Budget 2015

There’s plenty to discuss from yesterday’s announcements but any OP is not likely to be followed by related comments.

All the relevant documents from the Department of Finance are here.

This is a summary of the aggregate budgetary changes (in €million).

Here are two vintages of the debt interest table.  First from the April 2013 SPU.

And this from yesterday’s Economic and Fiscal Outlook:

There are lots of opinions I’m sure on how this (temporary?)  improvement was used.

Comments

comments

132 thoughts on “Budget 2015”

  1. So, what was the point of the two-company limited/unlimited structure and the routing through NL? Was it just to hide the accounts for trade secrecy? Or was it to avoid tax payable in the US?

  2. I see no reason to believe the improvement is temporary.

    The probability is that Ireland is in the early stages of another 20-25 years of strong growth. It is not certain, of course. Nothing is certain in the real world. Who’d have thought on the night of the World Cup final that Germany would be held to a 1-1 draw at home to Ireland? The main danger for Ireland at present is the miserable growth, bloated government, high taxation, awful demographics, loony-left liberalism, anti-Christianity and general uselessnesss of governance that is infecting many once-great continental European countries. France is the prime example, but others too.

    However, just looking at Ireland in isolation, all the stats look good.

    Ireland had continuous strong growth from 1958 to 1983 – a 25-year boom.

    then a recession, followed by:

    continuous strong growth from 1987 to 2007 – a 21-year boom

    then a recession, followed by

    continuous strong growth from 2012 to 20??

    Apart from the danger I mentioned above, I see no reason why the current growth spell should not last as long as the previous two, and lots of reasons why it should:

    (a) the balance-of-payments is in large surplus, so no external constraint on demand

    (b) competitiveness has hugely improved – Ireland has had the lowest inflation in Europe since 2007

    (c) the construction industry is at the bottom of its cycle – only 8k houses a year being built, about a quarter of long-term demand

    (d) unemployment is relatively high – it night seem strange to cite this as a factor for future growth, but the fact is that, when a period of growth commences, the higher unemployment is at the start of it, the longer the growth can continue before running up against labour shortages.

    No doubt in time, as the boom continues, bad habits and complacency will creep in. They always do, in all countries. Its called the economic cycle. Eventually, the boom will bring full employment, high immigration, but higher inflation and higher government spending. In the 1958-1983 boom, it was growth, growth all the way before these bad habits started kicking in around 1970. In the 1987-2007 boom, it was growth, growth all the way before these bad habits started kicking in around 2000. In this boom, it will probably be growth, growth all the way until the early to mid 2020s, then, as memories of the most recent recession fade, bad habits will start kicking in and another recession in the early to mid 2030s.

    However, as I said, continental Europe is a big worry. If it doesn’t get its act together, then the rosy scenario I outlined above is in danger. Anyone wanting to understand why Ireland’s growth is soaring and the country is oozing with optimism, while continental Europe is mired in low growth and pessimism, should look at the following figures. These are for the growth in government spending in REAL terms between 2007 and 2013.

    Ireland -13%
    Spain +3%
    Finland +4%
    Denmark +6%
    U Kingdom + 6%
    Netherlands + 8%
    France +9%
    Germany +10%

    It is scarcely credible that, given their budgetary situations, some of these countries increased public spending so much. France in particular. How can they justify such an increase in the current circumstances? No wonder they are growing at one-tenth Ireland’s rate. And George Osborne’s claim to be the slasher of ‘big government’ doesn’t look so hot either.

    For the second time in 25 years, Ireland going down the route of slashing ‘big government’ has paid off and resulted, not in the economic Armageddon left-wing commentators claim, but in an economic boom. You can feel the heartbreak oozing out of every word written by the likes of Fintan O’Toole, now that its dawned on them that this is so. And when will Paul Krugman mention Ireland next? Probably never. Indeed, i is not fanciful to believe that, if Ireland’s boom continues until Nov 2016 (very likely), it could be a factor in the U.S. election and swing it in favour of a pro-business candidate like Mitt Romney or Paul Ryan and away from the ‘big-government’ democrats.

    As for the political implications in Ireland, it pains me as a northern nationalist to say it, but it should be a shoo-in for FG/Lab. Michael Martin’s shifting FF to the left is proving a flop. Baldy Noonan has done a fantastic job and is turning out to be the greatest Limerick man since Sean South. FG should seriously consider replacing Enda Kenny with Baldy and bringing back Lucinda Creighton if they want to reap the full benefits of the economic boom.

  3. jto,
    I predict a 200 post thread with the following themes
    *the govt is cooking the books
    *giving away too much ot the rich
    *spending too little
    *should have adhered to the master-plan laid down by the EZ- DOCM in 47 posts
    *Double Irish will cause all the MNC to leave
    *We are all ruled by corrupt gombeen 70 year old teachers and we have no idea how to do anything right. Anyway our stats are makey uppy-MH in 67 posts
    *We are all doomed, doomed I tell ya- Corporal Seafoid.

  4. @ Ossian,

    The objective to was get the profits to zero-tax jurisdictions. The “double-irish” had no impact on tax paid in countries where these companies have their customers (UK, GER etc.) or where they book their sales from (IRE). The profits are attributed to the intangible assets and the location of that is key. Transfer pricing rules determine the profit allocated to each stage not tax residency.

    There are a myriad of ways of getting the profits to a no-tax jurisdiction. As long as the intangibles are located there current transfer pricing rules allow the profit to be allocated there. What companies want to do is to engineer a structure that doesn’t trigger tax payments along the way (mainly be avoiding have a permanent establishment in countries). That be can easily done for “digital economy” companies. Tightening around “double-irish” arrangements just means an alternative has to be put in place. That is not to say it is easy but the six-year transition period gives plenty of time.

    Of course, yesterday’s announcement was overplayed in the budget speech and lapped up by media outlets around the world. Perhaps they considered it some kind of victory. The Minister said ” I am abolishing the ability of companies to use the “Double Irish” by changing our residency rules to require all companies registered in Ireland to also be tax resident.”

    He cannot do that and the detail of the Finance Act will reflect that. What will be removed is the “trading exemption” to the test of incorporation. The “treaty exemption” will remain and necessarily so. Ireland cannot unilaterally decide that all companies registered here are tax resident here. In case of conflict, tax treaties determine the matter and the usual tie-breaker clause is the test of management and control.

    An Irish-registered company that is managed and controlled in France will be resident in France. Of course, companies don’t use France in the corporate structure shell games. But what about Jersey? Is it possible to have an Irish-registered trading company, owned by an Irish-registered holding company that also owns the intangible assets but is managed and controlled in Jersey? Where will the holding company be resident? Is this not a “double-irish”? We must await the detail but the headline writers don’t.

    Of course, for US MNCs all this profit is subject to their 35% corporate income tax rate anyway. The structures are all about creating a deferral of the payment of that until the profit is repatriated to the US (and ensuring as little tax as possible is paid in the interim). That is the heart of the matter. The “check the box” election offered by the IRS means this deferral can be easily achieved.

    What gets little attention is how the intangible assets were transferred out of the US in the first place. Current transfer-pricing rules means it is correct that an Irish trading company pays massive royalties for the right to sell based on these intangible assets. But how did the intangibles get to the no-tax jurisdictions in the first place? There was licensing agreements put in place between these intangible-asset holding companies and their US parents.

    If Google was to move its intangibles to Bermuda now there would have to be massive payments to the US parent to pay for the asset (and then a tax bill) based on the arm’s length principle. Early moves by Google back in the late 1990s put in place cost-sharing agreements before the commercial value of Google’s technology was apparent to tax authorities meant that the transfer was allowed at a price, which in retrospect, was extraordinarily low. A lot of the focus is how the transfers get to Bermuda but more attention should be paid to how the assets get there – and the country that allows them to go there!

    The OECD are focusing on this issue. Pascal Saint-Amans made all the right noises about the moves announced yesterday but he knows it will have no impact on tax outcomes. The OECD are hoping to address the problem with these structures by forcing companies to link their profits with substance. This is to try and prevent companies locating their high-profit assets like intangibles in no-tax jurisdictions like Bermuda. Under OECD proposals, companies will still be able to locate their assets in Bermuda but unless the staff who work with these assets are also there they cannot locate the profit there. The intention is that the profit must be co-located with the substance; not in a brass-plate operation with nothing more than paperwork. That is the intention anyway.

    Of course, countries are seeing this coming and are moving to make themselves attractive for these intangible assets. Thus we get announcements of “patent boxes”. Ireland is going for one and probably at a rate of no more than five percent. It looks like the effectiveness of the BEPS project will be undermined before it has even begun. This “patent box” announcement was far more significant than anything on the “double-irish” but didn’t garner the same headlines.

  5. Why is the tax buoyancy figure so low, in an economy that is growing at ~4% to 5% on an annual basis. Is this just caution or is it a true best estimate?

  6. @ Joseph,

    The “economy in Ireland” as measured by national accounts might be growing at 5% but the “Irish economy” that we actually see around us is not.

  7. Interesting stuff on Shire today. For those who don’t know, this company has over the years attracted a lot of press attention regarding its tax strategies.

  8. re tax revenue, the main reason for slower revenue growth in 2015 (3.1%) is the pension levy, which raised an estimated €590m in 2014, but this falls by around €475m in 2015. Adjusting for this and some other issues the Department says that tax revenue would grow by 5.5%
    Ireland’s potential growth rate has now been revised up by around 0.5% per annum over the medium term, highlighting the guesswork in estimating a structural fiscal balance for Ireland. Nevertheless it has to be done as Ireland is required to reduce any structural imbalance by over 0.5% of GDP per year and the Budget documentation is interesting in that regard.
    The output gap in 2014 is now deemed to be around zero (with an unemployment rate over 11%!) and the output gap rises to 1% in 2015, implying a cyclical fiscal surplus of around 0.5% of GDP. The actual forecast deficit is 2.7% so the structural deficit is put at 3.3%. That is projected to fall to zero by 2018. In addition Ireland has to adhere to an expenditure benchmark, meaning that government spending must rise at a slower pace than nominal GDP. In sum, Government voted current spending will have to fall steadily relative to GDP over the next 4 years whoever is in power, absent changes in the euro fiscal rules.

  9. Alan Ahearne’s assessment.

    http://www.irishtimes.com/business/economy/budget-decisions-framed-by-strong-economic-recovery-and-looming-election-1.1963337

    It seems to me that he has it about right. (One is prompted to the general conclusion that it – the budget – could have been a lot worse).

    The central question remains whether the political process will change i.e. that a consensus will emerge (i) that the tax base cannot again be “hollowed out”, to use the phrase of AA and (ii) that there must be a focus on investment which enhances the productive capacity of the economy and aids in running a sufficient surplus to begin paying down debt.

    The multi-annual elements introduced by the MOF should aid in achieving (i). The record on (ii) is miserable and is continuing. The argument continues to be about how to divide the cake with little attention paid to the fundamental need to increase it.

    It was, incidentally, remarkable to hear the MOF state on Prime Time that the only EU rule that applied to Ireland was that relating to the 3% budget deficit threshold as we were no longer “in a programme”. His opponent had either neither the knowledge nor the desire to contradict him. The same holds true of the programme leader. It will be interesting to read the Commission’s assessment.

    Lara Marlowe’s report on France shows that there is nothing new under the sun with regard to the management of the finances of a democracy.

    http://www.irishtimes.com/news/world/france-on-collision-course-with-brussels-over-budget-1.1963441

    Taking nine million households out of the income tax net, however, takes some beating.

  10. Dan,

    how can you have a economy operating at trend with an 11% unemplyment rate? Would that not imply that there was no excess supply in the labour market. Should somebody resp for the calcs be asked to explain themselves?

  11. @tullmcadoo.

    Yes the implied structural unemployment rate is very high and I remember in the late 1990s everyone argued that Ireland’s structural rate was also in double digits(it fell to under 5% subsequently of course). The ESRI have queried the European Commission approach to Ireland’s structural balance and as it is unobservable anyway it seems crazy to have made it a key cornerstone of the EU’s fiscal rules.

