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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.
"Sum Ergo Cogito"
the mobility of capital is a good thing.
Look, left-wing parties are likely to do well in our next election, but no-one sensible here, left or right, wants to raise the corporation tax rate. These companies provide our jobs.
If a raise would be announced, ordinary people here would really start to protest.
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It's the private bank's debts.
For some unknown reason the Irish government decided to guarantee all debts by banks in Ireland including banks that are owned and run by people who are not Irish or based in Ireland. These debts were not sovereign debts until the Irish government decided to unilaterally back them without any good cause. They did this back in 2008 and it's only now that they massive amount that they've basically handed over to private investors is becoming apparent.
It's pretty nuts that private investors had hoped to make money by investing in Irish banks - but now that they're actually facing losses the people of Ireland are going to step up and cover all these debts. So for the private investors it's a case of head I win, tails you lose - where there is no risk of the private investors losing any money - and no chance for the public to get a share of the profits that banks were making in the good times.
"Free software as in beer, copy protection as in racket" - Telsa Gwynne
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.
Should be the more appropriate headline here.
Posts, MyBio or Sig, may contain satire, sarcasm, bolded nouns be sardonic or even witty & be Church of SD
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.
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Government debt is also a useful tool (such as borrowing to buy infrastructure) but like any tool there are ways to abuse it. I wouldn't be so quick to throw it away.
As for making a balanced budget, that is the responsibility of the citizens to vote for reasonable candidates.
I dream of a nation where a man is not judged by his skin color but by an number assigned by a credit rating agency.
The Irish Times and The Irish Independent both claim 50,000.
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.
As usual, many people are quick to defend these pricks, saying that if it weren't for them, everyone would be out of a job. Yes, the economy is in their power. Calling that a mutually beneficial relationship sounds like Stockholm syndrome.
If your very survival depends on receiving a living wage from a corporation that can simply choose to go away if it is asked to pay for the infrastructure it also uses, then you are not living a "dream" generously provided by altruistic corporations, but in slavery to organizations who can let you starve if they wanted to. Not only workers, even governments are forced to debase themselves before these corporations, lowering their living standard, their wage expectations, cutting their social system and their taxes bit by bit to compete with other countries that are forced to do the same.
Ireland, and the entire European Union at that, should make a stand against this and play hardball. The fact is that while corporations can move their production elsewhere, they do have to sell something eventually. A high-tech market requires a high-tech industry to flourish: If corporations leave the country, the economy goes to shit and nobody can afford the flashy gizmos these corporations are selling. Standardize the tax hike over all EU states, accompany it with an import tariff on technology not produced inside the country, and suddenly paying a little more corporate tax will seem like a much better alternative. The workers are not only their slaves, but also their customers.
http://www.economist.com/node/17577107
I watched a German documentary this morning about how the Euro was bad (German is not my mother tongue, but I am fluent and could understand everything). Some of the stuff in that was political dynamite: I don't think that politicians in Europe understand the powder keg that they are sitting on.
From the The Economist article,
The most concerned onlooker is Germany, which sees its credit lying behind the entire euro area. As ever, Europe’s biggest tabloid, Bild, captured the mood this week, asking “First the Greeks, then the Irish, thenwill we end up having to pay for everyone in Europe?
Oh, let's piss off the Germans . . .grand idea . . . in Europe, that always ends in tears.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
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.
The main problem is the fact that big companies now are so powerful that they can hold entire tax systems hostage... they can play countries out against each other.
But instead of having a single EU corporate tax system (which imho would make sense), we have all kinds of other silly EU rules... and corporate taxes keep dropping in a futile attempt to lure more big business.
Governments should realize that big companies won't leave overnight. It'll take a little while to move people and offices.
At the same time, a lot of countries are suffering from the crisis - so if the Irish increase their tax together with a number of other countries, to give a clear signal, then they might get away with it... Shareholders and investors in stock markets should pay a part of the crisis too - they are at the root of its cause.
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!
No one ever 'generates' a lot of money, certainly the government mints print it but for every one else making s lot of money is all about being greedy. Paying very little for something and then putting a huge markup on it and selling (importing cheap junk), employing people where you have to capital to buy equipment and they do no and basically selling they're labour for much more than you pay for it, inheriting large sums of money and buying up all the income produce property you can, gambling with other peoples money at financial institutions, oh wait, they is always prostitution they certainly do generate money with their assets but they are the only ones (Psychopath pimps still take the lions share, hmm, much like the rest of the economy).
