Tax Systems

The Fall 2014 issue of the Journal of Economic Perspectives is free to download here.

Especially topical are:


Zucman, Gabriel. 2014. “Taxing across Borders: Tracking Personal Wealth and Corporate Profits Journal of Economic Perspectives, 28(4): 121-48.


This article attempts to estimate the magnitude of corporate tax avoidance and personal tax evasion through offshore tax havens. US corporations book 20 percent of their profits in tax havens, a tenfold increase since the 1980; their effective tax rate has declined from 30 to 20 percent over the last 15 years, and about two-thirds of this decline can be attributed to increased international tax avoidance. Globally, 8 percent of the world’s personal financial wealth is held offshore, costing more than $200 billion to governments every year. Despite ambitious policy initiatives, profit shifting to tax havens and offshore wealth are rising. I discuss the recent proposals made to address these issues, and I argue that the main objective should be to create a world financial registry.

Kleven, Henrik Jacobsen. 2014. “How Can Scandinavians Tax So Much? Journal of Economic Perspectives, 28(4): 77-98.

American visitors to Scandinavian countries are often puzzled by what they observe: despite large income redistribution through distortionary taxes and transfers, these are very high-income countries. They rank among the highest in the world in terms of income per capita, as well as most other economic and social outcomes. The economic and social success of Scandinavia poses important questions for economics and for those arguing against large redistribution based on its supposedly detrimental effect on economic growth and welfare. How can Scandinavian countries raise large amounts of tax revenue for redistribution and social insurance while maintaining some of the strongest economic outcomes in the world? Combining micro and macro evidence, this paper identifies three policies that can help explain this apparent anomaly: the coverage of third-party information reporting (ensuring a low level of tax evasion), the broadness of tax bases (ensuring a low level of tax avoidance), and the strong subsidization of goods that are complementary to working (ensuring a high level of labor force participation). The paper also presents descriptive evidence on a variety of social and cultural indicators that may help in explaining the economic and social success of Scandinavia.

58 replies on “Tax Systems”

The paper on the Scandinavian tax system highlights a general problem with a lot of economic analysis- local cultural and societal norms are important and render redundant the universal conclusions often drawn from economic research. The recent brouhaha on the significance of a 90% debt to income ratio is an example.


the ‘allegedly’ universal conclusions ….

Much of economics is ‘ontologically challenged’ …. due to the limits of the natural science model – which dominates in the most powerful academic milieu – the US – where the cartesian ‘individual’ is deemed to reign supreme in the blindman’s land of atlas shrugged …

The Scandinavians are more ‘republican’ in recognising the ‘common good’ of the collective bringing in the social and the psychological in historical time. Three areas stood out for me when first meeting the Danish World ….

(i) strong linkages between Education and Economic Activity

(ii) very good early childhood care

(iii) the computerised feeding systems for free-range pigs and the glorious rashers which ensued ….

There is an Irish ‘societal effect’ but methinks we have yet to figure it out ….

There is little evidence that the Scandanavian model is a social success. It is good in parts and bad in other parts. A mistake is to lump all the Scandanavian countries together. Sweden has very good health stats (life expectancy, mortality), but Finland trails Ireland and Denmark’s are the worst in western Europe. Finland has excellent education stats, but the other Scandanavian countries are an education disaster area. Sweden ranked miles behind Ireland in the last PISA tests. Suicide rates are much higher in Scandanavian countries than in Ireland. The recent EU survey showed that the Scandanavian countries had the highest rates of domestic abuse and sexual abuse of women in the EU. Economically, the Scandanavian countries were the wealthiest in Europe a generation ago. But, today they have chronic slow growth and are price uncompetitive, being by far the most expensive countries in Europe. Ireland’s GNI per capita has already passed Finland, and should pass Denmark and Sweden in the next couple of years.


I’m no self hating Irish man but sometimes I feel your green flag gets hoisted to easily….As i mentioned before, dark winters are tough on the Nordics, so suicide rates are somewhat skewed. Also, how are your crime stats controlling for our ‘systemic failures’ approach to recording of crime?

There must be 10s of factors to consider on domestic abuse. Cultural, fear of reporting, ease of reporting etc etc..

Why is GNI of any importance to the average citizen if it mostly falls to their “betters”, John? Or are you so “optimistic” that you, once again, missed the point entirely.

There are many differences between the Scandinavian countries, both culturally and in terms of their economic history. What they have in common is a commitment to (i) equality of treatment of their citizens and (ii) the governance capacity, both in political and economic terms, to bring that about.
The net result is a fairly stable level of economic well being although they have slipped in relative terms (the exception being, of course, Norway).

Ireland lacks a commitment to either requirement. It is, instead, being chivied in the right direction by its creditors.

Of course country comparisons have their limitations but it’s interesting to observe the impact of low corruption, transparency, services that are generally well-run, a high participation of women in the workforces and a willingness to adapt when necessary.

Sweden’s Freedom of the Press Act of 1766 is regarded as the world’s first freedom of information act.

JTO’s claim that Irish GNI per capita will overtake the Nordic countries soon is a little foolish – FDI is good for an economy (Ireland’s outward FDI is bigger than inward according to official data but not in real world) but Ireland has a small indigenous international trading sector. Actual individual consumption per capita is in line with Italy’s:,_consumption_per_capita_and_price_level_indices

On Wed a global English proficiency ranking was published and like many other such rankings, the Nordics head the tables.

