Austerity isn't really working is it?

dark crystal

Suryavarman wrote: »

This "ridiculous" question has yet to be answered in this thread. Mainly because the answer is because a minimum wage at such a level would cause unemployment; just like the minimum wage does when set at €8.65.

Well maybe I think a fair wage constitutes somebody being paid €100 per hour. It's unfair that somebody earning €8.65 per hour can't afford the finer things in life.

Where have you come up with the notion that the minimum wage has caused unemployment?

Are all the college graduates suddenly emigrating because they can't find work stacking supermarket shelves, making hotel beds or flipping burgers?

If you seriously think the lowest paid workers in this country are the cause of high unemployment, I have to wonder what planet you're living on.

Anynama141

dark crystal wrote: »

Where have you come up with the notion that the minimum wage has caused unemployment?

It's pretty obvious that it causes unemployment.* It's equally obvious that it hasn't caused a large amount the huge unemployment that we see in Ireland today.


*seriously - think about it for 10 seconds and you will know why. Or spend a minute googling it if you have to.

Bullseye1

What part of my post did you not understand? 1 or 2? I'm not the one arguing for minimu wage. I've pointed out that getting rid of minimum wage is likely to increase unemployment if current social welfare payments are kept at current levels.

Your the one who has stated that cost of living will come down. If people's salaries are reduced below current minimum wage levels without tackling cost of living they will give up work and go on the dole. That will drive up taxes on those still working. The social welfare bill is paid out of general taxation and IMF funding.

I am open to agreeing to scraping the minimum wage if you can show proof that those people effected have seen an increase in their standard of living.

Anynama141 wrote: »

Yup, it all needs to be tackled.

There's no justifiable reason for not tackling what can be tackled. Every interest group will want everything else tackled first, and they will all come up with plausible arguments why.
I'm still waiting for you to list the countries that have had a minimum wage and scrapped it. I can then investigate the effect on the cost of living.

Just one will do.


Yeah, I drew a blank too. It seems that once you have it, it's very hard to get rid of it.

I like the idea in principle: the question is whether it actually benefits society in practice. The evidence is mixed at best.

dark crystal

Anynama141 wrote: »

It's pretty obvious that it causes unemployment.* It's equally obvious that it hasn't caused a large amount the huge unemployment that we see in Ireland today.


*seriously - think about it for 10 seconds and you will know why. Or spend a minute googling it if you have to.

Ok, I've googled and already found:

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/14/why-economists-are-so-puzzled-by-the-minimum-wage/

http://www.econbrowser.com/archives/2013/02/minimum_wage_an.html

I'm really trying to find the correlation here between minimum wage and high unemployment.

Anynama141

Bullseye1 wrote: »

What part of my post did you not understand? 1 or 2? I'm not the one arguing for minimu wage. I've pointed out that getting rid of minimum wage is likely to increase unemployment if current social welfare payments are kept at current levels.

My very first comment on whether scrapping the minimum wage would benefit unemployment was this:

Yes, if you tackle the ridiculous situation where it pays more to be on the dole than to work.

Bullseye1 wrote: »

I am open to agreeing to scraping the minimum wage if you can show proof that those people effected have seen an increase in their standard of living.

If you are looking for a historical example, you first have to show me a country that has scrapped its minimum wage. I can then look into the effects, and see if they can be disentangled from whatever else was going on economically at the time.

Bullseye1

Anynama141 wrote: »

It's pretty obvious that it causes unemployment.* It's equally obvious that it hasn't caused a large amount the huge unemployment that we see in Ireland today.


*seriously - think about it for 10 seconds and you will know why. Or spend a minute googling it if you have to.

Why are you so cryptic in your answers? If your advocating the removal of minimum wage why can't you simply make your case and stop referring people to google.

If you were a married man with one child and your getting benefits of €325 week and a job offer of €400 (before tax) was made to you would you take it? More than likely your travel expenses and taxes would exceed the €75 a week extra. I know a father who has decided it was not worth his while to take that job.

Suryavarman

dark crystal wrote: »

Where have you come up with the notion that the minimum wage has caused unemployment?

Are all the college graduates suddenly emigrating because they can't find work stacking supermarket shelves, making hotel beds or flipping burgers?

If you seriously think the lowest paid workers in this country are the cause of high unemployment, I have to wonder what planet you're living on.

Jesus Christ. When has anyone in this thread said that Ireland has such a high unemployment rate because of the minimum wage? What is being said is that unemployment is higher than it would be without the minimum wage.