Human society is a function of all humanity, those that profit most by it should pay the most for the benefit they gain, of course being greedy, they just want more. You neither read, write nor even speak without the support of the rest of humanity. It is time to put a stop upon preying upon the rest of human society and start working together for mutual benefit.
Chaos - everything, everywhere, everywhen
Who would ever lend Ireland money ever again?
Who would ever lend insolvent banks money again? It's not Ireland that went bust, it's Irelands banks. The Irish government just got suckered into backing them.
The answer is, of course, the next sucker. Which we have a financial system full of, as if anyone loses their money lending to bums, the taxpayers will get to pay for it...
But really, would you feel safer lending money to someone who will probably default in the near future as they carry unmaintainable debt than you would lending money to someone who'd restructured their debt to manageable levels? Neither would be very palatable in a sane system, but that's not what we have, and you as a taxpayer will not get a say in whether to lend or not.
Where's the "Drunk on the Kool Aid" mod when you need it ...
How do you run a deficit without generating debt?
Leprechauns
The UK should buy Ireland, It'd look much neater on a map.
Marxist much?
Without capital there are no jobs, people with capital are the ones that do in fact provide jobs by using the capital to organize tools/land/labor into a system that adds value to the society in total.
Saying something to the tune of "importing cheap junk" is completely blind to the fact of how difficult it actually is to set up a working business, to meet the payroll every month, to keep the business afloat by somehow ensuring that business stays cash flow positive.
If you are not a gov't created/maintained/subsidized/bailed out monopoly, you are actually competing against such monopolies as well as you are competing against other legitimate businesses (and when I say 'legitimate', I do mean businesses that are not subsidized by the gov't.)
If it was a trivial matter - to "import cheap junk", to make it all work, to have a business that doesn't just run out of saved/borrowed money and die, something that actually works and employs people, while at the same time benefiting the society by providing it with wealth (and wealth IS the 'cheap junk', it's not money. People want 'cheap junk' and they are ready to part with their money to get it, because they it's this 'cheap junk' that gives them the quality of life they enjoy), it takes very hard work, very stressful hard work, very time consuming hard work, the kind of work that you do not do when you are on the clock, the kind of work, where you either really compete by innovating, by constantly working.
If it was as trivial as you make it out to be, then obviously there would have been many more companies doing it and there would have been much fewer people looking for just a 9-5 job.
Most people prefer not to work that hard, most people prefer the stability of a paycheck, most people do not in fact create wealth for their societies (and I mean wealth, as opposed to money.)
It's always easy to diss somebody who is taking this work and making it big while doing it, but this completely disregards the fact that most who try to do this - they fail. They lose money as opposed to making money. They end up losing time and capital and a calm sort of life, which most people have when they are working on a salary. Working for yourself, taking a risk, building a business, hiring people and ensuring they do get their paycheck at the end of the month, getting the business into the cash positive territory, growing a business, generating a profit and all of this, while providing the society with the wealth it is demanding, this is truly amazing anybody can even do it.
I put the regular businessmen much higher on the ladder of achievers than most other people, probably save for the most prominent scientists, who are at least at the same level if sometimes not more in terms of wealth generation for the society in total.
Indeed the highest ranking people AFAIC (and I really mean it) are those, who first invent/build something, some new idea, some new invention and then are even successful at bringing the idea to life in form of some useful product.
It's much harder to do that, than to be a pure scientist, but of-course we need pure scientists as well, it's not a or-or proposition.
Dissing businessmen who are there, making the society wealthy, that's easy. To understand what many of them actually do and how this increases the overall quality of life for all people, while HOPEFULLY making them rich, that's different.
AFAIC again, these people deserve much more respect than they actually get from the general public, but they are mostly hated I'd say due to the fact that SOME of them do end up much wealthier than any normal 9-5 worker and thus people are jealous of them and end up hating them, while not realizing even that they are benefiting from the dedicated and hard work of these very people through everything, from job creation, to wealth acquisition, to generally a basically working economy and stable and improving society, which depends on a working economy.
You can't handle the truth.
Nothing bad will happen if corporate tax rates are raised in Ireland! That's just fear-mongering by the poor-hating conservatives!
The US has been doing that, *and* heaping on all kinds of other taxes, *plus* tons of regulation on manufacturing and business, along with increasingly-heavy emphasis on unionization with incredible pension and healthcare costs for ages now, and our economy, trade balances, and employment levels are just...oh, wait.
Never mind. Carry on.
Strat
Ireland has been the European experiment in being extremely 'conservative' and corporation friendly, extremely low taxes, friendly regulation, etc. Look where it got them. Then take a look at fx Scandinavia.