According to the Swedish tax office, the top marginal tax rate in 2012 was 56.60% (at an average local income tax rate of 31.60%). This rate applies to taxable income above SEK 574,300 – €62,200 (equivalent to assessed income above SEK 587,200). This is the rate also quoted elsewhere but it’s higher in the paper.

Denmark has the highest labour rate in Europe but it also has a knowledge economy.

In Sweden when the Social Democrats became a minority government in 1920, the new finance minister was the head of the legal department of ‘Stockholms Enskilda Bank,’ the bank of the wealthy Wallenberg family.

The Wallenbergs invested in several Swedish companies that became international brands and the Social Democrats were able to develop a welfare state while the private sector was allowed get on with developing industry.

However, Sweden fell from being the fourth-richest country in the world in 1970 to the 14th in 1993 when public spending was 67% of GDP. It is now 52% and Sweden’s economy has been a rare star economy in Europe in recent times.

Gabriel Zucman highlights the remarkable advances that have been made in international tax reform and also the roadblocks.

This week we had Jean-Claude Juncker, in office as European Commission president for just two weeks with his past role as the architect of the Luxembourg tax haven under scrutiny, converting from poacher to gamekeeper and proposing that corporate tax rulings be exchanged across the Union and also raising the issue about a common tax base.

Also this week Germany and the UK agreed to restrict patent box incentives to R&D of substance in an economy and that is likely to be adopted by the European Commission as a general rule.

What we again see with the Luxembourg Leaks is special treatment for big companies and special access for high-paid tax advisors, while the same tax authorities operate aggressively with smaller companies and individuals – publicly naming them, imposing punitive penalties and sometimes hauling before the courts.

“Everything is legal”!


@ MH

Can name a company bigger than Apple that the European Commission has failed to tackle? The behaviour of national tax authorities is another matter.

@ All

One of the major differences between the countries studied is that between Sweden and Denmark in the matter of public access to information on the taxes paid by individuals. In Sweden, this is published and a detailed commercial publication is available for anyone interested. In Denmark, the situation is the opposite. It matters little in practice as the level of third-party information is of equal significance in both countries. But it does reflect an important societal/cultural difference.

For the rest, the study confirms what is obvious to anyone with some knowledge of the various economies e.g. the lack of universal public child-care facilities in Germany which is a reflection of cultural values and the country’s federal structure.

The lessons for Ireland jump off the page. Not that that there appears to be any hurry to learn them! The idea of public representatives openly agitating for breaches of the law would, for example, be unheard of in Scandinavia and, indeed, in most mature democracies.

One of the more noteworthy insights from the last leg of the crisis was what happened to tax systems based primarily on wealth when asset prices collapsed. A lot of poorer US cities where schools were funded by property taxes hit the buffers. And even in well off Switzerland many wealthier areas saw big deficits when the paper asset holdings of the handful of people who paid big chunks of total tax take dropped significantly.

If asset prices fall again back to realistic levels there’ll be tax carnage. An awful lot of tax and consequently public sector spending depends on the status quo holding.


Can name a company bigger than Apple that the European Commission has failed to tackle?

The international tax reform train had been well clear of the staion by the time the Commission opened company investigations in 2014.

A US Senate panel, the G20/OECD project and hearings and reports by the House of Coomons PAC on Google, Stabucks and Amazon predated action by the Commission.

On the three policies identified (“Combining micro and macro evidence, this paper identifies three policies that can help explain this apparent anomaly: the coverage of third-party information reporting (ensuring a low level of tax evasion), the broadness of tax bases (ensuring a low level of tax avoidance), and the strong subsidization of goods that are complementary to working (ensuring a high level of labor force participation”), I came across this link which is of interest in the context of the second.

(The link to the full text is not immediately accessible. It seems to contain valuable methodological insights that might inform the recent debate on the same issue in Ireland).

The claim is made that the electorate is “already paying for water through taxes” when the reality is that those in the top three income deciles are actually paying not alone insufficient taxes to provide an adequate service to themselves but to the other seven deciles. It seems that this particular penny may be beginning to drop and a majority view emerging that water should be paid for as a service and on the basis of usage.

Coincidentally, there is also recent debate on the the third policy explanation, that is subsidisation of public goods that aid work participation, notably the need for universal child care facilities which allow parents the option to decide whether or not both should continue to work.


Do you think those on below and average incomes are better or worse off, all things considered, in Nordic countries than here? Tax rates are only one part of that equation. What, for example, do those on low or middle incomes pay for child care?

You won’t find any relief her for speaking sense/truth.

A glance at the website will show that after all the austerity, that someone earining 15k is paying substantially less tax than they did in the early 2000s.

A recent supplement in SBP dated 19 Oct gave the tax rates for different salary levels.
Those in Germany pay 27% tax on 18K income, the Dutch pay over 20%, the Spanish pay over 18.5%, Swedes pay 17.24%, the Yanks pay 14.7%, those on Newry pay 12.33%, the Swiss pay 6.45% and Paddy who doesn’t want to hear the truth or pay for a basic service like water (and more importantly wastewater) pays 3.5%.

Those on 35K in Germany pay 36.43% while Paddy pays almost half the amount at 18.9%.
And for this Paddy gets twice the dole as in Newry and if he is luck enough to live to over 70 like (George Hook and Tom McGurk) qualifies to get a contribution of €35 per month towards his electricity regardless of his income. He will also get his TV license paid for by the State as well. This totals €580 a year.

