The Government: Have they failed?

Permabear

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carveone

Is it possible for the government to bypass the banks? Ie: to provide credit to small/medium companies without the banks being involved? They did something to attempt to shore up house prices in the budget didn't they? Don't know but the government need to act very soon before SMEs go to the wall.

The opposite side of that coin is Iceland; a country who's fate we might be sharing if it were not for the protection offered by the Euro.

I hear that. Remember 1993/1994? A similar interest rate in 2008 would have turned the economy into swiss cheeese. Iceland is practically at a state of collapse - 18% interest! Wow, it's like putting the whole country on your Visa.

oscarBravo

donegalfella wrote: »

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You keep telling us the government did, in the CRA. I've yet to see you quote the actual legislation that mandated that.

nesf

oscarBravo wrote: »

I'm assuming he's talking about the laissez-faire economic policies of the government of the time, which greatly exacerbated the effects of the famine in Ireland.

Not my area but from chatting to a few people that have looked into it, the blaming of laissez faire economic policies for the famine in Ireland seems to be misguided and the people throwing around the term laissez faire in the historic literature don't seem to really understand what the term means.

Permabear

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oscarBravo

nesf wrote: »

Not my area but from chatting to a few people that have looked into it, the blaming of laissez faire economic policies for the famine in Ireland seems to be misguided and the people throwing around the term laissez faire in the historic literature don't seem to really understand what the term means.

Again, I'm not claiming that the famine was entirely and solely the result of laissez-faire policies. I'm pointing out that the government's reluctance to interfere in the operation of the market contributed to the death toll. The idea that money shouldn't have been spent on direct relief, but on improving agricultural productivity, is a case in point.

Give a man a fish, and you feed him for a day. Teach him to fish, when he hasn't eaten for a week, and you have one less man to worry about feeding.

nesf

oscarBravo wrote: »

Again, I'm not claiming that the famine was entirely and solely the result of laissez-faire policies. I'm pointing out that the government's reluctance to interfere in the operation of the market contributed to the death toll. The idea that money shouldn't have been spent on direct relief, but on improving agricultural productivity, is a case in point.

Give a man a fish, and you feed him for a day. Teach him to fish, when he hasn't eaten for a week, and you have one less man to worry about feeding.

I've poked someone who's studied this area to respond to this thread.

Flamed Diving

oscarBravo wrote: »

The main point for me is the sacrifices that must be made on the altar of free-market ideology: a century and a half ago, it was preferably that hundreds of thousands of people die than that market-distorting measures be taken.

I'm sorry, but you are completely wrong, as is half the historical community in Ireland, with this respect. For example, the British Government imported Indian Corn and used it to suppress the price of food in the Irish market. In economics, this is referred to as a price ceiling, and is completely at odds with the idea of a free market as it creates distortions which do not allow the market to clear. This is just one of many examples of the free market being curtailed by the British Government during this crisis. In my time studying both economics and history as an undergrad, I found the economic knowledge of historians to be paltry, at best. It is something that seriously needs to be addressed in the treatise of that crisis.

oscarBravo

donegalfella wrote: »

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There's none so blind as them that will not see. The problem is that you start with your assumptions about what I mean, and then interpret what I say to fit.

Let me make it real simple for you: imagine that you quite literally haven't eaten anything whatsoever for several days. Which would you prefer:

(a) a lecture on how your plight is the result of the government meddling with the free market,
(b) a government-sponsored program to improve your agricultural productivity, or
(c) food.

Answers on a postcard.

Permabear

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oscarBravo

Flamed Diving wrote: »

I'm sorry, but you are completely wrong, as is half the historical community in Ireland, with this respect.

Would it help if I reiterated that I'm not trying to explain the entire cause and course of the famine? I'm just trying to make a single point - see my previous post.

Flamed Diving

donegalfella wrote: »

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I think OB has been reading a bit too much of...

http://www.libraryireland.com/Last-Conquest-Ireland/Contents.php

oscarBravo

donegalfella wrote: »

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Newsflash: in the context of the Irish banking system, the house is on fire.

Yes, but if you teach him to fish before he starts to starve, he will eat for a lifetime.

I'm sure he'll be delighted to hear all about it - after you've fed him.

Flamed Diving

oscarBravo wrote: »

Would it help if I reiterated that I'm not trying to explain the entire cause and course of the famine? I'm just trying to make a single point - see my previous post.

You said that free market ideology was partly to blame for the crisis, I have showed you how the government pursued a non-free market course.

Fin.

oscarBravo

Flamed Diving wrote: »

I think OB has been reading a bit too much of...

http://www.libraryireland.com/Last-Conquest-Ireland/Contents.php

I'm pretty sure he hasn't read it at all.

