica
re: Rabbitte comment
““If John the Baptist was leading the Labour Party coming into this election, it wouldn’t make any difference.”
The Labour Party got what it deserved in this election. The country may have needed saving, but who ‘God help us, did they save’.
Top level PS, Kevin Cardiff, tax exiles, Multi-billionaire debtors from paying their debts, the South Dublin professional classes etc; the vast majority of whom would not vote for Labour in a fit.
An explanation from Gilmore as to why ‘we’ paid the bondholders, Abramovich included, might have helped; or not.
One wonders if John the Baptist might have made the same selective decisions that Labour made, as to who to save and who to condemn, when the waters were rising.
Signed: Lost Labour Voter.
@ ronan (rf),
My point is not about LGBT issues specifically. It’s about ignoring the hard issues and pretending to lots of hard work on the easier issues.
The left has moved away from the harder issues i.e. employment, deficit reduction etc, to the much easier to tackle issues…. LGBT equality etc.
@ Michael Hennigan
The FAZ and Bloomberg commentary doesn’t amount to a hill of beans. “They would say that, wouldn’t they”, especially on the eve of an election. The establishment of the new bank as adverted by OMF above is of greater interest. The Germans have to re-balance or re-equilibrate the banking and payment systems in Europe and if they cannot get at the problem through the major players they will have to do it through the minor ones.
@ Sporthog
GLBT, getting their people appointed to plum jobs and maintaining cashflows to their voters.
It’s all about feeding interest groups. For all of the parties.
The view from the other side of international finance.
People too easily forget that the 2011 GE was primarily a contest for government between FG and Labour. The entire political elite, and the public, were aware that FF faced electoral meltdown. Only the scale of it was in dispute. The Greens were political toast long before the election.
The fest of promises from both Labour and Fine Gael were directed towards gaining advantage over one another, either in constituencies where a last seat might be up for grabs (remember Roscommon hospital?) or with particular cohorts of voters ( no student fees increase?). A significant portion of the Labour vote came from voters who wanted a coalition that involved Labour rather than the single party FG government that appeared to be in prospect from the opinion polls. Labour was supposed to go into government in order to act as a moderating influence on FG’s embrace of austerity policies. The electorate’s desire to have Labour participate in government was clear from the result of the election.
If Labour had opted for opposition, all that would have achieved is to force another election in the short term. They would have paid for that – and the inevitable impact of the political instability it would have caused – at the polls, and the further contest likely would have ensured an FG majority administration to boot.
The problem with this government is that, from the outset, it has demonstrated lack of any vision as to what kind of coutnry we want to have and the values it should be based on. In crucial areas that involve services to the public and fair distribution of resources, it manifests incompetence – the SUSI debacle, the management of the Health Service, energy policy, the environment, take your pick! In other respects it has shown itself to have worrying de-democratising tendencies, as illustrated in the Seanad Referendum debacle, the botched reform of local government, the treatment of the Garda whistleblowers to list just a few examples.
As for the economy, the various claims made about creating jobs and restoring economic performance ring very hollow indeed when people have begun to lose trust in the competence of an administration to manage anything effectively, beyond taxing them to the hilt and then mis-allocating the proceeds. The ‘sound economy’ spin doesn’t wash. If the collapse of the Labour vote in these second order elections was not so spectacular, there would be a sharper focus on the ‘wallop’ that has simultaneously been delivered to their partner in government.
Politically, the concern at this point is that neither of the government parties appears to recognise that in a two party coalition there are only equal partners – the withdrawal of either one leads to government collapse. Whether these parties are capable of grasping this reality, and modifying the way in which they conduct their business within government, and with each other, accordingly, remains to be seen.
@docm
Yes, it would be a welcome development if the Dutch rejection of the extreme right was replicated across the EU in these Parliament elections. I hope it is, but that’s only a ‘hope’. In terms of my previous analysis, I think it is helpful to look at the continuing trend of declining citizen interest in EP elections over time and what recent eurobarometers have been showing about the decline in trust in politics and parties generally, which would tend to bear it out.
Labour made it’s own choices. In 2011, they gave many in the electorate hope by offering a programme that they appear not to have believed in themselves. Having presented that programme to the people, and achieved the election results they did, they would have done better to stay out of government, even if that meant another election producing a single party Fine Gael government. We would have had a politically vital coherent opposition instead of relying on a few mouthy independents to do the job. The Labour Party would not have been exposed as a Emperor with no clothes, and would almost certainly now be lining up to be the country’s dominant party.
In 2011, a slavish adherence to political stability was not what the country or the EU needed. Europe is still in the mess that it is in today precisely because so many European parties have subordinated the interests of their voters to presenting a facade of stability. It is to be celebrated that several of these parties, Labour included, now seem to be following in the path to oblivion blazed by PASOK.
@BCT
The key word in your response is ‘stability’, which like it or not is what the electorate voted for in 2011. The Labour Party had to respond to that, otherwise they would have shown themselves as supremely elitist and self-interested in maximising their own position.
The promises that got Labour and FG into trouble subsequently were of the ‘spur of the moment, back of the envelope’ variety over and above what was in their official manifestos, which, as always, were a menu card for negotiating a programme for government. Both parties also promised significant political reform. In government they ignored that promise, in their own self-interest, of course. That negligence is part of what they are paying for now.
Going into government does not prevent Labour or anyone else from “protecting the interests of their voters”, as you put it, in so far as it is possible to do so. That task is bounded both by short term and long term judgements and decisions as to what the best measures are going to be to protect those interests. I think this is important, because it goes to the heart of what politicians must do in seeking to preserve a balance between the actions required to keep the economy afloat and acting in the interests of the people they serve. That’s where creative thinking, developing imaginative alternatives, reform of political processes and being honest with the people rather than wholesale spin come into it. Sadly, I can’t think of any examples of any of these attributes in this government’s performance.
The issue then becomes one of performance, which is judged retrospectively by the voters. The problem for the government parties is that, overall, the electorate currently rate that performance as ‘poor’.
@ veronica
Where there is good governance, neither the extreme right nor the extreme left will gain a decisive voice. The essence of that good governance is management of a country’s finances by balancing revenue and expenditure and dealing with both in an egalitarian manner. If the problems in these areas are fixed, the problem of the risk from the extremes will be overcome!
Labour were not up to the job and ended up pleasing nobody. The party is now caught between the devil and the deep blue sea. The consolidation of the public finances is not completed by any means. Labour can try to continue presenting itself as the smaller party fighting the avoidable actions of the larger party when it is clear that the electorate no longer subscribes to this narrative.
Or insist that all spending plans be put on the table where they belong; in committees of the Dáil within an agreed legislative fiscal framework. It is the only way to call the bluff of the cacophony of voices – now literally taking over local government – that continues to indulge the electorate in the belief that “austerity” is somehow avoidable. In fact, the electorate does not believe this. It is rather a case of individuals believing that they have done enough and it is up to others to do more. This dispute can only be settled by getting the facts out into the public domain through a single controlling department and modern accounting methods.
There is not even acceptance in the political class that this needs to be done five years into the crisis. What we have instead is a stream of management gobbledygook from two departments competing – both politically and administratively – to re-arrange the deckchairs while the line staff of a still very competent public sector attempt to keep government functioning.
@ veronica
To the above, I would add the point that the administration of the country continues under the same outdated management legislation which,it could be argued, contributed to the collapse of good governance. One would have imagined that the government would have had sufficient coherence to at least review it (as was indicated, if I am not mistaken, was one of the actions promised).
In May 2010 at the nadir of the recession, Eamonn Gilmore’s “big idea” at the Labour Party conference was a fourth review of the Constitution in recent decades – the most recent report was from 1996 when a committee chaired by TK Whitaker reported.
Less than a year before the general election, Gilmore was good at attacking the record of the Government but he lacked a credible prospectus for governing. Enda Kenny wasn’t much better.
I wrote in May 2010:
“For an aspiring taoiseach, against the backdrop of monumental governance failures leading up to the economic crash and a system of limited accountability dominated by vested interests, it was a depressing performance.
In the aftermath of a severe recession, change is the mantra of every opposition political party in democratic countries and in Ireland; it will be a potent argument in the next general election.
However, while Irish political parties do not generally produce detailed policy documents and in the past, headline aspirations and tax inducements have sufficed, a party that is serious about reform needs to have detailed work done on the issue before an election.
Politicians are usually amateurs in areas in which they are given responsibility for and in the Irish system, commissioning a report or several from management consultants and the appointment of so-called task forces are part of the glacial process of policy making.”
It’s too late now for reinventions and with at least two-thirds of Labour TDs fearing the loss of their seats, it will be a period of strife and controversy that will be reflected in the national media ahead.
So the best that Gilmore can hope for is to hold onto the leadership of his party, become minister for jobs announcements and try and speed up decisions on spending the €6.8bn residue of the national pensions reserve.
However spin is losing its potency as it has been overdone by governments for decades.
The Government’s publicity machine was in full election mode in recent weeks and last Thursday on the eve of polling, another ministerial press conference was held with the taoiseach and 3 ministers in attendance launching more schemes.
Why is the spin going to work now?
Deficit limits and debt will limit budgetary flexibility while the reported rise of 61,000 in jobs in 2013 is not making a big impact on tax revenues so far.
Finally, for a party in power to lose public support or to be voted out of office is not a long-term calamity if it can claim a record of credible achievements.
Implementing only a bailout program that had been agreed before it assumed office, is a limp legacy.
The embedded interview with Pat Rabbitte in this link fits well into the “where do go from here category?”.
“We will legislate for a reformulated code of laws, replacing both the Ministers and Secretaries Acts and the Public Service Management Act, which will spell out the legal relationship between Ministers and their civil servants and their legal accountability for decisions and for management of Departments.”
@ MH
I think your point about it being too late is correct. Brendan Keenan is right in his assessment that the next budget will be the crucial one. One might also note the mention in the video link above to the three issues where the political shoe pinches the most (i) property tax (ii) water charges and (iii) USC.
@DOCM
Thanks for the links and the insights. If you and MH (above) are right, then the government is now in crisis and it’s hard to see how it will be able to agree a budget.
@ veronica
They will agree a budget alright but not in the manner so extensively touted cf. the relevant paper linked at the bottom of this webpage (which I think is from 2012).
As the ad has it; “where’s the beef?” Neither the legislative fiscal framework nor the central budgetary and accounting mechanisms to allow the new system to function seem to exist. And it is well nigh impossible to imagine this happening without the amalgamation of the two departments, one of which should never have come into existence in the first place (and which Labour should have had more wit than not alone push for but put one of its own in charge of).
…. ahhh let’s forget the bleed1n ordoliberal abstractions in the budget …
Let’s start with the conclusion: if by this time next year if there are people still homeless, it’s because the Government made a policy choice. And the policy choice was to tolerate homelessness.
Now, back to the beginning.
The Government will be spending €7.1 billion this year. It won’t be spent on public services, or social protection or investment. And there will be no debate on it. There will be no current affairs programmes, no panel discussions, no commentaries in the print media. The Government will spend €7 billion this year and very few will know.
This €7 billion is being spent on paying down debt. It comes from the Government’s considerable cash balances. At the end of 2013, the Government held €18.5 billion in cash. This is made up of money that has already been borrowed and revenue from bank investments (e.g. bonds held in Bank of Ireland, etc.). The Government is taking the €7 billion and paying down Government debt to lower the debt/GDP ratio.
‘€3.5 billion would build approximately 20,000 social houses. This would house over 20 percent on the waiting list. And this programme could target the nearly 3,000 living in emergency accomodation.
This would make a significant impact on housing need in Ireland – though it would only be a beginning. More housing could be brought on stream if currently unsuitable social housing were brought back into the system – the average cost of rehabilitating social houses is €17,500.
The impact on employment would be considerable. 35,000 direct jobs would be created – that is, jobs on site. ‘
@”Others” – Largest group in local councils
Nice one!
@David O’Donnell
I agree with Michael Taft that spending the €7bn + on housing the homeless and generating 35,000 construction jobs would be infinitely preferable than using the money to pay down sovereign debt. But the question is: what are the likely consequences of such a default?
Apart from the practical feasibility of his proposal (planning, locations, workforce availability etc.) Taft does not address the ‘default consequences’ issue. It’s unlike him, as he usually has all the angles covered, one way or another.
Yes, the debt overhang must be addressed and thus far this government has not had much success with it in the EU. And yes too, the emerging housing crisis was entirely predictable which prompts the question as to what’s been going on to address it/ prevent it for the past two years? Maybe, like many of the rest of us, Michael Taft is just as mad as hell that this appalling crisis has been allowed to emerge when it might have been avoided, or at least prevented from reaching crisis levels, if only a little bit of intelligent thinking and foresight been applied.
@ David O’Donnell,
The 7 billion you speak of…
Yep… that’s what justice is all about….
Paying one’s debts.
Sweet suffering Marx but this is one rotten thread. I think the Sinn Fein surge coupled with the predictable death of the Irish Labour Party (the topic of this thread) has left Ireland’s liberals panicked and confused. Who will stand for the status quo now!
@DOCM
Where there is good governance, neither the extreme right nor the extreme left will gain a decisive voice.
Dross. Anyone who talks about the threat of the extreme left to good governance is trying to take you for a fool – where exactly have the extreme left been in government recently to justify this and what would be the policies of the “extreme left” that threaten good good governance? This is just conservative pablum (ever noticed how “centrists” are indistinguishable from the “centre riight”.)
The essence of that good governance is management of a country’s finances by balancing revenue and expenditure and dealing with both in an egalitarian manner. If the problems in these areas are fixed, the problem of the risk from the extremes will be overcome!
All you need to say to this is that Ireland had a budget surplus in 2006 – we must therefore have been experiencing good governance since matching revenue to taxation is the essence of it. Even forgetting this we now know for a fact that you can not “cut your way” to prosperity in the middle of a crash in demand so its sad that people can still blithely trot out fiscal rectitude as a measure of good governance without acknowledging that the economy has a path beyond the next five budgets.
I think the majority of non-sociopaths would agree that good governance is about the long term well being of the people of the state and not the current budget position. Of course the idea that the essence of good governance is matching expenditure and revenues is one that appeals to the simple minded but it is neoliberal rubbish – it suggest that government expenditures do not themselves contribute to the economy and are merely costs to the those paying tax which need to be allocated in the fairest way (where fair is left undefined.) and that in the case of an economic shock the main role of the government is to shrink.