I hear Michael Clifford moaning that we hadn’t spend money on water for the past 20 years. More like 120 years, Mick. There are pipes from the 1800s on the Dublin water system while there are over 800 km of pipes over 100 years in Dublin. There are around 2,800 kms of pipes in Dublin in total.

The left in Ireland which comprises SF, trust fund trots and elements of the LAbour, FF and even FG want an unique Irish model where we have the highest paid public servants, low productivity, universal benefits for their voters all paid for by someone else (native or foreign).
Such a model will eventually have to wake up and shake hands with basic math.


The math is catching up!


To quote from the Danish link above; “The Danish tax system is progressive. This means that the higher your income, the more taxes you have to pay. In many other countries citizens pay less tax than in Denmark, but in return they have to pay to go to school, to the hospital, the doctor’s, etc.”

This is where social solidarity and good governance come in. Irish taxpayers that are the victims of net “fiscal incidence” are disgruntled more IMHO by the fact that (i) they do not know where their taxes are going and (ii) they get so little in return.

Only the math can change the situation or, rather, the growing awareness in the electorate of it.


“A recent supplement in SBP dated 19 Oct gave the tax rates for different salary levels.
Those in Germany pay 27% tax on 18K income..”

I thought that finding looked a bit off, so I decided to have a look at the linked document.

My calculation for Germany, based on the document from the ‘CFE’, is that a person would pay at most €1550 or 8.6% of their income in tax.

One of the allowances is a deduction of up to €4500 for travel expense to and from work. Another deduction is “• child allowance – annual sum of €1824 EUR for a child (for a child under 14 years 1 000 EUR”.

@ Ufc

People can arrive at their own judgement. The important point is to put the material out there for debate.

The VAT rate in Denmark is 25%; no exceptions. Norway 25%; food 15%. Sweden 25%; food, services 12%; books, culture 6%.

It goes without saying that universal benefits that take no account of income have no place in a properly functioning system as they are circular in their operation i.e. a means of repaying tax to those who should not benefit from them in the first place. Persuading both politicians and the voters that are beneficiaries of this is a bit of a problem; but not insoluble!


Its not a question of ‘green flag’ but of cold sober analysis of the statistics.

I have never said that Scandanavian countries are not successful. They are. They are much better run than, say, France. I also admire the way they retained their own languages and cultures, and resisted being incorporated in larger counties, unlike Ireland, Scotland and Wales. Denmark wasn’t incorporated in Germany and Finland wasn’t incorporated in Russia. They also have good infrastructures and are good at designing everything from chairs to mobile phones.

I am simply challenging the myth that the Scandanavian countries are utopias that are more successful than Ireland across the board, which is the view you get in the Dublin 4 media ad nauseum, and which is the view implicit in Abstract quoted in the opening post of this thread.. They aren’t. They are better in some ways and worse in some ways. I listed some of them in my first post. I challenged the myth that high-tax in Scandanavian countries has led to excellent services provision across the board and referenced the very poor health stats in Denmark and the very poor education stats in Sweden and Denmark. Plus their poor performance in the recent EU survey of domestic and sexual abuse of women (BTW this had nothing to do with police reporting practices, but a survey of women conducted identically in all EU countries).

With regard to economic growth, the EU Commission forecasts for economic growth between 2013 and 2016, published last week give,

Ireland +12.5%
Sweden +7%
Denmark +2.4%
Finland +1.3%

Also, while Sweden weathered the global recession quite well, Denmark and Finland didn’t. GDP in both Denmark and Finland was 5-6% lower in 2013 than in 2007, almost identical to Ireland, but with the difference that Ireland is now forecast to grow strongly from 2013 on, while Denmark and Finland aren’t. If the EU forecasts are accurate, Denmark and Finland’s GDP in 2017 will still be 2-3% lower than in 2007, the peak pre-recession year, truly a lost decade for those two countries, while Ireland’s GDP/GNP will be about 10% higher, thanks to its strong 2013-2017 growth recovery.

One of the things they have going against them is their very high cost structures., which is the result of very high tax levels. Denmark is by far the most expensive country in Europe, while Finland is next. Ireland was nearly as bad a few years ago, but has got its cost base down significantly since then. Denmark and Finland need to emulate Ireland in getting their cost bases down, but I doubt if they have the same flexibility as Ireland to do so.


You credit the Troika with every successful outcome in Ireland these days. I’m sure you’ll soon be saying the Troika are the reason Ireland beat South Africa last weekend.


“Given the rapid advance in residential property values in Dublin particularly, the troika officials are likely to examine whether sufficient steps are being taken to increase the supply of housing in big urban areas of the State.”

Although I am no fan of the Troika, I do hope they roast the chestnuts off whoever in government they meet on this issue (if they can find chestnuts).
Incidentally, what Minister will they discuss the housing issue with?
I am not aware that we have any minister responsible for the very fundamental issue of housing the population.
There have been calls for a minister for housing, but clearly the government believes that it is better not to have one.

That way, there is nobody to take the blame when things go pear-shaped, and it allows the facility to drive things deliberately pear-shaped to the advantage of the pear-shaper and his friends.


What they have in common is a commitment to (i) equality of treatment of their citizens and (ii) the governance capacity, both in political and economic terms, to bring that about.