  12. @ DOCM,

    It was, incidentally, remarkable to hear the MOF state on Prime Time that the only EU rule that applied to Ireland was that relating to the 3% budget deficit threshold as we were no longer “in a programme”.

    Not sure what’s remarkable about that given that it is true. Under the EDP the only benchmark that must be satisfied is the GGB limit set out in the relevant Council Recommendation. Once a country is in the EDP no other benchmark applies.

    Upon leaving the EDP a country will be subject to the “balanced-budget rule” – a 0.5% of GDP improvement in the structural balance until the MTBO is achieved – and also subject to the “expenditure benchmark” – until the MTBO is achieved growth in expenditure is below the potential growth rate of the economy. Three years after leaving the EDP a country becomes subject to the debt-reduction benchmark. Ireland won’t leave the EDP until 2016.

  13. Dan McLaughlin mentions about that Govt exp will have to grow slower than nominal GDP over the next few years, fair enough.

    If you look at table 3 of the Econ and Fiscal Outlook:

    http://www.budget.gov.ie/Budgets/2015/Documents/141014%20Economic%20and%20Fiscal%20Outlook%20REV%202.pdf

    you will see that Govt consumption is forecast to grow at 0% in 2016, 2017 and 2018. This suggest 0% nominal growth and falling real G exp.

    Now this seems either naive or unrealistic.

    We have a slowly ageing pop, and a high school-going pop, with more demand for edu and healthcare exp.

    How will these needs be met with 0% nominal G exp growth??

  14. 0% nominal growth in Govt consumption suggests that the only way PS payrises can happen is for PS emp to fall further.

    Or else PS pay stays flat in nominal terms until 2018?

    What about increments? Surely they alone put small upward pressure on G consumption?

  15. @ Stephen,

    The text says:

    For the purposes of the budgetary projections … there is a technical assumption that voted expenditure continues at 2015 levels

    which makes them somewhat meaningless as projections.

  16. From afar, Irish interest rate assumptions (that the exceptionally low interest rates will continue indefinitely) are inherently optimistic. Look at some of the effects of today’s equity market falls:

    http://www.bloomberg.com/news/2014-10-15/debt-crisis-reawakens-in-european-bonds-as-greece-roils-market.html

    It would take very little to upset the cart. With Germany likely in recession again, the interest rate risks are again all to the downside. Anyone who understands interest rates knows that….

    Which is why Ireland shouldn’t get carried away anytime soon…..

    And there are all those known unknowns, etc. I liked this article in the Irish Examiner today.

    http://www.irishexaminer.com/viewpoints/columnists/gerard-howlin/yesterday-didnt-budget-for-the-looming-public-sector-pay-talks-291311.html

    “Fair wind” forecasting is all very well…..The Fiscal Council used to produce stress tested data a few years ago which focused on upside /downside capacity to absorb negative /positive shocks. Any of that publicly available these days? Relative analysis would be far more informative.

  17. @ Seamus Coffey

    I referred to a “rule” not a “benchmark”. You have set out the rules that apply. The MOF was – deliberately in my opinion – creating the impression that all we had to do was keep our deficit below the benchmark 3%. This may be understandable in political terms but not otherwise. To quote Michael Clifford in today’s Examiner;

    “The signposts, however, are somewhat confusing. He giveth here and taketh away there. He offers hints that social justice informs his politics, but he also shows that he can outbid all comers with a touch of auction politics. Too early to say yet whether he’s taking a road that leads anywhere but back to where we’ve come from.”

    http://www.irishexaminer.com/analysis/budget-2015-the-road-less-travelled-were-on-the-road-to-god-knows-where-291344.html

    There is little or no evidence that the current government has learned anything in terms of changing the mindset of the electorate with regard to managing the Irish economy.

  18. The other clear external interest rate threat is somewhat reflected of course in oil prices and fx.

    http://www.bloomberg.com/news/2014-10-14/get-used-to-strong-dollar-and-many-ways-it-ll-affect-investments.html

    At the IMF conference in Washington at the weekend, almost all FI CEOs were negative (US, European, Canadian in any event) and most senior FI economists are predicting a strengthening $ versus €, with some predicting parity in the not too distant future. Cheap oil (in $) and a strong $ is great for the US in the near term (and “importing inflation” via a strong $ is hardly an issue right now….). However, the opposite could very well be the case for Europe if a € decline is greater than the $ value decline in oil. More € will be required to buy $ oil.

    So May Ireland not be complacent!

  19. @ DMcL

    The issue you raise with regard to the structural deficit is an interesting one. My own conclusion, for what it is worth, is that it was chosen as the only rule against which no logical economic argument, as a cover for political unwillingness to act, could be raised apart, that is, from the difficulty in calculating it.

    What is really striking about the situation between the three main players is that, while Renzi is sailing close to the wind, the sails of Valls are flapping ahead of the coming storm, as indicated notably by the two fingers seemingly being given by his finance minister to the entire EU budgetary rule book.

    http://www.ft.com/intl/cms/s/0/f79cf99a-5460-11e4-b2ea-00144feab7de.html#axzz3GDo9txyR

  20. @DOCM
    It’s a form of ‘whatever it takes”, no?! As opposed to an Irish whatever you’re having yourself (or whatever which way you want us).

  21. @ Paul W

    Not quite! I think Renzi is playing a very clever game. The country that will end up isolated at the coming meeting of the European Council is France. The markets will have given everyone a right good fright, especially the ballooning of Greek bond yields, in the meantime.

  22. @DOCM

    I suppose it depends on what is considered more important. Fiscal policy is the only macro tool available to an economy in a monetary union but euro members have effectively chosen to give that up too. But if monetary policy is effectively at its limits (QE may not happen and probably wont do much if it does) the pressure to bust the fiscal rules grows. I am not sure how this tension is resolved.

  23. Ultimately, restructure. In the end, it’s about debt service, not economics (directly). However, it’ll be a long time yet before that break point is reached.

  24. @ DMcL

    Neither am I! However, I suspect that it will be a classic EU fudge with everyone going home a victor, especially Juncker who will get his €500 billion investment programme with the Germans pretending that they do not have to cough up the major share of it.

    Profligate governments, however, will still have no choice but to bite the bullet.

  25. Time to Tear up the Envelope?

    Posters may know that I have regularly adjusted DoF forecasts on the back of an envelope via a simple formula and compared this with their forecasts and actual outcomes and, so far, the envelope coming out as more accurate. This goes back to an old conversation with @grumpy and a paper he linked too.

    The envelope is really an optimism filter which says that on average Government forecasts are too high by:

    0.2% for the year we are in
    0.8% for the following year, and
    1.5% for the year following again.

    I do have subjective thoughts about this but first I’d like to look at how the envelope is doing.

    2010 DoF growth forecast (GDP) as of budget
    2010 -1.3%
    2011 3.3%
    2012 4.5%

    Envelope said:

    2010 -1.5%
    2011 2.5%
    2012 3.0%

    Outcome (according to EU Commission, Spring, after the fact):

    2010 -0.4%
    2011 0.7%
    2012 0.9%

    2-1 to the envelope.

    2011 DoF growth forecast (GDP) as of budget
    2011 1.7
    2012 3.2
    2013 3.0

    Envelope said:

    2011 1.5%
    2012 2.4%
    2013 1.5%

    Outcome:

    2011 0.7%
    2012 0.9%
    2013 -0.3%

    3 – 0 to the envelope.

    2012 DoF growth forecast (GDP) as of budget
    2012 1.3%
    2013 2.4%
    2014 3.0%

    Apply the envelope and we get:

    2012 1.1%
    2013 1.6%
    2014 1.5%

    Outcome (so far)

    2012 0.9%
    2013 -0.3%
    2014 1.7% (forecast)

    So currently 3-0 to the envelope with 2014 yet to come in (but clearly eyebrows North of the artificial border are being raised here so see below: I’m just consistently putting in the facts as they stand for now).

    2013 DoF growth forecast (GDP) as of budget
    2013 0.9%
    2014 1.5%
    2015 2.5%

    Apply the envelope and we get:

    2013: 0.7%
    2014: 0.8%
    2015: 1.0%

    Outcome (so far):

    2013: -0.3%
    2014: 1.7% (forecast)
    2015: 3.0% (forecast)

    So the envelope is currently losing 2-1 on that.

    And to bring it up to date:

    2014 DoF growth forecast (GDP) as of budget
    2014 4.7%
    2015 3.9%
    2016 3.4%

    Apply the envelope and we get:

    2014: 4.5%
    2015: 3.1%
    2016: 1.9%

    Outcome (so far):

    2014: 1.7% (forecast)
    2015: 3.0% (forecast)
    2016: N/A

    So currently 1 – 1.

    But at last the trend seems against the envelope, so is it time to tear it up?

    I did note from the start that my concern was that the envelope (which basically says things will turn out worse than expected) would miss the point of inflection: though it still may be the case that things will not turn out as well as predicted and I shall simply have to wait and see for that.

    But here’s my quick go at a narrative which I put out there (and to some extent, very politely, contra John the Optimist whose opinion I would be interested in) to see what people make of it.

    Essentially I think Keynes and Keynes flavoured economics (eg Koo) has done very well.

    Around the the bailout, 2010, it was clear that the cuts would have a *worse*impact than expected due to the balance sheet recession, a general sense of gloom, our trading partners doing much the same simultaneously, the actions of the ECB, etc. The 2010 figure above is very interesting to me as it looks like Ireland was starting to do better there but that is the year in which Europe turned to austerity, Olli Rehn began to boast about how they were doing better than the USA, the ECB began to worry about inflation, raised interest rates and more generally everyone realised that the ECB wasn’t prepared to be a lender of last resort.

    But even then it was pointed out in a paper ‘Can Austerity Work’ (must find author, Felix Salmon?, VoxEu?), that while (within its own terms) the general answer was ‘no’ (see EU/EZ unemployment for this), Ireland was different (also pointed out on the blog). This is due to the famous small, open economy with lots of Foreign Direct Investment. So as the UK under Osborne abandoned austerity and devalued and as the USA also didn’t do full austerity and both did QE, Ireland, has done generally better than the EU/EZ. But there was a four year lag in this and as the DoF, IMF, EU, OECD you name them, year after year called ‘jam tomorrow’ and even though the jam appears to be being spread at last they have lost credibility in their analysis.

    Put it another way, I don’t believe it was (generally) supply side reforms that made Ireland as most of the exported goods haven’t really been affected by that. I’m sure Michael Hennigan is on top of these figures.

    Where I do agree with JtO is that missing out on Ireland’s underlying strengths (including demographics) led to thinks like construction, and employment in construction, being allowed to fall too far too quickly: see lack of housing and social housing in Dublin.

    But very crudely, the Irish economic cork got pushed a lot further down than people in authority were prepared to face and is now bobbing back up (I hope). It’s good to be going in the right direction of travel for now but unemployment still over 10% and, looking at the streets of Phibsboro, a lot of local damage make this a tough recovery to love.

    I’m not a fan of just saying forecasting is for the birds. For one thing too many important decisions and calculations of debts levels depend on these things so they should be argued over. Also, as indicated above, I do think some analyses have done better than others and so an, ‘they’re all the same’ does not seem satisfactory. At the risk of being mean, the DoF in 2010 was forecasting growth of 4.5% in 2014. I hope they’ve had a chance to really think about that.

  26. @ Seamus C

    Thanks for the comments on the tax structures. Much appreciated. Particularly considering the nonsense written by our Financial ‘journalists’ on the matter.

    @ JTO

    You paint a bright pretty picture. I want to believe. Another Celtic Phoenix boom would be perfect.

    My nagging doubts revolve around.

    1) The over priced nature of most equities and property in a lot of major cities.
    What trick is left for ‘policy makers’ to pull if/when there’s a sharp correction in any/all of these?

