Could we live on what we have?

Lucozade man

If we default could we live on the 29/30 billion we take in in taxes? Could we pull of an overnight adjustment of 19 billion? Would it not be better to have a couple of years hardship from an overnight adjustment of 19 billion than a lifetime of hardship?

gman2k

Hello Morgan Kelly!

wiseguy

gman2k wrote: »

Hello Morgan Kelly!

Its funny how that mans name is being used as an insult now :rolleyes:

yosemite_sam

You would have to sort out the Social and Public pay, you would need to divide by 3 realistically to live within your means

Tora Bora

Don't you know you can shine your shoes with the inside of a banana skin.
That's a few more bob saved.:p

Daegerty

Tora Bora wrote: »

Don't you know you can shine your shoes with the inside of a banana skin.
That's a few more bob saved.:p

Posh people and their shiny shoes. Feck that

RichardAnd

I wonder this myself sometimes. The answer is that yes, Ireland could be run off 30 billions a year. In theory at least.

The problem is that the credit bubble allowed spending, wages, prices and borrowings to climb to a level that was un-sustainable. Because the average wage was so high, costs of living rose too because poeple had (and most still do) the money to pay for them. If wages were lower, prices would drop but I can't see that as being a smooth transition. Nay, more likely it would be the end for many buisnesses who would be unable to survive the transition if it were too sudden and that is the logic behind a gradual reduction of the deficit.

However, there is a far more pressing issue; debt. Thousands borrowed at boom time rates to buy apartments, houses, cars and other concomitants of the Celtic Tiger. Wages can and will fall but if I borrowed 100k euro then I still owe 100k euro regardless of my income. This, as I see it, is the real elephant in the room and the massive levels of personal debt will be a stranglehold for many years to come.

What's likely to happen, I would guess, is that those debts will become a legacy within families. That 40 year, 110% mortgage that Jimmy and Jane whimsically took in 2006 for a carboard box apartment might be extended to 70 years so that they can pay it. However, they're likely to expire before then so the debt gets passed on to their unfortunate offspring.

The moral here, never allow yourself to fall into debt.

eigrod

RichardAnd wrote: »

What's likely to happen, I would guess, is that those debts will become a legacy within families. That 40 year, 110% mortgage that Jimmy and Jane whimsically took in 2006 for a carboard box apartment might be extended to 70 years so that they can pay it. However, they're likely to expire before then so the debt gets passed on to their unfortunate offspring.

However, Jimmy & Jane's mums and dads are probably in their 50s/60s, sitting in nice (non-mortgaged) dwelling houses + nice nest egg. Over the next 20-30 years (if the banks manage to re-stabilise), a nice tidy sum will pass down to Jimmy and Jane, which may help.

It's all about survival for the next 5 years or so and with some good governance & with lessons learned (and a little bit of luck I suppose), things should be better.

_Kaiser_

eigrod wrote: »

It's all about survival for the next 5 years or so and with some good governance & with lessons learned (and a little bit of luck I suppose), things should be better.

Just highlighting the fundamental flaw in your argument - which I agree with incidentially, but this is Ireland after all... home of the "that'll do" and "it's easier/quicker to appear to do something rather than ACTUALLY do something" and now "the EU/IMF are making us do it" approaches to governance

What's worse than this is the roll over and beg for more attitude of the majority of people in this country - also known as the "can't someone else do it?" approach to citizenship. :mad:

Delancey

I am no fan of any politician but I thought Enda Kennys description of Morgan Kellys suggestion of an almost overnight correction as a '' lethal injection '' to the economy is accurate.
Thousands of businesses would collapse , unemployment would soar and there would be serious public disorder.

gman2k

Delancey wrote: »

Thousands of businesses would collapse , unemployment would soar and there would be serious public disorder.

Thousands of businesses are already collapsing
Unemployment is soaring. Without emigration and foreign nationals returning home, who knows what the true % is.
No public disorder - yet.

Morgan will be proved right.
The books have to be balanced (within 3% anyway), but when they do get to that level, the amount of repayment needed to service the national debt will result in an even worse scenario than an instant adjustment.