Irish taxpayers get so little in return.

These are the aggregate scores (3 subjects, 2 genders) for the 2012 PISA tests.

Ireland 3094
Denmark 2990
Sweden 2890

How do these results fit in with your theories?

Where is the Scandanavian commitment to equality in these figures, unless you mean ‘equally bad’.

If Ireland is ‘getting so little in return’, what are Denmark and Sweden getting from their education services for double the taxes Ireland pays.

Danes and Swedes should be asking “We pay almost twice as much in taxes as in Ireland, so why are our children performing so much worse at school than in Ireland?”.

But, of course, they won’t.


While agreeing with most of what you say, I was a bit shocked and felt very old when you said that TomMcGurk was over 70.

I was at Queen’s Uni at the same time as Tom and we were on the same floor in Hamilton Hall (of residence) in 1967/68. I recall he was a couple of years ahead of me. If your claim was true, that would make me 3/4 years older than I thought.

What a relief to check Wikipedia and find he’s only 67.

The State is seen a a broad board to be looted and pillaged by all sectors.
Out SW rates/schemes, our levels of compensation for personal injuries cases, our prices for land etc.are out seriously out of kilter with our nearest neighbour and everyone justs shrugs their shoulders.

Nothing lasts forever in any economy and Finland is facing challenges in electronics (demise of Nokia); forestry (drop in newsprint demand because of the Internet) and steel (due to a global glut).

Meanwhile Richard Bruton is back in the US for the second time in weeks to reassure on taxes but he can’t as it’s not a settled issue.


Here is a comment from the National Competitiveness Council, a public agency, last April on Irish prices.

“Recent price falls are largely a cyclical response to the Irish and international recessions rather than a response to structural changes in the Irish economy. In this light we need to see the Government’s continuing focus on those aspects of the economy which drive costs for business. Reforms that reduce business costs and improve productivity need to become the new story of the Irish economy.

Ireland’s current price level and inflation profile can be described as high cost but rising slowly. In 2012 Ireland was the 3rd most expensive location in the euro area for consumer goods and services. Irish prices were 14.6 per cent above the euro area average. Irish price levels remain above the euro area average in 10 of the 12 key product categories.”

In June Eurostat reported that Irish prices were 18% above the EU average – Ireland was the only EU member to experience a decline in consumer prices in 2008-2012.

The lawyers in Fine Gael and Labour have yet to agree on legal services reform.

Dublin house prices and rents are rising despite mortgage approvals currently at a level as a low as in 1977.


On the troika, guilty as charged; for the issues for which they are responsible!

On Scandinavia, let me put it like this; how many young adults – and their children – from the countries in question are staying in touch with their families on Skype while their sorrowing mothers descend into depression? Economic emigration from these countries ended more than a century ago.


I missed your claim that those that see advantages in the Scandinavian approach are doing so on the basis that the countries concerned constitute a utopia. I do not think that this is true; certainly not in my own case. The record simply shows that they are better run. This is part of the explanation as to why one – Sweden – could lend us money to help remedy the bad management of the Irish economy, notably under FF.


Your universal benefits that take no account of income have no place in a functioning system is a bit extreme. Delivery costs can be cheaper, benefits are not stigmatised, they can be part of the social compact of a society. Take them away and certain people will start complaining they get nothing back.

@Michael Hennigan

“Dublin house prices and rents are rising despite mortgage approvals currently at a level as a low as in 1977.”

This is true. It shows the current rise in house prices in Dublin has little to do with lax mortgage lending. It has far more to do with lack of supply. It will get worse as the EU Commission last week predicted a sharp acceleration in population growth and a return to net immigration by 2016. All but the blind can see that a sharp increase in new house building is urgently required.

@Michael Hennigan

One factor that appears likely to cause trouble for the Scandanavian countries in the next few years, while being of great benefit to Ireland, is the collapse in oil prices. Of course, these are extremely volatile and unpredictable, so might come back up to $120 again, maybe even before I finish this post. But, if they stay low, the Scandanavian countries will take a big hit. In particular:


If oil stays at 70$-75$ a barrel for a few years, Norway’s national income will be severely hit and will almost certainly fall. It will still be a very rich country, of course, because of its extremely high per capita oil production, but it is ability to import from other Scandanavian countries will be hit, and it is likely to have to cut back on big infrastructure and construction projects that neighbouring Sweden and Denmark usually have a big stake in.


Same as Norway, but on a much smaller scale. Denmark is western Europe’s third highest oil producer after Norway and Scotland. In addition, its oil production is in terminal decline.


I am not aware of Finland producing oil (could be wrong). But, it exports massively to Russia, which Russia pays for with its oil receipts. If these are collapsing because of the low oil price, expect a big knock-on effect on Russian imports from Finland. In addition, tensions between Russia and the EU and EU economic sanctions against Russia won’t help.

The last time the oil price was low and Russia was in the economic doldrums was in the 1990s. Their economies were very badly hit at the time, with severe recessions, while Ireland was Celtic Tigering. Expect something along these lines this time around, although not as pronounced. The EU Commision seem to agree.


If Sweden is so well-governed, why are their PISA results so bad?

On migration:

“In 2013, 23,500 women and 27,100 men upped sticks and left Sweden. While most still headed to neighbouring Norway, both Denmark and Britain crept up in the table of most popular countries to move to.”

