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« The IMF Rules OK: The Recession Diaries June 25th | Main | Histories At Dawn: June 30th The Recesion Diaries »

June 28, 2009

Comments

dealga

I want to take issue with how you present your numbers.

0.3% is not 'five times less' than 1.5%, it is 1.2% less.

If Option A reduces something from 100 to 98.5 and Option B reduces something from 100 to 99.7 you can't then claim that Option A is five times more damaging.

That's a nasty trick often employed by the press to add more 'wow' factor to stats. You shouldn't do the same.

dealga

On the substantive issue of An Bord Snip another thing you won't hear is a pro-active Union leader.

Is it too much to expect that the Unions offer to tear up a load of their restrictive work practices in return for keeping jobs and current wage levels?

For example is there any chance teachers could offer to do 20 hours class time per week instead of 18, and stop looking for payment for the same sort of extra curriculer activities many other people happily volunteer their time for?

Is there any chance nurses could stop looking for shorter working weeks, stop refusing to move wards, stop all those unauthorised tea and smoking breaks and the rest of it?

And as for CIE, well how about the transport unions accept summary dismissal for the instigators of the ridiculous wildcat strikes trhat seem to plague those companies?!

The public sector unions have only one chance because if they strike while the rest of us are losing our jobs and seeing our pay packets decimated the rest of the citizenry will turn on them in a flash.

Colman

"(why isn’t the Small Firms Association jumping up and down in protest against these policies, rather than supporting them)"

This is the greatest mystery to me: why are they shouting "Please take my customers' money away so they can't give it to me"?

WorldbyStorm

dealga, just re the teachers 'extra curricular' issue, you do understand the distinction between 'voluntary' and paid work, don't you? If I work, as I do, as a private sector worker on contract I expect to be paid for all work I do. I don't give it away for free. I don't see any valid reason for any other worker to do otherwise whether they work in the public or private sector. I'm not a charity. I don't expect anyone else to be either. Nor do I consider that a 'restrictive' work practice.

Teachers in secondary and VEC work 22 hours, not 18. A posts work 18 hours because they as asst. principals have extra duties in terms of admin.

And just to be clear I'm not a teacher although as one of my jobs I lecture in 3rd level. If you're asking for flexibility within working weeks, no problem.

As for unauthorised tea and smoking breaks, I'm wondering do you work in the private sector because as a staunch non-smoker, myself and a number of colleagues used to note with some incredulity the amount of time we in our private sector employments saw others have off for such perks. I don't believe it's restricted to the public sector one bit.

WorldbyStorm

Just to be clear that's "A" posts ie Assistant Principals, not A post... I should add that teachers do do extra curricular work unpaid like running football teams but its a bit of a gray area since for permanent teachers its in their contract that they do such duties and in that sense one could say they're paid for it. On the other hand are you suggesting that monies should be removed for that?

Hugh Green

I would like to take issue with dealga's representation of the meaning of 'five times less'.

If Option A reduces something from 100 to 98.5 and Option B reduces something from 100 to 99.7 you can't then claim that Option A is five times more damaging.

In fact, you can, because damage is an effect of the reduction, not the reduction itself.

Suppose your GNP is €1,000,000. And I say I'm going to reduce it by 0.2%. That means I will reduce it by €2,000. And suppose someone else says he is going to reduce it by 1.2%. That means he will reduce it by €10,000.

So we have one reduction of €2,000, and another reduction of €10,000. The latter is five times the former. Now suppose €2,000 represents the cost of keeping a hospital ward open. That means that €10,000 represents the cost of keeping five hospital wards open. Therefore, if you consider the closure of a hospital ward as damaging, then the latter is five times more damaging than the former, and it would not make any sense to argue that the effect of closing five hospital wards is only 1% more damaging than closing one.

WorldbyStorm

Well, Hugh, that's a fair point, but with all due respect to dealga, if his/her knowledge of the other areas s/he mentions ie. nursing etc is as fundamentally incorrect as his/her knowledge of teaching then I think it would be reasonable to ask for a bit more referenced source material before entirely taking such assertions seriously.

Tomaltach

"you can’t cut or tax your way out of a recession. You can only grow." Not far wrong. I think it's clear that cutting spending or increasing taxes as you plough into a recession is going to exacerbate the recession. As you know the whole idea of stimulus is to employ a counter cyclical, pro-growth shock to a flagging economy to at least make the recession shallower and hopefully shorter. The trouble with Ireland is that we dismantled the brakes as we gathered speed down a hill and now we find ourselves applying the brakes as we start up a steep incline. Pro-cyclical if ever I saw it.