    2) The slow/no wage growth in Ireland and a lot of other countries.

  27. Apologies for the break.

    Yes, Unfeasibly, you are correct. My mistake (I do not claim to be an economist). However, I have to say that “importing deflation /inflation” is an area where traditional economic definition is too simplistic and needs rethinking in my view. A confusing area and not straightforward. My “confusion” partly stems from the insertion of oil and commodities into the current equation. Difficult to reconcile the variables in a simple manner (especially when I am looking to move Euros into $)

    Here is a good article.

  28. @ JtO,

    Only digesting your initial comment now. The point about “temporary” was not in relation to the broader economic recovery; it was specifically in relation to the rapid improvement in the public finances. The public finances seem to be recovering fast; my intimation was that the public finances are improving faster than the economy because of factors that are somewhat artificial.

    It is fairly obvious that some of the recovery in the public finances is not not related to the real economy. The change in national accounting methodology in ESA2010 that was applied by the CSO during the summer saw Irish nominal GDP increase by €11 billion (c.6%). This was a level effect not a growth effect but it improved the appearance of fiscal ratios. The European Commission cannot say that the deficit is smaller because of methodological changes mandated by Eurostat because Eurostat is an agency of the European Commission!

    The reduction in debt interest expenditure is not related to the fundamentals of the economy. Repaying the IMF loans that carry an interest rate of 4%+ is completely sensible. Money markets lending to us at 1.63% to do so is not sensible. Mario Draghi’s “whatever it takes” comment is the factor here not the growth of the Irish economy. Central banking is a black art (to me at least) and subject to change.

    Next, the first table in the OP shows that since last Friday’s White Paper the government has decided to include €250 million of “special dividends” for deficit reduction purposes. These dividends were known on Friday but only put into the fiscal arithmetic on Tuesday. They are from asset sales by Bord Gais and the ESB. These sales are once-off while the tax cuts and expenditure increases in yesterday’s budget are permanent. We cannot sell again in 2016 but we have to cover the budgetary extensions every year. [As a side note who got the sums wrong in the National Lottery? €70 million is a pretty big sum.]

    And then there is the Central Bank surplus. In 2007, the Central Bank surplus was €98.5 million. The forecast for 2015 is that the Central Bank surplus will be €1,400 million. Is this €1.3 billion increase in the Central Bank surplus permanent? In case there is any doubt the the answer is no!

    For 2015, the DoF have factored in an increase in VAT receipts as a result of the change in the taxation of some services such as subscription TV. This is expected to result in an increase of receipts by Ireland of around €150m. While this effect is permanent it can only have a once-off improvement in the level of the deficit. This level effect was used this year.

    There has also been a reduction in expected social welfare expenditure because of a greater than expected reduction in unemployment-related transfers. Standard macro-theory points that these should be used as “automatic stabilisers” not as monies to be used to increase expenditure (such as the partial restoration of the “Christmas bonus”) as the economy improves.

    Then there is the apparent 5%+ increase in output (GDP). Oh to get a measure of output in Ireland absent the effect of the MNCs. Look at the endorsement letter from IFAC.

    I am not doubting that the Irish economy can grow steadily over the coming years. I think it can. I am doubting the permanence of the fiscal sums that give a deficit of less than 3% of GDP for 2015. Maybe growth will step in to take up the slack but maybe it won’t.

    Tuesday’s announcements increased the deficit by 0.6% of GDP – €1 billion. That is €1 billion extra we are borrowing because of decisions we made. Maybe economic growth will step in and pay for this largess. But maybe it won’t.

    If the economy is growing rapidly why is such an expansionary budget be necessary? [economically as opposed to politically] As page 16 of the Economic and Fiscal Outlook says this is a “€1,050m Budget package” on the expansionary side. And why is such a derisory amount of that expansion devoted to capital expenditure?

    What happened to the idea of counter-cyclical policy?

  29. http://www.irishtimes.com/business/sectors/financial-services/court-approves-aib-s-5bn-share-capital-reduction-1.1964895

    Here is a further €600 million gift to AIB staff and pensioners, who (the pensioners) receive an average of €30000pa (that is probably before the State pension, another 11,700, bringing the average to over €40000 in the case of those over 66). All this on top of the €1 billion siphoned off from the €21 billion AIB bailout to bump up the AIB staff pension fund.

    This State has no shortage of money when it comes to some sectors.

    “This followed assurances from the company [AIB] in relation to a deficit of about €600 million in the main defined benefit pension scheme covering 17,500 members, 9,000 of whom are current employees. The average pension being paid out to about 3,900 current pensioners is €30,000 per annum, the court heard.”

    Assurances!

  30. @ Paul W: “My “confusion” partly stems from the insertion of oil and commodities into the current equation ….”

    Not to worry! When the bbl ‘drops’ – a lot of smart folk will be ‘confused’… You know, as in – “No one saw this coming!” Yeah!

    Its when the bbl levitates – that’s when they will head for the Pampers counter. Bit late. But …

  31. Michael Noonan deserves credit for making the Double Irish move as does Feargal O’Rourke of PwC for the earlier advocacy of the move.

    It will take time for some past defenders of the conventional wisdom to adjust to the significant changes underway while too much focus on minutiae can result in missing the big picture.

    Like crime, tax avoidance and evasion will always exist but the environment is changing for big tax avoiders.

    1. “We comply with all laws” has been the mantra but it has often depended on a more favourable treatment by revenue authorities than that given to domestic firms.

    2. Amazon’s and Apple iTunes’ VAT regime is set to change and it would be foolish to predict that Starbucks, Apple and so on will continue to operate in their biggest European markets paying little tax.

    3. Without changing any law, the European Commission will be a threat in future.

    4. Patent box regimes are no El Dorado – the Commission again will set the parameters and several more countries will compete for the business.

    Replacing the Double Irish with Knowledge Development / Patent Box – Part 2

  32. @BW Snr
    Complicated further by rising prices and no wage growth vs official calculations of (low) inflation…..are 0.1% type inflation measures credible particularly when crime, prosititution adjustments “glamorize” the story further….plus the dodgy accounting as Seamus also points out above.

    Ref also Seamus’ 5% growth in the economy in Ireland. Presumably official Irish Govt figures use this basis as it’s foundation…..no account of looming deflation from Europe, etc. when that reality strikes (late), what then? Then, how will the international wave of deflation interact with local bubbles…eg inflating Dublin house prices drives by lack of supply?

    A quagmire of contradictions.

  33. No sign of any give on the part of Merkel! No surprise there!

    http://www.ft.com/intl/cms/s/0/fedbfcfc-5518-11e4-b616-00144feab7de.html#axzz3GDo9txyR

    The basic distinction between Germany and the economies in difficulty is that it is the unions that are part of the traded economy that call the tune in agreeing policies with the government and business. Indeed, this relationship is hard-wired into the German approach with the major industry unions having a pragmatic approach to wage restraint and changes to ensure continued competitiveness. The very opposite is the case elsewhere. How this handicap can be overcome remains unclear.

  34. Paul, the author would be accused of ‘exaggeration’ and ‘not engaging with reality’ if it were the plot of a pulp-fiction novel, displayed for purchase in an airport book-shop!

    Its difficult to believe that senior civil servants and their technical advisors are NOT aware that our developed and developing economies are actually ‘stagnating’ – again! Its hardly a novel phenomenon. By my reckoning we have had at least five such economic episodes, one in each decade, since the late 1960s. This latest appears to be the longest. And each time we have ‘bounced out’. Its just that each successive ‘bounce’ seems to have been a little lower than the previous one; ie: the Diminishing Marginal Bounce! Could you put that Newtonian variable in a ‘growth’ regression equation? 😎

    It may seem trite, but this one is different and its not the last. That ‘pleasure’ is probably a decade (if we’re lucky) from now.

    You do not (or should not) attempt to solve an economic problem (declining consumer demand + excess supply capability) by continuing to use policies that have repeatedly failed (in the past) to provide a lasting solution for that problem. Which is exactly what is currently, being both advised and enacted. Maddening. But there it is.

    Cheers.

  35. Yes, DOCM, you’re quite right: workers demanding that even a small portion of productivity gains go to them is surely a handicap to be overcome.

  36. @ DOCM: I hesitate to recommend reading* to update ones mindset, but this bald-faced economic propaganda deserves a robust response.

    “[this] relationship is hard-wired into the German approach with the major industry unions having a pragmatic approach to wage restraint and changes to ensure continued competitiveness. The very opposite is the case elsewhere. How this handicap can be overcome remains unclear.”

    Hardwired? Hardwired how? Please explain this inane comment!

    Handicap? What handicap would that be?

    Opposite elsewhere? Like in Ireland, UK and US? Indeed. Three bright and shining models of what? Please explain how this ‘opposite’ has come about.

    Pragmatic approach? Now what ‘pragmatic approach’ would that be then? Again, spell out the politics of pragmatic economic approaches for us.

    DOCM, how many times do I (and some others) on this blog, have to state that this quaint notion of ‘competitiveness’ was promptly ‘bashed, burned and buried’ the moment China and India were given (almost) unfettered access to the developed economies of US and EU. How many times?

    The so-called global trade ‘playing-field’ was not leveled – but firmly tipped-up against us. How many times DOCM? We can never again compete economically. Its over for us! How many times?

    If you believe in neo-Liberal economic ideas, values, beliefs, or whatever, please just come out and say so. These hegemonic economic ideas have caused, and continue to cause, great political and social upheavals. Millions of persons have been harmed – many have actually died as a direct consequence. And to what end? To what end?

    How many times, DOCM? How many times?

    * (please, only read this text if you are genuinely desirous of learning something unsettling. Otherwise – just carry on)

    Prasad, Monica. (2006). ‘The Politics of Free Markets: The Rise of Neoliberal Economic Policies in Britain, France, Germany and the United States’. University of Chicago Press.

  37. @ BWS

    My, my! The handicap to which I refer is the difference in the two approaches and the difficulties to which this gives rise in reaching an agreement. I am not a fan of of the German approach insofar as the point of departure is the assumption that the market for goods produced in Germany must be everywhere other than in the domestic economy. I am actually on record on this blog lambasting this.

    The possible agreement must lie somewhere in the middle.

    In fact, I think that the possibilities for agreement are good if no other reason than the risks of an outright rupture between the two biggest economies in the EA are too much for any of the participants. The current rush for cover in the bond markets is a sure indication of this.

    The topic is entirely pertinent to this thread, by the way. To quote the author;

    “There are lots of opinions I’m sure on how this (temporary?) improvement was used.”

    I think the question mark should be removed.

  38. @ BWS

    I will take the liberty of taking another quote from Seamus Coffey.

    “If the economy is growing rapidly why is such an expansionary budget be necessary? [economically as opposed to politically] As page 16 of the Economic and Fiscal Outlook says this is a “€1,050m Budget package” on the expansionary side. And why is such a derisory amount of that expansion devoted to capital expenditure?

    What happened to the idea of counter-cyclical policy?”

    If you can find it in this contribution by our second MOF, you might let me know!

    http://www.irishtimes.com/business/economy/full-text-brendan-howlin-s-budget-2015-speech-1.1963032

    The Bourbons have nothing on the Irish political class.

  39. @ DOCM: Thanks for those. I just have one question: You believe in Neo-liberalism? Just a Yes or a No. Thanks.

    Just in case: I have mentioned this before – I view economics (of whatever …ism) from the perspectives of the hard sciences – Chemistry and Physics and the hard rules of Mathematics – and I find the whole shebangs quite wanting.

    Ideas do rule – whatever some folk might wish otherwise. So, if I want to make a stab at what sort of economics a person may have in their head – I read (or listen) to what they write (or say). Not infallible – but useful.

    Some economic -isms are mad, some just bad, others plain hazardous. But its all politics in the end. And those politicians usually behave madly, badly and dangerous – especially when they insist on spending other folks’ monies. Unless that moolah keeps coming … ….