Straight question: as a historian and economist, do you believe that the appropriate course of action for the government in 1846 would have been to completely withdraw from all interference in the market in Ireland?

oscarBravo

Flamed Diving wrote: »

You said that free market ideology was partly to blame for the crisis, I have showed you how the government pursued a non-free market course.

Fin.

I see you subscribe to donegalfella's "if it ain't snowy white, it's jet black" school of thought.

Permabear

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Flamed Diving

oscarBravo wrote: »

I'm pretty sure he hasn't read it at all.

Straight question: as a historian and economist, do you believe that the appropriate course of action for the government in 1846 would have been to completely withdraw from all interference in the market in Ireland?

No.

Permabear

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oscarBravo

Flamed Diving wrote: »

No.

Thank you.

My point was never - and I can't really see how it could have been construed as being - that the government of the day was completely committed to a perfectly free-market ideology, and that that was the sole and only cause of the famine. My point was that the governments ideological reluctance to interfere in a free market exacerbated its effects. You could also make the case that such ideological reluctance was especially inappropriate, given that such a free market didn't actually exist.

The point of all of this, which donegalfella is characteristically indisposed to accept, is the analogy with the present day: argue all you want about whether it's over- or under-regulation that has led to the crisis, but right now small businesses can't get credit, and will go out of business, unless someone does something. Once something is done, we can re-examine the broader question of government's role in the markets.

oscarBravo

donegalfella wrote: »

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When you start replying to what I write, I'll resume replying to you.

Flamed Diving

oscarBravo wrote: »

My point was that the governments ideological reluctance to interfere in a free market exacerbated its effects.

Yet despite this 'reluctance', they went on to interfere in the markets.

On the one hand we have abstract notions, on the other hand we have real action. Yet you think the abstraction exacerbated the effects, even though the fulfillment of these abstractions never came to fruition.

Interesting.

Permabear

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oscarBravo

Flamed Diving wrote: »

Yet despite this 'reluctance', they went on to interfere in the markets.

On the one hand we have abstract notions, on the other hand we have real action. Yet you think the abstraction exacerbated the effects, even though the fulfillment of these abstractions never came to fruition.

Interesting.

Let's try an analogy.

A chip-pan goes on fire on my cooker. I'm reluctant to get near it; it's dangerous. I eventually pluck up the courage to turn off the heat - this helps somewhat, but it's still on fire, and the surrounding cupboards are getting scorched. Finally, I cover it with a wet towel and carry it out.

My reluctance to take action exacerbated the effects of the situation, even though my actions themselves helped.

Is that really so hard to understand?

Flamed Diving

oscarBravo wrote: »

Let's try an analogy.

A chip-pan goes on fire on my cooker. I'm reluctant to get near it; it's dangerous. I eventually pluck up the courage to turn off the heat - this helps somewhat, but it's still on fire, and the surrounding cupboards are getting scorched. Finally, I cover it with a wet towel and carry it out.

My reluctance to take action exacerbated the effects of the situation, even though my actions themselves helped.

Is that really so hard to understand?

Therefore the Irish were sacrificed on the alter of free-market ideology. Would you agree that this statement is just a tad over-dramatic in light of your above description? Or were your cupboards sacrificed on the alter of your arsonphobia?

oscarBravo

Flamed Diving wrote: »

...were your cupboards sacrificed on the alter of your arsonphobia?

Yes. That's the entire point of the analogy. The damage, while a result of the fire, was greatly exacerbated by my reluctance to deal with it. The fact that I did deal with it doesn't mean I wasn't reluctant to deal with it.

If your issue is with the phrasing I used, I apologise for any offence caused.

Permabear

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molloyjh

donegalfella wrote: »

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So if the banks didn't take advantage of the bubble we wouldn't be in this mess, therefore bad business practice had as much a part to play as bad policy, more-so infact as it was not required to follow blindly behind the poor policy decisions....as a great fictional character once said, "Who's the more fool. The fool or the fool that follows him?".

Ultimately the ECB rate was lowered fair enough, but the banks took advantage of that and the Irish Central Bank, by permitting the banks to reduce their rates as they were looking to do, also played their part. Every part of the machine failed so act responsibly. To lay the blame solely at the feet of the ECB is ridiculous. Save for a few commentators noone raised the cheap credit thing as an issue for most of the time it was available.

Flamed Diving

molloyjh wrote: »

the Irish Central Bank, by permitting the banks to reduce their rates as they were looking to do, also played their part.

Could you please explain the process of how the ICB could 'permit' Irish banks to reduce their rates, under current structures?

Permabear

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