To be honest, during the golden 60ies in the U.S. the top tax rate was 91%, and the country was wealthy and strong.
To be able to earn such a big income means that there are lots of external factors you can make use of, as in a stable society, a well maintained infrastructure, a strong military and low crime. And the more money you make, the more you use this infrastructure. People at the top easily forgot how much the country is supporting them, they live under the surreal impression that somehow they pay for everthing themselves.
Most of that money comes from countries where income tax is well above 50% (or even 72% in Denmark).
Yes even the Danes that don't use the Euro have pledged a substantial guarantee.
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%.
The implied claim high taxes destroy the economy is yet to be proven.
"The likes of Facebook and WhatsApp are free to those whose privacy is of zero value."
Debt is not intrinsically bad. Anyone who believes this should spend some time playing Transport Tycoon - the best strategy in that game is to borrow right up to your limit, because a well run company will make much more profit from the capital investment than the cost of the interest. It's a very simplified economic model, but the point still stands. If a government borrows $n, has to repay $n+20%, and invests the money in infrastructure that generates $n+50% in tax revenues, this is a sensible and responsible thing for the government to do. This is why most companies have outstanding loans - they are making more money from the investment than they are losing from the interest payments, so repaying the loan would be a net loss.
The problem is not debt, but debt without a plan for repayment.
I am TheRaven on Soylent News
What it fails to mention is that most of the other 9 guys in the bar work for the 10th guy, and provided the labour that made him his riches. So he's magnanimous enough to pay about 60% of their bar bill, when all his riches came from the sweat on their backs?
The other guys should say "Hey, how come you can afford to pay more than half of our bar tab, when we are the guys doing all the work? Why the fuck are we lining your pockets when you work no harder than us?", and then kick him out of the bar and find another drinking buddy who will do the same job (managing their labour) for a fair wage, allowing them to split the $60 fairly between them, making them all significantly more wealthy.
Tell that to the people who will have to emigrate from Ireland in search of work. A bit of a sore point I believe because of history.
100 years ago, they travelled to the USA. Now they'd probably not be allowed entry because the USA frowns upon economic migrants.
Nothing bad will happen if corporate tax rates are raised in Ireland! That's just fear-mongering by the poor-hating conservatives!
The US has been doing that, *and* heaping on all kinds of other taxes, *plus* tons of regulation on manufacturing and business, along with increasingly-heavy emphasis on unionization with incredible pension and healthcare costs for ages now, and our economy, trade balances, and employment levels are just...oh, wait.
Never mind. Carry on.
Strat
Ireland has been the European experiment in being extremely 'conservative' and corporation friendly, extremely low taxes, friendly regulation, etc. Look where it got them. Then take a look at fx Scandinavia.
It "got them" all those corporations into their country and employing people, bringing in cash, and generally improving things for most of the people.
The fault is with idiotic and greedy politicians that can't run a capitalist economy effectively, combined with the impact of the domino-like economic failures caused by the collapse of socialistic governments in Greece, Portugal, etc.
By "Scandinavia", I assume you mean Sweden? Sweden isn't quite the paradise that most think. It suffered mightily in the '90s. Sweden has also started from a great advantage post-WW2 in that it didn't suffer the costs of WW2 in fighting, and also benefited in that it didn't need to rebuild much of it's economy, military, and manufacturing after the war as many countries did.
http://en.wikipedia.org/wiki/Economy_of_Sweden
Sweden is unique in it's economy, society, and place on the world stage as a result of it's history, it's location, it's society, and it's size. The Swedish governmental/economic model only works in Sweden with it's particular history, location, size, & society. It would not and could not work elsewhere. One size does not fit all.
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
You make compelling, but misguided statements regarding the view of the "business man". Certainly there is value in what you say about the inventor and scientist. I even agree that a businessman is important for the building of order from chaos in the beginning steps of a market. You I miss in your statement is that the society does not hate the business man for making money, he/she angers the populous when greed is applied to the model.
Most people would like to be rich, to have wealth. Many work such that they can provide a good life. When business leaders makes decisions that not only benefit the very few at the top of the wealth pyramid, but do so at the expense of the middle and lower foundations of wealth, they hurt all parties including themselves in the long term. For the USA, in the late 50 and 60s there was one of the highest tax rates on the rich, yet the country prospered. In times of lowered taxes in this country the only group that benefited were the top few percent leaving he rest with increased debt and redcued services. Raising taxes on the rich is not meant as a punishment, it is meant to stabilize their own growth, even as it helps stabilize a society.