“The sheer number of emigrants now matches the massive wave of people who left for the US in the 1880s, Statistics Sweden noted.”

I would agree that emigration from Ireland since 2010/11 was higher than that from the Scandanavian countries. However, in the two decades prior to 2011, the flow was in the opposite direction and net immigration into Ireland was much higher than into Scandanavian countries. It looks like the pendulum is swinging again. If EU Commission forecasts prove accurate, we are rapidly reverting to the 1991-2011 pattern of migration flows.

Since 1961 Ireland has had more immigration than emigration.

Since 1961 Ireland’s population has increased twice as much as that of the Scandanavian countries.

@Michael Hennigan

“In June Eurostat reported that Irish prices were 18% above the EU average”

While accurate, and widely reported in the media, this is misleading.

First, the EU average includes dirt-cheap and dirt-poor countries in southern and eastern Europe. The gap between Irish prices and those of other northern European countries, with similar GNI per capita, is much less. The gap with Belgium, Netherlands and the United Kingdom was 6%, with France 9%, while Irish prices were lower than prices in Denmark, Sweden, Finland, Luxembourg, Norway and Luxembourg.

Second, the Eurostat figures are for 2013, when one euro equalled £0.86 sterling. Today its one euro = £0.78 sterling. Unless the £sterling suddenly falls v the Euro, I’d be pretty certain that the Eurostat figures for 2014 (when published next year) will show Irish prices lower than those in the U. Kingdom. And, hailing from close to the artificial border in Ireland, it is my experience that, at the current exchange rate (one euro = £0.78 sterling) prices on the southern side of the border are now on average slightly lower than those on the northern side, although it varies wildly from item to item.

Third, and I am sure that, with your vast knowledge of these things, you are one of the few in Ireland to know the difference, but the Eurostat figure of 18% applies only to consumer prices. To compare the competitiveness of economies, you need also to include construction and investment goods prices. These are lower in Ireland.

Eurostat gives the following figures for average price levels across the whole GDP (i.e. consumer prices + construction prices + investment goods prices) in 2013 (link below):;jsessionid=aqOvltI4_afZI8OxksBPfV6yiNUFumDVZoQItzzsoqAmYRPmxOjN!153066745

Portugal 81.5
Greece 85.7
Spain 91.0
Italy 101.2
Germany 104.3
U. Kingdom 109.0
Ireland 109.8
Netherlands 110.0
Austria 111.4
France 112.6
Belgium 112.8
Iceland 113.4
Luxembourg 122.8
Finland 123.8
Sweden 134.2
Denmark 139.1
Switzerland 150.0
Norway 154.3

ps as stated above, the figures are for 2013, and because of exchange rate movement, the U. Kingdom figure is probably now around 119.0

So, it confirms, Ireland is quite competitive now, while the Scandanavian countries are not. Strangely, I have never heard the phrases ‘Rip-off Finland’, ‘Rip-off Sweden’, ‘Rip-off Denmark’, ‘Rip-off Switzerland’ or ‘Rip-off Norway’, although these would be more appropriate than ‘Rip-off Ireland’.

@ JTO “The last time the oil price was low”

The oil price is not low.
Brent is $80 a barrel or 4 times what it was in mid 92 when “the oil price was low”


Denmark’s hourly labour cost is almost double the UK’s but Eurostat’s unit labour (productivity) cost data in 2013 show Denmark at 122.7 (2005 =100); UK at 123.6; Sweden 113.2 and Finland at 125.7.

Ireland is at 102.3 – however multinational company data shows that workers in Ireland are the most productive in the world:

Microsoft had a global revenue per employee of $777,140 in fiscal 2011 and $27m in Ireland.

One has to be careful when comparing Norway to Ireland.

Norway due to hydro power has cheap electricity… whilst Ireland continues with the damaging ideology of maintaining high electricity prices to encourage more competitors in to provide cheaper electricity in the long term.

In 100 years time they will still be implementing this false ideology.

In addition the implementation of levies and VAT make electricity more expensive again… personally my own monthly ESB bill contains 33% of just VAT, PSO levies. I would imagine in 10 years time… 40% of my monthly bill will consist of levies with the remaining 60% for the electricity I have used.

Norway is now facing several problems…. the demand for carbon fuels is slowly changing. Reminds me of a one horse race …. bit like Ireland and property a few short years ago..

1) Shale gas is depressing oil prices.
2) Advanced economies are trying to move away from carbon fuels to alternative fuels / technologies i.e. carbon neutral, renewable.
3) Alternative technologies i.e. Solar PV are starting to approach price parity with some carbon fuels (until recently anyway).
4) Advances in technology i.e. LED lights etc reducing the electricity demand. ( on this point… I see Philips have introduced a LED florescent tube which lasts 3 times longer and is 50% more energy efficient…. if all the offices in the world were to change to these think of how many power stations could be switched off!!)
5) High Union membership… approx 55%.

Some other interesting points made in this Reuters article by Balazs Koranyi OSLO Thu May 8, 2014


No utopia the to be found in the countries concerned! What a surprise!

But the fact that economies have ups and downs is not what is under discussion. The topic is comparison between different models of economic management, especially in relation to taxation.

I referred to “economic” i.e. forced emigration. You are referring to free movement of labour within several countries of the EU.

We have lessons to learn and very few to give.