Veronica, nice that you gave the late Peter Mair a mention. Maybe some budding political scientists on this site might benefit from reading some of what he wrote about our parliamentary party politics.
The ILP the leadership made a fatal political mistake by forming a super-majoritarian coalition with FG – by doing so, they effectively confirmed that they would concentrate on ‘policy’ rather than sucking up the spoils of ‘office’. They chose the latter course of action, and will now suffer the electoral consequences. They deserve all they are going to get. Which direction will FG go? Follow the Median Voter? This will be interesting.
David, I read that Taft piece, carefully, several times. It is quite long on rhetoric, but woefully short on recognizing the reality of our economic situation – that neither Keynsian-style spending, nor default will save us. We are going down. The choice is between what will hurt the citizens the least. I’d opt to tell the ECB to get stuffed.
Bye-the-bye. That Ukraine situation is becoming a real dilly. Its nice to know that us ‘west’ are being led, and lied to, by such historically ignorant fools. Civil wars and ethnic pogroms have a special place in folk memory.
@ BWS
The mistake of Labour was not to go into coalition with Fine Gael but to imagine that it could divide control of the public purse with it. It got little of the division and most of the blame.
@ veronica
The reform programme of the DPER in all its technocratic glory (and lack of almost any real substance).
It would be unfair, however, to say that nothing is happening. A lot of good work is evidently being undertaken but the question is whether it is leading in the right direction. It may be noted, for example, that the legislation on which our public accounts are based dates from 1866. Nevertheless, there is much reference to the “Westminster model” in the consultation paper which is in circulation with regard to changes in the present governing legislative structure.
Are the authors of the consultation paper not aware that Ireland is in the EU and is sharing a common currency with 17 other members of it; who happen to be on the Continent!
Labour had no obligation to enter government on a programme directly opposed to the platform on which they stood for election in 2011 They are justly suffering the consequences.
Labour were cosmetic more than anything and that doesn’t work in coalition in the new normal. CF the Lib Dems.
Meanwhile the Deep State grinds on.
I found this from 2010 – I think it was in the IT
“Tax breaks result in the Exchequer forgoing € 11bn in income annually according to a research paper..
Dr Micheal L Collins and Mary Walsh told the conference that lobbying by individuals and groupings was the main reason for the introduction, extension and expansion of assorted tax breaks, technically known as “tax expenditures”. There decisions were based on “very limited economic evaluation”, they added”
A lot of the money that might have been available for social housing goes into this vortex
@veronica
Here we might also usefully revive a discussion, extensive among political scientists some thirty years ago, as to how the ‘political elite’ of society is formed and sustains itself. The theory generally runs that irrespective of ideological leanings, or whose interests they primarily claim to represent, those who achieve representative status de facto become part of a general political elite and ultimately, on attaining office, set about establishing their own variety of elitist hierarchy.
European Union political arrangements add a new level (literally) to this and I think you can blame much of the political alienation there is in Eurozone on the the fact that the political class (and in particular the current government in any country) have two sets of constituents which they need to satisfy and two sets of overton windows which their debate has to remain within the limits of.
The first set of constituents is the national electorate but these increasingly take second place to the political requirements of European intergovernmental arrangements and institutions, particularly for small countries where the European level of politics offers higher status, power, comfort and remuneration. Manuel Barroso is not a Portuguese politician, nor he is a European representative, nor he is a civil servant. He is a political figures who owes his position to a informal election among national premiers (the EP can of course then say Yay or Yay to the next choice they are offered). Barroso is thus a political figure whose positions and actions are only distantly connected to the will of the people and who is not in any normal sense democratically accountable.
European Union political initiatives are similarly undemocratic – they represent the majority view of governments and do not have a direct relation to the overall political position of voters in Europe. A small majority of governments with small majorities in their own countries can set the European political agenda (and, as the Fiscal Compact indicates, does).
When you combine these political structures with the ordoliberal/neoliberal agenda and restrictions of EMU (a legally mandated Overton window) it adds up to a situation where voters have almost no choice in government policies because the limits of policy are set on an intergovernmental and European institutional level.
So when Eamonn Gilmore talked in the Dail about it not being the role of the government to create jobs he did so in the context of the neoliberal consensus in Europe. He could not have said anything else as a European politician regardless of the national debate in Ireland or manifesto of his party. There can not be a left wing government in Europe without a majority of left wing governments in Europe and radical institutional change in the institutions of EMU (change which would be fiercely resisted).
It is this poisonous combination of hidden intergovernmental politics, narrowly mandated political choices and lack of democratic accountability that has the national electorates in many countries voting for anyone not involved in the whole corrupt mess of European intergovernmental consensus politics.
I could go on…..
@ seafóid
That is where the question of egalitarian treatment of both the tax and spend side of the ledger comes in. The then government could still balance the books on the back of construction bubble taxes.
Seamus Coffey put it in these terms on the Baa1 thread in his exchanges with Paul Quigley.
“The mere presence of the euro is too easy a scapegoat for the explosion of credit in Ireland. Correlation is not causation. The banks did it because they wanted to. The regulator allowed them because he didn’t want to know. The government facilitated it because they collected a third of it.”
The question is whether we are about to see a repeat of this. The current tax breaks are only slowly being wound down and several new ones have been introduced.
@ All
To balance reports of an earthquake in France, this downbeat and more accurate report by Deutsche Welle which sums up the overall situation with regard to the outcome of the EP elections; “no real surprises!”.
The Christian Democrats need the Socialists and vice versa! Neither can find a majority, for example, for their “candidate” for the post of President of the Commission without the other.
The dinner discussion on Tuesday between Heads of State and Government, to give them their full title, on finding a majority for their nomination, whoever he or she may be, and who must also find a majority in the EP, should be interesting.
@Veronica
Taft is not speaking default. the 3.5 billion are already in the kitty.
@BWS
‘
I’d opt to tell the ECB to get stuffed.’
Text from Blind Biddy (out an about): +1
@Ukraine
Oligarch-eile!
@DOCM
.!
Coming late to an excellent thread.
@ DOCM
‘The essence of that good governance is management of a country’s finances by balancing revenue and expenditure and dealing with both in an egalitarian manner.’
That is just one aspect of good governance, namely prudence, currently defined as fiscal. There is no economics without politics, however, and no politics without morality.
The estimable and elusive Veronica has put her finger on it.
‘The problem with this government is that, from the outset, it has demonstrated lack of any vision as to what kind of country we want to have and the values it should be based on’
Shay is on the money too, even if he is chucking a few rocks as he goes along.
‘I think the majority of non-sociopaths would agree that good governance is about the long term well being of the people of the state and not the current budget position.’
Bottom line, as BWS says:
‘We are going down. The choice is between what will hurt the citizens the least’
That’s the harm reduction approach. Keep calm and have a cupcake.
In the context of the thread theme, it could be argued that FN in France have topped the poll, by taking at least one, if not two, of left policies; anti-globalization and anti-euro. Both of these policies are contrary to the interests of the working and out of work classes in most countries, with the possible exception of Germany.
It comes as no surprise at all to me that FN and UKIP are heading polls.
The EU has placed investors interests on a pedestal to which all must pay homage. The clear message from the EU, and in particular of the EZ, is that worker and employment protection rank behind investor and creditor protection.
The lower orders are simply fighting back.
“Last night, the leader of the European People’s party, the centre right grouping in the European parliament supported by Chancellor Angela Merkel’s CDU, claimed victory in the polls, a prelude to a push to install Jean-Claude Juncker as the new head of the European Commission in succession to José Manuel Barroso, also from the centre-right. But projections suggested the EPP, headed by Juncker, will have only 211 of the new European parliament’s 751 seats, compared with 263 out of 736 in the outgoing parliament. By any standards, that is a defeat not a victory. To impose Juncker now would be a catastrophic error.”
@ Paul Quigley
The point that you make is so obvious, that I took it for granted. However, no government can run eternally on credit, whatever its values. (It has been tried many times). It is also inherent in my use of the adjective “egalitarian”, which would include the equitable sharing of misery, which has not been the case in the handling of Ireland’s budgetary bust.
@ seafóid
Kettle has misunderstood Merkel’s position (which she summed up recently in stating that the obvious that a majority had to be found both in the European Council and the Parliament for the same person).
The argument that Kettle advances, however, is almost certainly also the one that she will be very happy to see other leaders advance as she is not a fan of Juncker. No decision is expected tomorrow, the exercise being a sounding-out one. Given the performance of Cameron to date, he is almost certain to blunder into to some public statement of intransigence which will help matters along in the direction in which she wishes matters to go i.e. getting someone other than Juncker appointed without any blame sticking to her. He is, after all, the candidate of the EPP.
@ PQ
The IMF runs a blog on the topic of budgetary management which had an item recently about developments in Sweden, the best exemplar that I am aware of (certainly better than the “Westminster model”).
It is an unending tug-of-war. The bottom-line is that there must be a consensus across the political spectrum regarding the need for sound budgets. We seem to be light-years away from achieving this, despite the issue being of the utmost topicality. This is amazing in one sense, given that we are borrowing billions to pay public service – including practically all academic – salaries and pension and social welfare payments generally. Even if one accepted the doubtful proposition that one-third of our debt position is somehow unjustified, the position, as I recall, set out by Philippe Legrain, this would not alter the wider picture. But the mythical third seems to be blocking all rational debate about the other two-thirds; at least until this weekend.
Attention has turned to the October budget.
@DOCM
It is an unending tug-of-war. The bottom-line is that there must be a consensus across the political spectrum regarding the need for sound budgets.
(1) The word “sound” is utterly devoid of content. You might as well have said “serious”.
(2) The political spectrum is a significant sense about different budget priorities including the level of debt it is appropriate to incur at any given point in the economic cycle. Asking for agreement on budget priorities across the political spectrum is like demanding the the end of politics (which is the topic of this thread really).
This is the kind of mendacious drivel that the European Commission could have come up with the implication being that they would provide criteria for “soundness” which would then be politically limiting and, of course, neoliberal in intent. People of the Eurozone rejoice in your democratic privileges – you can vote for any party you like as long as you realize that they are required by international treaty to implement a right wing fiscal agenda!
People complain about the rise of the far right but the EU has strong anti-democratic and autocratic tendencies already.
@ DOCM,
“It is an unending tug-of-war. The bottom-line is that there must be a consensus across the political spectrum regarding the need for sound budgets. We seem to be light-years away from achieving this, despite the issue being of the utmost topicality. This is amazing in one sense, given that we are borrowing billions to pay public service – including practically all academic – salaries and pension and social welfare payments generally. Even if one accepted the doubtful proposition that one-third of our debt position is somehow unjustified, the position, as I recall, set out by Philippe Legrain, this would not alter the wider picture. But the mythical third seems to be blocking all rational debate about the other two-thirds; at least until this weekend.
Excellent summation DOCM.
I would see the Irish public as suffering from the disease of “entitlement”.
Too many people see their rights of entitlement… and that the taxpayer has to fund those rights.
The fact that there is not enough taxpayers in the country to fund these ideologies is of course irrelevant. The money can be borrowed forever, and if we can’t borrow.. we just won’t pay it back.
@ DOCM
Thanks for link to interesting document on future budget planning. From scanning through it, it would appear to be an improvement on the archaic and unsustainable current budgetary process.
As to the civil service/political nexus reform consultation paper, I think it might be worth reading Frank Litton’s take on it on his blogsite ‘Just Muddling Through.’
For much of the history of this state, the ‘Westminister Model’ was far more rigidly applied than in the UK, from which it was derived. In terms of the structure of our political institutions, it is still important though, as you rightly point out, our EU experience and, in particular, eurozone membership have resulted in significant adaptations.
@ BWS
Mair’s contribution to political science scholarship, in Ireland and internationally, will enlighten generations to come!
@ SB, DOCM
Do we not already have consensus on how the budget should be managed? Everyone is in favour of balancing the budget in the long run, and nobody is in favour of balancing it at any particular point in time.
@skeptic01
Do we not already have consensus on how the budget should be managed? Everyone is in favour of balancing the budget in the long run, and nobody is in favour of balancing it at any particular point in time.
That is funny but not precisely true. The key thing to bear in mind is that the ordoliberal (and usually conservative/neoliberal) approach is based on fiscal goals whereas the Keynesian position (and the one of the left) is based on economic goals.
You could think of the positions like this:
Ordoliberal: Budgets need to be cut as soon as government revenues fall ie: If the economy crashes the government spending crashes too – follow the “market”, it will fix itself (why just look at the Eurozone’s 23% youth unemployment!).
Reganites: Budgets should be balanced but the deficit may have to rise as tax is cut and enterprise is freed from its state shackles. The inevitable improvement in growth will then deal with the deficit.
Keynesians: Budgets should be cut during booms to allow for savings to pay for the inevitable bust but even without a buffer the government may need to take up economic slack during a crash/recession by increasing debt – the markets are prone to animal spirits and can fall into a bad equilibria which need to be protected against. Do not follow the market over a cliff.
The left: Budgets are there for longer term social and economic goals and the position on the appropriate balance is a political one. The market serves a purpose, and when it fails other approaches are necessary,.
The budget balancing “all the time, every time” approach has a large train of classical economic baggage (markets clearing, ratex and policy ineffectiveness) which, to put it mildly, has not held up well over the last fifteen years or so. Unfortunately it is the German position (for reasons of self interest and culture) and the European Institutional position (because of class interest and political prejudice). Six years of economic crisis later it might be time for a more reality based approach
Incidentally the IMF post on Sweden unsurprisingly takes the conservative/ordoliberal approach but again it is a political preference rather than a technical one. Rules based approaches, whether informal or formal, have an unavoidable political cast. You can not have rigid rules and responsive democracy – and people like their democracy.
Sorry, this bears repeating.
The focus on fiscal rules during a recession is exactly the wrong one, we know that fiscal rules would not have prevented the bubble and crash and we know that the current fiscal rules are not helping us recover from them. They are less than useless, a reactionary attack on reason and economic history.
Fiscal rules are a huge red herring and an intellectual trap, like worrying over the fine tuning of carbon trading rules rather than an actually effective climate change policy. Do not be distracted.