Sadly, at this juncture in the world economy, I feel that most governments will or cannot effect change upon the rich as many of the leaders are either in the pocket of, or have an attitude and wealth account that drives them more towards greed, and less towards help the general society. To put it another way, a happy society is less likely to revolt. History has shown time and time again that when the gentry gains too much wealth they can wind up on the sharp end of a pike or guillotine and the society runs amok for a long time. Axa final thought, Warren Buffet himself says that he does not pay enough taxes, but that the system is rigged such that he needs to take the loop holes.
Life is a great ride, the vehicle doesn't matter
This is over-simplified. Germany might appear to be paying for Europe's bills, but how much of this "bailout" is going right back to German/US/etc. banks which would go bankrupt if the IMF / EU wasn't "bailing out" Ireland?
Follow the money, don't think just one move ahead. These bailouts are nothing more but the partial enslavement of Irish taxpayers in order to rescue foreign banks and governments.
The AACS key is NOT 0xF606EEFD628B1CA427BEA93A9CA9773F
in democracy with deficits allowed you are doomed to wreck your economy, because in order to win the elections you got to promise a shitload of 'freebies' (which are not free at all), otherwise someone else who promises a lot will win. Sanity and economic soundness are not valued by the average voter so it's the race to the bottom.
as Tocqueville said
The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.
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.
And I am not talking about the gov't created financial monopolies, that are subsidized and stimulated and maintained and bailed out by the gov't, the monopolies protected by the gov't, gov't who kills the competition by everything in their arsenal, including the regulations such as the 'Patriot Act' (many don't understand what this means, but that regulation is killing a lot of competition to the financials, it forces the hedge funds/banks/insurance companies to be CIA/IRS spies, it costs a lot of money to do that.)
I said in my comment, I consider the businesses to be legitimate only if they are not sponsored/protected by gov'ts, who make monopolies out of preferred businesses.
PS.
I usually comment on stories where economics are discussed and usually people take it the wrong way by moderating my comments as 'troll', that's unfortunate.
You can't handle the truth.
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...
Dude, There aren't any jobs here either. Most of us will have to live in the nest our rich shit into.
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.
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.
Everywhere needs its unique selling points. Germany is in the centre of a large population and doesn't need to transport stuff by ship and air, Ireland has to compete by cutting down costs to companies. As to the huge amount, yes I think Ireland would have been better just guaranteeing its own citizens and letting Allied Irish fall over. The other banks weren't anywhere near so bad. It had a bank strike for ages once and the economy grew during that time so there's no need to lie down like a doormat for the banks. A proportion of the debt was due to a construction boom which was a large financial bubble but most was nothing to do with Ireland but more to other banks mainly in Europe channeling stuff through Ireland so quite a bit now if anything is Ireland helping prop up America which is just plain stupid. Those other banks know they'd be in very big trouble if the Irish bans fell over and that's why the other countries are rallying around offering loans. They know if anything happened it wouldn't just affect Ireland - in fact some of them could easily be far worse hit.
thou discernest my thoughts from afar
Sweden and the rest of the Nordics. Denmark, Norway, Finland, Iceland.
Some of it may be cultural and come from having pretty homogenous societies as far as social norms go, but IMO I've always considered our societies to be proof positive that many neoliberal claims of why "Socialism" won't and can't work are overhyped.
It's certainly not paradise and has its issues, but I wouldn't want to switch -- and it seems to me that the people who are most ideologically bothered by how we do things up here to be those ones who feel that social stratification is desirable and that they are the übermensch who is being oppressed by the unwashed masses...
I want to play Free Market with a drowning Libertarian.
In retrospect it is obvious that the state should not be insuring bank deposits when the amounts become so large relative to GDP, and maybe the Irish state should not have honored that pledge, but it's not stupid or corrupt of them to do so.
Also you can't blame this on free markets, insured deposits are extremely mainstream but have nothing to do with free markets. The problem with the regulators was that they were asleep or caught up in the exhilaration of the housing bubble.
In group behavior: 'because they're evil/morons/sheep/crazy' is not 'insightful' it's 'oversimplified'
Not quite. That 12% double-counts partial disability, which is also counted as labour force. The official numbers from the CBS make it around 8%.
Mart
"I know I will be modded down for this": where's the option '-1, Asking for it'?
The capital deployed into a productive venture is a good thing. Speculative hot money pushed around various parts of the world does not accomplish anything except causing mayhem everywhere and enriching hot money pushers. And this is THE problem we suffer today. Too much hot money bumping around and too little capital willing to go into productive businesses (maybe except China).