Enda is right that it would be a very very difficult pill to swallow - i.e. overnight adjustment, but the route they are pursuing is just a very slow painful strangulation.

Count Dooku

Delancey wrote: »

Thousands of businesses would collapse , unemployment would soar and there would be serious public disorder.

The question is only when it happen - now or in 2013

Geuze

Note that Govt revenue is not 30bn as often reported, but approx 55-56 bn, see above.

Geuze

Here are details on total Govt expenditures, broadly defined.

Amhran Nua

Thanks Geuze I was planning to post something like that myself. A mod should sticky it to be honest. Be that as it may, if expenditure was at 2004 levels we'd be breaking even around now. The amount that was being spent ballooned in the meantime, and I'll give you three guesses where most of it went.

Yes it can be done, no it wouldn't be easy.

Pete_Cavan

Lucozade man wrote: »

Could we pull of an overnight adjustment of 19 billion? Would it not be better to have a couple of years hardship from an overnight adjustment of 19 billion than a lifetime of hardship?

No. In order to eliminate the deficit, you would have to make an adjustment of a lot more than €19bn due to the deflationary effect of taking the money out of the economy. Last years budget adjustment was €6bn but this did not actually decrease the deficit by €6bn.

later12

Pete_Cavan wrote: »

No. In order to eliminate the deficit, you would have to make an adjustment of a lot more than €19bn due to the deflationary effect of taking the money out of the economy. Last years budget adjustment was €6bn but this did not actually decrease the deficit by €6bn.

This is an important point that those who advance a sudden correction always fail to address adequately - or more usually, ignore altogether.

The argument about living off of what we have is ceteris paribus, it ignores all knock on effects apart from the short term issue of freedom from debt.

You cannot simultaneously tighten a screw and loosen a nut. Cutting public spending so rapidly would demolish consumer confidence, which would further demolish spending, further demolish tax revenues, and all-in-all, would lead to an extremely dangerous negative feedback loop

cosmicfart

Geuze wrote: »

Here are details on total Govt expenditures, broadly defined.

your talking about the building of roads, schools, hospitals, the maintenance needed to provide them, the people required to deliver the services and low and behold a....Bill ie money! and your point is?

Count Dooku

later10 wrote: »

This is an important point that those who advance a sudden correction always fail to address adequately - or more usually, ignore altogether.

The argument about living off of what we have is ceteris paribus, it ignores all knock on effects apart from the short term issue of freedom from debt.

You cannot simultaneously tighten a screw and loosen a nut. Cutting public spending so rapidly would demolish consumer confidence, which would further demolish spending, further demolish tax revenues, and all-in-all, would lead to an extremely dangerous negative feedback loop

It can go opposite way as well
Increased taxation would demolish consumer confidence, which would further demolish spending, further demolish tax revenues and force government to increase taxes again

Amhran Nua

Pete_Cavan wrote: »

No. In order to eliminate the deficit, you would have to make an adjustment of a lot more than €19bn due to the deflationary effect of taking the money out of the economy. Last years budget adjustment was €6bn but this did not actually decrease the deficit by €6bn.

That depends on where you are taking it from. If the expenditure wasn't going into the economy anyway, such as on servicing debt, you won't get a deflationary effect. It's a mistake to imagine that 100% of your taxes stay in Ireland.

Besides which, you're sucking cash out of the economy with excess taxes anyway, so it amounts to the same problem.

Permabear

This post has been deleted.

drdeadlift

Permabear wrote: »

This post had been deleted.

went into town last week to do a bit of shopping,cloths and electrical products arent any cheaper than a few years back.No wonder we arent spending

Godge

Geuze wrote: »

Here are details on total Govt expenditures, broadly defined.

I remember reading in some economics textbook that most Governments expenditure falls into three parts which are roughly equal in size. This ensures that goods and services can be provided through purchase of the goods and service, capital expenditure in those services (schools etc.) and payment of the public servants delivering them as well as a reasonable amount of social protection. With their current value for Ireland (in millions), here they are:

- Transfer Payments - 29,347
- Wages and Pensions - 19,753
- Goods and service, capital expenditure and subsidies - 22,815

Debt interest is 3,294.