    Ireland (politically, socially and economically) is a Roman Catholic Oligarchy – like it or love it, we’re (mostly) Neo-liberal. I suppose some would like to believe we are a Christian Democracy. Or even a Constitutional Republic. We’re neither. Who’d thought?

  40. @ BWS

    I do not believe in debate based “isms” of any kind and I consider indulging in such debate a waste of time. The facts of a particular argument should speak for themselves.

    In this instance, the issue is the government’s approach to the budget. I consider it to be far removed from what is required but not so far as to cause serious damage. One positive must be that any idea that the so-called “permanent government” (i.e. the public service) is calling the shots should finally be laid to rest. On the other hand, the unions defending said public service have done it a major disservice over the period of the crisis c. this comment by Martin Wall.

    http://www.irishtimes.com/business/end-to-public-service-staff-moratorium-announced-in-budget-1.1963225

    “The secretary general of the Department of Public Expenditure and Reform Robert Watt told a Dáil committee last year the lack of young blood in the civil service was “not optimal” and “reflects a planning failure”.

    The description as a “planning failure” must be the understatement of the year.

    On the other hand, I know of no other country in Europe where public servants would have taken the cuts that have been made to salaries and pensions so stoically. This is attributable IMHO to the fact that they could see both sides of the argument i.e. that the private trading sector of the economy was taking the largest hit of all; loss of employment. (In many instances, this balanced view was available at the family dinner table; as one spouse worked in each sector).

    The entire effort of “reform” over the period of the crisis should have been devoted to the introduction of modern sophisticated methods of financial control giving each department control of its own staffing and other resources thus enabling them to maintain a normal staffing and recruitment pattern. This could only have been done under the control of a single minister and a single department.

    An opportunity missed and one which is not going to return!

  41. @ DOCM: I did say, and I re-iterate it – “ideas rule”.

    Ideas are what get enacted. However, ‘institutions’ (an organization of some sort) are needed to provide a rule-based mechanism for the ideas to get enacted. One curious thing about these ‘organizations’ – they are populated with folk whose ideas are being enacted. Not by folk whose ideas are not being enacted. Funny that.

    So ….. new ideas will, usually get short shrift. Yes? Sure will. Unless … … real bad Karma (airborne brick) approaches. Like now. Then the folk in the organizations pfaff about for some time. Like now. Until that airborne brick smashes their teeth. Like soon. Then the newbies may get a chance with their new, but actually olde, “ideas”. Funny that.

    All governments approaches to a budget is – do as little political harm to us a possible (in terms of our re-election prospects). It cannot be otherwise. So it is with this budget. QED. There it is.

    Your “ideas” seem quite reasonable (though not my glass of tea) – but, they is going no place fast! Mine, likewise, would suffer a similar fate.

    We are not talking about missed opportunities here. There was never was an opportunity – so it could not be missed! 😎

  42. @Gavin Kostick

    Congratulations on the excellence of your figures. Shakespeare may have been your equal (just) in playwrigthing, but he couldn’t do stats.

    However,

    if you used GNP instead of GDP (as most economists suggest), you’d get different results.

    GDP growth is normally a bit higher than GNP growth. But, in 2012 and 2013 it was much lower. The reasons are purely technical, the pharma cliff. The value of Ireland’s pharma exports has two components: (a) payment for manufacturing work done in Ireland (b) payment for patents/research work done mainly in U.S. Both (a) and (b) are included in GDP, but (b) is repatriated and excluded from GNP. Because of patents expiring, there was a big drop in (b) in 2012 and 2013, but it had little effect on GNP. The employment and unemployment figures, tax receipts, PMI surveys all confirm that GNP was a better guide to what was going on in 2012 and 2013 than GDP. Ireland’s GNP in real terms looks like it will be around 11 per cent higher than in 2011. In most EU countries its 1-2 per cent.

    Glad you recognise that the construction industry was allowed to fall too far. That view was extremely unpopular when I expressed it here on numerous occasions in 2009/2010. The reason it fell so far was political. At that time there was an anti-FF anti-construction industry frenzy reminiscent of the frenzy of loyalist mobs in Belfast in 1969 (in the eyes of the Dublin 4 media/academia elites, FF and the construction industry are one and the same) . Everyone agreed there had to be a correction. New house building needed to fall to 45k per annum and house prices needed to fall 20-25 per cent. However, the Dublin 4 media/academia elites would have none of it. They wanted the complete destruction of the construction industry. Hence the public were told that Ireland wouldn’t need to build any houses for 20 years and that house prices would fall by 80-90 per cent. This combination effectively wiped out the construction industry. We are now paying the price. I note that most of the anti-construction industry cheerleaders in 2009/2010 are silent now. Has Morgan Kelly uttered a single word about the growing housing shortage, even though its affecting his own students as they struggle to find accommodation in the Dublin region? Of course not.

    @Seamus Coffey

    As my remaining years are far too short to go into the minutiae of every taxation/spending item for the next few years, I take your word for it. However, according to the government figures, the deficit will be lower in 2016, 2017 and 2018 than in 2015. So, while some individual items of taxation/spending may be temporary (isn’t that always the case?), the narrowing of the gap between spending and taxation isn’t temporary. The UK is planning some tax reductions even though its budget deficit is stuck at 5.5-6.0 per cent. Of course, it is possible that the government’s 1.0-1.5 per cent estimate for growth in most of continental Europe is too optimistic. It is also possible that it is not. However, you can’t run an economy or a business on the assumption that a whole continent will never grow again.

  43. @ Seamus/DOCM

    “If the economy is growing rapidly why is such an expansionary budget be necessary? [economically as opposed to politically] As page 16 of the Economic and Fiscal Outlook says this is a “€1,050m Budget package” on the expansionary side. And why is such a derisory amount of that expansion devoted to capital expenditure?

    What happened to the idea of counter-cyclical policy?”

    How about because although the economy may be growing it is still massively depressed and there is a long way to go yet?

  44. @ Brian Woods Snr

    Alan Greenspan is unlikely to be your cup of tea but he gave an interesting lecture in 2005 in Kirkcaldy, where Adam Smith was born and where Gordon Brown went to school.

    In the broad sweep of history, it is ideas that matter. Indeed, the world is ruled by little else. As John Maynard Keynes famously observed: “Practical men, who believe themselves to be quite exempt from intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” Emperors and armies come and go; but unless they leave new ideas in their wake, they are of passing historic consequence.

    The short list of intellectuals who have materially advanced the betterment of civilization unquestionably includes Adam Smith. He is a towering contributor to the development of the modern world. In his Wealth of Nations, Smith reached far beyond the insights of his predecessors to frame a global view of how market economies, just then emerging, worked. In so doing, he supported changes in societal organization that were to measurably enhance world standards of living.

    You do get to the core of the issue – when the global market workforce doubled, there was a notion that the West could have knowledge workers while China and others would do the metal bashing – and most people would be happy.

    What today’s model requires is a permanent underclass not only in advanced countries but in emerging economies also:

    Globalization’s new normal needs permanent underclass – Part 1

  45. This site is becoming the Eamonn Dunphy of the economics world.

    After the 1-1 draw against the World Champions, the self-confessed consumer of illegal substances described their performance as ‘rubbish’ and ‘crap’.

    This has provoked a furious reaction. The public have tired of his constant negativity and are demanding he be dumped from the RTE panel.

    Dunphy’s reaction to the performance on Wed night is very similar to that of posters on here in relation to the budget.

    If this site was televised live on RTE, the public would now be in uproar against it and demanding that Brian Woods Snr, DOCM, Ernie Ball and Seafoid be dumped. Seamus Coffey and Gavin Kostick could stay, however, as at least they’re entertaining and good at emplaning stats.

  46. @Seamus Coffey

    Thanks for reply above:
    “The “economy in Ireland” as measured by national accounts might be growing at 5% but the “Irish economy” that we actually see around us is not.”
    This seems true and in some senses it is a counterpoint to the question you pose yourself:
    “If the economy is growing rapidly why is such an expansionary budget be necessary?”

    The comments taken together encapsulate the difficulty of analysing or managing the ‘dual’ economy in Ireland i.e The economy is ‘growing’ at ~5%, but the full 5% does not reflect in an equivalent 5% across the economy.

    It points to the urgent need to develop the indigenous exporting sectors of the economy.

  47. @ Gavin

    Yes, you are right. This issue is not so much the direction but the position on the cycle. Technically we’d need to ask if the economy is growing above/below its long-run potential average and/or is there an output gap. We don’t (or can’t) know the answer to these.

    The growth rates from the national accounts (5%+) would suggest we are above the potential growth rate but the level of unemployment (11%) suggests that an output gap remains. It is possible to argue in either direction.

    The point was more in relation to the way the budget was presented which was along the lines of “the economy is growing rapidly, here’s an expansionary budget so everyone feels it in their pocket.” It is the inconsistency as pointed out by Joseph Ryan a few minutes ago that irks.

  48. @ Seamus Coffey/JtO

    Thanks for the replies.

    I shall use ‘better statistician than Shakespeare’ on my CV.

    Thanks for the observations on GDP/GNP. I used the GDP figure from the start because it is the one written into the MoU and the one used to calculate debt ratio, and once I’d done that I thought it better to be consistent and stick with it.

    I shall have a play on in your new theatre, the Lyric, Belfast, next Spring and I would happily stand you a pint.

    I am caught between writing a long post and a short one so I’ll keep it short: yes, I do think there is plenty of slack in the economy yet.

  49. @Gavin

    Just quickly, the envelope is of most use for larger economies – I haven’t noticed you update for the Eurozone. The subtle and not so subtle pressures in the system make it an excellent fit.

    Regarding Ireland, it is a small and volatile economy in terms of stats, so you have to be wary of one or two quarters. However, I cane to the conclusion there was a mini-boom starting (in higher end and asset rich) about 15 months ago. It has percolated through to other parts of the economy, not least through the property purchase / renovation route.

    On a few occasions over the last year I thought about suggesting you close out the envelope’s position to lock in its superior forecasting record, and temporarily revert to consensus or above to catch the turn. On reflection I decided not to meddle as that might undermine the whole point of the exercise – establishing a forecasting record based on common sense, a reading of the power relationships and biases in the system, and without experience in financial or economic forecasting or modelling.

  50. @JtO

    I fully appreciate that this is not a sports site but I believe the point Dunphy was making the other night was 100% the correct one.

    In essence he was suggesting that had Ireland not being as negative as they were early in the game and had the manager actually set us up to play they way were are capable of playing then we could be actually suiting here today win a win against Germany. Far from being negative, what Dunphy was actually saying was that had we being more positive as indeed we can be, then we wouldn’t have to endure the dross that we saw for the first 70 mins. He’s right.

    Don’t for one minute believe the public at large in relation to sports analysis and commentary are right or indeed in any way logical. The RTE pundits are light years ahead of the other stations – you can take that from someone who played and coached at the highest level.

  51. @ GK et al

    Following the advice of Seamus Coffey, I looked at the IFAC endorsement of the DOF forecasts (a pretty innocuous and not very productive occupation IMHO).

    http://www.fiscalcouncil.ie/wp-content/uploads/2014/06/IFACEndorse_06102014_Final.pdf

    The most pertinent comment.

    “The Council notes recent changes in the size of Ireland’s measured net exports in the National Accounts related to contract manufacturing. These contributed to the exceptionally strong GDP performance in the first half of 2014. In addition to the usual uncertainties, identifying the underlying pattern of growth in the economy is more difficult given these developments.”

    Seamus also comments above “Oh to get a measure of output in Ireland absent the effect of the MNCs”. I take it from this that the necessary data is not collected or, if it is, is not disseminated.

    Whatever about forecasts, the evident surprise at the sudden budgetary improvement must surely stem from the fact that there are, in effect, two economies in Ireland, that in the Dublin conurbation, with some other cities, dominated by the MNCs, and the rest, with a near total inability to distinguish between the two of them because of the muddling of the data, insofar as it is available. There is, in short, no reliable economic model, or at least none that I can discern from the various publications that I have been able to consult, of the Irish economy.