Most of this that complain about not getting anything back contribute very little if anything in the first place,

@ JohnTheOptimist

This is a repost from yesterday of post that remained “in moderation”:

Denmark’s hourly labour cost is almost double the UK’s but Eurostat’s unit labour (productivity) cost data in 2013 show Denmark at 122.7 (2005 =100); UK at 123.6; Sweden 113.2 and Finland at 125.7.

Ireland is at 102.3 – however multinational company data shows that workers in Ireland are teh most productive in the world: Microsoft had a global revenue per employee of $777,140 in fiscal 2011 and $27m in Ireland.

Looks like Arthur Laffer is in agreement with me.


It was the economist, Ronnie O’Toole, who suggested on this site that, since unit wage costs were difficult to measure, price levels should be used to compare competitive.

On this measure, the high-tax Scandanavian countries are not competitive. That’s what high-tax does. Show me a high-tax economy, and I’ll show you a high-cost economy. They now face, according to every forecast, a few years at least of very low growth in comparison with Ireland (and some others). Finland and Denmark will fare worst. I have no idea how they get out of it and reduce their cost base. Finland is in the Euro and needs to do an ‘Ireland’, but does it have the flexibility? Denmark could devalue, but then what of all those who thought they were the bee’s knees a year or so ago when they moved their savings to Denmark and got 0% interest?

So, residential rents are soaring right across the country. Not just a Dublin thing.

My commiserations and sympathy to @ThatsLegal.

What became of the 300k empty houses that FF were supposed to have left behind them?

If they ever existed (haha), why are rents soaring almost everywhere?

A continuation of this trend is not desirable. Ireland urgently needs an increase in new house construction, and not just in Dublin. All but the blind can see this.


With respect to your comments on emigration and Scandinavian countries I have some pertinent personal experience. I am currently working in the Middle East for a Danish Engineering firm. I am surrounded by Danish, Norwegian, Swedish, Estonian, Latvian and Finnish engineers, who like myself, skype home to the family while working here on projects that do not exist for them at home. While they are proud of their home country, they certainly do not believe that they are exiled from paradise.
They are here, like my other colleagues who hail from the UK, Australia, Germany, Austria , Greece, Spain , France Canada, USA, Syria, Lebanon, Jordan, Egypt, Iran, Iraq, India and the Philippines in order to survive, send money home, pay off the mortgage, pay down debt, develop their career, forge a new career, or are simply interested in the project depending on their own personal circumstances.
They are not forced to emigrate but have chosen to follow this path for their own clear economical and social reasons. Not one of them has a section in their national newspaper called “emigration generation” or see the world by looking backwards to coffin ships. We live in a global world whereby movement of labour is free and the reasons for moving to another country is as myriad as the individual and their particular circumstances. Approximately 10% of the UK population ( that is 6 million) live outside the UK. They just don’t go on about it like we do.

@ H

The suggestion that Scandinavian countries constitute a paradise does not come from me; as I have been at pains to point out. That we go on too much about the “scourge of emigration” is true. That many skilled personnel from all countries now find it normal to seek their fortune elsewhere is not in doubt; making a “lifestyle choice”, as Michael Noonan might put it. My target in this discussion has been, and remains, the issue of economic management. It is indisputable IMHO opinion that Ireland’s record on this has been very poor, especially in terms of construction boom and busts and associated failures in education which leaves swathes of our young people unskilled and forced to emigrate. That is the point I am making.

@ JohnTheOptimist

Comparing price levels is not a credible measure of relative of competitiveness.

@ Hieronymous

I was based in Jeddah in the first half of the 1990s with a Swedish group.

Of interest to the current dbate in the UK, according to the FT the number of European migrants in the UK is almost exactly balanced by the number of Britons living elsewhere in the EU, according to official figures.

About 1.8m Britons live in Europe, with Spain boasting an expat population of just over 1m UK citizens, according to government estimates. Of the Britons living in Europe, 400,000 are claiming a state pension from the UK.

That compares with an estimate of 2.34m EU citizens living in the UK, according to the latest official figures from Nomis – the National Online Manpower Information System, a service provided by the Office for National Statistics – based on passport records.


Thanks for your reply and your clarification. When economists talk about construction boom and bust they are talking about my industry and my cohort. In terms of economic management it is important that national economies do not become captive of the construction industry, as happened in Ireland, Japan, and Finland(yes Finland had a property boom in the 90s when they were flying high) however it is also important not to kill your construction industry stone dead either. It is a necessary component for any economy, but it only serves the greater good in terms of the provision of homes, schools, workplaces and the roads /rail by which people get there, it cannot be the main driver of growth and tax revenue as it was so recently in Ireland.
It is the nature of the beast that it is cyclical, and after a period of 15 years of necessary infrastructural development in Ireland the job is done and we in the construction industry are gone.
The lack of housing IMHO is a short term issue and confined to certain suburbs in Dublin and will be quickly over hauled.(if you can find the builders, architects and engineers to deliver them!)
As for failures in education leaving swathes of unskilled young people forced to emigrate , this is not case, as it is very difficult to emigrate unless you are skilled. No country will give you a work visa unless they need your skills.
The emigration debate is stuck in the 50s and does not reflect the reality of well educated highly skilled and highly valuable Irish people making a positive impact on the world.
The unskilled and uneducated are languishing at home.

@ H

“The job is done”? Far from it! There are still huge gaps relative to the Scandinavian countries; in the motorway network, water treatment etc.