Assume a rise in taxation from 56-57 billion to say 61 billion. Take out a debt interest payment of 4 billion. That leaves 57 million to be divided equally between the three parts. Looking at the current figure, the major adjustment should therefore fall on transfer payments, most of which consist of social welfare payments with a lesser adjustment on capital expenditure and on goods and services. About a 3% adjustment to public service pay or numbers.

Interesting, as you would have thought from these boards that the public servants were the biggest problem of the lot. Obviously if you change my assumptions - half should be on social welfare for example with the rest divided equally, then the adjustment is different.

Still the obvious question is, if you consider that a person sitting at home should receive say half of what a person working earns (remember the person working pays tax so the difference in net terms is less) then if the social welfare bill and the pay bill are roughly the same, the government is paying twice as many people to sit at home as people working hard providing public services. If the social welfare bill is twice the pay bill, you are paying roughly four times as many people to sit at home as you are paying to work (and if you move public service pensioners out of the public service part into the transfer payments, that is the result you more or less get).


-

Godge

later10 wrote: »

This is an important point that those who advance a sudden correction always fail to address adequately - or more usually, ignore altogether.

The argument about living off of what we have is ceteris paribus, it ignores all knock on effects apart from the short term issue of freedom from debt.

You cannot simultaneously tighten a screw and loosen a nut. Cutting public spending so rapidly would demolish consumer confidence, which would further demolish spending, further demolish tax revenues, and all-in-all, would lead to an extremely dangerous negative feedback loop

Absolutely right, such an overnight correction would be a complete shock to the rest of the domestic economy. But even then, that doesn't take into account the external effect. If we defaulted like that, we could be thrown out of the euro, MNCs would be slow to invest, our new currency would devalue, exports would slow right down and the feedback loop would intensify until we became a basket case.

Geuze

To clear up confusion on Govt finances, here are some tables of data from Seamus Coffey's blog:

Geuze

And here is data on the measures of the fiscal deficits:

Idbatterim

an immediate balancing would be extremely harsh, however I don't think the books are being balanced quick enough and there are still billions being wasted every year, that will snowball and accumulate interest... Billions that could be used to pay down debt and stimulate the economy...

the way things are going we are going to have to partially default or get a debt write down at some stage. For these reasons I cant believe the Troika are allowing this sham to continue, as it will be them that take the hit. And IF and when we can stand on our own feet again, will the markets just not look at the totally insane debt and either not loan at all or at rates that reflect the debt?

Icepick

The productive part of the population would actually be better off.

Delancey

Delancey wrote: »

I am no fan of any politician but I thought Enda Kennys description of Morgan Kellys suggestion of an almost overnight correction as a '' lethal injection '' to the economy is accurate.
Thousands of businesses would collapse , unemployment would soar and there would be serious public disorder.

not that much different since 2008

an important point that alot of people miss is that when you borrow you are still sucking money out of the economy.
The difference is that the money is sucked out at a later date with interest.


People are right when they say if you cut by 19 billion in one go you would take need to reduce it more to compensate from the knock on effects but this thing had been dragging on since 2008. It is 2012 now and our government has forecast an unemployment rate of 12% in 2015.

Now that is dragging it out over 7 years plus........... life is far too short for this sort of bull

http://www.irishtimes.com/newspaper/breaking/2012/0427/breaking50.html

The Government now expects gross domestic product (GDP) to expand for the second successive year and at an identical rate to last year.

Without additional measures in the coming years, unemployment will fall only very gradually the report forecasts. In 2015, just under 12 per cent of the workforce will be jobless.

and based on overly optimistic forecasts

ardmacha

Irish GDP growth in 2012 and 2013 will be above the Eurozone average. The problems are largely outside of our control at this stage, in an open economy we cannot grow quickly if there is decline elsewhere.

