Fantasy Economics for Ireland?

Junior #8

Having talked alot about the economic "downturn" in Ireland, (which is nowhere near as bad as its being portrayed in the media)
I had a few possibly crazy ideas.
How outrageous would it be to cut EVERYTHING, and i mean everything in the country by 10% overnight? Wages, minimum wage, prices of goods/services etc. Would this make Ireland more competitive in a matter of one day?
Also, should Ireland not have been saving during the good times, to curtail growth and inflation to managable levels, and then now have the money to spend MORE now that its slowing?

Time Magazine

Junior #8 wrote: »

How outrageous would it be to cut EVERYTHING, and i mean everything in the country by 10% overnight? Wages, minimum wage, prices of goods/services etc. Would this make Ireland more competitive in a matter of one day?

Not really. Things are complicated a good bit by being in the Euro and that "reality" thing, but what you're saying is kind of like doubling the amount of money every player in a game of monopoly has - everyone is still essentially in the same position as they were before, prices just double.

Edit: I should clarify that that's a gross-simplification of reality, but that simply changing prices over-night is not even near a cure all.

What we really need to be focusing on is our productivity: how much we actually produce with what we have. That's what makes economies grow.

Also, should Ireland not have been saving during the good times, to curtail growth and inflation to managable levels, and then now have the money to spend MORE now that its slowing?

Yes, imho.

Kama

Also, should Ireland not have been saving during the good times, to curtail growth and inflation to managable levels, and then now have the money to spend MORE now that its slowing?

Sure why would we have needed an umbrella when it wasn't raining? :rolleyes:

BroomBurner

My fantasy economy for Ireland would be to support the growth of small farmers, but in such a way that did not favour only meat and wheat production, but included a vast array of crops (both for food and possibly fuel). The farming methods would be organic, not high-production, high-chemical use. The food produced would be sold first within Ireland, with remaining sold as high quality food produce, thus raising our profile and reputation as a country of quality. This could help boost tourism also.

The construction industry would no longer account for 30% of our economy. In fact, the country's finances would be devised with a long-term objective in mind, with no one single sector being able to hold the government by the balls.

I'd love to see Ireland become able to produce a lot of high quality goods, with the emphasis on high quality.

We would no longer have sold our natural resources and we would have more wind power, thus selling power to other countries and not buying it.

As for taxes, it would be based on the Scandinavian style tax system (i.e. higher taxes but high quality of services). Everything would be accountable. TD's would be paid a fair wage that was above the amount that might start making them accept bribes, however, all expenses will be required to be receipted and justifiable. The government expenditure books will be published after the end of every tax year.

Insurance will be set like the system in Finland, with a set amount being paid as per the injury received. These are rated according to the severity, i.e. a bruise or graze would be level 1 and receive zero compensation, whereas loss of a limb/paralysis would be level 10 and receive the highest compensation. The amount for each level will be pre-set.

I could go on with my economic utopia, but I'll just get angry with how crappy the system is now!

silverharp

BroomBurner wrote: »

As for taxes, it would be based on the Scandinavian style tax system (i.e. higher taxes but high quality of services).

I've seen no evidence that Ireland can run a high tax , high quality of service style system. The chances of coming up with a centralised system that is both effective and efficient are up there with winning the lottery. The last 10 years was an experiment at throwing excesive amounts of money at the state and they fluffed it.

PhiliousPhogg

Agree with silverharp. In the last 2 elections, the Irish voted for economically liberal Fianna Fail while the opposition were stressing improvement in public services. The electorate voted for their own individual pocket because they didn't think they were going to get bang for their buck in the public services.

What's more, there's far too much cowboy economics and politics in Ireland. Take the cosy relationship between the government and the construction sector for example. We have a history of shady dealings and dodgy planning up to the highest levels.

The Scandanavians have much more discipline and sense of public duty and that's why their high tax system works. They do things by the book.

I'd like to see our way of doing business being cleaned up. There's too much reliance on who you know, doing deals in the pub, an "it'll do" attitude. Sean Fitzpatrick, for example being shown up for hiding an obvious disclosure. I've been expecting corporate scandals to surface for a few years now and I expect there'll be a lot more to come. Ireland has had a good reputation as a place for foreign companies to establish a base, but the banking system is taking a big hit and our imbalanced economy is tumbling down.

I think Cowen is a straight talking leader compared to Ahern, and his move to get rid of the fundraising tent at the Galway Races sent a great message. Hopefully his leadership will bring about a more honest culture and encourage better practice in business. We need it.

bnt

If you really were to cut everything, you'd be talking about a kind of currency revaluation - the opposite of currency devaluation. It's been done in Zimbabwe several times in recent years, and made no difference, because prices are essentially numbers. They reflect the relative valuations of various assets, including the currency itself. (Yes, I know it's not quite that simple, but it's a start.)

As noted, Ireland is not able to take this kind of action on its own, but even if the EU was able to co-ordinate such a measure, it would not change the underlying fundamentals. The average Dublin house would still cost a very high multiple of the average Dublin salary. (Is that coming down? I don't see it, yet...)

BroomBurner

silverharp wrote: »

I've seen no evidence that Ireland can run a high tax , high quality of service style system. The chances of coming up with a centralised system that is both effective and efficient are up there with winning the lottery. The last 10 years was an experiment at throwing excesive amounts of money at the state and they fluffed it.

I thought this was a thread for fantasy economics? Keep yer doom'n'gloom reality to yourself!

PhiliousPhogg

Cut the minimum wage and reverse that benchmarking craziness.

AlekSmart

As for taxes, it would be based on the Scandinavian style tax system (i.e. higher taxes but high quality of services). Everything would be accountable. TD's would be paid a fair wage that was above the amount that might start making them accept bribes, however, all expenses will be required to be receipted and justifiable. The government expenditure books will be published after the end of every tax year.

Given Ms Cooper-Flynns recent little two-finger salute to that sort of accountability I`m prepared to bet that BroomBurner`s vision of fiscal correctness ain`t coming to Kildare St just yet.......:o