    Back of the envelope calculations, or throwing darts at a budgetary forecast board, will be as effective as different bodies making official and often competing forecasts until this lacuna is remedied.

    @ MH

    I heard the OECD official responsible for taxation comment that Ireland’s move on the Double Irish was “courageous”! I agree with this view.

  52. @ Yields or Bust

    Only if Ireland wasn’t so defensive earlier against the World Cup champions – maybe or maybe not.

    For the punters at the end of the day, the stakes are not really very high.

    Sailing against conventional wisdom is welcome as it’s rare and credit where it’s due to Dunphy who was also lambasted in 1996 when he queried some swimming results at the Atlanta Olympics.

  53. @ DOCM

    A key indicator of the health of the economy is the trend in the number of full-time employees – additional people earning a regular wage week-to-week.

    The rise in job numbers from March 2011 to Q2 2014 of 60,000 comprises 21,000 employees, an additional 15,000 in public schemes and a rise of 24,000 in self-employment without employees – effectively one-person operations.

    Total employment was 245,000 below the level in Q2 2008.

    The 21,000 employees includes part timers and the CSO doesn’t publish a split between self-employed part timers and employee ones.

    24% or 450,000 of total employment were part timers in Q2 and 130,000 of them are seeking full-time work.

    So about 15,000 of the 60,000 are full-time employee additions.

    There were about 452,000 or 21% of the workforce on the Live Register at end September (including 71,744 casual and part-time workers) + numbers in publicly funded schemes.

  54. Contrarian views, be it on the Irish soccer team or the Irish economy should be judged on their merits. The criteria for the latter include some resemblance to the known facts and in that regard I suspect Dunphy says what he says for effect – we were supposed to build the team around Andy Read a few years ago as I recall. Ireland is currently rated 62 in the world and 32 in Europe based on the FIFA rankings , which are not perfect but at least based on the known facts i.e.results. Better that than half-baked notions based on lazy analysis and little or no research- ‘I don’t know much about that team, Bill’

  55. @YieldsOrBust

    I’ll take your word for it. I’m not that much into the fortunes of the Rep. of Ireland or N. Ireland soccer teams. I support Ireland strongly at rugby and other sports where there is an All-Ireland team. But, in those sports where Ireland is partitioned into two separate teams, my support is a bit lukewarm, although, unlike my late father and most others of his generation in rural Tyrone, I don’t view partition as a sufficient reason to want them both to lose. I don’t believe either the R. Ireland or N. Ireland will ever amount to much in international soccer, but one team would do better (although given the competition from GAA and rugby, Ireland will always struggle at soccer). Given the fact that (a) Ireland is partitioned into 2 soccer teams and (b) it has to compete with GAA and rugby, in my naiveté I thought that a 1-1 draw away to the World Champions, which has a population 20 times greater, and which suffers neither from its team being partitioned or from GAA/rugby competition, was a good result. But, if Dunphy thought it wasn’t and that Germany away is the sort of match Rep. Ireland should be expecting to win, who am I to disagree?

    @Michael Hennigan

    I doubt if today’s underclass has much to do with the economy. The poorest people today are materially better off than lots of middle-class were 50 years ago. In my first job after graduating I worked at Jefferson Smurfit plant in Santry in 1971, the only time (thankfully) I have ever lived in Dublin, I earned £12 per week as a computer operator. Not the best job and below what I was qualified for, but not the worst. I just checked the CSO website. Prices today are 12 times their 1971 level. So, that would correspond to 7k a year today. But, even that was much much better than someone similar would have earned a generation before me in the depressed 1950s.

    The underclass has more to do with the social changes than the economy. The last 50 years has seen an assault on the traditional family, on religion, and even you could argue, on things like trade unions, all things that bound society together. The result is an underclass in every city in the western world, comprising lots of disaffected young men and women, who don’t work, won’t work and have no intention of ever working, who have never had sight or sound of their fathers. whose only social activity is getting drunk, and whose only exercise is stabbing each other. By no means am I saying that all disadvantaged people are in this category. Most of them want to work and hopefully, as the economy improves, will find work. But, just as in 2005, when there was full employment, should full employment return later this decade, as seems likely, the underclass, as I described it above, will remain. During the time referred to above when I worked in Dublin, I walked every Saturday night (actually 2am Sunday morning) from the National Ballroom in Parnell Square (btw, anyone know if its still there?) to Terenure. I never saw anything untoward or felt in the slightest danger. You’d have to be off your trolley to do that these days. Don’t tell me its because people are worse off than they were then. The underclass has got little to do with the economy.

  56. @ MH

    As I travel frequently between the two economies, what I observe is what the figures you quote reflect. The difficulty is that the figures make little sense without a geographical breakdown. Is such available?

  57. MH – just picked up your early morning comment – thanks. Down in Cork for the DEW ‘luv-in’! I had forgotton about that Greenspan lecture, though I do recall reading it! Smithy sure had a handle on things.

    Now, you know, and fully understand, that that ‘new permanent underclass’ will be us. The Orientals – and other lower orders can only rise-up. We on the other hand can only rise-down! 😎

  58. @ JohnTheOptimist

    I’m using the term ‘underclass’ in a broad sense where through globalization and technological developments, there is a rise in high-paying and low-paying jobs while middle-income jobs, which include administration and production roles, are falling.

    At the low end as well, insecurity is rising through an increase in temporary and contract work.

    Between 2001 and 2011, the number of Britons employed in low-pay positions in UK cities increased by over 750,000 people, as those in ‘mid-range’ positions decreased by almost 200,000; it is claimed that there are now more employed than unemployed UK households in poverty.

    …and supporting Arsenal comes at a high price:

    http://www.bbc.com/sport/0/football/29634838

    @ DOCM

    Published regional data are limited – but I assume the CSO would not have not have a problem in producing it.

  59. I think you’d be fine walking from Parnell Square to Terenure at 2am, although there’s probably a bus from somewhere near Trinity College.

  60. @ JTO

    I’ll second Otto’s remark. A walk from Parnell square to Terenure at 2 am would pose a minimal risk to your safety. You’d find plenty of inebriated young yawns on route, as I’m sure you did in your day, but I doubt you’d feel under threat at any point.

    Not sure why you’d walk though, since deregulation there are taxis everywhere in Dublin at night. Reasonably priced too.

    By the way that 7k a year wouldn’t go long in Terenure today. Your rent would take up 200% of your wages. Perhaps that’ll give you a clue as to why the poorest aren’t as better off today as you claim.

  61. @ All

    FYI

    Stephen Collins on the subject of the Bourbons.

    http://www.irishtimes.com/news/politics/stephen-collins-budget-designed-to-restore-coalition-s-fortunes-1.1963627

    And Cliff Taylor on the reasons why history may not repeat itself.

    http://www.irishtimes.com/business/economy/the-government-can-t-buy-the-next-general-election-it-hasn-t-got-the-money-1.1967890

    “During the week came the first sign that investors were again assessing the risks posed by lending to peripheral countries. As a small indebted country we can’t ignore this. We are not still quite accepted as a core EU borrower – like, say, Belgium or Finland. But there is a big prize if we can keep heading in that direction, and that means getting borrowing and our debt burden down.”

    Do we continue to aim for the First Division or accept our precipitate fall to the Second with the collapse of the Celtic Tiger? That is the question.

    Were the Irish political class to be in full control, the question would answer itself.

  62. @ Otto TL et al

    I forgot to mention the pea-souper fogs that were a feature of Dublin before Mary Harney cleared the air. Does JTO have a view? Or was he only in Dublin when the weather was balmy?

  63. On the theme of income distribution, the Guardian comments on a report by Alan Milburn.

    http://www.theguardian.com/society/2014/oct/18/under-30s-priced-out-of-uk-alan-milburn

    “The median pay of a 22- to 29-year-old, £9.73 an hour, was more than 10% lower today than it was in 2006, according to Milburn. The pay of 18- to 21-year-olds, £6.73, is 8.8% lower. Both are at the same wage level as they were in 1998.”

    A shocking level of theft overseen by the older generation, to their own benefit.

    Bears out Michael Hennigan’s point above:
    “What today’s model requires is a permanent underclass not only in advanced countries but in emerging economies also:”

  64. Apologies for intruding on an active thread: but if I wanted to ’embed’ a chart or a table in a reply – how might I do it? Thanks.

    Brian.

  65. I’ve found the article I was looking for; it’s from November 2012 and it is ‘Self-defeating austerity?’ by Dawn Holland, Jonathan Portes.

    In the authors argue nice and clearly:

    “* While in ‘normal times’, fiscal consolidation would lead to a fall in debt-to-GDP ratios, in current circumstances fiscal consolidation is indeed likely to be ‘self-defeating’ for the EU collectively.

    * The fiscal consolidation plans currently in train will lead to higher – not lower – debt ratios in 2013 in the EU as a whole.

    * This will also be true in almost all individual EU nations, including the UK

    * Ireland is an exception.”

    And in Figure 1 they puts figures out for individual countries plus the Euro-area. These can now be compared to figures from Eurostat and the EU Commission.

    And yes, we can indeed see that the Euro area debt-ratio rose from 92.7% (2012) to 95.0% (2013) and is set for 96% in 2014.

    But are the authors fair in arguing that ‘austerians’ actually thought that debt to GDP ratios would fall as consolidation measures took place?

    Well, it is hard to know to whom they exactly refer but here is Olli Rehn (member of the Commission responsible for Economic and Monetary Affairs and the Euro) from June of the same year, 2012.

    “We expect the ratio of government debt to GDP to continue to increase this year and reach 93% next year. The stability programmes of euro area Member States are somewhat more ambitious and foresee a level of about 90% in 2013 and a decline thereafter.”

    So, the EU Commission did expect debt-ration to rise, not fall, but they expected a peak of 93% in 2013 and a fall to 90% in 2014. But instead we have a current figure of 96% for 2014 with any fall put off for another year – two years behind schedule so far.

    I think this kind of discussion does show it is worth looking at forecast figures, following arguments with the theory and empirical evidence that underpins them and trying to come to some judgment as to where to give credence and thus what policies to support.

    As for the envelope, I’ve enjoyed checking the figures once a year or so and it was nice to be ahead of the DoF. I’ve checked the EU Commission and, starting in 2010, the same is true there. But that isn’t just random. There were competing arguments since 2010 and, roughly speaking, collective austerity was going to be worse than the EU Commission predicted and more in line with what Keynesians and Neo-Keynesians were saying.

    As noted above, and by Portes and Holland, Ireland is different and I now wonder if the DoF will underestimate growth (as was the case at the end of the boom). But in Euro-land I expect the envelope still to do well for a while yet (sadly) unless collective policies are changed and the structure of the Euro addressed.

    http://www.voxeu.org/article/self-defeating-austerity

    Too many links can slow up posting but figures from Eurostat and EU Commission Spring 2014 report.

    No, Mr Woods, I don’t know how to do tables but I would also be interested.

  66. @JTO
    Yes it is all about the lack of Christian values, dangerous youth and too large government. This neocon claptrap is what has got us to where we are today and as for making ridiculous claims of a new golden age for the Irish Economy the under class he mentions would also welcome this and would not spend all the trickle down, if there were any, on drink and knives. A couple of general points.

    1. We are all agreed that a “lack” of government intervention made the recession in Ireland and debt overhang much worse. Perhaps if we had some bigger government in banking in Ireland we would be in a much better place.

    2. At what percentage of GDP does the government remain too big, does he want to go all the way to South Sudan 0% no effective government, education and 0% taxation or would a half-way Texan alternative be more in mind with little or no social mobility, massive gap between his christian class and the “underclass”, little or no public healthcare and large underclass ghettos.

    3. The data presented in Pickerty clearly showed that there is little or no difference in the long term growth rates between the high tax, big government countries and the low tax small government countries. There are massive differences though, social mobility, equality, life-span, etc.