@ veronica
Thanks for the blog link. I was not aware of it. The consultation paper is, indeed, very poor. Eddie Molloy had some very interesting things to say on the Marion Finucane show regarding the overall complex of problems; (halfway in on the item relating to his role in REHAB).
My concern is not so much with the minister/civil servant relationship as with the impact of the continuing attempt to apply a standardised management process to a disparate public sector. It is a dead-end and enormously wasteful of staff resources and time. Having two lead departments makes the situation even worse.
I understand that Eddie Molloy has a paper in preparation for the McGill summer school. Maybe the topic will get a wider airing. However, I cannot see how the existing legislation can only be tinkered with. The entire approach has to be abandoned and combined with budgetary reform under the direction of one department. I doubt if anyone could imagine that happening. The system will continue in its present “going through the motions” format until its irrelevancy become so obvious that it will be replaced, probably by another equally ineffective “reform”.
@ skeptic01
You have a point there! I am not, however, advocating continuously balanced budgets. Sound budgetary policy could be summed as “prudent management with the capacity to carry out counter-cyclical policies when required”. I recall reading a paper some years ago, prior to the euro-crisis, that this would require smaller countries to run budget surpluses in good times of the order of several points of GDP in the context of membership of a single currency! This is not a message that either politicians or electorates wish to hear.
@ Sporthog
“I would see the Irish public as suffering from the disease of “entitlement”. ”
I wonder if that isn’t linked to how centralised government is.
If power was devolved locally and people had to decide how a percentage of tax money was spent and had responsibility to ensure spending was within limits would things be different?
@ seafoid,
Not sure about centralised Govt. Ireland is a small enough place already…. how much smaller is the pie to be chopped up, divided down again and again.
The more divisions… the more levels of management involved, duplication of decisions across 26 counties, duplication of expenses to be paid perhaps.
Some counties would not be able to support themselves, due to the low population i.e. Leitrim, Mayo etc
My point is mainly directed towards what I see as “a culture of entitlement” which seems to be multiplying for a number of decades now.
Just one example… why are financial contributions not demanded from the fathers whose children are living with their single mothers? Why does the taxpayer have to keep these children out of poverty?
Of course I agree children should be kept out of poverty, very important, but if you are a parent of a child… you have to step up to the plate and contribute your fair share. Leaving the responsibility to the taxpayer is unjust, in addition the cycle can repeat itself every 20 years or so, when there will be an even greater number of children to be supported by the taxpayer.
@ SB Granted, theoretical economists have proposed different approaches to the budget question.
In practice though the approach most commonly applied seems to be to match the budget cycle to the electoral cycle whenever possible. A cynic might also take the view that the ruling parties will normally target any stimulus preferentially towards their own electoral base.
Unfortunately the electoral cycle does not normally coincide with the business cycle. Perhaps the government should be required to call a general election whenever we have two quarters of negative growth?
122 replies on “Why vote for a left wing party so they can implement right wing policy that doesn’t even work?”
It doesn’t appear to work and it’s without any precedent
http://www.ft.com/intl/cms/s/0/f2bac3aa-d2a0-11e2-88ed-00144feab7de.html
Punters wouldn’t buy that from a doctor….
The current administration has allowed a property bubble to start again in Dublin, when it first appeared Noonan welcomed it saying it was no problem. Their only concrete response was to offer reduced lending criteria for first time buyers, increasing demand and hence prices as has happened in the U.K.. Considering that a property bubble was what caused the last crash their lack of any meaningful response other than to pour petrol on the fire is mind blowing. This is all of course enabled by the labour party, why why why?.
Two years up the road prices will continue to escalate making wages more expensive and shoving the “undeserving” low paid workers and unemployed further out in the hinterlands and onto the streets or HSE funded hotels and hostels just as is currently happening in London. Eventually it will cause its own collapse under a sea of debt and increasing costs for industry and services. If this is the economic recovery the labour party is currently trying to credit for then they should have stuck with FF as at least we some us enjoyed the rise and FF was very good at looking after the pensioners and unemployed without running around with an austerity whip demanding that nearly all income tax receipts are given to the bond holders and that educational services are be dumbed down to a 24/7 Macdonalds type activity as Rory Minister for education recently suggested.
From what I can see the mainstream political parties in Ireland are pushing the centre to the right and Labour have bounded to the right of centre in most meaningful ways.
The last few years is not so much a case of being forced to implement policies they dont want to, it is a case of the leadership deciding that they are no longer as supportive of their old policies.
The reason for this is quite obvious.
From about 30 years ago the salaries of politicians have been increasing substantially out of kilter with the average industrial wage. If a politician or union leader is earning 3-5 times the average industrial wage how can he justify this to himself?
Well the only way they can do it is if they think that they think they are worth it. Even in opposition the current leadership of the labour party have been earning this kind of money for the last 15-20 years. This has to have an effect on your political outlook. You start to think that some people (including yourself) are special and are deserving of special financial treatment. It explains their acquiescence with how generous the government have been to bankers.
This isn’t a problem for FG. They are open about their political outlook. But what if you are in Labour and your reality matches the political outlook of your opponents?
The other thing that has exacerbated this is the increasing role of advisers and PR people in politics in general. Basically the reason Labour have lost their way is that they have surrounded themselves in well healed middle classes to give them advice, while at the same time they have become extremely well healed themselves.
This is very basic psychology. If your reality exceeds what is permissible in your Ideology your ideology will change.
Another question is why have labour made huge strides in their liberal agenda but gone backwards on their equality agenda?
I think the answer is simple. The leadership and their advisers care a lot more about the liberal agenda than the equality agenda.
The only time the leadership go hard on equality issues is when there is a massive immediate backlash from grass roots, other than that they are not to bothered at all about equality.
Austerity hasnt caused the labour leadership to concede on its beliefs. It has allowed the leadership to concentrate and focus on their new found beliefs.
Here are a few examples of when they let the veil slip.
Eamon Gilmore made a comment in the dail that “It is not up to Government to create jobs but to create the conditions so jobs may be create” That one is straight of the free market Milton freedman handbook.
Pat Rabbites recent comments on “middle Ireland needing a tax cut” As has been pointed out by economists such as Karl whelan actually Ireland is not a high tax economy by europena standards. Our main divergance from Europe is the lack of services. BTW when pat talks about the Middle
he is actually talking about the upper middle.
When Joan Burton halved the disability allowance she said that the reason it was done was to alow parents be the recipients rather than the disabled person themselves. (this was reversed as the disabled people fought it)
When Jobseekers was reduced from 188 to 100 for many Job seekers under 25 and they were sent job offers in Canada the minister was happy enough to let it go through under the guise of “Encouraging young people into work” or as Eamonn Gilmore put it stop watching flat screen TV’s All day. The fact that there was one job for every 30 young applicants was irrelevant to them.
Or how about Young TD from Ballymun John Lyons. When asked to justify his salary (3 times the average wages before expenses) his reply was “that if you pay peanuts you get monkeys” A huge show of Solidarity with his constituency that he obviously has a lot of respect for given that the vast majority of them would be earning half of what he does.
Not enough credit has been given to parties on the left that have imposed wage restrictions on their representatives. TD’s will always try to bite away at this principle due to human nature but abandoning it destroys the parties sole. In my view tagging salaries to those you represent is a golden rule if you wish to represent anything left of centre for the reasons I have outlined above.
AEP article is spot on.
I’ve spent time in Italy, France and Portugal over the past six months — it’s as clear as day that they should not be using the Deutschmark as their currency. Enigmatic and visionary leader required to lead one country out of the Euro shambles . . . and out of depression with it.
Europe is breaking apart. The reason is simple. European institutions have sided unequivocally with the investor and creditor classes. Low paid, no paid, and now increasing numbers of middle classes are being bled to protect the investor classes.
There is no ‘horrible twist of fate’ about Europe’s left being an enforcer for the investor classes. They are now part of that elite group in terms of income and wealth. They have been bought. Being an MEP or Euro mandarin is now akin to winning the lottery.
The unrepresented will look to left or to right, without caring much about the difference, in the search for somebody to defend them.
The latest investor scam in the bank stress tests. Investors are to be protected, even if there is another 3% rise in EU unemployment.
The bank capital will come with a high return, sucking capital away from the real economy. Alternatively bust States, and people who have never had tuppence to rub together, will be asked to provide ‘capital’ for the banks.
@Eamonn very good analysis, it is obvious when you hear Rory Quinn or Gilmore being interviewed that they view themselves as some type of elite group that we should all be taking guidance from and thanking for the current upturn (Despite the fact that all voted for the bank guarantee which transfered
50 billion to foreign bondholders).
As you also pointed out trade union general secretaries salaries should be linked to a low multiple of their members to stop this gradual decline in their ability to empathise with their members and increase in their own pomposity.
@Eamonn
+1 Precisely why Sinn Fein are becoming so attractive. There is a sense that they are somehow above the venality of the mainstream parties. The murder/torture/bank robbery business is being airbrushed out by time, which is not necessarily a bad thing. The easiest way to keep them civil and also show their policies up for the madness they are is to give them some power.
According to the European Parliament website, centrist parties of the left and right including those in S&D (Ireland: Labour), ALDE (Fianna Fail), and EPP (Fine Gael) will take more than 70% of the vote.
The left-wing anti-austerity GUE/NGL (Sinn Fein; Socialists) will take just over 6% across Europe, other hard-left coming to about 9%.
The right-wing Euroskeptics between them amount to about 9%.
http://www.elections2014.eu/en/news-room/content/20140324STO39616/html/2014-European-elections-latest-projections-of-seats-in-the-Parliament
@jules
“the fact that all voted for the bank guarantee which transfered
50 billion to foreign bondholders”…isn’t a fact.
Let me put it this way, the property boom (you say ‘bubble’) is not being financed by mortgage lending.
@ Be a Debaser
Did you always want to grow up to be a debaser ?
Most, possibly all, career politicians are quite simply bluffers when it comes to macroeconomics. They pick a party, learn the lines, and set about honing the skills necessary to get allocated a constituency, then those useful to garner enough votes to get elected.
Some will have done a degree course in P&E, PPE, history, or the like and picked up enough economics to write the odd essay and waffle to party foot-soldiers and voters who know almost nothing about it. One or two might have worked in finance, but few of those will have covered, or been interested in macro much.
Bluffers have to stay close to the accepted mainstream narrative about the economy when they are anywhere close to actual power because otherwise they will be challenged and exposed if necessary. The trick is to make noises that get you elected, and then fit in to the big, powerful system.
Can anyone think of a professional politician that could not, reasonably, be described as a ‘bluffer’ on economics?
The article highlights again that the EU Fiscal Compact was a dreadful move for Europe and for Ireland. Ireland voting for it on the basis that it was above our station to reject it was one of the most shameful days in the history of our political and social elites. I am proud that I voted against it, but it does not change that my country was beaten to a pulp by a shower of morons.
@grumpy
Unfortunately, your analysis of how people get ahead applies equally to our civil servants, not least in the Department of Finance.
@grumpy
“Can anyone think of a professional politician that could not, reasonably, be described as a ‘bluffer’ on economics?”
No, but this is not surprising since, apparently, a great many of our economists are also bluffers on economics.
@ Eamon Moran
Excellent post – I think it goes a long way to explaining ‘labour lost’. Even highly acocmplished filthy rich rock bands whose impoverished past is not too far in the rear view mirror can continue to make good music….but eventually as the memories start to match their prevaling reality the spark dies.
1) Fiscal prudence is neither left nor right wing, it is just good accounting
2) Ireland has not had true austerity as we still have a whopping debt funded current deficit
3) It is long past since time for the closet Keynsians in Ireland to put up or shut up. Some econometric modelling, indicating the value of the fiscal multiplier is needed. Not handwaving and references to irrelevant links
@ zhou_enlai
The fiscal compact? Andrew Smithers of the FT is expecting an upswing in the EU based on “fiscal rule-breaking”:
http://blogs.ft.com/andrew-smithers/2014/05/the-eurozone-rules-without-sanctions/
Then again if OMT and the prospect of ECB QE are behind current bond market quiesence, a sufficient level of rule-breaking by say Italy might call into question their access to ECB support and start the cycle all over again.
@Desmond Brennan
” Fiscal prudence is neither left nor right wing, it is just good accounting”
Fiscal prudence, on the backs of the less well off, to keep the better off in the lifestyles to which they have become accustomed, is not prudence, it is a policy choice, on behalf of the better off.
Why do all ’employees’ over 66 not pay PRSI at 4% like most other people. I can think of one or two esrtwhile luminaries that are getting a nice little break there, up to about €10,000 per year in the case of one of them, a well known public figure.
We all pay USC, right? No. There is no USC on capital gains. Why?
” Ireland has not had true austerity as we still have a whopping debt funded current deficit”
That is not logical, as it equates austerity with balancing the books, not the manner of the balancing the books. Some people are very definitely feeling ‘austerity’, others are laughing all the way to the State banks, State banks guaranteed by everybody, both haves and have-nots.
Some people in Ireland are very definitely experiencing ‘true austerity’, on behalf of people who never knew austerity in their lives.
” It is long past since time for the closet Keynsians in Ireland to put up or shut up…..
Would it not be better to channel the very apparent demand for housing, created this year by mortgages from State banks, into more new houses and employment, rather than into the pockets of existing householders.
Minister Noonan, ‘We need house prices to rise another bit’. Really?
Does a person who makes that statement know about economics of any kind, Keynesian or otherwise, except for the economics of self-interest.
@ Johnny Foreigner
Re: Sinn Fein
What policies? They don’t seem to have many, but of the ones outlined on their webpage, I’m curious, which do you see as mad?
‘Amongst our proposals are the introduction of a third rate of income tax of 48% on income over €100,000, the introduction of a 1% wealth tax on assets valued at over €1 million, the standardisation of all discretionary tax reliefs, the capping of public sector salaries at €100,000, increases of 10% in both Capital Gains and Capital Acquisitions taxes, and a cut in the salaries of government Ministers, TD’s and Senators. We completely oppose the introduction of the property tax and water charges’
@ Grumpy
Shane Ross and Vince Cable know what they are talking about.
@ All
Breaking news!