Back to Ireland. They are now forced to do draconian austerity measures on everyone except the banksters and to accept "bailout" loan that will propably have ~7% interest attached to it (and it doesn't matter that they don't need any money until mid-2011 - "bailout" has been pushed down their throat anyway).
Over the course of this financial meltdown that has started in 2008 I see the same people that caused massive suffering of so many now 3-rd world countries (G. Soros, etc.) and it scares a hell of me. It seems that they are doing to as the same they did to so many other countries over the decades - just in a more outrageous way. In the past it was bankers pushing a country into massive debt by corrupting politicians into doing some, say, infrastructure projects that are far too expensive for such country (see most of South America, Indonesia etc.). Now I see some strange kind of "suicide bankers" bullying politicians using "whole economy will collapse if you won't bail us out" bullshit. So we end up giving outrageous sums of taxpayer money to those banks and then paying interest on it to the same bankers who got that money !! And then IMF comes in and forces crushing austerity measures on everyone except the bankers. This is the same kind of financial warfare they used in so many countries - just more sophiscated and effective.
In short: Bankers are doing the same thing to us they did to 3-rd world countries in prior decades. Expect life conditions worsening soon as we'll get "demodernized" by those corporate scumbags.
That's funny because if it's so bad how do you explain that after Argentina defaulted that it now has the second highest per capita GDP in Latin America?
Is there any actual evidence that the world needs these executives, or that they need to be paid what they are? The ratio between the pay of CEOs and their workers has sky-rocketed in recent decades, but in that same period the economy has stagnated and most people are worse off. They get paid what they do because they've convinced people that they're worth it, not for what they actually do.
There were operating systems before Bill Gates, his accumulated wealth is merely at the expense of everyone else. A failed executive can run his company into the ground, jeopardising the livelihoods of thousands of workers, and still walk away with more money than a normal, hard-working individual will make in several lifetimes.
I don't see how anyone not blinded by wealth-worship can possible justify these people.
You say the government created the Great Depression as some kind of argument that "paying people to dig ditches" didn't get us out of it. The government did create the Great Depression by letting people borrow unlimited amounts to spend on credit-inflated stock and the rest of an inflated economy (including hugely inflated liquor during the concurrent Prohibition). But that is totally irrelevant to the fact that "the" government got us out of the Great Depression. You tacitly concede that the government got us out of it, but you talk as if you've somehow proved something. BTW, there were two extremely different governments, not just "the" government: Republicans controlled the House, Senate and White House the entire 1920s that created the Great Depression, and Democrats controlled that elected trifecta during the entire 1930s-1940s that got us out of it.
You're also wrong about "cheap labor in the form of the soldier". The returning soldiers did not work cheap. They were largely unionized and were well paid, which is a big part of what they fought to protect from Fascists (and from Communists, too, as well as slavers before that and lords before that). It's the organization and consequent power of American workers that could demand high pay, despite the organization and consequent power of capital owners that would (and does) insist on paying low despite any other fact, that made America's postwar economy "the envy of the world".
Indeed, the main postwar benefit to America's economy was its large working industrial capacity paired to the rest of the world's destroyed production capital (and consequent huge demand for new production, including production of productive capital). Coupled with the Bretton Woods system of global finance that uses the dollar as the global trade reserve currency, requiring foreign stockpiles of dollars they buy from us. But without Americans getting paid a good share of that new income, America's economy wouldn't have been the envy of anyone in the world - except the various tyrannies that we either created in former colonies of our WWII allies or opposed in the clutches of our new Communist enemies. Without locking the Soviet Union into a box, the Soviet industrial capacity (and its - literally - rocketlike growth) would have resupplied Europe instead of the US doing so. Which points at the last major feature of managing the global economy that we did right but which is now lacking: we used global politics to direct global economics to prefer American exports instead of our "Communist" rival's. The US didn't export nearly as much inflation (the world's homegrown inflation from destroyed and wasted assets dwarfed what the US spilled abroad) as it did assets, which is the opposite of inflation.
Plus Krugman certainly understands inflation better than you do. Reading what you've written here, against what he's written elsewhere, I can see that he understands it better than you do.