Yet the issue is not whether growth is the only way out of a recession. By definition, and end to recession is a return to growth, so anything and everything we can do to keep growth potential in the economy should be good for mitigating the worst effects. But Ireland's problem isn't that it is in a deep recession - that's only part of the problem. The problem is that we have found ourselves with a fairly stark structural deficit. And I know, Michael, that you have treated this whole issue - structural versus cyclical elsewhere, but it seems to me that even an optimistic return to growth in a couple of years, and a sustained period of long term trend growth after that, will leave us with a very significant mismatch between our spending and revenue.

The gap to me seems so large that it is not reasonable to simply ignore it and pour everything into growth in the hope that one day our deficit becomes managable. (And again I know you pointed out we are still in terms of debt/GDP in decent shape, but how would that look after a say, a decade of sustained large deficits. These numbers tend to roll up pretty quick as far as I can see).

Personally I have very grave concerns about the bank bailout, and frankly, I'm not qualified to say how systemic a particular institution is, nor whether leaving the banks to their devices almost entirely and letting them go insolvent is a real risk of total economic disaster.

This weakness in my understanding means that I cannot say if the likely borrowing we have to do for the banks (capitalisation, guarantees, or otherwise) is absoltely necessary. If it is not, then we are on a course of absolute madness and our borrowed money would be much better spend in providing a stimulus. (though even there we'd have to address the structual issue eventually).

So while I'm convinced that we need not sip the exact IMF medicine now or ever, and that the public sector is neither bloated nor particularly inefficient, I cannot avoid concluding that we need some way of addressing our structural deficit, apart from just relying on a return to growth.

Concerning the public sector. As I said, neither bloated nor terribly inefficient. But in a huge, complex system, I cannot imagine that during a long sustained period of very bouyant funding, that many decisions were taken - in terms of strategy, organisation, structure, etc - that were not particularly wise from a point of view of getting value for money, and that many practises crept in where long term and medium term spending consequences were not as prominent as they should have been and now ought to be.

This all happens in the private sector too of course, and adjustments there when they hit very lean times tend to be brutal for individuals and often harmful to the organisation's long term well being. That is not what we want for the public sector and calls for big chunks to be dropped here and there are insane. But after the long growth, a measured, serious, and thoughful process of examining the individual parts, and in partnership with those involved, I think should be undertaken to find ways to making them more efficient.

An none of what I've said negates the need to move to a broader, and deeper, and more progressive tax base than we have today.

dealga

OK 'World by Storm' - hands-up. I should have stuck to my general point - the unions (not just public sector) are offering nothing form their own point of view as an alternative to wage and/or job cuts'. I think they have a lot of room for manouevre with their existing contracts. I'm betting there's a lot of stuff in there they could offer to sacrifice to keep their pay and jobs.

My mistake was to use examples - I shouldn't have. Only one teacher I know has ever explained his hours to me and he told me he has 18 hours 'contact time'. He's full time in a Secondary school - my bad if he is not representative. Still - if it's 22, why not offer to do 23?...

My sister works in a hospital and she told me about the nursing unions using the 'established work practices' (I can't think of the correct term right now) rule being invoked when the HSE tried to clamp down on what it saw as an abuse of the terms of contract. Limerick hospital and Tullamore hospital I believe were where the issues were.

But yes I have used anecdotes - always dodgy - so I'll withdraw them and stick to the general query above.

Hugh Green, you have explained exactly how such stats are generally represented. It is still incorrect.

You compare the changes with respect to the total, not with respect to each other.

To use your example: Suppose your GNP is €1,000,000. And I say I'm going to reduce it by €1. And suppose someone else says he is going to reduce it by 1.2%. That means he will reduce it by €12,000.

So we have one reduction of €1, and another reduction of €12,000. The latter is how much worse than the former...? Are you seriously going to say it's 12,000 times worse? No because it's essentially meaningless to talk of these figures that way even though it is done.

Talking about five hospital wards being five times one hospital ward is entirely irrelevant. But you've gone for the emotive angle, not the cold numbers. If you want to be emotive you'll say that's five times as many. But what matters is the relationship to the total figure. If there are 1 million wards all of a sudden it doesn't look so bad. Bloody awful if you only have ten, though.

Talking about 'five times' and all the rest of it are how sensationalist newspapers dress up numbers to look worse than they are - 'wow' factor - like increases in drug use, house repossessions and so on.

t g macamhloaibh

The huge economic structural deficit is matched in size by the moral deficit in Ireland. The same tired old arguments are being bandied about while the general ethos of the govt and their mirror-image opposition remains intact. The one aim of this govt has been to maintain the status quo. Trickle down economics remains the plan. As long as some wealth, based upon any asset pumping scheme, can be devised which results in the concentration of wealth into a few enobled hands, all will be well. The rest can live off the scraps and their master cards.

This general economic theory, such as it is, is the accepted norm for our society. Everything is measured against it.