According to exit polls, there has been no breakthrough for the right-wing PVV, the extremist party of Geert Wilders. It has lost substantial support and seems likely to end up in fourth place!
http://www.dutchnews.nl/news/archives/2014/05/definitive_poll_confirms_d66_a.php
Something seems to be working! What, exactly, it is hard to say but it is not any of the Armageddon scenarios.
@Eamon
great points, though to be fair Labour were the only ones who actually voted against the guarantee.
but the question we’re left with is: if left wing parties implement right wing policies, then whose left to vote for? You can be guaranteed the Shinnors would be enthusiastic auesterians, as they are in Stormont. Would the Socialists be capable of implementing anything given their lack of organisation?
@Kerchav
Hey man! U never heard of “THE STONES”?
H … one can fool a lot of the people most of the time …
‘So, if the poor economic balance of the crisis-fighting measures is so obvious, why does the German public not see through it?
One reason might be tunnel vision. The economic climate in Germany is not bad. Unemployment is at a record low and the German economy is benefiting from record-low interest rates, caused both by the ECB’s lose monetary policy and capital inflows from the periphery into the German government bond and covered bond markets. Young Germans only encounter double-digit unemployment rates in news reports.
The other reason might be German elite’s and media’s adherence to ordoliberalism – an economic policy concept that has always had an anti-empirical approach. Ordoliberals rely on principles to determine what is right and wrong, and do not rely on data from messy reality to draw conclusions. So who needs to look at GDP or unemployment data to evaluate whether a policy was good or bad? After all, Germans know, without a doubt, that they have been right about austerity. Isn’t it obvious that thrift is better than profligacy?
http://www.social-europe.eu/2014/05/angela-merkel-right-end-wasnt/
@Joseph Ryan
+1
Starve yourself fitter it is.
The problem you’ll find with the austerians is that austerity is not a policy with a measurable goal other than carrying out the policy. In the case where austerity’s failure is too obvious to deny the answer always is that it has not been tried with enough conviction. The question of how much conviction one would have to display for the gods of the market to bless you with growth is left to higher powers. Who knows the will of the market?
Austerity’s desirability to its proponents is not measured by its real world outcome any more than religious devotion is – its done because it is a moral necessity. You can talk about the paradox of thrift all you like (or the IMF’s work on the fiscal multiplier) or the comparative performance of different policy sets and all you will get is the repetition of the catechism of structural reform, budget cuts and growth just around the corner.
These are not people you can reason with or persuade.
Rising standards of living have blurred the distinctions between left and right while modern politicians in Europe tend to be career politicians like David Cameron and Ed Milliband in the UK – becoming researchers and advisers and eventually getting on party lists or being selected for safe constituencies.
The generation before them once had passion but that dissipated over time.
José Manuel Barroso (seen in a clip from 1976 below) was once a Maoist student group leader in Portugal while Pat Rabbitte and Eamonn Gilmore were radical student leaders and they then joined a Marxist (maybe Karl not Groucho) political party.
http://www.youtube.com/watch?v=wAHv3UnXvmM
There hasn’t been much evidence of radicalism from them in recent times: Eamonn Gilmore in particular has been a blank slate since the Berlin Wall was breached.
Electoral politics and as Eamonn Moran has suggested, the comfortable middle class double-earner life have been big factors.
However, believing in an old-time religion isn’t enough according to Janan Ganesh in the FT this week:
The response of left-wing parties in Europe to the financial crisis has been dismal as they have had little of substance to say about the status quo.
Banks have been nationalised but people generally are likely not convinced that mass nationalisation is an answer to slow economic growth.
Only half of French households have to pay income tax, but everybody pays social charges – this social contract works as long as people have good public supports including a high standard health service.
In Spain, young temporary workers, many of them immigrants, were the main victims of unemployment and a socialist government gave way to a right wing party led by a man who could be said to have a charisma deficit.
Thomas Piketty refers to the period 1945-1973 in the West as a Golden Age but exceptional.
During the recession in Europe while there has been austerity, the huge social and corporate welfare state has been largely maintained.
The biggest challenges are ahead as slow structural growth will make it difficult to maintain the lifestyles that the people the Americas call ‘baby boomers’ got spoilt on.
For most of the period since 1945, the populations of the biggest countries were not part of the international supply.
According to Richard Freeman, the Harvard economist:
@ SC: ” … if left wing parties implement right wing policies, then whose left to vote for?”
The political landscape has shifted – like those Tectonic plates. What was familiar to us, Left or Socialist and Right or Conservative, have sub-ducted to create a large ‘centrist’ landscape. The likelihood is that it was the Median Voter who shifted rightwards and the parliamentary parties had to follow.
This shift in the political landscape renders the conventional L-R paradigm redundant. Its the former Socialists who failed to move along with their voters, that now find themselves marooned. Something similar happened to the Irish Labour Party in 1922 – their mass electoral base in the north-east was effectively lopped off. They never have recovered.
Would the Socialists be capable of implementing anything given their lack of organization?
Again, its hardly a lack of organization, as a complete unwillingness (or incapacity) to re-evaluate what has occurred in terms of parliamentary politics since the onset of Globalization in the late 1980s. The Median Voter shifted, the parliamentary parties followed, then the organized representatives of the waged-labour population trudged happily after.
The Right (Conservatives) have no such problem. They never left home-ground and they have firmed up their occupancy and control of their territory and have established significant edged-boundaries (both political and economic) to corral their increased electoral support. The Socialists are simply wandering about, somewhat dazed, in what is for them, unfamiliar territory. All their known political landmarks are either obscured or have been demolished.
And no, a political GPS device will not suffice to re-locate themselves. They need to comprehensively plough over the parliamentary landscape, and start again. De Valera did that! Not the ILP.
@DOD
unfortunately the Stones were one of the bands i had in mind when the analogy came to mind….sorry!
@ Sarah
Re not voting for the Guarantee this was nothing more than clever political expediency. They knew it would carry regardless of their vote.
Even before the elections Joan Burton labours shadow economics representative had agreed to pay the bank debts from the national debt. Remember the Piri Paso conversations with Lenihan?
“You can be guaranteed the Shinnors would be enthusiastic auesterians, as they are in Stormont.”
You dont know that! You cant know that. It is the interest of all the middle class political media to say that, and they have been play every trick in the book to damage the SF vote from increasing (wonder why?) but people who are earning less than 50K a year see them as the only ones offering them any prospect of hope. You might be right and they might just sip the koolaide like Labour but the one thing that makes me think they might actually resist is that people who join SF do not do it to enrich themselves. Thats why the pay caps are so important. I am not a SF supporter by the way.
The other 3 FG, FF and Labour have already shown that they are going to go along with the idea that we are going to have a society with a fairly large upper, fairly large lower and a shrinking middle class. We are currently seeing a consistent policy being imposed by elites in the investor classes that is forcing an abandonment of our old social democratic norms and ever increasing inequality
Household taxes, water taxes waste disposal taxes are not introduced to primarily to broaden the tax base.
The real purpose is to damage society. Destroy the idea of a shared purpose. Destroy the idea that we pay for certain universal requirements as a community from general taxation. Individualize as much as possible so that you then have a society (much like the USA) where you are increasingly on your own and must fend for yourself or be a loser. Ayn Rands aspirations are slowly being realised step by step all over Europe and the upper echelons of the moderate social democratic parties have been bought off to allow it to happen. The politicians are no longer in charge, and they know it.
@ BWS Hard left socialism may have struggled since the wall fell but it seems that social democratic parties in Europe still garner substantial electoral support.
Ireland is a special case since the uniquely Irish FF movement has traditionally absorbed a lot of support that would otherwise have gone to social democrats. If FF disappears then the way could open for a strong center-left social democrat party to emerge. Either SF or Labour could aspire to this role, with FG holding its position on the center right. Since SF are in opposition they are well placed to beat Labour to the punch if they play their cards right.
On the other hand FF could regain its strength and push the Irish left to the margins for another generation.
Eamonn, some of your comments seem a tad ill-thought through. Maybe not, but that’s my read on them.
Sinn Fein are fascists. They spent at least 70 years using murderous terrorist tactics in order to get a significant political foothold. Please, let no one even suggest to me that they are Constitutional Republicans. They are Nationalists. I will not trust them with my liberty – and neither should anyone else, who is not yet a self-deluded, SF supporter.
Sinn Fein smell power due to the political, social and economic incompetence of the incumbent parliamentary cabals. These useful idiots have consistently put self before their voters. They have been consistently untruthful with their voters. When real and substantial economic problems arrived, they deserted their voters. So, when the voters eventually and reluctantly, copped on to this treachery – as they are now doing, what did folk expect those voters to do? Yeah, that’s exactly right – even if its bordering on the self-destructive.
The Irish Labour Party have been admitted to the ECU – they are on political life-support. Its just a matter of time before someone switches off their ventilator. And good riddance. That should clear the way for the emergence of a genuine Irish-style Social Democratic party – one that has its origins in non-violence. This may take at least three inconclusive parliamentary elections. The only problem I can foresee is another financial crisis – or worse an oil supply shock. If this latter occurs sooner than later – all bets are off the parliamentary table.
@BWS
Cheers for insulting my intelligence and the derogatory pat on the head. By the way I thought your comment was “a tad ill-thought through”. Now go sit in a corner and write the first chapter of Thomas Pikettys new book five times.
I am not saying that SF are paragons of democracy. All I am saying is that they are offering hope to people on the basis of fighting against the prevailing orthodoxy of an increasingly unequal society.
If they sip the Koolaide as Labour did voters will abandon them in droves as quickly as they joined them.
Their huge lift in support is not based on a new found respect for past SF/IRA deeds.
@John Foody
All their economic policies are daft because they all move in the wrong direction – ie more tax and spend. But just to take one example, no water charges and no property tax. One is a green consumption tax, the other a tax on wealth – ie ideas which are intrinsically progressive and would be good ideas in any fiscal context. Every other developed country has them and people understand that they are the foundation for the funding of local services. We simply don’t fund local services (and many others) at the moment, unless you count holding our a begging bowl to other countries as funding.
@Sarah Carey
“You can be guaranteed the Shinnors would be enthusiastic auesterians, as they are in Stormont. ”
One hopes their austerity options would not include, among other things;
1. Multi million euro debt forgiveness, by State controlled banks, for tax exiles who don’t want to pay tax in Ireland, but are happy to borrow money (through their companies) from Irish banks. Money that they now don’t want to pay back, and the State says OK, no problem.
[I have in mind the Independent Group and the examiner group and no doubt there are many many others. Can’t pay or won’t pay.]
2. Pay Abramovich & Co 100% on bonds he picked up for a pittance.
And to pay for the above decide to cut medical cards for Downs Syndrome children, but forget to implement a cut to ministerial bumper payments.
It is difficult for the ordinary Joe to feel represented by the people who allow this.
PS Not a member of Sinn Fein or any political party, nor affiliated to or beholden to any political party.
I think the lines of traditional Right & Left and Center are all blurred, and have been blurred for a long time.
The Irish Left is more interested in LGBT issues than dealing with the hard issues of the economy, employment, making things easier for companies to fire unemployable workers and retain employable ones.
FF who one would think was traditionally right of center… increased social welfare rates by over 6 Bn / year from 2002 to 2008.
With the exception of various external shocks… i.e. oil, or the Russians invading… there is a large problem coming down the tracks… lack of taxpayers, i.e. people who actually get out of their pajamas and hoodies and go to work.
As the population continues to age, taxes from workers will reduce… the problem of squaring the budget will get worse.. not easier.
SF has the attraction of never having exercised responsibility so they can say anything . They’ll get in and be as damaged as the rest of the parties.
None of them are interested in shaking things up. There is a lot of tough talk but the system is more or less untouched. The Executive has too much power. The CS is a mess . Legal system is not fit for purpose. Education system is mediocre. Banks are still banjaxed. Economic growth is going to be low for the foreseeable.
@ eamonn: “I,m on it!” Apologies by the way. My fault.
@Brian Woods Snr.
Fascism is a fairly broad church but it is not one that Sinn Fein would be welcome in and it is some of ignorant, dishonest or sadly deluded to say so. They are no more fascists than the FLN was.
This is not completely off topic. Sadly in the last forty years the European left have been less occupied by the ongoing threat of imperialism, plutocracy and neoliberal managed democracy rather than the historically questionable threat of nationalism. The centre left’s confused and conflicted response to the Eurozone financial crisis is a reflection of this preoccupation with imaginary threats. The inability to accept that power structures can be impossible to change within the constraints those power structures enforce was crucial to the end of imperialism in the twentieth century, no analysis of Europe’s current plight and path makes sense without it.
Something that makes me chuckle is when people thank the EU for the last sixty years of peace in Europe – something like thanking NAFTA for the absence of war between Canada and the US in the last ten years. Liberals are such awful fools.
@ JF
‘But just to take one example, no water charges and no property tax. One is a green consumption tax, the other a tax on wealth – ie ideas which are intrinsically progressive and would be good ideas in any fiscal context. Every other developed country has them and people understand that they are the foundation for the funding of local services.’
Yes, water tax is as about a green a tax as the PRSI I pay. The environment is just the excuse to make people accept more and more taxes and charges on their after tax income. I pay for water already in the tax I pay each month/year and in the VAT rate that is applied to the goods and services I buy. As for LPT being a tax on wealth, it is missing the point, my home is just that, a home. It creates no wealth for me or my family. It actually costs me a lot to up keep, i.e. heat and light not to mention fixing things when they break. When rates and water charges were done away with the last time they increased vat and tax to cover the cost.
Also the reason that ‘others do it’ so we should too is just pure rubbish. In some countries they chop the hands off people who steal. should we introduce that while we are at it because others do it.
When bin charges were introduced in 98/99 they started at 1.50 for a bin tag, by 2003 they were 3.00 now they are 9.00 plus a charge of 110.00 per year. Water and LPT will go the same way.
@paulr
“I pay for water already in the tax I pay each month/year”
Really? Where does it say that on your pay slip? Your taxes go into a bowl. The food in the bowl gets eaten by a voracious State by about August. Then we take the pot on a world tour and hope that it gets replenished enough to tide us over till Christmas. Ireland does not pay for what it spends at the moment, hence the need (absent real efficiency reforms) to raise more revenue.