Basic economic theory tells us that when you set a price floor for a particular good you increase the supply of that good and reduce the demand for it. In the the case of the minimum wage, that good is low-skill labour. The result of a minimum wage is therefore to increase the number of people willing to work at low-skill jobs. At the same time though, this reduces the demand for low-skill labour resulting in less low-skill jobs, which in turn results in a higher unemployment rate, especially among low-skill workers.

To look at it a different way. The minimum wage is set at €7.65. An employee is earning that wage while providing services worth €8.00 per hour for his employer. The minimum wage is the raised to €8.65 without a corresponding increase in productivity from the employee. This means that the employer goes from making an €0.35 profit per labour hour to making a €0.65 loss per labour hour. Taking into consideration that businesses are profit making entities and not charities, the business is then going to sack the employee.

Anynama141

dark crystal wrote: »

Ok, I've googled and already found:

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/14/why-economists-are-so-puzzled-by-the-minimum-wage/

http://www.econbrowser.com/archives/2013/02/minimum_wage_an.html

I'm really trying to find the correlation here between minimum wage and high unemployment.

Ok, two simple examples:

1. Do your parents have a maid? Why not?
2. If I run a factory and I have a choice between buying a machine to do a job and hiring people to do a job, what factors will affect whether I decide to go with humans or machines?

The question gets more complex of course when you get into minimum wages which are, for many industries, not far off what the market would set anyway.

mikemac1

Meh, I'm sick of economic theory

Marc Coleman of Newstalk Radio talking to Pat Kenny of a Friday night about his new book

In 2007 he published The Best is Yet to Come. The book forecast the continued growth in the Irish economy as well as a sustainable construction Industry for the years ahead

http://www.amazon.co.uk/Best-Yet-Come-Marc-Coleman/dp/1842181424
Published in 2007

Been told to commit suicide by Bertie for naysaying

Jim Power, Chief Economist of Bank of Ireland, then went to AIB and then to UCD with his comical Ali commentary of shure, twill be grand.

Landlords don't accept economic theories when you have to pay the rent and to have a sandwich at Centra is too much expense

Anynama141

mikemac1 wrote: »

Meh, I'm sick of economic theory

Marc Coleman of Newstalk Radio talking to Pat Kenny of a Friday night about his new book

http://www.amazon.co.uk/Best-Yet-Come-Marc-Coleman/dp/1842181424
Published in 2007

Been told to commit suicide by Bertie for naysaying

Jim Power, Chief Economist of Bank of Ireland, then went to AIB and then to UCD with his comical Ali commentary if shure, twill be grand.

Landlords don't accept economic theories when you have to pay the rent have a sandwich at Centra is too much expense

Those guys were shills working for banks for the most part, their job was to sell mortgages for banks by selling the property market. Most people swallowed their bullsh!t, so they did a great job. Economic evidence clearly showed that there was a property bubble, and every bubble in history had burst.

Coleman is just a total idiot. He really can't be blamed for his hilarious book.

By the way, it was Professor Morgan Kelly who was the target of Ahern's suicide comment.

dark crystal

Anynama141 wrote: »

Ok, two simple examples:

1. Do your parents have a maid? Why not?
2. If I run a factory and I have a choice between buying a machine to do a job and hiring people to do a job, what factors will affect whether I decide to go with humans or machines?

The question gets more complex of course when you get into minimum wages which are, for many industries, not far off what the market would set anyway.

1. No, because she's not afraid of housework.

2. Not a clue.

I'm still wondering how plunging thousands of workers below the poverty threshold and allowing employers to decide wage limits would make this country a better place to live and I still see no evidence to prove that abolishing the minimum wage would reduce the cost of living or reduce unemployment in any significant way.

Anynama141

dark crystal wrote: »

1. No, because she's not afraid of housework.

2. Not a clue.

Ok, you've demonstrated with these answers to rather easy questions that you are not interested in a serious discussion.

That's fine, this is AH, after all. But I'm not going to waste time and effort actually explaining stuff to someone who isn't interested and just wants a point-scoring game.

I'll also take those stupid answers as an acknowledgement that cheaper workers means more employment, ceteris paribus.

Augmerson

Augmerson wrote: »

Is there some kind of belief going about these days that the imposed austerity we are experiencing in Ireland and across Europe is not only required but also good for us?

I just think, from having listened to a few conversations with acquaintances or friends of friends and having read through a few Irish internet forums and beyond, that some people (at home at least) think higher taxes and more budget cuts are the only way to go.