We need to do things that need to be done for an effective economy and avoid dramatic action that would do more harm than good.

Sand

RichardAnd wrote: »

I wonder this myself sometimes. The answer is that yes, Ireland could be run off 30 billions a year. In theory at least.

It isn't theoretical at all. The country was run on 28-31 billion Euro in 1999 and 2000 respectively, which weren't remarked on as years of hardship or deprivation. The public sector funtioned about as well as it ever has done, nobody starved to death. Rolling back to those spending levels ASAP is a requirement of whatever strategy isn't denial in pretty colours.

@DeLancey

I am no fan of any politician but I thought Enda Kennys description of Morgan Kellys suggestion of an almost overnight correction as a '' lethal injection '' to the economy is accurate.
Thousands of businesses would collapse , unemployment would soar and there would be serious public disorder.

I find it extremely :rolleyes: that people still talk about "overnight" adjustments given this is 2012 and the party was very clearly over by 2007. 5 years waiting to even get started on a realistic adjusment is not by any means an "overnight" adjustment.

The official gameplan has always been to kick the can down the road, put off the hard decisions and hope some miracle will occur. The original bank guarantee, NAMA, the November 2010 bailout...these were all "Double or nothing" bets that somehow Official Ireland could avoid any serious adjustments - that if the gravy train couldn't be rolled on, at least all the gains won could be held. I'm still staggered that this incredibly reckless Vegas style strategy was barked out as the responsible and moderate strategy...

Well, we're all out of road and all the official gameplan has won current and future generations of Irish people is a huge amount of debt that teeters on an extremely generous definition of "sustainable".

Ah, shure, no one could have predicted that. Least of all Morgan Kelly. Oh well, at least everyone in Official Ireland got out with their pensions and investments intact.

@Later12

This is an important point that those who advance a sudden correction always fail to address adequately - or more usually, ignore altogether.

Ireland is a tiny, tiny, tiny incredibly open economy which could best described as a regional economy rather than a national one - with a high propensity to import to boot. We are not the United States, the Soviet Union, the British Empire or any other huge, closed economy that existed in the era Keynes was prescribing solutions. Any state spend stimulus simply evaporates as its spent on foreign holidays, foreign cars, foreign luxury goods and foreign services.

Ireland's economic activity rises and falls on the tides of global economic activity. If protectionism and state spending worked for Ireland, the 1930s-1950s would have been a golden age. They werent. Pseudo-Keynsian arguments defend frankly unsustainable spending to the benefit of the recipients of that unsustainable spending. That's their only purpose and only value.

Ireland's best strategy is to balance the books ASAP, whilst encouraging the UK, US and Germany to spend and spend and spend.

murphaph

ardmacha wrote: »

Irish GDP growth in 2012 and 2013 will be above the Eurozone average. The problems are largely outside of our control at this stage, in an open economy we cannot grow quickly if there is decline elsewhere.

We need to do things that need to be done for an effective economy and avoid dramatic action that would do more harm than good.

This is a load of rubbish really. The problems are exactly in our control for a large part. We can reduce welfare and public sector pay and pensions further and increase certain taxes (especially taxes on wealth, not on work). The private sector (the real private sector, not bankers, builders and assorted other hangers on that usurped the real private sector's importance about the end of the 1990's) has shown itself capable of generating jobs and growth, in spite of the government doing little or nothing to make work attractive or reducing the cost of business (and therefore job creation) by perhaps reducing rates.

You obviously want us to continue borrowing so you get paid, fair enough from your perspective I suppose, but it's not in the long term interests of the country to keep adding to this crippling national debt that will be left to future generations to deal with.

I never really thought an overnight adjustment possible, but as Sand correctly points out, we've know the need to make these adjustments for about 5 years now and in that time we've reduced welfare and public sector pay and pensions very little in that time.

You know it and I know it-the government(s) were/are hoping for some miracle recovery of the world economy to enable us to create masses of jobs without having to put any of the hard work in. It's not going to happen though without the cost of doing business being reduced dramatically in Ireland.