Money and credit, we are told by our political masters, are the life blood of Ireland and its economy. Labour is a drain on enterprise. Services are drain on the economy. Community a hurdle to labour mobility. Savings, by ordinary wage earners, are a hinderance to commerce.

The affects of this economic/political theory on the broad spectrum of Irish people are of secondary importance and becoming less important by the day.

An bord Snip is largely comprised of appointess, largely made up of wealthy accountants and legal hacks, who can be depended upon to maintain the status quo and wield a sharp knive on services, wage earners and their commmunities.

Meanwhile 10's of billions will be thrown into proping up the banks. These givers of economic lifeblood will walk away from their past responsiblities and errors at tax payer's expense.

When the premise upon which one devises a economic-political system is corrupt, you cannot expect the policies and the results therefrom to culminate in anything other than a warped outcome. So, while we may bandy about Keynsian policies or budget busting cuts, the results are preordained.

I have become heartily sick of the creation of committees, tribunals, think-tanks which are being formed by this govt. They act as a mud guard and often result in the creation of new quasi-governmental quangos who act as a shield to accoutable government decision making. We are increasing being governed by non-elected committees.

Accountability, tranparency and down right decency have been the biggest victims of this government's policies and have resulted in a deep recession. The cure? Root and branch reform of governemnt and the economic model? No way. More of the same seems more likely.

Hugh Green

Dealga,

'Talking about five hospital wards being five times one hospital ward is entirely irrelevant. But you've gone for the emotive angle, not the cold numbers. If you want to be emotive you'll say that's five times as many.'

Well, even a Vulcan would agree that it's five times as many, but it doesn't matter if it's five hospital wards or five tractors: my point is that you should be basically concerned with the impact of the reduction, a point you have not sought to contradict in any way.

Your explanation about 'cold numbers' is utterly silly.

The only reason most people follow these numbers in these contexts is in order to measure and understand what people do, because you want to know how it affects their lives.

If it were all a question of 'cold numbers', why the hell would anyone study economics, since -as you appear to be saying- it ought to be merely a question of abstract mathematical representations, not of how human beings are affected by economic decisions.

To say that the economy shrinks 0.2%, or 1.2%, or 50% means sweet FA in the abstract. What most sentient human beings want to know about is the EFFECT this reduction is going to have on people's lives.

Paul Hunt

Michael,

This is not unrelated to your post. I suggested moving our exchange on:
https://www.irisheconomy.ie/index.php/2009/06/16/growing-the-economy/#comments
offline.

The CER has recently published details of the electricity network asset valuations and when these are combined with their revenue determinations and the actual network revenues reported by the ESB the impact on consumers and businesses are frightening. This is not an attack on ESB workers. It simply highlights serious and sustained policy and regulatory failures. The appropriate solution is radical but it would finance a much required investment stimulus and enhance Ireland's future economic performance.

You raised some concerns about my proposals which I'm happy to address. If you're interested, please indicate your preferred process.

dealga

Hugh Green,

I'll say it again and focus on the substantive point. You should compare the changes with respect to the total, not with respect to each other.

If you choose to deal in relatives, rather than absolutes, you can pretty much dress up any change to be as dramatic as you need it to be to reinforce your argument. By focusing on the relative and ignoring the absolute you get to mislead your audience.

The rest of your response consists of you taking a ball and charging off into the distance with it. I take issue with how Michael presented his numbers to his audience. I didn't start any argument with regard to 'impact', or what sentient human beings want to know, or any of the rest of it.

WorldbyStorm

dealga, appreciate that... :) Teachers hours are on the TUI/ASTI websites. There in black and white. I can't imagine how a full time teacher would be on 18 hours.

Re 23 instead of 22. Schools are timetabled so that teachers can do contact time... the 22, and then class preparation/corrections etc in addition to work that is taken home. That makes up the other hours. Now, what precisely is the point of doing an extra hour? I mean how does that assist matters?

I'm a private sector worker on short term contract to the public sector in two different employments, one educational, one business oriented. What's happening in the commercial businesses analogous to my work - to my friends and former colleagues as it happens - is that working people are being asked to take paycuts. Not work more hours. And in the context of a school what more optimal outcomes would it lead to? School children can only be taught x number of hours. They require a sufficiency of trained teachers in various subjects to teach that number x. Are you likewise suggesting the children should be kept in an hour longer per week?

What purpose does this serve other than a cosmetic one?

Re contracts of employment, impossible to say without the details. But that doesn't sound like quite the same thing.

