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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.'"
There was never any serious proposal to raise the corporation tax rate in Ireland, it's the one non-negotiable position of the Irish government and always has been. Having a low rate is also popular generally, though many would feel the rate could go up a few percent (though still well below other many other European countries) so that corporations do contribute more, but no-one seriously proposes raising it dramatically. What should perhaps be changed are the rules about moving profits around so that multinationals actually pay the 12.5%. I read this week Google only paid a few million in tax last year. It's not the rate, it's the application of the rate. Germany may have a nominal rate much higher than Ireland but the effective rate is often much lower due to special tax breaks in certain sectors.
Debt's that cant be repaid, wont be repaid. The only question is how you intend not to pay them.
09F91102 no, 455FE104 nope, F190A1E8 uh-uh, 7A5F8A09 that's not it, C87294CE no. Ah! 452F6E403CDF10714E41DFAA257D313F.
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.
Iceland didn't let it's banks default as part of an act of clever crisis management even if that's what the members of the firmly right wing Icelandic independence party will confidently tell you. What happened was that a series of governments (dominated by the independence party) and stuffed full of free market fundamentalists sat around from the mid-nineties to 2008, deregulating everything, letting the banks grow at a fantastic pace and crippling the various organizations that were supposed to regulate the financial industry. For years they just held their ears shut singing: "lalalalalala... I can't hear you!" whenever somebody criticized the state of the icelandinc banks and the fact that they had become 12 times the size of the national GDP meaning that the state was therefore unable to back them up in a crisis. By the time the crisis finally hit the Icelandic government was completely bowled over. The Independence party had by now formed a coalition with the Social Democrats who proved just as useless as their right wing coalition partner and did little other than watch while the Independence party (who also dominated the central bank) fumbled about and caused things to fall apart. There were no emergency plans in place, nobody had anticipated this. After all, the infallible all-knowing free market should not act like this should it? They finally decided, at the climax of an epic panic attack, to nationalize the most endebted bank, Glitnir, which caused the whole icelandic banking sector to collapse like a row of dominos. Krugman (probably unintentionally) gives you the impression that the Icelandic Government that presided over the 2008 collapse allowed the banks to default by clever design when in reality they simply "pulled a Homer" a phrase which wikipedia defines as: "to succeed despite idiocy". Like Mr. Krugman I pity the Irish for their successful efforts to postpone the pain by a couple of years because it made the problem exponentially worse.
Debt is intrinsically bad when it's gov't debt, because gov't is not supposed to be a business.
A business can invest money to generate some positive cash flow and then maybe even some revenue, gov't does not and shouldn't be expected to.
When gov't borrows to finance its programs, it means the same thing as taxes, only this is taxes + interest forwarded to the future generations of voters, which is theft, because those future generations didn't agree to any of it, and it would be best for those future generations to get their belongings and leave the country, rather than stay repaying the debts of their parents/grandparents.
Taxing consumption is the only true and honest way to fund a gov't, and gov't shouldn't be spending much on anything beyond basic protection against military invasion and a justice system *(and probably cops/prisons, to give teeth to the justice system.)
Gov't IS consumption, any citizens benefits from gov't only as much, as he benefits from any other consumption. Gov't is consumption, and thus its income (taxes) should be proportional to other consumption that people are willing to spend on.
When gov't taxes production, it cannot be controlled, the only feedback mechanism, by which a growing gov't system can be stopped (if it's taxing production) is basically loss of jobs and of productivity, which implies reduction in production and wealth and destruction of economy. In that case the gov't usually switches to acquiring debts, which shouldn't be allowed.
Gov't with a debt, is a gov't that cannot be afforded by its country current and especially future.
Consumption based taxes would provide gov't with enough money to finance the minimum required spending, while also creating a feed-back mechanism, necessary to control the size (budget) of gov't, because if people spend less on everything, they end up spending less on gov't, and this basically reduces gov't consumption just like all other consumption, and it is a good thing, needed to restructure a slowing economy.
Obviously all Keynesian shamans' brains explode at this very moment, but that's also a positive thing, we need their brains to explode, they have done enough damage.
The only way to get out of a recession is the way it was always done: stop spending, save money, rebuild savings, have a deflation by reduction of money supply, see prices for products and labor fall, use the saved capital to start new businesses, rehire people, start production.
The gov't wants to do it like so: print/borrow money, prop up spending on consumer goods produced in different economies, OK, so support economies of other countries while destroying the currency itself, and robbing everybody who holds it of purchasing power, do not allow the savings to be rebuild by low interest rates. Somehow hope that this will inflate another bubble that economy will somehow use to float on, but this new bubble obviously needs to be bigger than the previous one, that caused the last recession.
Every new bubble is bigger and will cause a bigger explosion, until the very bubble that will end up taking out the currency itself, as well as bankrupting the country and sending interest rates into the skies. Good luck with restructuring then, the pain will be enormous.