Not one single public servant has been made compulsorily redundant since the onset of this whole business-that of itself quite frankly, is a load of bollix and that's not me screaming for job cuts in the PS, it's just symptomatic of successive governments showing absolutely no backbone and always opting for the politically easier option.

femur61

We in the private sector have no alternative. But could you magine the bearded ones trying to agree to live within our means.

ardmacha

We can reduce welfare and public sector pay and pensions further and increase certain taxes (especially taxes on wealth, not on work). The private sector (the real private sector, not bankers, builders and assorted other hangers on that usurped the real private sector's importance about the end of the 1990's) has shown itself capable of generating jobs and growth, in spite of the government doing little or nothing to make work attractive or reducing the cost of business (and therefore job creation) by perhaps reducing rates.

The private sector presently has not shown much ability to create jobs for 3 reasons. International demand is flat, there is no confidence and even normal credit conditions are not available. So public reductions are not taken up by the private sector. Public sector pay has been reduced significantly and appropriately in many cases. In other cases it could still be reduced, but a large part of any reduction would simply show up as reduced tax revenue for the government. Some people could be made redundant, but most are needed as people are queuing up to get into A&E and taking grinds to get into Third Level. Pensions and welfare have been reduced by less, but any reduction here would also affect the "real" economy and reduce taxation somewhat. All of this would cause even more problems with debt and insolvent banks which is why the likes of the IMF are not pressing for a more rapid reduction of the government deficit, they do not believe that it would actually lead to an improvement.

murphaph

ardmacha wrote: »

The private sector presently has not shown much ability to create jobs for 3 reasons. International demand is flat, there is no confidence and even normal credit conditions are not available. So public reductions are not taken up by the private sector. Public sector pay has been reduced significantly and appropriately in many cases. In other cases it could still be reduced, but a large part of any reduction would simply show up as reduced tax revenue for the government. Some people could be made redundant, but most are needed as people are queuing up to get into A&E and taking grinds to get into Third Level. Pensions and welfare have been reduced by less, but any reduction here would also affect the "real" economy and reduce taxation somewhat. All of this would cause even more problems with debt and insolvent banks which is why the likes of the IMF are not pressing for a more rapid reduction of the government deficit, they do not believe that it would actually lead to an improvement.

The only thing capable of digging Ireland out of the hole it's dug for itself is through exports. The "real" economy of Spar shops and breakfast rolls that many people want to support is a false God. It is the same false God that got us into the mess in the first place.

We totally took the focus off generating and sustaining export dependent jobs and began to focus instead on the domestic economy, on the property market-a fatally flawed practice for such a small open economy. We, instead of continuing to reduce real unemployment by generating real export dependent jobs, instead opted to reduce unemployment by hiring record numbers into the public service. This was done to buy elections on behalf of FF & Co. Everything should be done to re-ignite the export sector (which to its credit is the only thing keeping Ireland from total ruin at the moment). The government can help by reducing taxes on work and employment and commercial rates too (by re-introducing rates/property taxation for non-commercial properties).

ardmacha

We, instead of continuing to reduce real unemployment by generating real export dependent jobs, instead opted to reduce unemployment by hiring record numbers into the public service.

Fully agree about the exports, but this bit is nonsense.
Employment rose in the boom because of construction and related sectors and other private sector service employment. This "crowded out" the export sector. There was no need to reduce unemployment by public hiring and it was difficult to fill some posts in the public sector because of buoyant private sector demand. Public service numbers only rose in proportion to the population, reflecting the increased demand for their services and things like an increase in the proportion of people going to third level.

Related to population PS numbers are now less than most European countries and less than in Ireland for long time. There may be pockets where numbers are excessive but these are far outweighed by those where this is not the case.

One problem with the debate is that this concept of vast numbers having been hired in the public service is repeated again and again, by people who should know better, and facts seem to have no effect on the prevalence of this inaccurate contention.