Water and sewage treatment is one of the useful things that the State spends money on, along with schools, health services, roads, pensions and employment insurance (not the same thing as dole). In a sane world all those services would have dedicated funding streams (e.g. local property taxes, social health insurance) and ringfenced budgets, protected from the all the other rubbish that Governments like to buy elections with.
@paulr
With respect to bin charges – you created the waste, you pay for its disposal. Why should we socialise your wastefulness?
Friends, if I am elected as your representative I solemnly promise that I will arrange for FREE WATER … to fall down out of the sky on the heads of every voter in Ireland
@ skeptic01: Great! You now have my No.1! cf: below!
@ Shay: Thanks. You and I will just have to accept that we disagree on the nature of SF.
Will a term in Gov here make any difference? Maybe. But I have deep concerns. Its always a successful electoral ploy to promise voters what you know is impossible in practice.
@BWS
Thanks. No hard feelings.
BTW I dont think SF will get in next time.
IT will be FG and FF. Put a Monkey on it.
Maybe we like water as much as alcohol but at more than double the per capita consumption of some other European countries suggests that it’s because it’s “free.”
Most water per person per year (more than 125 m3) was consumed in Ireland (141 m3), followed by Cyprus, Latvia and the United Kingdom (between 101 m3and 125 m3). Between 76 m3 and 100 m3 of water per person per year was consumed in France, Latvia, Spain and Sweden, while in most Member States (including Slovenia) between 51 m3 and 75 m3 of water per person per year is consumed.
The lowest consumption (0-50 m3 per person per year) is recorded in the Czech Republic, Estonia, Lithuania, Hungary, Poland and Romania. In 2009 on average 58 m3 of water per person per year was consumed in Slovenia.
http://www.stat.si/eng/novica_prikazi.aspx?id=4565
I used the html tags and for the “3” cubic measure but it didn’t work.
@JF
Yes and that is why I and all other working people in this country pay taxes for, for the provision of the services you list. It is not for fun. When water and rate were scraped the last time 2% was added to VAT and 1% to tax to pay for these basic services. Those increases have never come off. So yes I do pay for water, in general taxation and by having even a basic economic life.
And just because you don’t seem that clever my point is that since bin charges have been introduced they have risen hugely in cost and water and property tax will follow the same path. The environment is the excuse and only fools cannot see that.
@ paulr,
You are leaving stuff out….
Remember Ms Mary Harney’s health levy???? That was increased, then rolled into the USC, and effectively is permanent.
Anybody remember “de Bert” declaring
“I am one of the few socialist’s in politics”
The sad thing is the HSE is still a mess, even if the USC was increased a thousand fold, it would still be a mess.
Anybody remember the Public Service Obligation levy on electricity meters…
Each year steadily increasing…. in fact went up 54% in the Autumn… to 42.87 per year per domestic customer.
Of course we have to make electricity expensive… to attract outsiders in to make electricity cheaper. This ideology has been undermining our competitiveness for the last 10 years now.
And yes you hit the nail on the head….we are being taxed TWICE for lots of stuff… and still the population cannot see it.
The point about the most recent exchanges above IMHO is that both sides are right but simply addressing different aspects of the problem. We do not know who is paying and who is benefiting and, most importantly, we seem not to be interested in finding out; as long as whoever is representing us brings home the bacon!
An egregious example is the recent saga of the benevolence of the departed minister for justice in handing over €70,000 of the taxpayer’s money, to which he was clearly not entitled (confirmed by his own participation in a government decision to abolish such payments) to a deserving charity (with the head of which he happened to be personally close). Only Miriam Lord seems to have twigged the implications of this or, rather, to be alone in being willing to address them.
https://www.irishtimes.com/news/politics/shatter-milks-the-moment-looking-like-secret-millionaire-1.1805882
There are lessons to be learned from the experience of other countries. We simply do not want to learn them.
http://www.bportugal.pt/pt-PT/OBancoeoEurosistema/Eventos/Documents/LJonung_paper.pdf
Whether the Portuguese have taken the advice on board or not, I do not know.
From the Swedish paper;
“The basic idea behind the trust towards independent fiscal councils is that fiscal policy councils will reduce the deficit bias characterizing economic policies in many countries. In short, the tendency of democratic societies to run persistent budget deficits, creating rising public debt, and in some cases leading to unsustainable debt levels may be dampened by independent fiscal authorities. At this stage, it is an open question to what extent such institutional arrangements will be successful.”
In Ireland’s case, the answer is almost certainly no! At least on the basis of the current pre-election performance of the government. It seems that, as in the case of Sweden, a change will be a rather long drawn-out affair, if it happens at all.
As to Portugal, Stephen Kinsella thinks that our economies and experiences are not that different!
http://www.independent.ie/opinion/columnists/stephen-kinsella/the-final-bitter-cost-of-austerity-is-yet-to-play-out-here-30287198.html
The experiences of bringing public expenditure into line with tax revenues are almost certainly similar. But that is where the comparison ends!
The FT takes a swipe at Piketty
http://www.ft.com/intl/cms/s/2/e1f343ca-e281-11e3-89fd-00144feabdc0.html#axzz32Zy3r2MF
@DOCM,
Some interesting paradoxes in the Stephen Kinsella Independent article.
“In the grand experiment that is the European project, the imposition of austerity on the peripheral countries is one of the most costly, and potentially, the most destabilising.”
O.K…. but previously….Stephen writes….
“Mario Draghi’s now famous, game-changing “whatever it takes” speech in July 2012 was what gave the markets confidence they would not lose money if they bet on peripheral European states like Ireland and Portugal, so, rather than the Portuguese austerity programme delivering confidence, really, it was Mario Draghi and the ECB’s credibility that compressed peripheral yields”
The fact that the ECB has allowed breathing room to emerge so that Portugal can now carry out a slower adjustment.
So it is for Ireland…… our bond yields are now low….
If it was not for our membership of the euro… the austerity adjustment would have been much faster… and much more severe.
And before everybody gets on their high horse and starts blaming the euro for Ireland’s crash and burn….
There were many warnings from Brussels about Irish Property prices getting out of control back in the early noughties. I think it was Romano Prodi who came to Ireland to see why the Irish rejected one of the treaties.
But as usual… it is always somebody else’s fault!!!
@Sporthog,
The problem is that there is so much that we pay for on the double that I don’t have enough fingers and toes to count them all.
Ireland wears blinkers that severely restricts the field of vision when it comes to ensuring a reliable flow of income that allows government to meet its obligations over decades. We are the land of one trick hobby horses which we beat to death with regularity.
Corporate taxes, how low can we go <2%.
Property taxes =0%
Water taxes =0. Now to become a National Water Authority. Big is the latest fad. Water is local and always has been local. Nobody in Gov’t has heard of watersheds. Water Authorities have to be designed to fit watersheds. There are no economies of scale from fitting the River Feale to the River Liffey watershed. In Ireland we have a problem in that our perception of water is formed at a young age. At 8-14 yrs of age we dug holes deep enough (ground water 0.5 to 5 ft. down) to drown toddlers if they crawled into one. It is hard to believe that any house in Ireland could not drill a hole up to 20 metres deep and not have a reliable source of water. Only Dublin city would have to import water from other Water Authorities. People have to keep an eye on their water authorities. I remember looking into a an in ground holding tank surrounded by metal mesh and razor wire 8 ft high and seeing a rotting dog in the water. This was water pumped out of a pristine pure aquifer beside the river Galey. Clearly the dog did not scale the fence, some amadan threw it in there. The polluted tank fed a village of 600 4 miles away, we alerted a few militant women in that community. Nothing like Irish women in high dudgeon berating public officials. Pizenin our children, spreadin disays……
We knew where water came from and where it was consumed. What kind of results would you expect from a bunch of employees in a protected Quango.
Power is a sick joke in Ireland. Electricity and NG cannot be distributed by the state because we cannot trust the politicians to run an efficient operation. We cannot trust them to run a central procurement agency or to build nuclear power plants. Engineers who work for gov’t threw up their hands in horror when I suggested that the Irish Gov’t could future proof what is promising to become an expensive problem, namely electricity and gas. We cannot trust them to regulate private sector generators or gas procurement companies. Distribution which breaks down to back bone and local, national and county levels seems to be too complex for FF or FG to understand.
VAT/ Sales taxes/ duties seem to be in the ball park.
Income taxes are too high to enable Irish companies to compete effectively.
High property prices in Ireland added to high income taxes doubly ensure that wages in industry have to be higher than allows companies to compete effectively. We have no golden mile in Dublin or Russian and third world oligarchs to prop up Dublin property prices on the London model. The Irish are stuck with the age old situation of having to work for a living.
The management of the Health Care System is an expensive overconsulted joke.
The legal system is another protected expensive enclave.
As John Corcoran has mentioned on occasion, commercial lease laws were written by landlords for landlords, the gov’t was an innocent bystander.
The safety valve of emigration allows the politicians to continue milking the system without provoking widespread backlash.
I am sure some of you could do much better than this.
I am just comparing well functioning countries I have lived in with Ireland 98 years after independence, that is four generations.
Input closed Mar 31st.
http://www.taxjustice.net/2014/03/07/imf-launches-consultation-tax-spillover/
http://www.taxjustice.net/topics/race-to-the-bottom/tax-wars/
Ellie May O’Hagan contributed to this, it must be good.
http://www.taxjustice.net/wp-content/uploads/2014/04/Mythbusters-2013-competitive-tax-system-is-bad-tax-system-.pdf
I see Mary Murphy and Peadar Kirby have been working on this. Of course coming out of Limerick they do not get the traction they deserve.
politico.ie/index.php?option=com_content&view=article&id=8876:murphy-broaden-tax-base-to-create-a-decent-society&catid=40:politics&Itemid=877
@ Mickey H: Now and again someone makes the valid point that many of us on this site (me too!) are ‘fence sitters’. We know with great certainty what ails us, and make all sorts of proposals, some good, some bad, some decidedly dangerous. That’s the way these things go.
If we could all arrive at the consensus that our society is headed into some real bad political, social and economic troubles – that would be a start.
If we could agree that many of our current political and economic practices have, and will continue to, make our situation worse (more intractable) – that would be a start also.
But us human folk are irrational – despite the best efforts of some economists to convince us of the opposite, hence we will doggedly persist with what we are doing. Only some cataclysmic event or events will halt us and make us reconsider.
We are doggedly awaiting those events – knowing with great certainty that they will not happen! How could they? We are so intelligent. We have such sophisticated technology at our disposal. So, let’s just “Carry on regardless!” “Ignore all those dopey doomers”.
Those legion of leaks in our potable water pipes? Fixing a leaky pipe is straightforward. Its the mental effort needed to recognize the problem, (not just acknowledge that it exists), gird your loins, hoist your administrative arse out of your office chair and hit the street with your equipment, is the problem. Lots of folk do not like getting dirt under their fingernails. Its ‘someone’ else’s job. That may indeed be correct, but …
I’d opine that the element of ‘fear’ may be absent. The fear of being shamed in public. Or better, fear of being chucked out of office.
@ Paulr
Tax in Ireland goes into one big pot and it’s not allocated specifically to anything. So while you may be told you’re paying for x, it’s going into the same pot as everything else. And the pot doesn’t have enough money to cover expenditure since the funding model broke down a few years ago. Many taxpayers who could have helped plug the gap have emigrated.
Everything is run centrally because they know how to do things best in Dublin.
Voila.
The FT, a fat-cat rag, accuses Piketty of having a “fat finger problem”.
According to the FT, the excel entry for Sweden for 1920 is, horror of horrors, the 1908 Sweden figure.
The FT know who side of the fence it is on, and it sure as hell is not the 99%.
http://www.ft.com/home/europe
Note the headline and note how Piketty’s response is suitably downstated.
@John Foody: Thanks for above links.
@ Sporthog
What you say is true. However, there is more at play IMHO than the actions of the ECB as the behaviour of Irish bond yields in recent days reveal.
http://www.independent.ie/business/irish/election-fears-hit-eu-markets-but-irish-bonds-remain-firm-30300029.html
The Club Med economies have lagged other member countries from the beginning of their respective memberships of the EU (Italy being a founding member). The question for Ireland has always been whether the country could detach itself from honorary northern membership. It was well on its way to doing so when FF blew it in style. It is on its way back provided, and it is a big proviso, that it can make the necessary radical shift in culture that is required.
Oddly enough, the two legacies that the Troika has left that are most likely to make the biggest contribution to achieving this are the property tax and water charges. No party can go into the next election promising to abolish them. Their key feature is their universality. (This also hold true of the USC, introduced as a last gap measure to steady the budgetary ship).
The other key must be a proper system of government accounts with dedicated revenue-streams where possible (the point made by JF above) and removal from ministers of the power to adapt expenditures for electoral advantage. This can only be achieved by changing the budgetary procedure to allow detailed prior consideration by the Dáil of spending plans within tight legislative parameters (as adopted by Sweden and other countries). The system of nods and winks from a self-appointed arbiter in the person of the MOF – and rabbits pulled out of hats on budget day – should end.
Whether this will happen is very much open to doubt. The current government is not even thinking along these lines. The one thing that might force the change is the EU budgetary corset to which the country is now signed up. The Med countries – France included on this occasion – are endeavouring to loosen it and I fear that we will follow them rather than the more responsible path of the successful Northern economies.
cf. Brendan Keenan
http://www.independent.ie/opinion/columnists/brendan-keenan/rising-expectations-could-make-next-budget-most-difficult-of-all-30293951.html
@ Sporthog
Remember when plucky Iceland was seen as being in a better place than Ireland within the straitjacket of the euro?
In a recent paper, Prof Thorvaldur Gylfason of the University of Iceland, presents a picture of an economy that remains in a limbo with no visibility on when capital controls can be ended as an impasse continues with hedge funds that own most of the foreign assets of the collapsed banks.
Despite big loan write-offs, loans in the surviving domestic banks amount to a quarter of assets; “despite deleveraging through repayment, write-offs, and significant government help to distressed households, many households and firms remain in dire straits.”
https://notendur.hi.is/gylfason/cesifo1_wp4605.pdf
On the EEC/EU eaten bread is soon forgotten.
Membership for Ireland has been more important than for the UK since 1973 and the Irish shouldn’t allow the events of recent years to poison a significant portion of the public’s view similar to what has happened in the UK.