Michael Taft

First off, I'm sensitive to the use of numbers myself and how they can be manipulated. For instance, what can one say when reading a headline 'Shock! Horror! Acusations of Social Welfare Fraud up 784%!' Never mind that it's just reports, most of which are not substantiated (WBS covered this quite well recently over at CLR); never mind that the percentage is worked on a ridiculously low base. So, in future, I will be mindful of how such numbers can be misused, misunderstood, etc. Suffice it to say that the general point is still pertnent: general public spending cuts produce very negative effects with little fiscal gain (never mind the social damage it will cause which I'm not sure ESRI's HERMES programe captures - how could it?). Tax inceases, while still deflationary, are less so - with less damage to the economy. BTW - this is not the last word. The one thing there is a unviersal agreement on is that there is no agreement on how multipliers play out in the real economy.

Tomaltach - there is nothing you say I can disagree with. And I will admit that, at times, I have not full elaborated all the points you make because I'm concerned to evolve an alternative perspective. In that sense I glide over things I shouldn't. For instance - there is no doubt that efficiencies can be made in just about every Department and agency of State. One need only read the annual and special reports of the Comptroller and Auditor General. Indeed, on other occasions I have argued that it would be worth expanding this body so that there was a full-time unit in every Department, reporting constantly.

I part company with Dealga on the general tone of targeting public sector workers (or private sector) when examining issues of process and productivity. This approach will advance very few goals. To suggest that trade unions are there to protect their members is only to state a truism (that's why they were established in the first place). But why is that interpreted as being inconsistent with processes which have a beneficial outcomes for process and productivity?

Still, the Left can't run away from hard issues. And this will involve issues of public spending, allocation of resources and prioritisation of programmes and social strategies. I will do up a post soon on an issue I've addressed before - child income support. It's not good enough to say 'we have to cut it'. But nor is it good enough to say 'hands off Child Benefit'. We have to find a new way of addressing these issues - but first we have to try to figure out what the issue really is. Otherwise, we do battle on peripherals and never get to discussing, never mind disagreeing, on the core concerns.

In that respect, t g macamhloaibh's reference to a 'moral deficit' is well taken. On too many occasions we debate at a mechanistic level, slinging calculations at each other. We don't ask the more fundamental question - what kind of society do we want? What is the purpose of health policy? What is the desired end of education? Without incorporating these fundamental concerns into our arguments, we end up debating means, not ends. As the saying goes - if you don't know where you're going, any path will lead you there.

Paul, always delighted to take up this discussion, here or elsewhere. I note that you have sent me an e-mail on this subject. I will return to this issue - but for now, I'll just ask: what would be the impact if (a) the CER abandoned it's tariff setting for the ESB; (b) allowd the ESB to compete for market share (especially among large industrial users); (c) allowed the ESB to make investments as per the market, not the CER's own determinations (as always, done in the context of ensuring supply)? Would this not be a better approach?

Hugh Green

Dealga

'You should compare the changes with respect to the total, not with respect to each other'.

Let's recap on what you mean here, and I apologise for boring the pants off everyone else, whom I counsel to read no further.

The original post deals with the impact (see, I didn't introduce the word) of two distinct budgetary policies -cutting public spending and increasing tax. The former, it is said, will cause the economy to contract by 1.5%. The latter will cause the economy to contract by 0.3%.

Now, you are saying that the changes should be compared with respect to the total. But when you say one will cause the economy to contract by 1.5% and the other by 0.3%, you are doing just that. You may well add that one will cause the economy to contract by 1.2% more than the other, but that isn't saying a whole pile more. Your position is akin to saying that the difference between 1.5y and 0.3y is 1.2y, and the impact should be unfailingly described as such, regardless of what y is.

Now if y represents one per cent of your weekly pocket money of €1, then maybe you might have a point in saying it would be sensationalist to say that the impact of a 1.5% reduction is five times greater than one of 0.3%, even if it does happen to be true.

But in this case, what does a difference of 1.2% of GNP mean? My rough guess is about €1.9 billion of difference. So you have one policy that would cause the economy to contract by about €470 million, while the other would cause the economy to contract by €2.35 billion. What is so 'sensationalist' in this context about emphasising that the impact of one is five times greater than the other, when it happens to be true? Are multiples of €470 million chump change to you?

dealga

Er, if the original post had stated that "you have one policy that would cause the economy to contract by about €470 million, while the other would cause the economy to contract by €2.35 billion" that would have been ideal - because those numbers are still changes with respect to the total - expressed in the clarity of numbers instead of percentages for good measure. I can see the difference between the two and there is far more meaning than 'five times'.

You see Hugh every time you have tried to disagree with me here you have converted 'five times' back to real numbers of some description, which perfectly proves my point, I believe.

Hugh Green

OK, so from what I can see, you don't like it when people talk in terms of multiples but don't mind so much when people talk in terms of fractions. Might I suggest you lack a sense of proportion?

Pavement Trauma

Dealga / Hugh
This discussion has become too divisory. I suggest you agree a mutually acceptable numerator to referee the dispute, find the lowest common denominator points of agreement and carry the remainder to some other blog.

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