    Of course Ireland was overspending on its government sector salaries before the crash and these had to be curtailed or we have been forced by external forces to massively reduce expenditure on social welfare, health and education. However the cuts that were made were not without cost and the cut-backs, in particular in education, have possibly caused long term economic damage. To claim as he does that these cutbacks were the fundamental cause of our current upturn is just playing into a now discredited neocon agenda.

  67. @ Gavin – thanks. Funny that when you ask for something – it kinda gets little comment – whereas ….

    At the recent DEW in Cork, during my presentation, I posed a Q to the audience (overwhelmingly male!) – quite a pregnant silence ensued. I usually do not answer Qs – so I passed on. I’m not one bit impressed by that non-response, when the response was in ‘plain-sight’. Not sure what it means – yet. Audience asleep (likely) or had no idea what I was talking about (possible). I think I’ll have to compose a comment piece for this site on the matter – hence my need to be able to embed figures and tables. Text is good, but pics are better!

    Here’s hoping.

  68. I think it’s plamas for the Gov to tell the people that the austerity budgets are finished. Great to have a bit of growth and some good news but IBEC are nuts talking about a return to normality by 2016. I know they are only doing what they know but I don’t see the point of raising unrealistic expectations. If the economy can move ahead slowly and steadily, great. Ireland does have advantages that can bring results but things are still fragile and the US is just one bad jobs report away from a big vix jump. It would be super if wages were
    increasing in the US. They are not and this is very worrying. Neither are they in the UK. Will they in Ireland?

    Open globalised economies depend on the outside world. It is not time to sing ‘I believe I can fly’ just yet.
    I

  69. @Jules

    I’d say that 25 per cent of GNP (repeat: GNP for Ireland, not GDP) is the maximum that should be tolerated for total government expenditure in normal boom times, possibly rising to 28-30 per cent during recessions (depending on their severity). In Denmark government expenditure amounts to almost 60 per cent of GDP. It has 1.2 years lower life expectancy than Ireland and got much worse results than Ireland in the 2012 PISA tests.

    I look upon cutting government expenditure in the same light as putting someone on a diet to get them lean and fit. Its a bit uncomfortable and unpleasant at the time and might have some minor but temporary bad effects. But, after it’s done and the body gets accustomed to it, the effects are very beneficial. Thanks to the cuts in government expenditure implemented in the past few years, the Irish economy is now very lean and fit, and that’s why its growing at 5-6 per cent, while many of the economies of continental Europe are still bloated to the point of obesity with government expenditure, much of it useless, which of course has to be paid for by extremely high taxes on the wealth-creating sector.

    A very good article in today’s Sunday Telegraph about what high government expenditure and high taxation is doing to France.

    @ThatsLegal, @Otto, @DOCM

    The point is I walked the route regularly in 1971 because (a) I was young and fit (b) I went dancing every Saturday night (c) I couldn’t afford a car (d) I couldn’t afford a taxi. None of these are true today, so the question of my ever walking the same route again no longer arises. I’d say it was pretty normal for someone in their early 20s back then.

    I will take your word for it that it is possible to walk that route on a Sat night/Sun morn today and still have some chance of making it back to Terenure without being knifed. However, the reality is that Ireland is a far more violent country today than it was then, even though it is materially much wealthier now. From the CSO publication ‘That was then, This is now’, I read:

    (a) in 1958, the low point of Ireland’s economic fortunes, the total prison population was 370.

    (b) In 1949 there were 2 armed robberies in Ireland (in one of which the robbers got away with the princely sum of £30).

    (3) In 1963 there were 4 murders and 1 manslaughter in Ireland.

    Compare those figures with today. I simply don’t buy Michael Hennigan’s theory that today’s underclass is the result of economic developments. To my mind, its the result of social developments, principally the shift to an ultra-socially-liberal society, both in Ireland and elsewhere. The central point I am making, spiced with personal anecdote, is that the huge increase in anti-social behaviour, lawlessness, hooliganism and crime between then and now is not due to material deprivation (the loopy-liberal-left’s explanation), because there is far less material deprivation now than there was then. There were also far fewer suicides then. There was very little illegal drug-taking and far less drunkenness and hooliganism among young people, and far fewer teenage boys without a father in their life. Difficult for people under 45 to believe, I know, but back then lots of dance halls didn’t serve alcohol and quite a large proportion of those attending dances wore Pioneer pins. Something has clearly been lost in society between then and now, and its not because of any increase in poverty or deprivation. There were more murders in Ireland in the first 2 years of Enda Kenny as Taoiseach than in the entire 22 years that De Valera was Taoiseach. And De Valera was supposed to be authoritarian, but the number of people locked up in prison when he was Taoiseach was less than one-tenth the number locked up now. Am not blaming Enda Kenny for this. The rot set in well before he became Taoiseach. But, he’s the one who never misses an opportunity to tell us all how ‘enlightened’ everything is now compared with then.

  70. “I forgot to mention the pea-souper fogs that were a feature of Dublin before Mary Harney cleared the air. Does JTO have a view? Or was he only in Dublin when the weather was balmy?”

    It is possible that my memory is playing tricks as I get older, or that I was just lucky, but, I certainly do not recall ever having seen anything that could be remotely classified as a ‘pea-souper fog’ in Dublin. Certainly not in comparison with Belfast, where back in the 50s and 60s, hundreds of tall factory chimneys belched huge quantities of smoke and other pollution into the air and there was real ‘pea-souper fog’. People used to drive up to the top of the Black Mountain to look down on Belfast and see it. A spectacular sight, I remember it well, although of course very unhealthy. Never saw anything remotely similar in Dublin. It all ended with the de-industrialisation of Belfast from the 1970s on. Unlike Belfast, Dublin had no industry until the 1960s, and then it was mostly modern high-tech industry. A quick google also failed to show up any photos of this ‘pea-souper fog’ in Dublin, although it threw up hundreds for London. Presumably, if it ever existed, someone can produce a link to a photo showing it.

  71. @ JTO

    So no taxi, but I presume you could afford accommodation back in the day in Dublin. What percentage of your 7k did accommodation, electricity, education, fuel, travel and water take up?

    One would be doing really well to rent a shared room in a rat infested Pre63 freezer box for that these days in Dublin..

    My guess is there wasn’t far less suicides back then, my guess is there were far less REPORTED suicides back then. The hush hush culture being of course part of the ugly underbelly of the lost society you cite. Not the worst part mind, reporting a suicide as an accidental death is certainly not unforgivable, not like some of the horrors that Ireland turned a blind eye to back in the day.

    Perhaps I’m wrong but your position seems to be,

    Poverty in real terms is a myth invented by the looney left, cos in your day you earned 7k in todays money, couldn’t afford much (though presumably could afford rent) and didn’t commit any crime because you grew up at home in a nice stable home in Tyrone, which followed traditional values, like those typical of Ireland at the time?

    Hence, crime is a function of number of single mothers and/or lack of traditional values and/or the divorce rate, as these have changed dramatically since then.

    Am I misrepresenting your position?

  72. @BWS
    “if I wanted to ‘embed’ a chart or a table in a reply – how might I do it? Thanks.”
    My understanding is that you would first have to include any formatted text (or chart) within HTML tags. Simple tags like ‘bold’ would be easy, (some people use ‘bold’ on this site) but charts I suspect would be much more difficult.
    http://www.htmlgoodies.com/primers/html/article.php/3478151

  73. @ThatsLegal

    I stayed with my aunt. I paid her a small sum for rent, not the market price.

    Housing conditions in Ireland today are vastly superior to what they were then. In 1961 only about half the population had indoor toilets or running water. And the number of rooms per person in Ireland’s households is almost twice today what it was then.

    Valid point about the suicides, but even throwing in the ‘dubious accident’ figures with the ‘suicide’ figures, the numbers were much lower in the 1950s and 1960s than today.

    You have simplified my position but not misrepresented it.

    The breakdown in the traditional family in Ireland and elsewhere is undoubtedly a factor in the far higher rates of crime, lawlessness, murders, drunkenness, drug-taking and so forth in today’s societies than was the norm 50 years ago, when material poverty and housing conditions were infinitely worse.

    The rot started in Ireland much later than in the UK. In the 1960s Dublin was almost crime-free compared with the likes of London, Liverpool, Manchester, Birmingham, but today there is little difference, as every disastrous social experiment in the UK has been imported here (usually after a series of articles in the Irish Times advocating it). Some rural areas of Ireland still retain vestiges of the old more socially conservative Ireland and these areas generally have very little crime compared with Dublin. To my surprise, I read at the weekend that 90,000 attended a Novena in Dundalk last week. Not sure how many stabbings there were among the 90,000, or how many were arrested for rioting, but I would guess the number was quite low.

  74. @ Joseph R and Michael H: Thanks both. I assumed that I would have to prepare the comment (with charts and figs already embedded), then submit it (in PDF format?) to the moderator of the thread, who might then post/no-post. Tedious, but that’s what it appears.

    I want to show exponential growth (and consumption) charts and the math expressions that need to accompany them, together with tables of values.

    Thanks again.

  75. @ JTO

    Some things have improved and it’s good that the fear of croziers has eased.

    It was common in my school days to see drunk people staggering out of pubs and driving – the past statistics certainly underreport the level

    The destruction of the Four Courts and Public Records Office in 1922 means that historical data is lacking.

    In times past, a man could be hanged for gaysex but violence and abuse in the home was seldom reported or ignored.

    James Dillon TD said in the Dáil in 1940 on the 3 year sentence to an industrial school in effect a children’s prison, that was given to a child who had stolen some grapes: “Can you imagine the son or the daughter of a resident of Fitzwilliam Square being brought down to Morgan Place and sent from there to an industrial school because he stole 5 shillings (32 euro cent) worth of grapes?”

  76. They would be alright. I’m sure you’ll correct me if I’m wrong but was your point not that people aren’t that badly off as you were on 7k in todays money and did just fine. Though you didn’t pay the market rate for rent at the time, as your Aunt was a property owner and if you did it wouldn’t have been taking up 100% of you income, as renting a room in Terenure would cost you today.

    So it’s government policy that’s the problem? Or a break down in traditional values? For example, will Gay marriage further increase the stab rate?

    I would certainly agree government policy has a lot to answer for. However I’d guess that the sophistication of the drug trafficking industry has increased dramatically since your day. i.e. The availability of drugs is not doubt a big factor in drug taking and indeed violent crime. As the former is funded by the latter, one gets an increase in crime, via rival drug gang turf wars, etc. Exploring the legalisation and taxing of drugs could then be a more appropriate answer to that problem than say compulsory mass attendance.

    The single mother rate is probably not a real number. There’s likely to be more Mum and Dad household than you think. With Dad parking his car in the next estate over so as to avoid her being caught at benefit fraud.

    I feel you underestimate the issue of housing in the equation. I myself am from a village in the west of Ireland, 4 of us kids in family, Mum could stay at home and Dad supported us on a Milk mans salary. They own there own home. All 4 of us went on the University, all 4 of us now employed, none of us are work shy. My sister had to emigrate, not much demand for PHDs in Physcology apparently. The rest of us found employment in Dublin or Cork. All in all, a good example of ‘upward mobility’.

    This family would be impossible now. Firstly, Dad’s milk company couldn’t compete with Aldi prices and he was made redundant. The same is true of many other industries west of the Shannon, hence at the moment I couldn’t get a job anywhere near home in Connaught.

    I live in Dublin ( and in sin) with my girlfriend. We’re expecting our first child in the new year. She’s employed, is on her second 2 year contract with her employer. She’ll get paid maturity leave but doesn’t know if she’ll have a job when she returns.

    Our rent on a modest 50sqm 2 bed apartment, is 1300, it will rise to 1500 next month. Landlord is pretty ruthless. My net income after tax and pension contributions is 3000 a month.

