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« April 16th Evening: The Recession Diaries | Main | April 27th Morning: The Recession Diaries »

April 20, 2009

Comments

Barry

Michael,

I too am utterly dismayed by the government’s disregard for the fate of people’s livelihoods.

However, I am also more or less convinced by the argument that our cost base is too high and that it has to be reduced. That means lower everything; prices, wages, the lot.

Can the state promote fiscal stimulus as well as bring our cost base down?

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CMK

Great post, Michael, and as ever a potent riposte to the ongoing muddled thinking that 'informs' the media consensus and attempts to explain how we get out the current mess. I think your point about a stimulus package and the creation of more, not less, public sector jobs is very well made. It's counter intuitive in the current debate but you've hit on perhaps the key element for future recovery. My firm belief is the state will have to, regardless of ideological baggage, go back to the creation of large semi-state business (in renewable energy, for instance) as the key driver for further economic growth. FDI will continue to be important, but we can't rely on that as heavily in the future,as we did in the past. And let's not get our hopes up about the fabled Irish entrepreneurial class. The latter will likely continue taking the easy option of property speculation, gimmicky companies and websites or the all round mickey-mouse economic activities that seem, to me at least, to typify the Irish 'entrepreneur'. Ireland will never possess a socially conscious entrepreneurial class of sufficient scale to be economically significant. It'll always be true to it's nature: selfish, anti-social, anti-worker, tax dodging, fundamentally lazy, perpetually whinging etc. etc. etc. ad infinitum. The state, through semi-state businesses, will have to be the driving force our knowledge based economy going. That means, more public sector jobs, as you correctly point out. The public sector will be the eventual saviour of the Irish economy. It won't happen of course, but there's no harm in dreaming...

Barry, yes costs need to be controlled. A few strategic price controls (in housing, professional fees and energy, for instance) need to be permanently imposed and administered. You can have control over your cost base or you can let the market run riot: but you can't have the market determining prices and control of your cost base.

Jim

Michael,
I admire your resilience in writing these superb posts continuously without becoming disheartened. I, and all I do is privately ponder between golf, work and family time; am fit to explode.

Head and brick wall really do come to mind. I have a massive problem with ff and fg or tweedledumb and twee(can't muster effort to finish). Can I begin by saying that I am not like the guy from 'One Foot in the Grave' naturally, and normally I am revlatively bright eyed and optimistic, but I have been getting a serious growing pain of recent years. To exemplify; I wathced a bit of prime time last night, some FF guy was on - minister for defending my corner inanyway and exhaling when interview is over with a look around for someone to tell me how it went and what was said - kind of guy.

Now Miriam had pinned this guy down on the shopping in the north issue, he danced around declaring that first of all they (the govt. god love us) first had to ascertain who was causing the price differential. He was admiting therefore that he didn't know. Miriam bobbed and struck with a 'you are the minister - you should know' lance. Your man - reverted to repeat mode that we need to ascertain whether it is the retailer or the wholesaler, or the supplier (looked like he found out there were a number of words for shopping in last six months).

OH SWEET MOTHER AND MARY OF ALL THAT IS WITHIN OUR SENSES.

The problem wih Fianna Fail is that they do not have any ideology (perhaps other than brits out and irish good; oh and life is about taking and sorting stuff out for people nodnod winkwink - sure we will look after that, howyrya, youll do the best you can for us - sound man.

So action man from last night can sit there and discuss who is to blame for the price increases. I am screaming at the tv (frightening the life out of the child) saying 'what has that got to do with you'
IN THE NAME OF ALL THAT IS HOLY AND UNHOLY - - HOW CAN YOUY SPEND A DECADE CHAMPIONING THE MARKET AND WITHOUT BREAKING A SWEAT DECIDE THAT YOU NEED TO POLICE THE MARKET AT A FUNDAMENTAL LEVEL. NOT EVEN VIA VAT OR ANYTHING AS INDIRECT AS THAT BUT BY FINDING OUT WHO IS UPPING THEIR PRICE AND BY GOD STOPPING THEM (WE ASSUME, NEVER QUITE GOT TO WHAT WOULD BE DONE).

HOW CAN WE DO THAT - WELL WE CAN BECAUSE WE DIDN'T KNOW WE WERE CHAMPIONING AN UNFETTERED MARKET IN THE FIRST PLACE. AS PAT SHORT'S SCHOOL TEACHER'S CAHARACTER SAID TO MOLONEY - GO OUT THERE AND DO IT MALONEY CAUSE YOU'VE THE STUFF TO DO IT, CAUSE YOUR THICK ENOUGH!!

