Category Archives: Ireland

Soaking the rich

Jean-Baptiste Colbert, French Finance Minister under Louis XIV, colorfully explained “that the act of taxation consists in so plucking the goose as to procure the largest quantity of feathers with the least possible amount of squealing.”

Those on the left have long advocated squeezing the rich until the pips squeak. What almost everyone can agree on, however, is that a tax system should be progressive so that those with the broadest shoulders bear the greatest burden.

There are those that would wish to tax the rich simply as a blunt instrument to reduce income and wealth inequalities. A better approach is to establish what public goods and services, and what sort of welfare state, government should provide and then set about financing it in the most efficient and equitable way possible. Before deciding how many feathers to pluck, you should see how many pillows need to be filled. Continue reading

Is your glass half full or half empty on the Irish economy?

How you see Ireland’s economic prospects may depend on whether your glass is half full or half empty in the post-Paddy’s day haze. There’s plenty to be bullish about, but warning signs have begun to flash in recent months as we brace for Brexit and a global slowdown.

First, the good news:

In many ways, the Irish economy looks to be in ‘goldilocks’ territory: not too cold, but still not too hot. Moreover, the number of people outside the labour force that could look for work again in the right conditions is still over 100,000, suggesting it still has room to run if factors beyond our control don’t get in the way.

*** This article was first published on thejournal.ie on 24 March 2019 *** Continue reading

Ireland needs a Green New Deal

As human beings, we are designed to be able to process vast amounts of complex information to inform the countless decisions we make every day. Some are split-second decisions of little import – such as where to sit in as we enter a room. Others are potentially life-changing and warrant a period of reflection – such as what to do after secondary school, or who to marry. But, we tend not to sweat the small stuff. We take mental short cuts so that we don’t waste precious brain power calculating the most advantageous seat to sit in. Often, we’ll simply sit in the same seat as last time!

But, not all mental shortcuts are good for us. For example, when we are young we tend to save less than we should for retirement because it seems so far in the future. We tend to value the here and now more than the future. This is a problem for us as individuals, but potentially disastrous for society. Our grandkids, our children and our future selves will pay the price.

Climate change is another catastrophe in the making. Other than those few members of the flat-earth society, we all know that man-made global warming is well underway. The science in uncontestable. The proof is in the increased frequency of extreme weather events, the melting polar ice caps, and the slow but inexorable rise in sea levels. Continue reading

Irish Economic Prospects for 2019

Writing this time last year, I expected our economic fortunes to get better before they got worse. I saw clouds gathering on the distant horizon, but no major storms forecast for 2018.

*** This article was first published on thejournal.ie on 28 December 2018 ***

Ireland isn’t quite partying like it’s 2006, but the stats don’t lie – 2018 has been a bumper year by most measures.

  • The economy generated nearly 1,300 extra jobs per week in the 12 monthsto end-September, up from less than 950 per week the previous year. Even if the pace of job growth slowed after the middle of 2018, this is still impressive progress by any measure, and enough to see the unemployment rate fall to 5.3% in November, down from 6.4% the previous year.

  • Although this is close to what economists call ‘full employment’, it should be remembered that the share of the working age population making themselves available for work is still (62.6%) significantly lower than its 2007 peak (67.4%). This flatters the unemployment rate and suggests there are still some 300,000 people that could be enticed back to the workforce.

  • Growth in average hourly earningshas picked up, from 2.1% a year ago to 3.2% now, more than double the growth rate from two years ago. The minimum wage will increase by 2.6% from New Year’s Day, from €9.55 an hour to €9.80.

  • Only part of the increase in people’s pay packets is being eaten up by higher prices. Consumer prices are basically flat, edging up only slightly from 0.5% in November 2017, to 0.6% in the same month this year. This average hides important differences: the cost of housing, water, gas and electricity increased more than 5% on the year while the price of furniture and household equipment fell by more than -4%.

  • This means real hourly wages are increasing in every sector with the exception of public administration, which clocked up only a 0.8% gain in the year to end-September.

  • With more people at work earning higher wages, it is hardly surprising that we are spending more. Ireland’s GDP figures are heavily distorted by multinational activity, but the most unpolluted – and least volatile – component is private consumption which grew by 2.9% in the third quarter of the year compared to a year earlier.

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Cooperative Advantage

Economists are well versed in the concepts of competitive advantage and comparative advantage, but could we be missing a trick by not putting more emphasis on what has been called ‘cooperative advantage’?

What if the economy was organized around cooperation instead of competition? What if the principles of shared ownership and community solidarity replaced the pursuit of profit and maximizing shareholder value?

It’s so far from our everyday reality that, for most of us, it is little more than a thought experiment. Continue reading

Budget 2019 Housing Redux: welcome to the Republic of missed opportunity

THIS WAS SUPPOSED to be the ‘Housing Budget’.

A series of government plans, strategies and false starts have so far failed to stem the surge in rents, reverse the relentless rise in homelessness or put homeownership back within the means of low-to-middle income families.

A decade since the property bubble burst and homeless figures began their long march to 10,000, this was flagged as the moment when the Minister for Finance would do what Ministers of Finance do to tackle a social crisis when there’s an election on the horizon – throw money at the problem.

So, let’s take a deep dive into the good, the bad and the ugly of the housing measures in Budget 2019.

*** This article was first published on thejournal.ie on 10 October 2018 ***

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‘That’s insane… did they guarantee everything?’: Remembering the bank guarantee

NOBODY LIKES TO get a call from the boss when they’re still in bed.

Exactly ten years ago, in the early hours of 30th September 2008, I got such a call: one I’ll never forget.

From January 2008 to the general election of February 2011, I was, among other things, economic advisor to Joan Burton TD, then opposition Finance Spokesperson for the Labour Party.

As such, I had a front-row seat to the political theatre and economic tragedy of Ireland’s unfolding banking crisis.

*** This article was first published on thejournal.ie on 30 September 2018 ***

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