I can see some kind of rational in the idea. Government expenditure is higher than Government income. Something has to change. What I don't agree with, is how this is approached. We are in are sixth year of austerity and recession. There is still serious unemployment and emigration. I don't believe austerity is working, in fact I feel it's just prolonging the recession. It's keeping us back.

I don't have any foolproof response to what should be done to tackle our current situation, other than say we should have done exactly what Iceland has done (but the chance to do that has passed) but cutting more and more money out of the economy like we are now doesn't work. If we could inject billions into our financial institutions, why can't we do the same for the economy with jobs programs or public works? I just think this is all madness, and I am sick of some people, political institutions and elements of the media promoting the idea that this is all getting us somewhere.

Perfectly willing to listen to the other side of the fence about this.

Also, in before anybody calls me crusty, hippy or lefty for feeling this way.

Where you limit the spending power of any society it will suffer greatly to be honest. Spending contrbutes to job creation and alot of MNCs would be drawn by the fact that consumerism of their product is big in the country of manufacture.

I dont trust our politicians one bit. They are self serving greedy and manipulating utterly disgraceful excuses for human beings. There is one or two independents i have some time for but the majority of party politicians are low life's to be frank. Everyone is taking a hammering for a mess which they the fat cat elitists in the banks and their property developing cronies are responsible for, and the weasels we continue to elect give us the two fingers, safe in the knowledge we'll re-elect them.
Really irks me to see the esteem they are held in by our public. I do agree with you. I suppose the hole we were in was massive and the clowns decided to plug the hole in the bank and ' put all the 'hamsters' on the wheel' in order to sort it out.

Enda's photo opportunity at the Mayo match last week was disgusting. Aided an abetted by the state broadcaster of course who are themselves another institution who are creaming off the top of the pot and giving very little back (Love/Hate aside )

Deleted User

Deleted User wrote: »

Where you limit the spending power of any society it will suffer greatly to be honest. Spending contrbutes to job creation

Well, in keynesian thinking, yeah
In other thinking... savings is for source of capital which has actual change
http://econstories.tv/2012/12/05/macrofollies/

And if you look at Friedman, spending shifts mainly with a change in permanent income, not temporary income
http://en.wikipedia.org/wiki/Permanent_income_hypothesis

Three Seasons

dark crystal wrote: »

Ok, I've googled and already found:

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/14/why-economists-are-so-puzzled-by-the-minimum-wage/

http://www.econbrowser.com/archives/2013/02/minimum_wage_an.html

I'm really trying to find the correlation here between minimum wage and high unemployment.

Who said there was a correlation between minimum wage and high unemployment.

The argument being made is that it causes unemployment.

I see now why you can't follow the logic.

Why not move the minimum wage up to 20 euro an hour? Can you answer that question properly.

Would society be better off with a minimum wage of 20 euro per hour?

Do you think any damage would be caused by having a minimum wage of 20 euro per hour? If so what?

Bullseye1

It can cause unemployment if social welfare is almost on a par with it. There is no point in abolishing MW without tackling the other issues which government has direct control over. But does your theory take account of people wanting to feel useful and not useless?

Why do you insist on claiming those not in favour of cutting MW are in favour of high per hour rates. I have not seen one person suggest it apart from those who are in favour of abolishing. In its current form MW should reflect inflation.

Three Seasons wrote: »

Who said there was a correlation between minimum wage and high unemployment.

The argument being made is that it causes unemployment.

I see now why you can't follow the logic.

Why not move the minimum wage up to 20 euro an hour? Can you answer that question properly.

Would society be better off with a minimum wage of 20 euro per hour?

Do you think any damage would be caused by having a minimum wage of 20 euro per hour? If so what?

Three Seasons

Bullseye1 wrote: »

It can cause unemployment if social welfare is almost on a par with it. There is no point in abolishing MW without tackling the other issues which government has direct control over. But does your theory take account of people wanting to feel useful and not useless?

Why do you insist on claiming those not in favour of cutting MW are in favour of high per hour rates. I have not seen one person suggest it apart from those who are in favour of abolishing. In its current form MW should reflect inflation.