I take your point with regard to the level of skills involved of those emigrating and agree with your assessment that the unskilled are mainly languishing at home; unless they have found employment in countries of the EU to which they can freely move, notably the UK. But my essential points remains the same; the management of the economy has not been such as to avoid a situation in which there has been a large waste of resources and young people have been denied a choice as to their lives. (The point comes up, incidentally, in the context of the other thread dealing “varieties” of capitalism).

Another example with regard to bad management and lack of choice relates to childcare. This item from the IT shows a response which is, unfortunately, typical of Ireland i.e. a misdirected debate on “fairness” with regard to the tax treatment of spouses who choose to remain at home when the issue objective should be to give each a choice as to what to do. (It may be noted that the reference is to “stay at home mothers”).

Result; no action!


Start stong?

All just to satisfy a landlords greed. Possibly a BLT landlord, over 30% of whom are not even paying their loans, despite extraordinary reduction in tracker interest rates.

Some people think the current issue is water rates. Personally, with an estimated 32% of Dublin households renting their homes and annual rent increases of approx €1800 either in the past years or waiting to be dropped in the mailbox, I do not think it is all about water rates.
I suspect there is a very fearful and very angry group of tenants in the Dublin area right now.

In the 15 years from 1990 to 2005 Ireland built an entire motorway network, upgraded the rail network, upgraded and rebuilt major sewerage and drainage schemes, upgraded the power networks including building new power stations, built brand new hospitals,created and built new third level institutions, and carried out urban regeneration schemes in every major town and city. The government also built thousands of social housing units throughout the country during this period.
This work employed over 250,000 people at the peak and was mostly funded by EU regional development funds, particularly from 1990 to 2000.(We should not forget this when we rail against the injustice of the nabobs of Brussels for making us bail out our own banks)
The level of infrastructural development we have in Ireland compares favourably with any other country in Europe, including our Scandinavian friends, who’s infrastructure is 20 to 30 years older than ours.
There is of course more to do ,particularly in terms of the schools building programme and social housing, all supported by a positive demographic.
It is welcome in the recent budget that the Minister has allocated 800million for the social housing programme which will help alleviate the pressure on homelessness and rental levels. It is also noteworthy , that our much maligned Govt. kept the schools building programme going while under severe pressure to cut all capital spending, for which they should be commended.
However even when the construction industry is slowly revived from it’s coma the potential level of activity will be relatively low when compared to the boom as we have no more towns to be bypassed.
This is what I mean when I say the job is done and that is why I am in the Gulf today with all my Scandinavian colleagues, who are also in the same position with respect to their own countries.

@Joseph Ryan

Deplorable though it is, this is the price to be paid for not building houses.

Unless new house-building is increased sharply, the problem can only get worse, as population growth is clearly accelerating and net emigration is clearly falling. If the pattern of the 1980s recession and recovery is repeated, Ireland will be back in net immigration by late 2015.

House-building in Ireland came to a halt several years ago and, despite the overall economic recovery, has yet to resume on anything like the scale required.

This halt was greeted at the time with glee and jubilation by media commentators, blog posters and the usual assortment of loopy-leftists and wacko environmentalists, for whom the term ‘builders and developers’ has become a term of abuse.

Ludicrous overestimates were made of the number of empty houses and ludicrous underestimates were made of the annual number of new houses that needed to be built. Enda Kenny claimed a few months ago that only 25k new houses were required in past years and attacked FF for building more.


Between 2002 and 2011 the average annual increase in the number of households in Ireland was 42k. Add in obsolescence and second houses, and the average annual build requirement was 50k. The actual number built was a bit more than this, hence the surplus by 2007/08. But, never at any point did it come remotely close to the 300k claimed. The annual build requirement will have gone down during the recession, because of the severe deceleration in population growth. But, it is increasing again now. The EU Commission last week forecast a doubling of population growth in Ireland between 2014 and 2016 and a return to net immigration by 2016. I’d suggest that both these trends are now well under way and that accounts for the acceleration in rent increase this year.

FF’s prioritisation of building new houses doesn’t look so daft now.

@ H

Could you describe the “entire motorway network” to me, especially the links between (i) Waterford and Cork (ii) Cork and Limerick (iii) Waterford and Limerick (iv) Limerick and Galway (v) Galway and Sligo (vi) Dublin and Sligo/Donegal? The entire “upgraded” rail network runs on the basis of imported diesel locomotives. And not much faster, if at all, than in Victorian times. Can you give me a parallel example from Scandinavia? Any examples of boil notices for potable water impacting almost an entire county? Or of at least ten urban areas with no effective waste water treatment?

Ireland still has no modern children’s hospital. The idea of universal health care is still a pipe dream. There is a major crisis in housing because of the failure to build adequate social housing. Examples of a similar kind must surely exist in the dilapidated infrastructure of Scandinavia!

@ JTO,

“This halt was greeted at the time with glee and jubilation by media commentators, blog posters and the usual assortment of loopy-leftists and wacko environmentalists, for whom the term ‘builders and developers’ has become a term of abuse”

Indeed… don’t forget to mention investors in property or other assets. In particular landlords, accidental or otherwise.

Ireland can be a strange country, people who provide a service can at times receive harsh criticism.

It will be very very interesting to see what happens after 2016 GE, and if there will be investors running for the door.