But for what it is worth this is the data, related to population.

murphaph

ardmacha wrote: »

Fully agree about the exports, but this bit is nonsense.
Employment rose in the boom because of construction and related sectors and other private sector service employment. This "crowded out" the export sector. There was no need to reduce unemployment by public hiring and it was difficult to fill some posts in the public sector because of buoyant private sector demand. Public service numbers only rose in proportion to the population, reflecting the increased demand for their services and things like an increase in the proportion of people going to third level.

Related to population PS numbers are now less than most European countries and less than in Ireland for long time. There may be pockets where numbers are excessive but these are far outweighed by those where this is not the case.

You have to factor in Ireland's tiny military when comparing to most other EU states.

ardmacha

You have to factor in Ireland's tiny military when comparing to most other EU states.

I fully agree with the concept of adjusting data for relevant factors.

andrew

I think the 'if we default' bit is important in OP's post, because defaulting tends to have long term implications and is generally a bad thing. If Ireland were to default, this would make it more difficult for Ireland to borrow on international capital markets. This is bad, because given we will in the (hopefully near) future the ability to borrow on international markets, 'living on what we have' isn't the optimal thing to do. In general, it's almost never optimal for a country to decide to now and forever exist solely on it's tax take.

This is because borrowing from abroad allows a country to engage in what is called 'consumption smoothing.' To see why, consider a situation in which a country cannot or does not borrow money from abroad. Imagine that country enters a recession, and GDP falls by 10% for a period of a year. Imagine also that this reduces the tax take of the government by 10% (I know this over-simplified, but it doesn't alter the central point). Because the government can't borrow, it must make a 10% adjustment on last year's budget, and reduce the amount it spends drastically. Across the board, everyone in the economy is significantly worse off, because government expenditure percolates through the entire economy (even in Ireland, where the multiplier is low). Even if you assume that GDP rises again by an amount equivalent to the fall the next year, people see an abrupt change in their income. Before the recession they had their expenditure for each year relatively planned out, but once the recession hit they had to drastically alter their spending plans for that year and take a lot of pain in that specific year, forgoing things they had planned on purchasing, and cancelling plans, and changing their decisions.

The point is that people don't like to do this, and by proxy, neither do countries. If you know for sure you're going to get a permanent raise in two months time, then you might start spending now, right? Or if you know your wage will permanently fall, you'll cut your expenditure now. Or if you know your wage for a single month was going to be less, you might ask for a loan from a friend to cover you for that month. These examples illustrates that people don't like to have abrupt changes to their consumption plans, they prefer to have smoother ones. And when they borrow on international markets, and decide not to live solely on what they have, countries are engaging in this smoothing. In the example above, imagine that the government can borrow internationally. A government could get a loan for the year and only have to reduce it's expenditure by 1% instead of 10%, and allow everyone in the economy to have a smoother level of consumption. Then, it'd pay back the loan in increments in future periods, spreading the large amount of pain from the previous scenario over a longer period of time, such that it's not painful at all. The exact same fiscal situation would obtain in the end, but the difference would be that individual citizens in the second case might not even notice that there's been a recession, which (given recessions are crap) is a good thing.

So countries borrow money to smooth their consumption, just like people would. Therefore, defaulting and 'living on what we have,' while doable in practical terms, isn't a desirable strategy to pursue when you consider the long term implications doing so would have in terms of the government's ability to smooth it's consumption over time.

Degsy

murphaph wrote: »

The private sector (the real private sector, not bankers, builders and assorted other hangers on that usurped the real private sector's importance about the end of the 1990's) has shown itself capable of generating jobs and growth.

What exactly is the "real private sector"?

paul71

Degsy wrote: »

What exactly is the "real private sector"?

Glendimplex, Intel, HP, Diageo, Agriculture, Agri-food, ie people who make excelent products and services in Ireland that people abroad like and will pay for.

andrew

Degsy wrote: »

What exactly is the "real private sector"?

s/he probably means the export sector?