So do you not think a min wage of 20 euro per hour would cause unemployment as social welfare is well below that?

johnr1

I have read the entire thread, and I think its a pity that it has degenerated into a min wage thread, as it started well on the topic of "austerity"
Im not familiar with "Kenysenian thinking" or any other school of economics, but I have read the links provided, and I'm with dark crystal, in that I haven't seen any evidence from our two new-reg proponents of cutting the min wage as to how it would help employment, just demands on everyone else to prove otherwise. That's troll behaviour imo.
I'm regarded as a raving capitalist rightie by some of my friends, yet I see no purpose to reducing the take home pay of people who earn barely enough to justify their effort over the effort made by the people on social welfare as it is.
I do however advocate cutting social welfare rates when an employer can't compete with the package the Dole office offers.

Three Seasons

johnr1 wrote: »

I have read the entire thread, and I think its a pity that it has degenerated into a min wage thread, as it started well on the topic of "austerity"
Im not familiar with "Kenysenian thinking" or any other school of economics, but I have read the links provided, and I'm with a dark crystal, in that I haven't seen any evidence from our two new-reg proponents of cutting the min wage as to how it would help employment, just demands on everyone else to prove otherwise. That's troll behaviour imo.
I'm regarded as a raving capitalist rightie by some of my friends, yet I see no purpose to reducing the take home pay of people who earn barely enough to justify their effort over the effort made by the people on social welfare as it is.
I do however advocate cutting social welfare rates when an employer can't compete with the package the Dole office offers.

The dole should be cut in addition.

The rationalel has been explained countless times. No one has answered properly the 100 euro per hour min wage question? It's been ignored be caused it will become blindingly obvious that it would cause unemployment to increase the min wage to 100 euro per hour.

johnr1

johnr1 wrote: »

I have read the entire thread, and I think its a pity that it has degenerated into a min wage thread, as it started well on the topic of "austerity"
Im not familiar with "Kenysenian thinking" or any other school of economics, but I have read the links provided, and I'm with dark crystal, in that I haven't seen any evidence from our two new-reg proponents of cutting the min wage as to how it would help employment, just demands on everyone else to prove otherwise. That's troll behaviour imo.
I'm regarded as a raving capitalist rightie by some of my friends, yet I see no purpose to reducing the take home pay of people who earn barely enough to justify their effort over the effort made by the people on social welfare as it is.
I do however advocate cutting social welfare rates when an employer can't compete with the package the Dole office offers.

Alright, some interesting reading
http://www.djei.ie/publications/employment/1999/nationalminimumwagereport/appenb.htm

The discussion of the 100 euro one is them trying to apply reductio: If you take the idea of a min wage to extremes, what happens - that much is obvious - and where does this effect stop happening? 50 euro, 20 euro, 10 euro an hour? Current MW? Lower again?

Bullseye1

Three Seasons wrote: »

So do you not think a min wage of 20 euro per hour would cause unemployment as social welfare is well below that?

No doubt. Many businesses would lay people off just as they have been because local authorities have increased commercial rates which must be paid at the beginning of the year.

Do you believe employment would increase if we only abolished he minimum wage and tackled nothing else including social welfare? How would inflation be reduced?

Three Seasons

Bullseye1 wrote: »

No doubt. Many businesses would lay people off just as they have been because local authorities have increased commercial rates which must be paid at the beginning of the year.

Do you believe employment would increase if we only abolished he minimum wage and tackled nothing else including social welfare? How would inflation be reduced?

If we only cut the minimum wage I believe unemployment would drop marginally, however the effect would be far greater if social welfare were reduced. With these two implementations in place I believe the standard of living would improve over time for the poorer members of society. The timeframe within which the improvement would be seen is hard to predict.

Bullseye1

You also need to abolish upward only rents and greatly reduce commercial rates (now that property tax is here). SMEs are the lifeblood on the domestic economy. They provide the majority of employment. We are currently doing nothing for them. It is absolutely pointless tackling minimum wage and social welfare payments and at the same point doing nothing to make it easier to stay in work like providing better cheaper public transport, reducing duty and vat on fuel. If someone is left with little or nothing out of their wage packet at the end of the week why would they bother? The approach needs to be complete.

johnr1

Three Seasons wrote: »

The dole should be cut in addition.

The rationalel has been explained countless times. No one has answered properly the 100 euro per hour min wage question? It's been ignored be caused it will become blindingly obvious that it would cause unemployment to increase the min wage to 100 euro per hour.

First, it's a stupid question given that the average wage isn't that high.

But, ok, I'll play; Because goods and services produced would have to rise dramatically to cover the increased cost, - massive unsustainable inflation.