Well is it the man's fault that he hasn't a clue what he is talking about - I don't know and at this stage I don't care. I believe our focus should be how we improve the Labour party - not scream at people that Labour is better suited than this bunch of.
I guess maybe my anger and this tirade stems from the feeling that stupidity in itself is a subjective thing at best, and shouldn't really be seen as the fault of the carrier, it is the misplace confidence that one is not stupid and is indeed worthy , and of leader/representative material, that is the problem. We have two major parties - neither of whom stand for anything other than a historical disagreement. Both attract a generational following of people who want to have power - want to be bigknobs around their area, perhaps to help - perhaps not; and unrelenting machines of group delusion in the form of back slapping for these same ?? in the first place. We need to grow up or else go the whole sad hog and as I said before get the healy-rae family to take over the finance department and the central bank. You can not always look after people and get stuff for them - there is still a limit to stuff. You must stand for something, be it less or more governmental economic involvement or anything else you choose; and as members of the leading national media, it is not enough that you find holes in arguments that are suspended on abysses of incredible voids in logic. Get to the core of this, pull down the masks of competence. PHEW, I needed that.

Keep up the good work, Michael. Martin O'Dea

Fergal

Hi Michael,
Well done again.George Orwell wrote that leftists put people off by using "fancy" words, with this in mind could the state let the banks collapse,nationalise the best parts and with the 50 billion this Nama lark will cost provide credit for small industry and launch a stimulus programme.Is this doable?Could it work?Any left-wing party should be attempting to redefine the whole idea of work,hours worked,ownership of means of production,leisure activities,sharing,sustainable over "productivism"and so on.How come Waterford Crystal and SR Technics weren't transformed into workers' cooperatives,with capital coming from the wider trade union movement and the state?Keep up the great work

Liam

Martin, Jim.

Ironically reading comments like yours gives me hope.

I've long held FF in disregard. It began actually somewhere about the growth of the boom, when walking about Dublin city I noticed an ever increasing number of flash cars, an ever increasing mountain of wealth, and an ever increasing number of bodies, curled up in blankets on cold nights with a styrofoam cup. It was then I made up my mind that I'd never vote for them.

That was ten years/fifteen years ago. And sadly, nothing ever changed.

The reason I've got hope, is that for the first time, I get the sense that people are sick of it, or at least slowly coming to that point.

Change is never a slow thing. People think it's a gradual process of evolution, but in reality it's not. The conditions for change occur slowly, granted, but the actual movement, the momentum, is an avalanche, that comes all at once as the result of a trigger/scream. It's ever been that way.

So for the past fifteen years I've ranted and raved, but few have cared to listen to me. Why should they? Their lot was improving, or so it seemed. Plus, "sure doesn't change happen slowly?" they would ask, considering that the rising tide would lift all and sundry.

But it doesn't, and this is the point. It takes a sickness, an overwhelming need resulting from altered conditions.

The guy on Primetime is a functionary. Nothing more and nothing less. He's exposed, because like all functionaries he has to serve a purpose, and quite blatantly they're failing.

So I suppose what I'm saying is, have hope. I know it's in short supply at present, but that's the time to have it. Hope when things are going good serves no real end. It's now it's required. All the best.

By the way, Michael does write good posts doesn't he.

Alec

Just a point, but is there no case to be made concerning our membership of the euro? Did our interest rates not need to rise before before the crash in order to dampen demand, and would a devalued irish currency not improve our ability to export?

Just wondering what was happening to other small economies with their own currency, how are they doing?

Michael Taft

Barry - apologies for getting back on this so late (was away for a few days). Yes, the cost base can be reduced and is currently being reduced through deflation. So that phenonemon is happening. But there is room for more concerted action. For instance, Forfas showed in its comparative study of the cost of running retail operations here and in other EU cities - that Irish workers were paid less than in Maastricht, but the overall costs of the retail operation was higher here. The main culprits were commercial rent (10 times higher than in Maastricht, IT services, etc. Another area is electricity prices - high in Ireland courtesy of Government policy to maintain an artificially high price regime to induce private companies to enter the market. In fact, tackling the real problems in our cost base would in itself provide a stimulus - in terms of cash efficiencies for businesses and households.

Jim - I'm sure you feel better for that. And you're not alone. There are a lot of people who just feel at bursting point. Is there a productive outlet - politically? Big question.

Alec, no doubt that interest rate movements didn't assist the Irish economy. But let's not overlook that Fianna Fail were pursuing pro-cylical policies - pumping an over-heating economy during the boom, and deflating a contracting economy today. Interest rates played their part in the property boom - but so did capital tax cuts, property tax reliefs and a wild-west market in land prices.

As to other small economies with their own currency - Iceland melted (and is trying to get into the Euro) while Latvia is being run by the IMF.

Alec

Yes Michael, I accept the point re latvia and Iceland, but they are the two examples alsways quoted, surely there are other examples we could also be looking at.

Michael Taft

Alec, I will attempt to do some research and get back to you on that. It's a good area of study - especially the impact of the recession on other small, open economies and their response to it, on both a monetary and fiscal level.

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