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make install -not war
You clearly know nothing about the situation, or our country, and just have a free-market axe to grind. Well buddy, I'm a believer in free enterprise, and I'm Irish, so let me give you a summary of what's going on. The billionaires referred to are the large investment institutions and the high net worth individuals that took bonds in the Irish banks. The argument is that they were paid interest for the bonds, in return for risk (thats how investment usually works, the reward is in return for the risk). The banks became insolvent (partly due to the global banking crisis, partly due to irresponsible behaviour, partly due to the low EU rate of interest (which suited the larger economies) providing cheap credit). The comment in the summary is referring to the fact that the bonds of the investors, who took the risk, are being guaranteed by the Irish state. Supposedly to avert a banking crisis, due to the systemic importance of the banks. Only we seem to have gotten a banking crisis anyway; which has made the billions poured into the banks seem like a bad use of money... As such, the losses of the bondholders (the 'billionaires' of the summary) are being socialised. This is what pisses people off. Irish people are very pro enterprise, pro business, and pro building shit. That's why so many companies invest here. We have a low rate of corporation tax, true, which is a big part of things; but we've also got a creative culture, and its a good business environment here. People like to have the craic; but they also like to work hard, and have a healthy disrespect for authority that helps them innovate. Now, sure, there is social welfare for the poor, and free health care, which maybe you are referring to. And its probably a little on the high side, these days. But Ireland doesn't have a culture of entitlement. The history of the people of Ireland is not one of entitlement, and its not in our psyche. Sure, some of the kids in the boom recently may be a little entitled - but thats because of the free money they had, not because of the welfare state. If anything, there isn't enough entitlement in Ireland. We didn't really know what to do with the money because it was the first time we ever had it; people couldn't believe how good it was, couldn't believe it could last, and that economic prosperity could come to us... ...and so didn't ask enough questions about whether it was being managed right, whether the politicians were properly serving us etc.
And as regards the parts of a welfare state we have being so bad...
Well, I remember spending a summer in Boston. Lived in cambridge, beside Harvard, MIT.
I'll never forget walking past a really awful looking woman, sitting on harvard square. She was clearly pregnant and had a sign saying 'please help, pregnant with AIDS'. And she looked it.
I've worked in the valley too - great tech culture, great enterprise culture. But walking around palo alto, past the homeless crazy guys on the street, asking for money, with nowhere to go...
Well, no, Irelands not perfect; but there's aspects of a welfare state I'll take over the 'fsck the poor' attitude any day.
Don't believe the false dichotomy - you can have a great culture of enterprise, without stepping over broken people on the way to work.
If we can figure some way out of the bank bailout here, maybe we'll get there yet.
Debt is intrinsically bad when it's gov't debt, because gov't is not supposed to be a business.
That sounds like you've bought into that position as an a priori assumption. While I'd agree that governments aren't businesses, to say that all government borrowing is therefore bad is foolishness. The purpose of good borrowing is so that investment can be made so as to increase income in the future that will repay the debt and ensure more money to do other things with. When applied to a government, the purpose has got to primarily be to invest in steps that will lead to increased total tax take in the future, generally through increasing overall economic activity in some way.
This is all independent of how wisely governments in your locale are spending, taxing or borrowing. If you're going to make an argument, it helps to start out from an intellectually-sound basis, which saying that "government borrowing is bad" is not. Reality just doesn't allow for such simple distinctions, and any sane policy must be at least grounded in reality.
"Little does he know, but there is no 'I' in 'Idiot'!"
None of gov'ts business, it's not what the gov't is for - creating factories/hospitals/etc. I can't believe this is even an argument.
Gov't is a monopolistic structure by default, which is incapable of any sort of competition and thus does not follow the rules of price discovery through trade.
Gov't funding in itself is anti-competitive in nature, as gov't gets its funding by force. You can't build anything of use if it's all dictated by gov't, gov't cant't build independent structures in the market that are not profit motivated, and profit driven motivation system is the only sound economic system we have to date, it ensures market level price discovery through trade, it ensures nearly correct market saturation levels with various products/services at the prices that the market is willing to bear.
You don't want gov't to deal with economy, it's a big mistake to allow a monopolistic, non-profit driven, income ensured, bureaucratic, ever growing, anti-competitive, money printing system to set economic rules, it will inevitably crash the society by imposing itself all over the economy.
Gov't is supposed to be just a cost, it's a cost of having minimum military for protection and a cost of having a working justice system to look after criminal and contract laws.
Leave the individuals to take care of market requirements, leave the individual choices for price/quality discovery, leave the market to set interest rates, do not allow gov't to borrow, do not allow gov't to tax production, keep it on a short consumption financed leash, otherwise it will destroy the economy and society, because it has no boundaries.
You can't handle the truth.