To then extrapolate that its removal would lead to lower prices for goods and services is a classic jump of logic and in my opinion, wrong. The price of goods is largely set by "what the market will bear" rather than production cost.
Also, why cant you respond to the links to the recent studies posted by dark crystal?

bluewolf wrote: »

Alright, some interesting reading
http://www.djei.ie/publications/employment/1999/nationalminimumwagereport/appenb.htm

The discussion of the 100 euro one is them trying to apply reductio: If you take the idea of a min wage to extremes, what happens - that much is obvious - and where does this effect stop happening? 50 euro, 20 euro, 10 euro an hour? Current MW? Lower again?

Blue, I agree with you on most economic questions I've seen you post on, but can't on this one. I accept what would happen if taken to the extremes, but nobody here is suggesting raising the min wage to those levels. What is being discussed is the abolition of it entirely, and in my opinion it's a logical fallacy that its abolition would lead to a drop in the price of goods and services or increased employment.
Also, your study is 14 years old, -older than the opposing evidence posted, and done by a government quango I frankly don't believe did their work, rather more likely responded to pressure from vested interests as was t the way of the time.

johnr1

johnr1 wrote: »

Blue, I agree with you on most economic questions I've seen you post on, but can't on this one. I accept what would happen if taken to the extremes, but nobody here is suggesting raising the min wage to those levels. What is being discussed is the abolition of it entirely, and in my opinion it's a logical fallacy that its abolition would lead to a drop in the price of goods and services or increased employment.

Well, I think if it were at least lowered, people who have no skills or experience which make them employable would be able to get a foot in the door, and work their way up. As I mentioned before, a lot of them in the states have been part timers/students, not people trying to support families on min wage or below.
Of course, that's why we already have three tiers of it, but it needs to be kept up to date with the lack of inflation etc.

Also, your study is 14 years old, -older than the opposing evidence posted, and done by a government quango I frankly don't believe did their work, rather more likely responded to pressure from vested interests as was t the way of the time.

lol
The study is taken from before the introduction of the min wage in Ireland
The govt wanted to introduce it, and they looked into it and the effects of it in the UK. Of course it's old!
I said it was interesting reading, and I still think so

Mr. Incognito

Oh dear.

I read he first page of this thread and it was very interesting. Skip to the end and it has turned into a pi$$ing contest about economic theory that people don't understand.

Austery will not work. It has never worked. Anywhere, ever. Europe has a reality problem. It keeps robbing it's reserves to shore up losses that largely are paper investment losses underwritten on overvalued assets that are greatly inflated.

Until they take a collective deep breath and work together to say, sorry. That money is gone and we, the governments and the funds and the investment houses and YES the euro too. (it's INSANE to think you can protect your currency when half the countries that use it are bankrupt) Then we can hit bottom and stop crippling people and countries with debt and start growing with realistic values.

I studied economics in college and it never struck me as anything other than pseudo science for stupid people. It is useless. It predicts nothing. It's up there with the horoscopes for me. Macro was interesting for an overview. Micro is horse dung.

Like this 100 euro min wage debate. WHO CARES. No one has the reserves in a business to do that. It would be the result of hyperinflation not the other way round and where we are tied to the euro it's an academic exercise.

Ireland has options. We just keep electing uneducated cretins and populist morons. Another 26 year old political science student this week. Dear god. A degree in how to spin.

Proactive plans could be.

1. Identify specific industries that are cutting edge and growing. Half the PAYE contributions to employers in those industries and give tax breaks. The r and d tax breaks and the pharma industry is all that is keeping us afloat.

2. Merge AIB and Bank of Ireland. You will never sell them off to anyone that wants them viable. Selling one will result in another eircom where they will be asset stripped. Bankers bonuses annoying you? TAX them at 100% no need to interrupt privity of contract.

3. Build a decent airport in Cork. FFS. The port is there. Make it an industrial hub.

4. Fix the HSE. It is bloated with middle management. You know where they could go? Revenue, education, ANYWHERE where they are not sucking wages and cutting frontline services.

5. Grow a pair electorate and elect decent intelligent people. Unfortunately we are an Agrian society and backwards despite all our Celtic tiger pretentious so we are a little screwed. Our best and brightest are fed up and leaving. It's a waste.

Anynama141

Mr. Incognito wrote: »

Oh dear.

I read he first page of this thread and it was very interesting. Skip to the end and it has turned into a pi$$ing contest about economic theory that people don't understand.

Fair point. Perhaps AH isn't the place to try to explain basic economics. As I've said, I like the principle of the minimum wage - the question is whether it benefits society or not.