In the UK in the 1970s it was the left that opposed the EEC and a decade later the left saw the benefits of membership with EU rights legislation countering the increasingly eurosceptic Tory Party.
In 1984, Antony Jay & Jonathan Lynn, the excellent script writers of the ‘Yes Minister’ series has Jim Hacker, the useless minister, becoming PM on a campaign to save the British sausage from the EEC – not much has changed since.
In Ireland some of the left have been consistent opponents of membership and the Green Party first supported a related referendum when it was in government.
This has been strange as EU social, labour and environmental legislation was years ahead of what would have been introduced locally.
It had taken a brave woman from Cork to challenge the ban on the importation of contraceptives, which the Supreme Court declared unconstitutional in 1973, our year of joining. It took two decades more of tomfoolery and fears of ‘floodgates’ being opened, to modernise the law.
Coincidentally, on the conditions under which OMT might actually happen, the FAZ is running with a video clip from Schaeuble where he links approval of an ESM programme (on which Germany holds an effective veto) to any actual action by the ECB.
http://www.faz.net/aktuell/wirtschaft/eurokrise/omt-schaeuble-kassiert-die-wunderwaffe-der-ezb-12955803.html
The FAZ is not, of course, a fan of Draghi. What is, however, intriguing is that it does not draw attention to the obvious point viz. that Schauble in his intervention was clearly indicating that Germany has no intention of allowing any softening by any party with regard to the obligations that all have signed up to under the Fiscal Pact. Ireland, take note!
@ MH
Hair-raising article by Gylfason! Appropriate bed-time reading for fans of “the Icelandic way” who, I think, also include Fintan O’Toole.
@ MH, DOCM,
Many thanks for the links and in particular the Gylfason article… very insightful.
I read recently (two weeks ago perhaps) a article in one of the mainstream Irish papers… might have been the SBP…
The Arthur mentioned that a 20% discount should apply to Irish assets, due to the uncertainty of the elections in 2016.
The demise of the mainstream political parties, the rise of SF, and independent flaky socialists being the main reason.
I thought it was most interesting… pity I don’t remember the link.
On the subject of property…whilst property is relatively cheap… affordability in a era of high personal income taxes pushes property out of reach again.
@DOCM
Prof Sinn on Thursday praised Shauble’s comments on OMT:
http://www.finfacts.ie/irishfinancenews/article_1027709.shtml
http://www.irishtimes.com/culture/roddy-doyle-of-the-10-novels-i-ve-written-only-one-stands-alone-1.1806629?page=3
“Officially the recession’s over – isn’t it? Which doesn’t mean an awful lot. We’re told now that things are ‘picking up’. Which doesn’t mean an awful lot to most people, either”
Re right wing policy that doesn’t work :
I think this is one of my favourite EZ crisis quotes, from Sarko in 2011
“Pledging to exercise control over France’s own debt, he said: “I wasn’t elected so that France would experience the agony of Greece, Ireland and Portugal”
Donc Voilà Quoi
In unrelated news, the government have finally revealed how they will be implementing the next recapitalization of the Irish banks. You’d wonder why Moran left.
Very interesting discussion for the day that’s in it. While our national political scene has its own unique characteristics, it’s also part of a broader transformation underway in western democracies over a prolonged period.
Driven by pressures of increased global economic integration, communication technology changes and increasing political and economic interdependence, the era of ‘mass party democracy’ is passing. Politics based on class identity, and perceptions of national self-determination operating within the territorial and cultural boundaries of your typical liberal democratic nation-state are giving way to a more individualistic, cosmopolitan outlook on the relationship between the state and the individual and society at large that in a negative sense finds expression in a regressive nationalism or more general disengagement from the national party-based system. To sum up the vast and continuously emerging literature on the subject, what is in crisis is not the concept of democracy, per se, but the continuing erosion of public trust in the current party-based system of representative democracy.
Politics is increasingly framed by political actors themselves as being about operational transparency, rather than electoral accountability (even though the former remains as elusive as the latter). Democratic politics, as we all know, is also an expensive business. So the dominant mainstream parties have, whether unwittingly or deliberately, stumbled across a means of ensuring their own preservation – what the late Peter Mair referred to as party ‘cartel’ formations – in terms of state-funding arrangements, the thrust of which works to prevent the emergence of any viable challenger parties.
The net result is a frustrated popular vote splintering in all directions, towards independents, or extremists of various hues, none of which challengers – with the exception of Sinn Fein, which has its own peculiarities – appear likely to achieve any threshold of long-term political sustainability.
Further, large ‘catch-all’ parties with a broader electoral base are, in government, less at risk of diminishing their support to critical survival levels than ‘niche’ parties aligned with a particular class (which may ultimately disappear due to the dynamics of the economy/society) or a specific ideological platform (witness the fate of the PDs, then the Greens, and now Labour, hanging on by its fingernails). The transformation to a ‘God knows what’ version of democracy appears irreversible. It also looks likely to be long-drawn out. It will advance incrementally, but in the meantime giving rise to increased political fragmentation and political instability.
Here we might also usefully revive a discussion, extensive among political scientists some thirty years ago, as to how the ‘political elite’ of society is formed and sustains itself. The theory generally runs that irrespective of ideological leanings, or whose interests they primarily claim to represent, those who achieve representative status de facto become part of a general political elite and ultimately, on attaining office, set about establishing their own variety of elitist hierarchy.
The political elite of any society extends well beyond its immediately visible top- tier party leadership. It has several tiers that filter through in networks of activity, contact and patronage across the media, institutional and civil society (as recently became so apparent, for example, in our own ‘charity’ sector). In the current environment, it is the unwillingness of that top level political elite to reform its own workings, to respond to the needs of society and to take seriously their status as representatives – in our case as the people’s ‘messengers’ to parliament – that contributes to widespread disaffection and disillusionment with conventional politics among the electorate. The main trouble with the broader political elite, as has long been pointed out, is that its cohorts communicate more with one another, and seeking to influence each other, than engaging with the general public.
Pat Rabbitte said on radio this morning that: “If John the Baptist was leading the Labour Party coming into this election, it wouldn’t make any difference.” Kerry TD, Arthur Spring later suggested the being led by God Almighty wouldn’t have helped much either. But it’s not about leadership, or better communication with the electorate, or any of the other solutions that parties invoke when things go badly for them at the polls. The real question is, and not just for the Labour Party : are you relevant any more?
@veronica
Yeah, that’s all a brilliant theory except for the fact that Labour would now be over 50% in the polls if they had only done the obviously intelligent thing and gone into opposition in 2011. It is not lost on the electorate that their presence in government has not moderated Fine Gael at all and has instead been used to provide cover for them. Their oblivion is of their own making, not some sort of pre-ordained symptom of broader phenomena.
Great post, Veronica. UKIP are shaking up the status quo in the UK too. John Harris had an article on the theme yesterday .
http://www.theguardian.com/commentisfree/2014/may/23/ukip-success-local-elections-two-party-system-crisis
I havent read the link in the OP or most of the comments yet(not a good start I know!) but this idea of ‘why dont left wing parties implement left wing policies’ annoys me. Leaving aside what we mean by ‘left wing policies’, a juniour (left wing ) partner in Govt will only have (1) so much legitimacy from the electorate to follow a LW policy plan (2) so much influence in government to implement such a plan. It’s as though people become amazed that politics exists when a party (like Labour) which is relatively left wing, gets into power and doesnt immediatly start developing soviet councils around the country.
If someone wants to have left wing politics in this country (which here, for the sake of simplicity, we’ll say is pro working class policies) then you have to organise society around that goal. Which would mean strenghtening a working class voice in the political process (for a vague definition of the working class) Whether that’s through stronger private sector unions, more empahsis on local/community politics, or more representation in working class communities is a matter of opinion, but it wont come solely by electing Labour as a juniour partner. If you want left wing politics, then you are probably going to get some degree of class politics, and divisive politics. Do people here want ‘divisive’ class based politics ? I’d assume most wouldnt.(jesus, i probably wouldnt either) But thats what you’d have to do, rather than just moan at Labour.
This is also a standard *only* left wing parties are held to. If they dont have a mandate to implement far reaching leftists policies, then that’s their fault. If they have to function in a society where civil society is not ordered to push for ideological leftist positions, then that’s also their fault. If they have to compromise and work with the banal incompetence of FG and FF, then that’s also their fault.
There’s much too much emphasis on personalities and parties and the election cycle in general in this country, imagining that every 4 years we’re going to have the opportunity to elect someone to swoop in and save the day, rather than just another slobbering imbecile who will do pretty much what the person before did. Politics doesnt change through elections, it changes through organising people, demographic and larger socio economic changes.
Back to the Crimea! [h/t Blind Biddy .. out an about ..
‘Putin certainly isn’t the greatest European strategist since Bismarck. But it doesn’t take much to win when opposed by dumb, ultra-greedy opponents guided by the arrogance of ignorance. All Putin needed was seeing one tiny move further ahead.
The only thing dumber than the transparent US-EU-Exxon moves was the American and European media’s slavish coverage of the same.’
http://www.counterpunch.org/2014/05/23/crimea-an-eu-us-exxon-screwup/
Labour might deserve to be above 50% in the polls if they had gone into opposition. As it is, they deserve to be obliterated politically, and there is a chance that this will happen. At the last general election, they positioned themselves both against capitulation to the ECB and against austerity. They completely failed to pursue the first of these in government and were perceived by the electorate to have failed to pursue the second too. Whether or not they were right in thinking the choices they actually made were good for the country, there is no good reason why the electorate should ever trust them again.
@one of the best left boots in the business
Johnny Wilkinson
Great exit!
@ BeeCeeTee,
“Labour’s way not Frankfurt’s way”
Publicly making promises which were impossible to deliver on was foolish, if not downright stupid.
E.Gilmore must think the public have a I.Q. of a grasshopper if he thought he could get away with that one.
But forget the economy…. or the increasing deficit, or the unemployed, it’s the LGBT issues which matter.
@ veronica
I regret to have to say it, but your analysis simply does not wash in the present European context, as evidenced by the outcome of the Dutch European elections. The dividing line is one of perception of social justice which has a price that can be costed and made acceptable to all if there is a commitment to it. That commitment simply does not exist in Ireland. The two-tier system of health coverage, for example, would be unthinkable in the Northern tier of European countries. The Dutch simply did not want a large party in their political spectrum that could be identified with the policies of Le Pen or Farage.
The Labour Party in Ireland has no understanding of what a commitment to social justice means. If it did, it would not have questioned the underlying logic of the approach by Minister Reilly to health care reform, even if it questioned the detail. It was simply pandering to that sector of the electorate from which it thought it could draw support.
This approach is true of all political parties in Ireland where politics is seen as a profession, not in any way action in pursuit of an ideal.
The victory won by Labour in the last election was attributable largely to the fact that public service employees realised that they needed a friend at court and voted accordingly. The friend simply could not deliver. More importantly, there is a splintering in the electorate with regard to who is benefiting and who is paying. This explains the fragmentation. If clarity emerges on this question, the larger political groupings will reconstitute themselves. That is Labour’s only hope.
“But forget the economy…. or the increasing deficit, or the unemployed, it’s the LGBT issues which matter.”
Having a vote on gay marriage does absolutely no work against any of those other problems, but does make life substantially better for a significant amount of people. What does this even mean though, that labour have become the party of the gays ? Because of one policy concern?
@Veronica
re: Rabbitte comment
““If John the Baptist was leading the Labour Party coming into this election, it wouldn’t make any difference.”
The Labour Party got what it deserved in this election. The country may have needed saving, but who ‘God help us, did they save’.
Top level PS, Kevin Cardiff, tax exiles, Multi-billionaire debtors from paying their debts, the South Dublin professional classes etc; the vast majority of whom would not vote for Labour in a fit.
An explanation from Gilmore as to why ‘we’ paid the bondholders, Abramovich included, might have helped; or not.
One wonders if John the Baptist might have made the same selective decisions that Labour made, as to who to save and who to condemn, when the waters were rising.
Signed: Lost Labour Voter.
@ ronan (rf),
My point is not about LGBT issues specifically. It’s about ignoring the hard issues and pretending to lots of hard work on the easier issues.
The left has moved away from the harder issues i.e. employment, deficit reduction etc, to the much easier to tackle issues…. LGBT equality etc.
@ Michael Hennigan
The FAZ and Bloomberg commentary doesn’t amount to a hill of beans. “They would say that, wouldn’t they”, especially on the eve of an election. The establishment of the new bank as adverted by OMF above is of greater interest. The Germans have to re-balance or re-equilibrate the banking and payment systems in Europe and if they cannot get at the problem through the major players they will have to do it through the minor ones.
@ Sporthog
GLBT, getting their people appointed to plum jobs and maintaining cashflows to their voters.
It’s all about feeding interest groups. For all of the parties.
The view from the other side of international finance.
http://www.the-american-interest.com/articles/2014/05/08/how-offshore-finance-sunk-western-soft-power/
People too easily forget that the 2011 GE was primarily a contest for government between FG and Labour. The entire political elite, and the public, were aware that FF faced electoral meltdown. Only the scale of it was in dispute. The Greens were political toast long before the election.
The fest of promises from both Labour and Fine Gael were directed towards gaining advantage over one another, either in constituencies where a last seat might be up for grabs (remember Roscommon hospital?) or with particular cohorts of voters ( no student fees increase?). A significant portion of the Labour vote came from voters who wanted a coalition that involved Labour rather than the single party FG government that appeared to be in prospect from the opinion polls. Labour was supposed to go into government in order to act as a moderating influence on FG’s embrace of austerity policies. The electorate’s desire to have Labour participate in government was clear from the result of the election.
If Labour had opted for opposition, all that would have achieved is to force another election in the short term. They would have paid for that – and the inevitable impact of the political instability it would have caused – at the polls, and the further contest likely would have ensured an FG majority administration to boot.
The problem with this government is that, from the outset, it has demonstrated lack of any vision as to what kind of coutnry we want to have and the values it should be based on. In crucial areas that involve services to the public and fair distribution of resources, it manifests incompetence – the SUSI debacle, the management of the Health Service, energy policy, the environment, take your pick! In other respects it has shown itself to have worrying de-democratising tendencies, as illustrated in the Seanad Referendum debacle, the botched reform of local government, the treatment of the Garda whistleblowers to list just a few examples.
