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The Luck of the Irish Runs Out
theodp writes "Looks like threatening to take their ball and leave paid off for US tech firms. The Irish government announced plans this week to tap the welfare state and working class for much of the $20B in savings they've pledged to find over the next four years, but the austerity measures will not touch large businesses like Microsoft, Intel, Google, HP, Facebook, LinkedIn, and Pfizer, which created jobs and fueled exports in Ireland after being lured by low corporate tax rates. More than 100,000 Dubliners took to the streets to protest the bailout plan, calling for the Irish government to default on the country's debts, and demanding an immediate election. 'We should default,' said a retired union worker, 'the idea that the workers of this country should pay for the gambling of the billionaires is disgusting.'"
Going default will be a short-lived remedy. The country will go back to 1990 in terms of market appeal and productivity. And yes, if the big tech companies leave, the hope of reacquiring a high-tech knowledge industry will go away as well.
Paul Krugman's latest column addresses this. The main point is that Iceland let the banks default, while Ireland took the banks debts as public debts and guaranteed it. In the end, Iceland has recovered while Ireland's people have to bear the burden due to austerity measures.
god n. : the Supreme Being, indistinguishable from a good random number generator.
Who would ever lend Ireland money ever again?
Good, then maybe it will force their politicians to actually make do a balanced budget rather than keep running a deficit, spending money they do not have, effectively using the country's future income to secure their own positions in elections.
Well, one can hope.
Oliver.
The rich aren't paying 40% tax! The top tax rate is 41% but this is only paid on income over €36K (single) or €45K (married) or €73K (married both working).
But when you factor in people's tax credits and various tax reliefs, the statistical data for workers in Ireland shows that income tax peaks at about 20% of income. Those with a *lot* of income who would in theory be affected more significantly by the 41% tax rate actually pay tax advisors and use various schemes so that at the top end, the income tax proportion drops below 20% again!
Most workers pay almost no income tax - as you pay none at all up to something like €17K (when you factor in tax credits). Median income is about 20K, and ordinary workers would pay a max of about 10% effective tax rate. On an above-average income, I pay about 12% total in tax.
10% is the tax rate some countries charge the low paid! (as opposed to 0% here!)
We do have many other taxes, but that's to make up for low income tax.
Of course all this is only valid until the budget on 7th December.
-- *~()____) This message will self-destruct in 5 seconds...
The debts involved are massive, too.
From this article (though note it was written back in September):
"Under the current program, we estimate that each Irish family of four will be liable for 200,000 euros in public debt by 2015."
Ouch.
Each American family of four is liable for about $200,000 in public debt.
No, they are broke because the government decided to cover the private bank's debt to the tune of a hundred or so billion euros.
-- Give me ambiguity or give me something else!
"You really think the European HQ of companies are getting moved to shangai... ?"
No, they'll move to Luxembourg, like Ebay, Paypal, Amazon, iTunes already did.
Lowest inflation in 50 years
"Lowest", except for inflation in the cost to eat (food), stay warm and move around (fuel).
Those luxuries are now ignored when computing the official inflation rate because (drum roll please) they were inflating too fast.
No "inflation" figure that excludes the costs of eating and staying warm can be taken seriously.
Unemployment in the Netherlands is a lot higher than the official figures indicate. We used to "park" a great many hard-to-employ people in our Medical Disability scheme, which is why at some point we have stopped counting people on Medical Disability as unemployed, because the figures became something of an embarrasment. That practise has recently picked up again in the form of the new Medical Disability for Young people (WaJong); a scheme which according to the Bureau of Statistics is set to become as large as the original disability scheme.
We've about 900.000 people on Medical Disability in NL, that's roughly 6% of the population and 12% of our labour force. You can stop wondering why our unemployment is so low, because it isn't. Start wondering instead why our taxes are so high....
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
That is why I figure the USA will default in 5 years, 10 tops.
This keeps getting repeated and it keeps being wrong. The US CAN'T default on it's debt. Our debt is denominated in US dollars, which means the US government can always make payments, either through raising taxes or inflating the currency.
The only thing really keeping us afloat is the Fed printing money as fast as the presses will run and using it to buy our debt, basically making the money worthless.
So then, there must be rampant inflation then correct? According to economic indicators our currency has been strengthening recently, and inflation has been low to non-existent. In fact it has been too low which has worried some that we would enter a deflationary period.
Then figure in the retiring boomers...
Yeah, who will be taking their SS money and dumping it back into the economy. Sure it will stress the SS program but that money isn't evaporating into thin air. It will be re-entering the system.
huge masses of working poor that are only kept afloat by social programs
Mainly because we don't have a real education system in place for people to gain new skill sets. There's a reason why we rank far below other developed nations in education.
and the cost of two endless wars?
No argument there. The money that was spent on those two conflicts alone could have done much more good here in the US.
Yeah I give it a decade tops. Enjoy it while you can folks, because from the looks of it another worldwide great depression will soon be upon us.
You're a little late to the party on that one. So far it has mainly been a recession. The US is in a recovery, albeit a slow one.
The only question is whether we will learn from our mistakes and put heavy regulations on the banks like we did during the last one, or if those that believe in the free market fairy will win out. Without control free markets quickly end up corrupted when too much ends up in the hands of too few, just as we have now.
People like to think a free market is like nature, where survival of the fittest would yield the best companies. However this is naive. Companies will influence the market much like humans influencing their environment. Humans alter their environment, wipe out all competitors for resources, and any possible predators. Companies in a pure free market would act in the same regard. Eventually you would end up with one or a handful of companies that would completely dominate the market.
You will always need to control greed.
~X~