The emotionally appealing answer is 'yes'. The problem is that the evidence may suggest otherwise. Of course, people usually want to do the nice/right thing, and defending the minimum wage falls under that category, but people don't seem to realise that sometimes when you don't understand what you are doing you can do harm with your help. The guy who throws water on a chip pan fire isn't trying to make the problem worse - he just doesn't understand the consequences of what he's about to do.

In brief, before leaving the subject and getting back on topic, here are a couple of points about minimum wages that people may not have considered:

1. Minimum wages make it more expensive to hire people on average.
2. Making something more expensive reduces demand for it.
3. Some jobs will never produce enough value to justify paying the minimum wage - although they might do if it were possible to hire someone for slightly less.
4. From the supply side perspective, the cost of goods and services is a function of the cost of inputs to provide those. If the cost of these fall, prices will fall.
5. The people whose jobs have been eliminated due to a minimum wage (due to replacement by machinery or simply by society forgoing their service) have to be subsidised by taxing others. If those people were at work, those taxes would not be needed and instead the money would be spent on more goods and services, creating more work again.

In summary, supporting minimum wages may be a classic case of 'unintended consequences' - people think they are doing a good thing, but the consequences may actually be bad.

Back to the austerity point: it's interesting that, beyond the usual ranting complaining about the government, nobody has managed to actually to come up with any alternative to the current situation. I find that interesting: has it sunk in with people that the coalition here are not going down this road for a laugh, but rather because they have to?

Every government wants to make people feel rich and that everything is improving. Unfortunately, FF did that for a decade by borrowing against the future, and now the future is here.

Anynama141

Mr. Incognito wrote: »

Austery will not work. It has never worked. Anywhere, ever.

You make some good points, but this is just silly. Are you familiar with a country called Germany?

Mr. Incognito

Mr. Incognito wrote: »

Austery will not work. It has never worked. Anywhere, ever.

http://en.wikipedia.org/wiki/Expansionary_fiscal_contraction

http://www.nber.org/chapters/c10973.pdf

It has been done and of all places it was a success in 1980s Ireland.

From the paper:

Ireland stands out as the most prominent example of an
expansionary cut in public spending.

You crowd out the private sector when the public sector sucks up all the resources. You cripple the private sector when you tax it too much. You cripple your short, medium and long term growth rates when you borrow too much.

The only time borrowing to spend money makes sense economically is typically for capital and projects where the % return on your money is higher than the % of the interest on the money borrowed.

Mr. Incognito

Anynama141 wrote: »

You make some good points, but this is just silly. Are you familiar with a country called Germany?

Oh my. Germany is an exporting powerhouse. It has real labour collective bargaining. It has fantastic infrastructure and developed industry and agriculture. It is located on some of the largest rivers in Europe hat runs to the largest port in the world. it's population tends to rent modest houses and save instead of building mansions and it's teachers running to buy investment houses and dabbling as landlords.

Austery is raising taxes and significantly slashing government expenditure in one fiscal year. When has Germany tried this? It tried to print money in the 1930s and the results were so catastrophic it is used as the text book example of hyperinflation which led to the fringe party the nazis assuming power.

I think you meant to say that Germany has better controls on spending and inflation, but this is not austery sir.

Mr. Incognito

Deleted User wrote: »

http://en.wikipedia.org/wiki/Expansionary_fiscal_contraction

http://www.nber.org/chapters/c10973.pdf

It has been done and of all places it was a success in 1980s Ireland.

From the paper:



You crowd out the private sector when the public sector sucks up all the resources. You cripple the private sector when you tax it too much. You cripple your short, medium and long term growth rates when you borrow too much.

The only time borrowing to spend money makes sense economically is typically for capital and projects where the % return on your money is higher than the % of the interest on the money borrowed.

Personally, I think this is a load of bull. The global economy took off around that time and the US investment into Ireland dragged us with it.

We still had massive emigration until well into he 90s when the rest of the world was doing well.

Economic theory is always looking back and mostly gets it wrong. Economic theory looking forward is almost always wrong.

I am not getting sucked into economic debate anyway. It's all irrelevant childish point scoring. I'm going to avoid the squabble. Enjoy.

steddyeddy

Spain have a lower minimum wage than us. How's their job market doing?

Anynama141

Mr. Incognito wrote: »

Oh my. Germany is an exporting powerhouse. It has real labour collective bargaining. It has fantastic infrastructure and developed industry and agriculture. It is located on some of the largest rivers in Europe hat runs to the largest port in the world. it's population tends to rent modest houses and save instead of building mansions and it's teachers running to buy investment houses and dabbling as landlords.