    We would love to be in a position to have one of us at home after she finishes maternity leave. The remaining 1500 per month would leave things tight though. Of course it wouldn’t allow for much savings. Meaning we would be leaving ourselves very exposed if I found it difficult to get employment in the future. As for becoming part of the property owning class, that would be unlikely and impossible in Dublin.

    Now, she can stay in work, bring in an extra 2500. Of course then, as we have no family or grandparents nearby, between a third and half of that extra will go on childcare. If we have a second child, her income would be wiped out and a third, would mean moving to the west and living off benefits would be a far better choice, economically at least.

    My point being the price of property is the primary contributing factor in the fall of the Irish stay at home Mammy. In addition, no salary growth (neither or us have had a pay raise in 4 years) means we are getting poorer as rent goes up, poor terms and conditions means no mortgage and the need to emigrate to Cities for work means, for us at least, exclusively relying on the private sector for the support one could have got from family back in the day.

  77. @ All

    The deal the French government evidently thinks the Germans should agree to.

    http://uk.reuters.com/article/2014/10/20/uk-germany-france-idUKKCN0I90J820141020

    It seems doubtful that Germany would sign up to such an arrangement as there is virtually no equivalence or link between the two actions. It is up to France to get its budgetary house in order in its own interests.

    http://www.irishtimes.com/news/world/lille-mayor-martine-aubry-rows-in-to-save-france-from-sinking-1.1969391

    The options with regard to the latter seem to be getting narrower and narrower. It is a case of back to the future with the re-entry of Martine Aubry on the national political stage. As the author of the 35 hour week, she seems to continue to believe that the majority of the French electorate will continue to sign up to the thesis that a nation can borrow more and work less and nevertheless survive indefinitely.

  78. “You have simplified my position but not misrepresented it”

    Is it really possible to ‘simplify’ your argument anymore than what it is ?
    Not that I think you argue in good faith and so are worth engaging with, but virtually no ‘liberal’ thinks single parent hood (particularly if the parent is young and without resources) is a *good* idea, or think becoming addicted too heroin is a sensible life plan..as always you are arguing a complete strawman. What they accept is that life is complicated and societal norms change. That you have too deal with societal problems in the world that now exists, not by trying to recreate the 50s. Yes somethings might have been better in the past, and somethings better now, but these are complicated questions that cant be answered by boilerplate, sweeping generalisations and morality plays.

    And to identify the source of these massive, sweeping changes in the economy and societies of advanced western countries (the replacing of old institutions, norms and authority figures) as being the Irish Times and D4 liberals is so stupid that Im surprised you could make the argument with a straight face.

  79. @DOCM: “she [Ms Yellen] seems to continue to believe that the majority of the American electorate will continue to sign up to the thesis that a nation (and they) can borrow more and more, and nevertheless survive indefinitely.”

    Its not the hours-per-week that is the emerging problem, but the Francs-per-Hour. Thought that might be obvious by now. Apparently not.

    Borrowing for day-to-day spending is nuts. But that is what is on the political menu. Take it, or take a hike! And the US is ‘recovering’? I fancy not.

    @ JtO: John, I vividly recall those smokey-coal induced Dublin pea-soupers: very nasty. Drove up the seasonal morbidity and mortality stats.

  80. @ DOCM

    What would you do if you were Valls ? Follow Germany into the abyss ?
    The Euro status quo will be changed well before 2017, I bet.

  81. @ seafóid

    The French could start by scrapping the 35 hour week. Wherever Germany is headed, it is not the abyss. Hollande is at 15% approval. Many of the problems facing the French economy are the direct inheritance of the last Socialist administration. The generation of “young Turks” that has taken over in the new one is completely out of its depth. This is not the case with Renzi. The Commission is set to approve his draft budget, according to reports, with some qualifications.

  82. And JTO’s moral, temperate and Christian Ireland gave us industrial schools and Magdalene laundries and priests raping children. Let us not forget that when he sings paeans to the good old days.

  83. @ DOCM: “The French could start by scrapping the 35 hour week.”

    This is First Class rubbish (please think it through). So why suggest it? Do you actually believe it will achieve … what?

  84. @Thats Legal

    That was a wonderful post, full of poignancy and honesty.

    The bottom line is that your income and your future is being destroyed to satisfy a rentier class and a landlord’s greed. You and so many tens of thousands of others like you.

    50% of a good income going on rent. That percentage of income paid on a mortgage would disallow the mortgage being given in the first place, with an institution like the central bank guarding against such an even.
    Because you and hundreds of thousands of other rent, you have no protection whatsoever. In fact your government (and mine) is as supportive of the landlord class today, as the British government were of the then landlord class in the 19th century.

    I have read that 67% of all Dail deputies are landlords, so guess whose side they are on.
    And it is a question of sides, despite the palaver that such TDs go on with. It is very definitely a question of sides.

  85. @Michael Hennigan

    If by ‘belt from crozier’ you mean ‘being put on the straight and narrow by some authority figure’, rather than literally a belt from a bishop, I’d say quite a few people are now dead who would be alive if they’d experienced just that. The total number shot dead in inter-gang warfare in Dublin in the past 20 years must now be getting on for 500. Most of these unfortunates grew up in households that were morally and spiritually dead. They sure as hell could have done with some form of moral guidance in their formative years, whether from a bishop, a teacher, or whoever.

    @Garo

    Sorry to intrude with politically-incorrect facts, but I think you’ll find that sexual abuse is much higher in trendy Nordic countries and in the secular UK. Read this:

    http://www.trust.org/item/20140304161923-p1e2k

    The 3 countries in recent EU report with the highest sexual abuse were Denmark, Finland and Sweden. The lowest were Poland, Croatia and Austria.

    Now what do Poland, Croatia and Austria have in common? Think.

    Ireland came out fairly well, certainly better than the UK and the Nordic utopias, but not as good as Poland, Croatia and Austria. Not at all surprising when we consider that the Nordic countries were the first into extreme social liberalism and, not coincidentally, the first to develop large-scale porn industries.

    @Brian Woods Snr

    Any chance of a link to a picture of the Dublin ‘pea-soup fog’?

    @Thats Legal

    Your family history is a great tribute to your parents and indeed to traditional Ireland. My own family history is not that much different. In particular, the upward social mobility exhibited is largely due to a combination of the high-growth pro-business economy developed in Ireland since the late 1950s, the strong social stability prevalent in rural Ireland until relatively recently that had the traditional family as its bedrock, and the emphasis on education that has long been a feature of traditional Ireland.

    Regarding your landlord, he’s able to act in such a shameful way mainly because a housing shortage has developed in the past few years thanks to the virtual destruction of the house-building industry in 2008-2010. We are now paying the price for the lack of houses built in the past few years. Which economist was saying a few years ago that Ireland wouldn’t need to build any houses for 20 years? One of the most disastrous forecasts in history. People like you are now paying for it. I notice though that housing in Meath and Kildare is only half the price of Dublin. I don’t know the geography down there that well, but any possibility you could buy a house in one of those counties while working in Dublin? I know lots of people who live in Tyrone, but work in Belfast, which is much further. In fact, I did it myself for a few years in the 1970s.

    Regarding your wish to have either yourself or your partner at home after maternity leave, I am totally in favour of the government using the tax system to help you achieve this. I am completely against tax individualisation. However, its part of the liberal social engineering project to discourage this and to have as many children as possible raised in child-processing factories rather than with their parent(s).

    @rf

    “Not that I think you are worth engaging with”.

    Then, you do just that. A slight inconsistency there.

    Are you Aodhan O’Riordain by any chance? On second thoughts, daft question. You come nowhere near the level of nastiness that creep exhibited today.

    No one ever said that ‘liberals’ think single parent hood is a *good* idea, or think becoming addicted to heroin is a sensible life plan, or that they actually desire a huge increase in crime, lawlessness and prison population. Its simply the inevitable consequence of their policies, in particular their assault over the past half-century on tradition, religion and family values. Just as no one ever said the French socialists intended to turn the French economy into a joke. Its simply the inevitable consequence of their anti-business, high-tax policies. What explanation do liberals have for the vastly higher rates of murder, crime, and prison population in Ireland today as compared with before the ‘liberal revolution’?

  86. I would say most plausibly increases are due in part (on burglaries, beatings etc) to more reporting of crime and the factors listed below, but primarily (in murders, drugs) to the rise of organised crime, transnational criminality (drugs, access to weapons, professionalisation of gangs) the leftover of the Norths paramilitaries so on and so forth. Very little to do with liberal dogma.
    I don’t buy your apoclypatic take on modern Ireland (or Dublin at least) but my initial comment was a bit of a strawman and snarky..I was in a bad mood. my apologees.
    On anti social behaviour and what we might see as ‘dysfunction in the underclass’..I dont buy that framing really, but I’d say mostly the answer would have a number of factors relevant(decline in meaningful work, decline in strong communities, increase in organised criminality, access to drugs, poverty etc)
    As I say though, I dont really buy your position..but taking it as given that’s where I’d look for reasons (not the opinion pages of the IT ; ) )

  87. I was talking about priests raping children. The article you link is about sexual violence against women. If anything needs puncturing it is your holier than thou posturing. And not a word in your response about the industrial schools where children where raped and abused wholesale and were delivered there by the state. Do you really want to go back to an Ireland where women were sent to prisons (and that’s what the laundries were) for having children out of wedlock?

    And by the way, if you had bothered to finish reading the article you posted you would have come across this:

    “One possible explanation for the difference in results is that women may be less likely to feel stigma talking about incidents of violence in countries with a better record of gender equality.

    Women are also more likely to go out to work, socialize and date in countries where they enjoy greater equality – putting them at potential risk of sexual harassment in the workplace, for example.”

    The Ireland you pine for is dead! Thank goodness.

  88. ..just to add to what Garo said, I meant to include sexual violence in .. “I would say most plausibly increases are due in part (on burglaries, beatings etc) to more reporting of crime ..”
    Also, of course, we’ve completely rethought (in a hugely positive way IMO) the concept of sexual violence (and what counts as such) in the past 50-70 years.

  89. @Garo

    It seems I have touched a nerve bringing up this report.

    You obviously haven’t read it.

    Here is link to the full report:

    http://fra.europa.eu/sites/default/files/fra-2014-vaw-survey-main-results_en.pdf

    The report is the most comprehensive ever carried out on the subject. It deals with both physical and sexual violence against women, both before the age of 15 and since the age of 15. Over 40,000 women interviewed.

    A small sample of the tables included.

    Table 7.1:

    experience of sexual violence before age 15:

    Poland 4%
    Ireland 9%
    Sweden 15%
    U. Kingdom 18%
    Netherlands 20%

    Table 2.1:

    experience of physical or sexual violence since age 15:

    Poland 19%
    Ireland 26%
    U. Kingdom 44%
    Netherlands 45%
    Sweden 46%
    Finland 47%
    Denmark 52%

    There are lots of tables in the report and they all show the same pattern.

    Looks like the socially-liberal Nordic utopias aren’t such utopias after all.

    True, the report only deals with women. No reason to think a report dealing with men would show a different pattern, although the figures would probably be lower all round.

    The idea that the lower figure for Ireland than UK or Nordics is because women here don’t go out or date as much is frankly bonkers. Its not even in the report. Its an excuse dreamed up after the report was published by liberal commentators to explain away the poor record of the counties they admire most.

    Your rush to defend the countries with the worst records speaks volumes.

  90. @ JTO

    Indeed it is. I consider myself lucky and make the 3 and half hour trek home once a month to see them. The west coast of Ireland is a magic place.

    I can’t buy at the moment due to our Incomes not being of the ‘full time permanent’ kind. It’s a kind of labour market apartheid, consequently it’s mostly the public sector that has access to credit as a lot of the private sector jobs are now contract based.