Oh, the next bubble to blow - US bonds. Then it's probably hyper-inflationary depression, because the gov't still relies on Keynesians like Krugman.
You can't handle the truth.
The implied claim high taxes destroy the economy is yet to be proven.
That, my friends, is the one truth that the millionaires and billionaires want to keep out of the public debate at any and all cost. Roosevelt called these people "economic royalists" and he was right. Every country that has high marginal taxes on large profits and large incomes and sticks to it has a strong and stable economy. When you embrace the insanity that Reagan and Thatcher brought to the world, you get bubbles followed by crashes. It happens every single time it's been tried, but it's wildly profitable for the uber-rich and the hell with everyone else, right? Then they go around and spend some of that money convincing all you free market libertarian or conservative types to vote against your own economic interests. Religion, marginalizing certain groups or points of view, extreme nationalism all get trotted out to make the uneducated or the delusional vote for policies that directly hurt them. Lather, rinse, repeat.
another G. W. Bush or Obama
I'd say the chances of this are pretty likely. Barring a major upset, Obama will get the Dem nomination and the GOP will likely pick someone that makes GWB look like Einstien. I wouldn't be suprised to see "we must stand by our North Korean allies" Palin get the nod from the GOP.
Sometimes the light at the end of the tunnel is the headlight of an oncoming train.
Yes even the Danes that don't use the Euro have pledged a substantial guarantee.
We may not use the euro, but our currency is still closely tied to it, being a small country with a lot of euro-neighboors and all.
In the mean time two of the countries with the highest taxes, Denmark and The Netherlands, have the lowest unemployment of the Union, around or even below 5%.
In Denmark we have quite a notorious unemployment-regime in place. Basically you're eligible for social security the moment you loose your job here, however, you need to send about 4 job-applications a week to stay eligible for social security, and willingly accept any and all jobs that comes your way (shrimp-picker, anyone?), otherwise you loose the right to social security. It works but it sucks, but then again unemployment is not supposed to be nice.
The implied claim high taxes destroy the economy is yet to be proven.
High taxes bolster the country's ability to deal with stuff like the recent crisis. Yes to an "outsider" it may seem like an outrageous thing to have your paycheck cut in half each month, but we're used to it, and it's not like we're struggling for subsistence because of it; my guess is, on the luxury-scale, the median of Denmark exceeds the median of the US.
Of course, that's already outlawed. So your argument is that we need more cops then ? I don't understand.
You're purposefully misunderstanding. Anyone living in 2010 knows very well that regulation has been essentially shredded in favor of exactly the kind of practices that grandparent described. Where it's still outlawed, the regulator monitoring is usually crippled by legislation purchased by Big'n'Big Co.
Cases to point: microsoft, banking system.
Well fuck, if it's not the middle class or the lower class, who the hell is left? :P
Oh, right, the bourgeois. Well, as long as they're doing all right, everything is just peachy! Hurray for Capitalism!
And since this mobility first started, we moved from 1950's to 2010. Are you seriously claiming either the lower class or the middle class is worse off ?
This is just blatant trolling. The reason why standard of living has moved up is because science has progressed to the point where we can produce things needed to raise standard of living far more efficiently. If Big'n'Big collusion and significant income variance had been shrunk to reasonable size, average standard of living would be MUCH HIGHER.
So yes, in comparison of 2010 without flaws, and 2010 with flaws is indeed obvious. If you want to argue that 1950 vs 2010, we can just as well start praising benevolent North Korean leaders, who made sure that their standard of living of their people is better then in 1800.
Which is the whole bloody point, and to miss it, you have to make a real effort.
another G. W. Bush or Obama
I'd say the chances of this are pretty likely. Barring a major upset, Obama will get the Dem nomination and the GOP will likely pick someone that makes GWB look like Einstien. I wouldn't be suprised to see "we must stand by our North Korean allies" Palin get the nod from the GOP.
Modded troll by some wingnut, but you're definitely right. Who thinks Obama is not going to get the Dem nomination? And, looking at the current crop of GOP candidates, we are likely going to wind up with someone like Palin. Gingrich thinks he is a serious candidate, but he would now be considered too "rational" and "nuanced" for the GOP. The current two-party plan is to keep the nation divided into two camps and have each side scared shitless of the incompetent fucker on the other side so that they feel like they have to vote for the least of two evils "just this one more time".
In short, we are doomed.
Sometimes the light at the end of the tunnel is the headlight of an oncoming train.
Definitely sounds like the 2012 elections. ;_;
Similar to the upcoming US election results
Except our mess very much isn't just the GWBs/Obamas of the US. We're in what, 13T(rillion) of debt right now?