Austery is raising taxes and significantly slashing government expenditure in one fiscal year. When has Germany tried this? It tried to print money in the 1930s and the results were so catastrophic it is used as the text book example of hyperinflation which led to the fringe party the nazis assuming power.

I think you meant to say that Germany has better controls on spending and inflation, but this is not austery sir.

All irrelevant. Germany went through a period of austerity after the reunification - it was a real mess for a while but now it is in great shape. Don't take my word for it, here's a report on it from well-know right-wing nutters, the BBC.

dark crystal

Anynama141 wrote: »

Ok, you've demonstrated with these answers to rather easy questions that you are not interested in a serious discussion.

That's fine, this is AH, after all. But I'm not going to waste time and effort actually explaining stuff to someone who isn't interested and just wants a point-scoring game.

I'll also take those stupid answers as an acknowledgement that cheaper workers means more employment, ceteris paribus.

Again, you have no practical model that bears out the economic theories you espouse, so calling my answers stupid, while others waffle on about raising the minimum wage to €100 p/h seems somewhat disingenuous to me.

However, as others have said, I'll leave the debate on minimum wage there as we're clearly not going to agree on the subject and like you say, it's turning into a point scoring game at this stage and going nowhere.

Anynama141

steddyeddy wrote: »

Spain have a lower minimum wage than us. How's their job market doing?

Brazil's minimum wage is lower, how is their job market doing? As is Estonia's, how is their job market? :rolleyes:

Phoebas

Mr. Incognito wrote: »

2. Merge AIB and Bank of Ireland. You will never sell them off to anyone that wants them viable.

BoI is not for sale, not state owned or controlled.

Anynama141

Mr. Incognito wrote: »

Economic theory is always looking back and mostly gets it wrong. Economic theory looking forward is almost always wrong.

If it's all voodoo to you, why are you even trying to discuss it? :rolleyes:

By the way, Cork has a decent airport - they spent a fortune on shiny new (very quiet) terminal only a couple of years ago. What else do you want 'them' to do about it, and where should 'they' get the money?

Anynama141

Phoebas wrote: »

BoI is not for sale, not state owned or controlled.

Don't confuse him with facts.

Mr. Incognito

Anynama141 wrote: »

All irrelevant. Germany went through a period of austerity after the reunification - it was a real mess for a while but now it is in great shape. Don't take my word for it, here's a report on it from well-know right-wing nutters, the BBC.

Once again. This is NOT austerity. It is one half of Germany pouring money into the other half. What happened to this money, east Germany needed to be rebuilt, the people needed jobs, who do you think provided these services, west Germany.

Look, people here don't know what they are talking about, as regards economics, but two economics cannot agree on anything. It's a pseudo science IMO. I really have to stop checking this thread, like picking a scab now. You believe whatever you want.

Phoebas

steddyeddy wrote: »

Spain have a lower minimum wage than us. How's their job market doing?

Spain's minimum wage is just one part of their screwed up labour market. Its probably not sensible to think that a minimum wage is the only ingredient in a labour market.

Mr. Incognito

Mr. Incognito wrote: »

Look, people here don't know what they are talking about, as regards economics.

Because we disagree with you?

Anynama141

Mr. Incognito wrote: »

Once again. This is NOT austerity. It is one half of Germany pouring money into the other half. What happened to this money, east Germany needed to be rebuilt, the people needed jobs, who do you think provided these services, west Germany.

It was austerity - they taxed the balls off the former West Germany to pour money into East Germany. The former West Germany - 75% odd of the country - endured austerity to help the other 25% catch up.

Mr. Incognito wrote: »

Look, people here don't know what they are talking about, as regards economics, but two economics cannot agree on anything. It's a pseudo science IMO. I really have to stop checking this thread, like picking a scab now. You believe whatever you want.

It's a social science, so it's more complex in some ways than other sciences as you can get different answers to the same question at different times etc. etc. - the real problem is that it gets bound up with political beliefs, left wing and right wing, where people twist the evidence to suit their agenda. Evidence for that on this thread is how there hasn't been a single economic argument made here in favour of minimum wages, yet nobody in favour of them seems to have changed their position. There's been a mountain of arguments showing how and why they can have a negative effect on society and they are all ignored.

Suryavarman

Mr. Incognito wrote: »

Austery will not work. It has never worked. Anywhere, ever. Europe has a reality problem. It keeps robbing it's reserves to shore up losses that largely are paper investment losses underwritten on overvalued assets that are greatly inflated.