    So we would be renting if we move else where in Leinster, as we would have to go from zero cars to 2. 100 each a month on fuel. 50 on tax. Another 50 (average) on maintenance. That’s an extra 400 pm. So it would cancel out any rent saving easy enough. The cost of the cars would to tough to manage too. We’d also lose aprox 1-2 hours a day in commuting time and any/all services would be a car ride away. Besides, a move now while she’s so pregnant isn’t a runner. The landlord has us over a barrel in that respect. A few of our friends (with kids) are leaving Dublin alright, though none of them want to live in a 3 bed semi in a housing estate somewhere in Leinster. I’m sure there’s plenty that do though.

    I have been running through the infinite permutations for some time now. Weighing costs, quality of life, job prospects, schools, services up against each other in various Cities in Ireland and Europe (Wouldn’t go as far as the US or Oz). It’s real wake up at 3am stuff. I’ll work it though.

    You didn’t address my point on crime. Surely you’ll concede that drug availability has sky rocketed since your day. Bringing with it vast profits for an industry that has its disputes resolution process based on the gun. Hence bringing way more crime with in. Making it a stronger factor than the single mother rate when it comes to violent crime.

  91. jto – i would assume the Nordic countries have stricter laws and more opportunties for reporting sexual violence than Poland et al .. which would explain a good bit of the difference.

  92. ..or sorry it’s not based on crime stats ..ill read it first but there are a number of plausible reasons for the difference

  93. @ThatsLegal

    Yes, I agree drug availability has sky rocketed since my day. So has the propensity of people to consume drugs and to go looking for sources of supply. Not sure which came first, chicken or egg. I never knew anyone at uni who was offered drugs, but then I never knew anyone who wanted to consume them and went looking for them (although I am sure it went on to some small extent even then). So, you could say people take drugs now because they are more widely available. Or, you could equally say they are more widely available now because more people want to consume them and go looking for sources of supply. Both are symptoms of moral and social breakdown, of which the collapse in traditional marriage is an important factor. I count your situation as ‘traditional marriage’ because, although you say its ‘in sin’, thats not the important thing, as its obviously a stable hopefully long-lasting relationship. And I try not to use the term ‘single mother’, as the main cause of the decline in traditional marriage, and the huge increase in the number of single parents, is more often the bad behaviour of men rather than of women.

    Even if gangland killings are excluded, there has been a huge increase in the number of homicides, stabbings in particular. There are 3 or 4 almost every weekend now, as many as there used to be in a whole year.

    All this is getting a bit far away from the original point, which is that MH said the development of an underclass was related to economic globalisation, whereas I say its due to social developments.

    Going back to housing, obviously the best solution for you would be if housing cost the same in Dublin as in adjoining counties. I see no valid economic reason why it should be much more expensive in Dublin than in adjoining counties. Central Dublin maybe, but not elsewhere in Dublin. No valid reason why there should be a shortage of houses in Dublin any more than elsewhere. Dublin is much more left-wing and anti-builders and developers than other counties. While I have no proof, I have little difficulty believing that that is part of the reason. Column McCarthy wore in the Sunday Independent a few months ago that Nimbyism was the main reason that houses in Dublin cost so much more than in other counties and I can well believe it.

  94. well, so far pages 22-25 give numerous reasons for differences. Be that as it may though, it still doesnt say anything specific to your larger point about ‘liberalism’ leading to societal breakdown (which might work as a caveated explanation at some level, but not as a general theory like you claim)

    Or more specifically, you look at the changes brought by larger social, economic, political and demographic changes occurring over the last 50 years (a lot of which you seem to support as positive), and then argue some undefined ‘liberal agenda’ is responsible for all the negatives that followed. (but not the positives, obviously)
    Perhaps in a more qualified way, if you identified specific liberal policies that had a specific negative effect (rather than just connecting haphazardly a series of different phenomena with complex causes) you might have an argument.

  95. @ JTO

    I certainly agree with you. More availability is required. It seems that we needed the housing units built in the boom, we just required them in Dublin, not in the likes of Leitrim.

    Though MH has a strong point. if you’re saying people are wealthier today in real terms, because globalisation has brought us cheap TVs, iPhones, travel, clothes etc etc. Therefore the poor aren’t that poor. I don’t agree. Things that are needs, housing, education, childcare hasn’t come down that much and in a lot of cases has skyrocketed and is continuing to do so. This is particularly true in America and we seem to be following a similar pattern, as third level feels are slowly ratcheted up.

    Coupled with the mechanisation/computerisation of labour, the outsourcing of jobs to China, 0 hour contracts, the great wage stagnation, We are seeing a slow decline of middle class work on the one side and on the other a massive output of graduates worldwide, all competing for the remaining ‘knowledge’ based jobs.

    Which gives less opportunities for people to be upwardly mobile, no matter how morally or socially pure the upbringing.

  96. @JTO

    Again not a peep about priests raping children or the Magdalene laundries or the industrial schools that incarcerated and perpetrated physical and sexual violence on children. Instead all I get is diversion through an avalanche of statistics.

  97. @ BWS

    Think what through? I suggest that you put your own thinking cap on and allow for the fact that others may possibly have valid arguments.

    Scrapping the 35 hour week would help create more output and wealth and help return France to the level of esteem to which the country thinks it is entitled. In fact, one could say that it suffers from exactly the same problem as Ireland i.e. those pulling the levers of power come from the non-traded sector of the economy and have little or no concept, or direct experience, of what is required for a country to prosper economically.

  98. @DOCM
    Swiss industry reporting very negative outlook on the back of developments in Germany. PMI is down to 50. Der wichtigste Absatzmarkt Deutschland
    schwaechelt. Demand is banjaxed. Endlogic of the balanced budget mentality.

    France got over the Nazis. It’ll get over Germany’s Schuldenwahn too.

  99. @that’s legal?
    I empathise with your situation which is reflected in the lives of so many of your cohort- young people starting a family in Dublin. I spent over 20 years as an architect in Ireland designing private and public sector housing schemes and the problem lies with the planning system. The problem is the planning system restricts supply rather than controls development. There is enough zoned land in the Dublin area for it’s housing needs IMHO, but it exists in smaller parcels in the suburbs rather than in larger greenfied sites and is therefore more difficult to develop. This has resulted in overdevelopment in the rural counties where we now find the so called “ghost estates” (although not so many as first described by some eminent economics professors – anyone remember the 300,000 empty units figure that went unchallenged except by the CIF who’s estimate of 25,000 was more realistic as it turned out) .
    There is not the wherewithal of developers to finance the risk (even if the could access finance) of going through with the planning system whereby any individual can object to the development even though it meets with all of the criteria of the local authority development plan. In a recent case, the very same councillors who voted on the development plan to meet the housing need of the population wrote objections on behalf of the local residents groups objecting to small developments of 4 houses on a small urban site on the basis that they are “out of keeping” with the area, resulting in 4 houses not being built that would have been suitable for first time homebuyers like yourself.
    When policy makers stop seeing existing housing stock as commodities that must be protected in the interest of the banks balance sheet and instead see affordable housing as being integral to the life blood of the economy (which is now largely based on the large urban centres) and overhaul the planning system so that it serves all of the people and not only those who bought their houses in the area a few decades ago.Only then will you see supply increase and rents/house prices stabilise to enable you and your family to live a more productive and fruitful life in the city, close to your work, schools , amenities and not have to commute 3 hours a day.

  100. @ DOCM: Thanks for that. I really meant what I wrote – you really do need to think the matter through*. Its a very complex matter.

    “Scrapping the 35 hour week would help create more output and wealth and help return France to the level of esteem to which the country thinks it is entitled.”

    This is wishful thinking. Why would you need to create MORE output when we cannot even consume what is already produced? ??? Its final consumer demand which has fallen.

    The reasons for this are now in plain sight – its just that our Great Men have not gone to SpecSavers yet. Maybe they never will – lacking the specs to see what is behind them and the possibilities before them.

    Actually, I do not expect any meaningful solution to arise. Those ‘pulling those levers’ are not fools. They have ideas and agendas. Their agendas will prevail. They are NOT interested in the prosperity of this country. They are only interested in personal accumulation. Hence, we are stuck with these policies until the oil shocks start to roll in. 10 years? Possibly. Or maybe someone, in the meantime, decides to ‘abandon’ the SS EU. Interesting times.

    Wealth? Judging by you comments I have to wonder whether you actually understand what real wealth** means – in an era of wanton and unfettered, fiat money creation.

    * Jervis, Robert. (1997). ‘System Effects: Complexity in Political and Social Life’. Princeton University Press.

    Perrow, Charles. (1984). ‘Normal Accidents: Living with High-risk Technologies’, [ch 3: Complexity, Coupling and Catastrophe]. Princeton University Press

    ** Soddy, Frederick. (1933). ‘Wealth, Virtual Wealth and Debt’, 2nd ed. Omni Publications.

    Cheers.

  101. I believe J of N had eleven beatitudes – the 11th being;

    “Blessed be the Crapmakers, for theirs shall be the Kingdom of Debt!”

    Needles to say, this beatitude was, in the interests of political and economic sensitivity, deleted. God bless WikiLeaks!

  102. @ Hieronymous

    Thanks for that. It does seem Nimbyism is a real issue alright. Not sure how one would tackle it. I think we’d emigrate before doing a 3 hour commute every day to be honest. Being a property owner isn’t worth that. Not to us at least.

    I totally agree, to me housing shouldn’t be seen as a commodity. It disgusts me to be honest. What irked me most over the last few years was Michael Noonans capital gains exemption. Surely we should be chasing speculators out of the housing market not inviting them in with tax breaks. Though of course I’m biased on the issue.

    Also, where’s the Aldi/RyanAir/Amazon for housing? When are those 3D printers going to arrive and set us free from CIF. Technology is disrupting the sh*t out of every other sector. When is it the construction sectors turn?

    I digress :).

    Anyway, rent control has arrived in Berlin, so that could be the ‘if rent prices go nuts’ move for us. There or Helsinki, where she’s from. As always, it’ll depend on employment.

  103. @That’s Legal?
    The budget has allocated a budget of 800million for social housing. That is all welcome but remember that this is your tax money going to house people who are considered less well off than yourself, and you are now considering emigration due to the fact that you cannot afford housing suitable for your new family.!
    The Govt. and local authorities can provide social housing where ever it wants on a needs basis due to the local authorities powers under section 8 of the building control act and no one can appeal it to An Bord Pleanala, whereas private sector development is a crapshoot that will take years in planning before there is a return for the developer, so they sit on the land and wait for values to increase.
    JTO is correct in his posts above about the fact that this housing crisis was perfectly predictable and this crisis has come about because certain influential commentariat see development as speculation whereas new housing is a requirement for a growing population with such a large cohort in the house formation age group.(such as yourself). It is galling to see how the Govt is cheerleading (apparent) increase in house values that favours the banks balance sheets as this was achieved by reducing supply and thereby increase the value of assets held by the banks and NAMA.

    The number one priority for the Govt. is getting the money back that it ploughed into the banks and it is not based on any clear forward thinking on affordable housing policy.

    Affordable private sector housing needs to be produced for purchase or for rental in order to assist the overall economic recovery ,not only to keep our home grown talent but also attract an educated work force from abroad. The Govt and local authorities combined with NAMA can address this problem but it first needs to overhaul the planning and legislitive system which is an impediment to proper development because it prioritises the protection of existing property owners.

    This is not just a matter for the construction industry as represented by CIF and others but it is critical to future growth and development of the country. The Govt could introduce planning legislation whereby local authorities could identify all brown field sites in their jurisdiction, provide development plans for these individual sites with pre determined set backs, densities, height restrictions, internal spatial requirements, facilities, facade guidelines and if a developer meets with all of the requiremenrs of this plan they can build it without appeal. Combine this policy with a “use it or lose it” clause and we can start building proper homes that will be in the right locations with access to work, schools and amenities.
    In reference to your comment on technology, please be aware that the DoE will not sanction any development for sale unless you can demonstrate that the materials used have a guarantee life of 60 years (in the interest of protecting the consumer!) so any new or innovative technology cannot be used for the construction of dwellings as they must have been around since 1954 to meet with this criteria. – so 3D printed houses are a long way off!

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