Government Spending Under Ahern

In yesterday’s Irish Times, Stephen Collins wrote:

The current appalling plight of the public finances is a direct result of the profligacy of Bertie Ahern’s governments since 1997 when public spending was ratcheted up far ahead of economic growth, year after year.

If public spending grew at rates far ahead of economic growth, then government spending must have increased as a share of GDP. However, when I check one of my favourite sources of information, the Statistical Annex of the European Commission’s European Economy publication, page 174 tells me that government spending as a share of GDP fell from 39.1% in 1996 to 36.9% in 1997 and fell further to 31.5% in 2000. The ratio moved up to 33.4% in 2001 and then stayed at essentially this level until the final two years of the second Ahern government at which point there was a gradual rise in this ratio to 35.7% in 2007, still below the level inherited by Ahern.

So the figures show that on average, rather than increasing public spending at rates far ahead of economic growth year after year after 1997, Bertie Ahern’s governments on average increased spending at a lower rate than economic growth.

Many fiscal policy mistakes were made during the Ahern era but it would be better if public discussion of these mistakes started from facts rather than imagined truths.

Sunday Independent Article on NAMA

Here‘s a link to an article I wrote on NAMA for today’s Sunday Independent.

July Live Register Figures

The CSO released the Live Register figures for July today.

Optimists can point to the fact that the month-on-month increase (s.a.) for July was 10,500, slightly down from 12,000 in June, and only one third the January increase of 31,400.

However, the composition of the total is changing towards longer-term unemployment, as may be seen in the shift among males aged 25 and over from Jobseeker’s Benefit, which actually fell in July, to Jobseeker’s Allowance, which rose steeply. (You may get Jobseeker’s Allowance if you don’t qualify for Jobseeker’s Benefit or if you have used up your entitlement to Jobseeker’s Benefit.)
There are now more males aged 25 and over in the Allowance than in the Benefit category. The number of females claiming the Allowance is also rising very rapidly.

No doubt when details on the duration of claims are released, they will confirm the shift towards longer-term unemployment.

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O’Leary on Fiscal Policy and Competitiveness

Jim O’Leary analyses these topics in today’s Irish Times: you can read it here.

“Overpaying Saves Money” Talking Point Gains Popularity

I noted last week that a new talking point about NAMA was emerging which went beyond the old canard that “it doesn’t matter” how much we pay for bad bank assets. The new talking point actually suggests that we will be better off if we overpay for these assets. I found it interesting that the new talking point appeared today in two, highly influential, guises.

Continue reading ““Overpaying Saves Money” Talking Point Gains Popularity”