As for the economy, the various claims made about creating jobs and restoring economic performance ring very hollow indeed when people have begun to lose trust in the competence of an administration to manage anything effectively, beyond taxing them to the hilt and then mis-allocating the proceeds. The ‘sound economy’ spin doesn’t wash. If the collapse of the Labour vote in these second order elections was not so spectacular, there would be a sharper focus on the ‘wallop’ that has simultaneously been delivered to their partner in government.
Politically, the concern at this point is that neither of the government parties appears to recognise that in a two party coalition there are only equal partners – the withdrawal of either one leads to government collapse. Whether these parties are capable of grasping this reality, and modifying the way in which they conduct their business within government, and with each other, accordingly, remains to be seen.
@docm
Yes, it would be a welcome development if the Dutch rejection of the extreme right was replicated across the EU in these Parliament elections. I hope it is, but that’s only a ‘hope’. In terms of my previous analysis, I think it is helpful to look at the continuing trend of declining citizen interest in EP elections over time and what recent eurobarometers have been showing about the decline in trust in politics and parties generally, which would tend to bear it out.
Labour made it’s own choices. In 2011, they gave many in the electorate hope by offering a programme that they appear not to have believed in themselves. Having presented that programme to the people, and achieved the election results they did, they would have done better to stay out of government, even if that meant another election producing a single party Fine Gael government. We would have had a politically vital coherent opposition instead of relying on a few mouthy independents to do the job. The Labour Party would not have been exposed as a Emperor with no clothes, and would almost certainly now be lining up to be the country’s dominant party.
In 2011, a slavish adherence to political stability was not what the country or the EU needed. Europe is still in the mess that it is in today precisely because so many European parties have subordinated the interests of their voters to presenting a facade of stability. It is to be celebrated that several of these parties, Labour included, now seem to be following in the path to oblivion blazed by PASOK.
@BCT
The key word in your response is ‘stability’, which like it or not is what the electorate voted for in 2011. The Labour Party had to respond to that, otherwise they would have shown themselves as supremely elitist and self-interested in maximising their own position.
The promises that got Labour and FG into trouble subsequently were of the ‘spur of the moment, back of the envelope’ variety over and above what was in their official manifestos, which, as always, were a menu card for negotiating a programme for government. Both parties also promised significant political reform. In government they ignored that promise, in their own self-interest, of course. That negligence is part of what they are paying for now.
Going into government does not prevent Labour or anyone else from “protecting the interests of their voters”, as you put it, in so far as it is possible to do so. That task is bounded both by short term and long term judgements and decisions as to what the best measures are going to be to protect those interests. I think this is important, because it goes to the heart of what politicians must do in seeking to preserve a balance between the actions required to keep the economy afloat and acting in the interests of the people they serve. That’s where creative thinking, developing imaginative alternatives, reform of political processes and being honest with the people rather than wholesale spin come into it. Sadly, I can’t think of any examples of any of these attributes in this government’s performance.
The issue then becomes one of performance, which is judged retrospectively by the voters. The problem for the government parties is that, overall, the electorate currently rate that performance as ‘poor’.
@ veronica
Where there is good governance, neither the extreme right nor the extreme left will gain a decisive voice. The essence of that good governance is management of a country’s finances by balancing revenue and expenditure and dealing with both in an egalitarian manner. If the problems in these areas are fixed, the problem of the risk from the extremes will be overcome!
Labour were not up to the job and ended up pleasing nobody. The party is now caught between the devil and the deep blue sea. The consolidation of the public finances is not completed by any means. Labour can try to continue presenting itself as the smaller party fighting the avoidable actions of the larger party when it is clear that the electorate no longer subscribes to this narrative.
Or insist that all spending plans be put on the table where they belong; in committees of the Dáil within an agreed legislative fiscal framework. It is the only way to call the bluff of the cacophony of voices – now literally taking over local government – that continues to indulge the electorate in the belief that “austerity” is somehow avoidable. In fact, the electorate does not believe this. It is rather a case of individuals believing that they have done enough and it is up to others to do more. This dispute can only be settled by getting the facts out into the public domain through a single controlling department and modern accounting methods.
There is not even acceptance in the political class that this needs to be done five years into the crisis. What we have instead is a stream of management gobbledygook from two departments competing – both politically and administratively – to re-arrange the deckchairs while the line staff of a still very competent public sector attempt to keep government functioning.
@ veronica
To the above, I would add the point that the administration of the country continues under the same outdated management legislation which,it could be argued, contributed to the collapse of good governance. One would have imagined that the government would have had sufficient coherence to at least review it (as was indicated, if I am not mistaken, was one of the actions promised).
No sign of that either!
http://www.finance.gov.ie/news-centre/speeches/senior-officials/address-secretary-general-moran-public-accounts-committee
In May 2010 at the nadir of the recession, Eamonn Gilmore’s “big idea” at the Labour Party conference was a fourth review of the Constitution in recent decades – the most recent report was from 1996 when a committee chaired by TK Whitaker reported.
Less than a year before the general election, Gilmore was good at attacking the record of the Government but he lacked a credible prospectus for governing. Enda Kenny wasn’t much better.
I wrote in May 2010:
It’s too late now for reinventions and with at least two-thirds of Labour TDs fearing the loss of their seats, it will be a period of strife and controversy that will be reflected in the national media ahead.
So the best that Gilmore can hope for is to hold onto the leadership of his party, become minister for jobs announcements and try and speed up decisions on spending the €6.8bn residue of the national pensions reserve.
However spin is losing its potency as it has been overdone by governments for decades.
The Government’s publicity machine was in full election mode in recent weeks and last Thursday on the eve of polling, another ministerial press conference was held with the taoiseach and 3 ministers in attendance launching more schemes.
Why is the spin going to work now?
Deficit limits and debt will limit budgetary flexibility while the reported rise of 61,000 in jobs in 2013 is not making a big impact on tax revenues so far.
Finally, for a party in power to lose public support or to be voted out of office is not a long-term calamity if it can claim a record of credible achievements.
Implementing only a bailout program that had been agreed before it assumed office, is a limp legacy.
The embedded interview with Pat Rabbitte in this link fits well into the “where do go from here category?”.
http://www.independent.ie/irish-news/elections/ireland-was-a-shipwreck-we-had-to-do-things-we-did-not-want-to-do-labours-pat-rabbitte-30302690.html
@ veronica
From the Programme for Government.
“We will legislate for a reformulated code of laws, replacing both the Ministers and Secretaries Acts and the Public Service Management Act, which will spell out the legal relationship between Ministers and their civil servants and their legal accountability for decisions and for management of Departments.”
@ MH
I think your point about it being too late is correct. Brendan Keenan is right in his assessment that the next budget will be the crucial one. One might also note the mention in the video link above to the three issues where the political shoe pinches the most (i) property tax (ii) water charges and (iii) USC.
@DOCM
Thanks for the links and the insights. If you and MH (above) are right, then the government is now in crisis and it’s hard to see how it will be able to agree a budget.
@ veronica
They will agree a budget alright but not in the manner so extensively touted cf. the relevant paper linked at the bottom of this webpage (which I think is from 2012).
http://www.per.gov.ie/expenditure-reform/
As the ad has it; “where’s the beef?” Neither the legislative fiscal framework nor the central budgetary and accounting mechanisms to allow the new system to function seem to exist. And it is well nigh impossible to imagine this happening without the amalgamation of the two departments, one of which should never have come into existence in the first place (and which Labour should have had more wit than not alone push for but put one of its own in charge of).
…. ahhh let’s forget the bleed1n ordoliberal abstractions in the budget …
Let’s start with the conclusion: if by this time next year if there are people still homeless, it’s because the Government made a policy choice. And the policy choice was to tolerate homelessness.
Now, back to the beginning.
The Government will be spending €7.1 billion this year. It won’t be spent on public services, or social protection or investment. And there will be no debate on it. There will be no current affairs programmes, no panel discussions, no commentaries in the print media. The Government will spend €7 billion this year and very few will know.
This €7 billion is being spent on paying down debt. It comes from the Government’s considerable cash balances. At the end of 2013, the Government held €18.5 billion in cash. This is made up of money that has already been borrowed and revenue from bank investments (e.g. bonds held in Bank of Ireland, etc.). The Government is taking the €7 billion and paying down Government debt to lower the debt/GDP ratio.
Read on: http://www.irishleftreview.org/2014/05/12/time-year-homelessness/
‘€3.5 billion would build approximately 20,000 social houses. This would house over 20 percent on the waiting list. And this programme could target the nearly 3,000 living in emergency accomodation.
This would make a significant impact on housing need in Ireland – though it would only be a beginning. More housing could be brought on stream if currently unsuitable social housing were brought back into the system – the average cost of rehabilitating social houses is €17,500.
The impact on employment would be considerable. 35,000 direct jobs would be created – that is, jobs on site. ‘
@”Others” – Largest group in local councils
Nice one!
@David O’Donnell
I agree with Michael Taft that spending the €7bn + on housing the homeless and generating 35,000 construction jobs would be infinitely preferable than using the money to pay down sovereign debt. But the question is: what are the likely consequences of such a default?
Apart from the practical feasibility of his proposal (planning, locations, workforce availability etc.) Taft does not address the ‘default consequences’ issue. It’s unlike him, as he usually has all the angles covered, one way or another.
Yes, the debt overhang must be addressed and thus far this government has not had much success with it in the EU. And yes too, the emerging housing crisis was entirely predictable which prompts the question as to what’s been going on to address it/ prevent it for the past two years? Maybe, like many of the rest of us, Michael Taft is just as mad as hell that this appalling crisis has been allowed to emerge when it might have been avoided, or at least prevented from reaching crisis levels, if only a little bit of intelligent thinking and foresight been applied.
@ David O’Donnell,
The 7 billion you speak of…
Yep… that’s what justice is all about….
Paying one’s debts.
Sweet suffering Marx but this is one rotten thread. I think the Sinn Fein surge coupled with the predictable death of the Irish Labour Party (the topic of this thread) has left Ireland’s liberals panicked and confused. Who will stand for the status quo now!
@DOCM
Dross. Anyone who talks about the threat of the extreme left to good governance is trying to take you for a fool – where exactly have the extreme left been in government recently to justify this and what would be the policies of the “extreme left” that threaten good good governance? This is just conservative pablum (ever noticed how “centrists” are indistinguishable from the “centre riight”.)
All you need to say to this is that Ireland had a budget surplus in 2006 – we must therefore have been experiencing good governance since matching revenue to taxation is the essence of it. Even forgetting this we now know for a fact that you can not “cut your way” to prosperity in the middle of a crash in demand so its sad that people can still blithely trot out fiscal rectitude as a measure of good governance without acknowledging that the economy has a path beyond the next five budgets.
I think the majority of non-sociopaths would agree that good governance is about the long term well being of the people of the state and not the current budget position. Of course the idea that the essence of good governance is matching expenditure and revenues is one that appeals to the simple minded but it is neoliberal rubbish – it suggest that government expenditures do not themselves contribute to the economy and are merely costs to the those paying tax which need to be allocated in the fairest way (where fair is left undefined.) and that in the case of an economic shock the main role of the government is to shrink.
Veronica, nice that you gave the late Peter Mair a mention. Maybe some budding political scientists on this site might benefit from reading some of what he wrote about our parliamentary party politics.
The ILP the leadership made a fatal political mistake by forming a super-majoritarian coalition with FG – by doing so, they effectively confirmed that they would concentrate on ‘policy’ rather than sucking up the spoils of ‘office’. They chose the latter course of action, and will now suffer the electoral consequences. They deserve all they are going to get. Which direction will FG go? Follow the Median Voter? This will be interesting.
David, I read that Taft piece, carefully, several times. It is quite long on rhetoric, but woefully short on recognizing the reality of our economic situation – that neither Keynsian-style spending, nor default will save us. We are going down. The choice is between what will hurt the citizens the least. I’d opt to tell the ECB to get stuffed.
Bye-the-bye. That Ukraine situation is becoming a real dilly. Its nice to know that us ‘west’ are being led, and lied to, by such historically ignorant fools. Civil wars and ethnic pogroms have a special place in folk memory.
@ BWS
The mistake of Labour was not to go into coalition with Fine Gael but to imagine that it could divide control of the public purse with it. It got little of the division and most of the blame.
@ veronica
The reform programme of the DPER in all its technocratic glory (and lack of almost any real substance).
http://reformplan.per.gov.ie/foreword/foreword.html
It would be unfair, however, to say that nothing is happening. A lot of good work is evidently being undertaken but the question is whether it is leading in the right direction. It may be noted, for example, that the legislation on which our public accounts are based dates from 1866. Nevertheless, there is much reference to the “Westminster model” in the consultation paper which is in circulation with regard to changes in the present governing legislative structure.
http://www.per.gov.ie/minister-for-public-expenditure-and-reform-announces-public-consultation-process-on-strengthening-civil-service-accountability-and-performance/
Are the authors of the consultation paper not aware that Ireland is in the EU and is sharing a common currency with 17 other members of it; who happen to be on the Continent!
Labour had no obligation to enter government on a programme directly opposed to the platform on which they stood for election in 2011 They are justly suffering the consequences.
@ All
FYI
http://www.independent.ie/world-news/europe/farright-national-front-stuns-french-elite-with-eu-earthquake-30303866.html
Labour were cosmetic more than anything and that doesn’t work in coalition in the new normal. CF the Lib Dems.
Meanwhile the Deep State grinds on.
I found this from 2010 – I think it was in the IT
“Tax breaks result in the Exchequer forgoing € 11bn in income annually according to a research paper..
Dr Micheal L Collins and Mary Walsh told the conference that lobbying by individuals and groupings was the main reason for the introduction, extension and expansion of assorted tax breaks, technically known as “tax expenditures”. There decisions were based on “very limited economic evaluation”, they added”
Here’s the paper
http://www.tcd.ie/policy-institute/assets/pdf/Tax_Expenditure_Blue_Paper_24.pdf
A lot of the money that might have been available for social housing goes into this vortex
@veronica
European Union political arrangements add a new level (literally) to this and I think you can blame much of the political alienation there is in Eurozone on the the fact that the political class (and in particular the current government in any country) have two sets of constituents which they need to satisfy and two sets of overton windows which their debate has to remain within the limits of.