There were many people on the left who argued strongly for a house building programme during the period 2008-2014. Their voices were drowned out, not by looney leftists but in the main by rabid fiscally correct rightists.
NAMA is particularly culpable with regard to virtually abandonment semi-finished houses throughout the country, in what was in effect an act of national vandalism.
To add insult to injury, NAMA and bank receivers sat on development land, waiting for values om rise on the back of housing shortages, so that ‘bank balance sheets’ would look better and profits could be ‘booked’.
NAMA is currently, according to Frank Daly, sitting on land that could accommodate approx 25,000 houses.

“Mr Daly also said NAMA is committed to providing 4,500 houses in Dublin by 2016, funding debtors to build the homes with the aim of developing the bulk of those this year and next.
He said it also has control over land or sites that could potentially deliver another 20,000 houses. ”

The failure to build houses is down to an ideology that places the need for citizens housing way down the list of national priorities, and well behind the coterie of people who seek to make a quick buck (or million) on land development; and that includes the State and State institutions, including but not limited to the banks.

The entire motorway network is described in the National Spatial Strategy 2002 -2020. Essentially the Greater Dublin Area is expected to grow to 2.2 million and this conurbation will be linked by strategic radial corridors (motorways) to “gateways” (Cork, Limerick, Waterford, Galway, Sligo, Letterkenny- Derry, Athlone- Mulligar). These gateways are linked to each other by strategic linking corridors. (roads). See map 3 of the linked document.
The linking roads are only partially complete(particularly the western corridor) due to the downturn in construction activity but are all in the plan and will be completed once funding returns. The motorway network is largely completed and every city and town on the map is bypassed.

The deficits in our infrastructure you have identified is work to be done, however in terms of construction activity and employment we are well on the right hand side of the bell curve as the majority of the work in the NSS is in the completion phase as we approach 2020.

The upgrading of the rail network is largely within the GDA where it should be as a suburban rail system because you can now get a bus from the city centre of Cork to Dublin Airport directly in a little over 2 hours for a 20 euro fare. So why take the train and get scalped by IE?

Don’t get me started on the Children’s Hospital! a total failure of the planning system and deserving of its own thread on the detrimental effect of the Irish planning and regulatory system on the economy and environment.

@ H

I am of the view that the NSS cannot be considered as either a success or anywhere near completion. You have identified and agreed with me on some of the gaps. (The number of urban areas without proper sewage is 40 not 10, apparently).

The childrens’ hospital and the investment in railways are examples of poor planning. The head of the latter is recently quoted as saying that €100 million annually additional will be required by way of subvention to avoid it going bust. The fact that the investment duplicates that in motorways has been pointed out by many.

Coincidentally this item was on RTE radio this morning (scroll down to item on Claremorris and rural towns).

I would be the first to admit that the country, or, more accurately, Dublin and the Limerick and Cork areas, has been modernised but in a wasteful and not joined up manner. The fact that these areas have benefited most has, as you know, brought no electoral advantage to FF.

The tragedy now is that the present collection of political incompetents have clearly nothing in their sights other than getting re-elected or, rather, avoiding electoral annihilation. Investment comes way down in their list of priorities. Ireland is the only country of the OECD not to charge for water. In recent weeks, the only thing that can be said is that it has made a holy show of itself on the subject. Whether this will percolate the general electoral consciousness remains to be seen.

We are a long way from the performance of the Scandinavian economies both in social and economic terms.

” trust fund trots ”

Are there actually people in Ireland with trust funds? Or is this just an irrelevant ad hominen? I would have thought trust funds were pretty much an American phenomenon.

You can keep pointing out the negatives and I will keep on pointing out the positives we shall never agree. For your Children’s Hospital , which is a monumental planning failure, and not a failure of the NSS I give you all of the development of all the major hospitals in the country, some of of which I am proud to say I contributed to. I was also party to the capital buildings programme for the universities and third level institutions and this programme is close to completion.
The current Govt is focussed on consolidation of the public finances and not on infrastructural development, and therefore the NSS has been stalled.
The basic point I am trying to make is that the majority of the 150,000+ people who left the construction industry will not be coming back soon even though Ireland is thankfully growing again. The reasons are three fold- the job is complete bar a few key buildings such as the childrens hospital and secondary roads, there is no private capital available and the Govt does not have the wherewithal to invest.
Since this thread is about comparison with Scandinavian countries, as said up above, my Scandinavian colleagues are sitting in the Desert with me for the same reasons- no work at home.
The only Scandinavian country that is still investing in infrastructure is Norway, and they are building a coastal road network to connect the Artic regions. They , of course, have the largest Oil Fund in the World to pay for this so they don’t need to go the markets for their money. Their reasons for this investment is to open up the Artic for Oil and Gas exploration. Just don’t tell Greenpeace.

As the Irish Water saga demonstrates, there is little understanding in the electorate of how skewed the tax system in Ireland is and of the need to bring it into line with economies elsewhere in Europe. These two links are of interest in this context.

As Michael Taft points out;

“However, I would urge one note of caution. Taxation is only one side of the redistributive coin. The other side is the range of benefits and public services that taxation finances. The gross income in this study does include social transfers (Child Benefit, pensions, unemployment payments and other payments) as per the CSO survey.”

Incredible as it may seem, it appears that only the top three deciles of taxpayers in Ireland are net payers in terms of taxes paid and social transfers received. The figures are better in the UK, one would assume, because of the redistributive impact of having a national health service.

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