The problem is that the baby boomer generation promised itself SO MUCH, we're going to go bankrupt from entitlements. Social Security is a small part of it. The real meat is Medicare. And that's not all LBJ. For instance, after Bush barred seniors from going to Canada/Mexico to appease the drug industry, he and Ted Kennedy (I think) pushed Medicare Part D to appease the huge senior lobby. This was called the single most financially irresponsible piece of legislation in history and will cost $10 Trillion dollars looking forward. The debacle shows how much the dear leaders here are really for free market, how dare people shop for cheaper drugs! /s
Looking forward, at current tax rates, we'll have a total of $50 Trillion dollar gap between revenue coming in and revenue going out. By 2030, the Federal Government will have little more revenue than to pay entitlements and interest on debt, nothing for it's official functions.
And is this surprising in a country where most government workers (including Army, USPS, many suburban Teachers depending on their local contracts, etc) work 20-25 years and can then retire on half pay and full health insurance the rest of their lives. How many private sector jobs let you start at 18 and quit with by 43? Yeah.
Most of my numbers came from David Walker, former US Comptroller General from 1998 to 2008, America's head accountant, appointed by both parties to various positions. Many of them came before the 2008 disaster although he was warning of a bubble iirc. It's probably worse now.
http://video.google.com/videoplay?docid=-7461407498377956300#
Anyway, I don't blame politicians except for bending to their constituencies. I blame following our democratic tendencies instead of our republican (small r) one starting with the 17th amendment. The People wanted entitlements, they got them.
The back and forth in this thread really just shows that a "free market" is an illusory concept. It is useful to a limited degree, but you have to keep in mind that it is not possible in real life.
I see the usual disagreement, but I don't see the "back and forth". The free market is an asymptotic idea. Here's how I see it. I consider a market "free", if it is close enough that the market and its participants behave as if the market were free. For example, if one trader gets a very slight tax break (say 0.1% less taxes paid than its competitors), then a market is still free (that is, there's no significant change in the market from this advantage). But suppose a trader pays 50% less of a very substantial tax load. Then that's a significant advantage which can lead to things like persistent monopolies or great wealth concentrations. The market is no longer free due to this substantial distortion.
Once you throw government into the mix, you necessarily limit the freedom of the market. But, without a government, you don't have the structure to set up anything resembling a "free market".
The presence of a government does not in itself limit the freedom of a market, especially if the market wouldn't exist without the government.
The other point that seems to have been missed is that, although you are right in saying that the Irish situation is not due to a real "free market", the term "free market" is what is thrown about to keep the proles in line.
As I said before, I don't care about such rationalizations past the consumption of my time in listening to them.
People always seem to drag this one out, but fail to understand what Mussolini meant by corporatism. Fascism is at its core a merging of Nationalism and Syndicalism. The corporation is a syndicate, which is a vertical trade union in which binds management and labor together. Its more like a guild.
Each "corporation"/syndicate/guild elects deputies to the Chamber of Deputies, who are there to represent the interests of the industry as well as to speak on its behalf as experts in the field. Thus members of the transportation syndicate, who would include workers from railroads, airlines and the shipping industry, would be responsible for crafting the legislation that the executive committee, and ultimately the dictator, would be responsible for signing off on. This avoids the problem of having lawyers with no concept of how things work writing laws with regards to agriculture, communications, etc.
Under Fascism there would have been no Ted "series of tubes" Stevens. The election for telecommunications representatives to the chamber of deputies would have been democratic through all levels of membership, from cable monkey to executive. The best people would be chosen to represent the interests of the guild and people with no clue get no say.
Honestly, having read extensively treatments on various political ideologies in the left, right and center, by those who adhere to them as well as by those who critique them, the picture I got of fascism honestly doesn't sound half bad compared to some of the other harebrained bullshit people have come up with in the past.
Well, first remember that National Socialism isn't Fascism. It's just similar. Italian Fascism was an attempt to regain the prestige of the Roman Empire combined with an odd form of Syndicalism which was influenced by the fact that Mussolini grew up in a Communist household, his father being an active party member. Mussolini's paper, Il Popolo, began as a Socialist paper that went more Syndicalist and finally, after WWI, became the nucleus for Fascist ideology.
The Nazis are almost irrelevant to a discussion of Fascism in Italy. Mussolini was in charge of Parliament by 1922, while Hitler was in prison after the attempted rising in Munich. In Rome at least, possibly other cities in Italy as well and I just didn't notice, manhole covers and other public infrastructure items bare the SPQR (Senatus Populusque Romani) marking, which was re-introduced by Mussolini, iirc, as part of his bid to draw a link between himself and his movement and old Rome. Even the fasces themselves were the Roman symbol of authority, identifying the consuls at the time, being carried before them in procession by their retinue of lictors.
Fascism isn't just a synonym for "really bad right-wing thing" which many, in some sort of post-Trotskiest mindset, want to believe. Hitler wasn't a fascist, neither was Francisco Franco. just saying.