The first set of constituents is the national electorate but these increasingly take second place to the political requirements of European intergovernmental arrangements and institutions, particularly for small countries where the European level of politics offers higher status, power, comfort and remuneration. Manuel Barroso is not a Portuguese politician, nor he is a European representative, nor he is a civil servant. He is a political figures who owes his position to a informal election among national premiers (the EP can of course then say Yay or Yay to the next choice they are offered). Barroso is thus a political figure whose positions and actions are only distantly connected to the will of the people and who is not in any normal sense democratically accountable.
European Union political initiatives are similarly undemocratic – they represent the majority view of governments and do not have a direct relation to the overall political position of voters in Europe. A small majority of governments with small majorities in their own countries can set the European political agenda (and, as the Fiscal Compact indicates, does).
When you combine these political structures with the ordoliberal/neoliberal agenda and restrictions of EMU (a legally mandated Overton window) it adds up to a situation where voters have almost no choice in government policies because the limits of policy are set on an intergovernmental and European institutional level.
So when Eamonn Gilmore talked in the Dail about it not being the role of the government to create jobs he did so in the context of the neoliberal consensus in Europe. He could not have said anything else as a European politician regardless of the national debate in Ireland or manifesto of his party. There can not be a left wing government in Europe without a majority of left wing governments in Europe and radical institutional change in the institutions of EMU (change which would be fiercely resisted).
It is this poisonous combination of hidden intergovernmental politics, narrowly mandated political choices and lack of democratic accountability that has the national electorates in many countries voting for anyone not involved in the whole corrupt mess of European intergovernmental consensus politics.
I could go on…..
@ seafóid
That is where the question of egalitarian treatment of both the tax and spend side of the ledger comes in. The then government could still balance the books on the back of construction bubble taxes.
Seamus Coffey put it in these terms on the Baa1 thread in his exchanges with Paul Quigley.
“The mere presence of the euro is too easy a scapegoat for the explosion of credit in Ireland. Correlation is not causation. The banks did it because they wanted to. The regulator allowed them because he didn’t want to know. The government facilitated it because they collected a third of it.”
The question is whether we are about to see a repeat of this. The current tax breaks are only slowly being wound down and several new ones have been introduced.
@ All
To balance reports of an earthquake in France, this downbeat and more accurate report by Deutsche Welle which sums up the overall situation with regard to the outcome of the EP elections; “no real surprises!”.
http://www.dw.de/keine-wirklichen-%C3%BCberraschungen-bei-europawahl/a-17662074
The Christian Democrats need the Socialists and vice versa! Neither can find a majority, for example, for their “candidate” for the post of President of the Commission without the other.
The dinner discussion on Tuesday between Heads of State and Government, to give them their full title, on finding a majority for their nomination, whoever he or she may be, and who must also find a majority in the EP, should be interesting.
@Veronica
Taft is not speaking default. the 3.5 billion are already in the kitty.
@BWS
‘
I’d opt to tell the ECB to get stuffed.’
Text from Blind Biddy (out an about): +1
@Ukraine
Oligarch-eile!
@DOCM
.!
Coming late to an excellent thread.
@ DOCM
‘The essence of that good governance is management of a country’s finances by balancing revenue and expenditure and dealing with both in an egalitarian manner.’
That is just one aspect of good governance, namely prudence, currently defined as fiscal. There is no economics without politics, however, and no politics without morality.
http://en.wikipedia.org/wiki/The_Allegory_of_Good_and_Bad_Government
The estimable and elusive Veronica has put her finger on it.
‘The problem with this government is that, from the outset, it has demonstrated lack of any vision as to what kind of country we want to have and the values it should be based on’
Shay is on the money too, even if he is chucking a few rocks as he goes along.
‘I think the majority of non-sociopaths would agree that good governance is about the long term well being of the people of the state and not the current budget position.’
Bottom line, as BWS says:
‘We are going down. The choice is between what will hurt the citizens the least’
That’s the harm reduction approach. Keep calm and have a cupcake.
In the context of the thread theme, it could be argued that FN in France have topped the poll, by taking at least one, if not two, of left policies; anti-globalization and anti-euro. Both of these policies are contrary to the interests of the working and out of work classes in most countries, with the possible exception of Germany.
It comes as no surprise at all to me that FN and UKIP are heading polls.
The EU has placed investors interests on a pedestal to which all must pay homage. The clear message from the EU, and in particular of the EZ, is that worker and employment protection rank behind investor and creditor protection.
The lower orders are simply fighting back.
http://www.theguardian.com/commentisfree/2014/may/26/martin-kettle-comment-britain-marching-to-different-drum
“Last night, the leader of the European People’s party, the centre right grouping in the European parliament supported by Chancellor Angela Merkel’s CDU, claimed victory in the polls, a prelude to a push to install Jean-Claude Juncker as the new head of the European Commission in succession to José Manuel Barroso, also from the centre-right. But projections suggested the EPP, headed by Juncker, will have only 211 of the new European parliament’s 751 seats, compared with 263 out of 736 in the outgoing parliament. By any standards, that is a defeat not a victory. To impose Juncker now would be a catastrophic error.”
@ Paul Quigley
The point that you make is so obvious, that I took it for granted. However, no government can run eternally on credit, whatever its values. (It has been tried many times). It is also inherent in my use of the adjective “egalitarian”, which would include the equitable sharing of misery, which has not been the case in the handling of Ireland’s budgetary bust.
@ seafóid
Kettle has misunderstood Merkel’s position (which she summed up recently in stating that the obvious that a majority had to be found both in the European Council and the Parliament for the same person).
The argument that Kettle advances, however, is almost certainly also the one that she will be very happy to see other leaders advance as she is not a fan of Juncker. No decision is expected tomorrow, the exercise being a sounding-out one. Given the performance of Cameron to date, he is almost certain to blunder into to some public statement of intransigence which will help matters along in the direction in which she wishes matters to go i.e. getting someone other than Juncker appointed without any blame sticking to her. He is, after all, the candidate of the EPP.
@ PQ
The IMF runs a blog on the topic of budgetary management which had an item recently about developments in Sweden, the best exemplar that I am aware of (certainly better than the “Westminster model”).
http://blog-pfm.imf.org/pfmblog/2014/04/formal-vs-informal-fiscal-rules-lessons-from-sweden.html
It is an unending tug-of-war. The bottom-line is that there must be a consensus across the political spectrum regarding the need for sound budgets. We seem to be light-years away from achieving this, despite the issue being of the utmost topicality. This is amazing in one sense, given that we are borrowing billions to pay public service – including practically all academic – salaries and pension and social welfare payments generally. Even if one accepted the doubtful proposition that one-third of our debt position is somehow unjustified, the position, as I recall, set out by Philippe Legrain, this would not alter the wider picture. But the mythical third seems to be blocking all rational debate about the other two-thirds; at least until this weekend.
Attention has turned to the October budget.
@DOCM
(1) The word “sound” is utterly devoid of content. You might as well have said “serious”.
(2) The political spectrum is a significant sense about different budget priorities including the level of debt it is appropriate to incur at any given point in the economic cycle. Asking for agreement on budget priorities across the political spectrum is like demanding the the end of politics (which is the topic of this thread really).
This is the kind of mendacious drivel that the European Commission could have come up with the implication being that they would provide criteria for “soundness” which would then be politically limiting and, of course, neoliberal in intent. People of the Eurozone rejoice in your democratic privileges – you can vote for any party you like as long as you realize that they are required by international treaty to implement a right wing fiscal agenda!
People complain about the rise of the far right but the EU has strong anti-democratic and autocratic tendencies already.
@ DOCM,
“It is an unending tug-of-war. The bottom-line is that there must be a consensus across the political spectrum regarding the need for sound budgets. We seem to be light-years away from achieving this, despite the issue being of the utmost topicality. This is amazing in one sense, given that we are borrowing billions to pay public service – including practically all academic – salaries and pension and social welfare payments generally. Even if one accepted the doubtful proposition that one-third of our debt position is somehow unjustified, the position, as I recall, set out by Philippe Legrain, this would not alter the wider picture. But the mythical third seems to be blocking all rational debate about the other two-thirds; at least until this weekend.
Excellent summation DOCM.
I would see the Irish public as suffering from the disease of “entitlement”.
Too many people see their rights of entitlement… and that the taxpayer has to fund those rights.
The fact that there is not enough taxpayers in the country to fund these ideologies is of course irrelevant. The money can be borrowed forever, and if we can’t borrow.. we just won’t pay it back.
@ DOCM
Thanks for link to interesting document on future budget planning. From scanning through it, it would appear to be an improvement on the archaic and unsustainable current budgetary process.
As to the civil service/political nexus reform consultation paper, I think it might be worth reading Frank Litton’s take on it on his blogsite ‘Just Muddling Through.’
For much of the history of this state, the ‘Westminister Model’ was far more rigidly applied than in the UK, from which it was derived. In terms of the structure of our political institutions, it is still important though, as you rightly point out, our EU experience and, in particular, eurozone membership have resulted in significant adaptations.
@ BWS
Mair’s contribution to political science scholarship, in Ireland and internationally, will enlighten generations to come!
@ SB, DOCM
Do we not already have consensus on how the budget should be managed? Everyone is in favour of balancing the budget in the long run, and nobody is in favour of balancing it at any particular point in time.
@skeptic01
Do we not already have consensus on how the budget should be managed? Everyone is in favour of balancing the budget in the long run, and nobody is in favour of balancing it at any particular point in time.
That is funny but not precisely true. The key thing to bear in mind is that the ordoliberal (and usually conservative/neoliberal) approach is based on fiscal goals whereas the Keynesian position (and the one of the left) is based on economic goals.
You could think of the positions like this:
Ordoliberal: Budgets need to be cut as soon as government revenues fall ie: If the economy crashes the government spending crashes too – follow the “market”, it will fix itself (why just look at the Eurozone’s 23% youth unemployment!).
Reganites: Budgets should be balanced but the deficit may have to rise as tax is cut and enterprise is freed from its state shackles. The inevitable improvement in growth will then deal with the deficit.
Keynesians: Budgets should be cut during booms to allow for savings to pay for the inevitable bust but even without a buffer the government may need to take up economic slack during a crash/recession by increasing debt – the markets are prone to animal spirits and can fall into a bad equilibria which need to be protected against. Do not follow the market over a cliff.
The left: Budgets are there for longer term social and economic goals and the position on the appropriate balance is a political one. The market serves a purpose, and when it fails other approaches are necessary,.
The budget balancing “all the time, every time” approach has a large train of classical economic baggage (markets clearing, ratex and policy ineffectiveness) which, to put it mildly, has not held up well over the last fifteen years or so. Unfortunately it is the German position (for reasons of self interest and culture) and the European Institutional position (because of class interest and political prejudice). Six years of economic crisis later it might be time for a more reality based approach
Incidentally the IMF post on Sweden unsurprisingly takes the conservative/ordoliberal approach but again it is a political preference rather than a technical one. Rules based approaches, whether informal or formal, have an unavoidable political cast. You can not have rigid rules and responsive democracy – and people like their democracy.
Sorry, this bears repeating.
The focus on fiscal rules during a recession is exactly the wrong one, we know that fiscal rules would not have prevented the bubble and crash and we know that the current fiscal rules are not helping us recover from them. They are less than useless, a reactionary attack on reason and economic history.
Fiscal rules are a huge red herring and an intellectual trap, like worrying over the fine tuning of carbon trading rules rather than an actually effective climate change policy. Do not be distracted.
@ veronica
Thanks for the blog link. I was not aware of it. The consultation paper is, indeed, very poor. Eddie Molloy had some very interesting things to say on the Marion Finucane show regarding the overall complex of problems; (halfway in on the item relating to his role in REHAB).
My concern is not so much with the minister/civil servant relationship as with the impact of the continuing attempt to apply a standardised management process to a disparate public sector. It is a dead-end and enormously wasteful of staff resources and time. Having two lead departments makes the situation even worse.
I understand that Eddie Molloy has a paper in preparation for the McGill summer school. Maybe the topic will get a wider airing. However, I cannot see how the existing legislation can only be tinkered with. The entire approach has to be abandoned and combined with budgetary reform under the direction of one department. I doubt if anyone could imagine that happening. The system will continue in its present “going through the motions” format until its irrelevancy become so obvious that it will be replaced, probably by another equally ineffective “reform”.
@ skeptic01
You have a point there! I am not, however, advocating continuously balanced budgets. Sound budgetary policy could be summed as “prudent management with the capacity to carry out counter-cyclical policies when required”. I recall reading a paper some years ago, prior to the euro-crisis, that this would require smaller countries to run budget surpluses in good times of the order of several points of GDP in the context of membership of a single currency! This is not a message that either politicians or electorates wish to hear.
@ Sporthog
“I would see the Irish public as suffering from the disease of “entitlement”. ”
I wonder if that isn’t linked to how centralised government is.
If power was devolved locally and people had to decide how a percentage of tax money was spent and had responsibility to ensure spending was within limits would things be different?
@ seafoid,
Not sure about centralised Govt. Ireland is a small enough place already…. how much smaller is the pie to be chopped up, divided down again and again.
The more divisions… the more levels of management involved, duplication of decisions across 26 counties, duplication of expenses to be paid perhaps.
Some counties would not be able to support themselves, due to the low population i.e. Leitrim, Mayo etc
My point is mainly directed towards what I see as “a culture of entitlement” which seems to be multiplying for a number of decades now.
Just one example… why are financial contributions not demanded from the fathers whose children are living with their single mothers? Why does the taxpayer have to keep these children out of poverty?
Of course I agree children should be kept out of poverty, very important, but if you are a parent of a child… you have to step up to the plate and contribute your fair share. Leaving the responsibility to the taxpayer is unjust, in addition the cycle can repeat itself every 20 years or so, when there will be an even greater number of children to be supported by the taxpayer.
@ SB Granted, theoretical economists have proposed different approaches to the budget question.
In practice though the approach most commonly applied seems to be to match the budget cycle to the electoral cycle whenever possible. A cynic might also take the view that the ruling parties will normally target any stimulus preferentially towards their own electoral base.
Unfortunately the electoral cycle does not normally coincide with the business cycle. Perhaps the government should be required to call a general election whenever we have two quarters of negative growth?