BOHtox

Abolish foreign aid, stop the communion allowance, reduce the number of councillors by around 1/3 for the next locals, abolish the senate, cut the number of tds, means test welfare such as child benefit and scrap the Croke Park Agreement. No further taxes beyond the water charges and site valuation tax will be needed nor should they be implemented

maninasia

Yep, it's pretty obvious what needs to be done, but the politicians, and a large part of the population, don't want to do it.
They need to be forced to do it like the children they are.

Degsy

paul71 wrote: »

Glendimplex, Intel, HP, Diageo, Agriculture, Agri-food, ie people who make excelent products and services in Ireland that people abroad like and will pay for.

How many of those are actual irish companies though?

Some people dont give a damn about the domestic economy and think that multintaionals will be here forver..very short-sighted view imo.

bb12

Sand wrote: »

It isn't theoretical at all. The country was run on 28-31 billion Euro in 1999 and 2000 respectively, which weren't remarked on as years of hardship or deprivation..

The problem is though that the price of petrol was about 80c a litre back then. How much was a unit of electricity? the cost of health insurance etc? A lot less than today...these will never go back down to those prices again so it's unrealistic to expect that wages will fall to those levels either. People will not accept a mass reduction in their salaries without one hell of a fight. So it's all very easy to say slash salaries and prices will drop accordingly, but in reality this never happens. in fact most prices are on the way up these days!

paul71

Degsy wrote: »

How many of those are actual irish companies though?

Some people dont give a damn about the domestic economy and think that multintaionals will be here forver..very short-sighted view imo.

Only 2 are not, and the ownership is completly irrelevent anyway, they pay wages in Ireland for goods Irish workers make and produce here thus creating a flow of hard cash into the country unlike the retail sector which really just imports goods takes a margin and moves it on which results in flow of cash out of the country.

The shortsightedness is yours if you think an econony can live off imported goods and civil service salaries. The only wealth created in a domestic economy is that which is produced here and sold abroad, the excess of what we produce and sell over what we import can then be taxed to pay for the services we need.

If we dont produce an excess there is nothing to tax and therefore nothing to pay for services. The ownership of the Capital of the business does not enter into the equation.

AlmightyCushion

paul71 wrote: »

Only 2 are not, and the ownership is completly irrelevent anyway, they pay wages in Ireland for goods Irish workers make and produce here thus creating a flow of hard cash into the country unlike the retail sector which really just imports goods takes a margin and moves it on which results in flow of cash out of the country.

The shortsightedness is yours if you think an econony can live off imported goods and civil service salaries. The only wealth created in a domestic economy is that which is produced here and sold abroad, the excess of what we produce and sell over what we import can then be taxed to pay for the services we need.

If we dont dont produce an excess there is nothing to tax and therefore nothing to pay for services. The ownership of the Capital of the bussiness does not enter into the equation.

There are plenty of Irish companies that aren't in retail. He does make a valid point, an Irish company is more likely to stay here than a foreign company (even if it is a multinational public company, the likes of dell, microsoft, intel are still considered American companies). We do need to try and grow and develop our own companies as well as attract multi-nationals.

paul71

AlmightyCushion wrote: »

There are plenty of Irish companies that aren't in retail. He does make a valid point, an Irish company is more likely to stay here than a foreign company (even if it is a multinational public company, the likes of dell, microsoft, intel are still considered American companies). We do need to try and grow and develop our own companies as well as attract multi-nationals.

Thats why I mentioned Glendimplex, Diagio (not strictly Irish, but with a large Irish shareholding), Argi-food (Dawn, Kerrygold, Rye-Valley Foods, Kepac, ect.), Agriculture (by which I mean Irish Farmers producing high quality food), there are also companies like realex an Irish owned company who export their online credit card payment solution to internet operators all over the world.
I really could list many more companies but the point is that these are the power house of the Irish economy which combined with multinationals pay for the rest of the economy.
I still contend that the ownership is irrelevent as the shareholders be they Irish (you can be damn sure Intel and HP have Irish shareholders too), American or Chinese do not care where they locate their business as long as it is profitable. An Irish owned company such as Glendimplex is just as likely to move its operations abroad as Intel is if it finds better operating conditions somewhere else.