Austerity will work when it's actually tried.

America in the 20s and after WWII. Ireland in the 80s. Canada in the 90s. The Baltic nations in the current crisis. All examples of austerity being tried and working.

Suryavarman

johnr1 wrote: »

But, ok, I'll play; Because goods and services produced would have to rise dramatically to cover the increased cost, - massive unsustainable inflation.

No they wouldn't. Only an increase in the quantity of money in an economy can cause massive inflation.

The result of a rise in the minimum wage to such a level would cause an enormous rise in unemployment.

Mr. Incognito

bluewolf wrote: »

Because we disagree with you?

No, because they don't know that minimum wage is not a commodity and apply supply and demand rules to it. It is a gross oversimplification that doesn't deal with policy, opportunity cost, labour elasticity, migration of labour etc.

That they think austery in Europe or ireland can work, or has worked, anywhere, ever. That reunification is austetity.

That cork has an industrial export airport. FFS large commercial beings cannot land there as the runway is too short.

Mostly because when someone makes a valid point they pass snide little remarks and attack the poster.

I welcome debate. This is not debate. It is a bunch of people talking about things they have no experience of beyond googling nonsense.

I've joined the rabble and taken the bait and lost as a result.

Anynama141

Mr. Incognito wrote: »

No, because they don't know that minimum wage is not a commodity and apply supply and demand rules to it. It is a gross oversimplification that doesn't deal with policy, opportunity cost, labour elasticity, migration of labour etc.

Minimum wage is not a commodity? How can a price for something be a commodity?

Or do you mean that low-skilled labour is not a commodity? If so, why not?

You have been shown to have no argument whatsoever to back up your points. You have lost the debate, because with no arguments, there is no debate to be had. And now you are claiming that we were mean to you, when all we did was point out that you have no argument.

Three Seasons

Mr. Incognito wrote: »

No, because they don't know that minimum wage is not a commodity and apply supply and demand rules to it. It is a gross oversimplification that doesn't deal with policy, opportunity cost, labour elasticity, migration of labour etc.

That they think austery in Europe or ireland can work, or has worked, anywhere, ever. That reunification is austetity.

That cork has an industrial export airport. FFS large commercial beings cannot land there as the runway is too short.

Mostly because when someone makes a valid point they pass snide little remarks and attack the poster.

I welcome debate. This is not debate. It is a bunch of people talking about things they have no experience of beyond googling nonsense.

I've joined the rabble and taken the bait and lost as a result.

We are spending far more than we are taking in. This gap needs to be corrected. Would you prefer we simply keep borrowing more and more?

pH

I've never understood these "Austerity isn't working" complaints - except if they're aimed at the Germans as a form of begging letter.

Leaving aside various banks and crazy decisions by the then FF gov to guarantee the banks debt - we (as in the Irish people) found ourselves in an 18 Billion pa hole. We were going to be spending 18bm more per year than we would get in in tax.

So no problem - no austerity - you borrow the money - except that those with 18billion looked at our economic basis and said pretty much "hell no" there's no way you could ever pay this back. - So they stopped lending us money.

So we needed cash from elsewhere, as because we're part of Europe other countries and institutions came up with the cash - however they were equally skeptical about our ability to ever pay back a debt that was increasing at 18bn pa.

So if "Austerity's not working" is aimed as a kind of pleading to europe then fair enough - it would be lovely if other Europeans funded out lifestyle with money we would never pay back - but just as we're not leaping to throw away our money to help the Cypriots, it's exceedingly unlikely there are others who would just throw away their money on us.

Apart from some magical wonderland where people just "give" us billions each year so we don't need to make cuts - what exactly do people think is the alternative to "austerity"?

1st dalkey dalkey

southsiderosie wrote: »

But they don't live in countries where a liter of petrol costs twice that amount, or where people pay 200 quid/week in rent. You can't compare a country like, say, Bangladesh to Ireland.

I agree. But does increasing globalisation not mean that 'convergence' is inevitable.
Either Bangladesh moves up or we move down. Likely both move to some point in between. This means down for us.
The unknown is the timeframe for this convergence and whether that timeframe can be managed.

steddyeddy

Phoebas wrote: »

Spain's minimum wage is just one part of their screwed up labour market. Its probably not sensible to think that a minimum wage is the only ingredient in a labour market.

I'm not but most people on the lower the minimum wage camp are.