Leader wanted. Yes men need not apply.

realitykeeper

Generally speaking, short term thinking is not conducive to good outcomes. The problem for the Irish economy is that it is managed by people who need quick fix results in order to please the masses in order to get re-elected. So, short-term-ism is how our economy has been run in the past and how it continues to be run today. For example, Minister Lucinda Crichton said in a recent interview that the Irish Government had managed to persuade the ECB to extend the term of our promissory notes so that we won`t have to start paying back the principle for 25 years - as if that was somehow a good thing. The only way to reduce our debt repayments in the long term is by paying more and not less in the short term.

For example: If Ireland owed 100 euro + 10% interest per year, then the sooner we pay down the 100 euro the better. If we reduce it by 10 euro to 90 euro then we only have to pay back 9 euro in interest instead of 10 - but it gets better. We can use the euro we have saved to further reduce our debt to 89 euro and thereby reduce our interest payments again! If we continue this pattern of paying down the principle by larger and larger amounts every year we will not only be debt free but will be in the happy situation of having other countries pay us for monies we can lend to them.

Until such time as our government cuts its credit card splurge - we are destined to fall ever further into the abyss. One thing is certain, very few politicians are stupid enough to run their own affairs as irresponsibly as they run the country.

In the UK in the 1970s a Labour Prime Minister admitted (after learning the hard way) that they could not borrow their way out of a recession. After Communism collapsed in Russia - massive austerity eventually saw them through. They had no choice because the Americans refused to help them. Today, Russia is a prosperous country and American is crippled with a debt it will never be able to pay off and when they default Ireland will face a new depression along with the rest of the world. This is why it is a mistake to try to stimulate growth in the Irish economy. Growth was never the problem. Our government takes in 35 billion per year - that is more than enough for a country of our size and population. The fact that we have a lot of debt interest to pay is not a reason to borrow more - it is a reason to pay down the principle. Admittedly, some people don`t want to make the necessary sacrifices required to pay down the principle on our debt and would rather let their children pay for it (along with accumulated interest) in the coming years. It is also true that if the Irish as a nation were to grab this nettle and tackle the debt problem head on, we would have to be prepared for austerity the like of which no living person can recall. If Ireland had a competent leader, he/she would explain this to the electorate and the people would not only embrace the challenge but reward the leader for saying it as it is. We cannot afford another Yes man -can we?

barneystinson

Ummmm.... and what's your question? Or have you mistaken Boards for your blog?

realitykeeper

barneystinson wrote: »

Ummmm.... and what's your question? Or have you mistaken Boards for your blog?

No mistake - there is a question.

barneystinson

realitykeeper wrote: »

No mistake - there is a question.

There wasn't originally - admit it you beaky snollocks

[Jackass]

realitykeeper wrote: »

For example: If Ireland owed 100 euro + 10% interest per year, then the sooner we pay down the 100 euro the better. If we reduce it by 10 euro to 90 euro then we only have to pay back 9 euro in interest instead of 10 - but it gets better. We can use the euro we have saved to further reduce our debt to 89 euro and thereby reduce our interest payments again! If we continue this pattern of paying down the principle by larger and larger amounts every year we will not only be debt free but will be in the happy situation of having other countries pay us for monies we can lend to them.

Debatable Economics to say the least.

How about I give you a scenario. Imagine a country owed tens of billions and was borrowing year on year just to be able to afford to pay public sector wages to keep the infrastructure operating and to prevent a complete melt down in services to third world proportions.

Now imagine this country had zero growth in its economy and had zero money available to stimulate growth in this economy, in fact, its total existence revolved around trying to stabilise public finances so that a credible and sustainable economy could emerge from it.

This involved taking away allowances from little Timmy on his conformation, and little Sally won’t get those shiny shoes she saw in the shop window, as mummy hasn't worked for 30 years and has never looked for a job, and we just can't really afford to be paying her above the average industrial wage of China for doing nothing any more.

Granted, these nasty individuals won’t get re-elected, as when cuddly Bertie was in power, mummy was getting more and more money for doing less and less, and the people in the public sector got very annoyed looking at all these cheeky chappies in the private sector jobs driving lovely cars because of their productivity at work and competitiveness in the European market, so uncle Bertie said "It's ok, you don't need to contribute anything to the Economy in terms of wealth generation, but we'll pay you the same as them, in fact, we'll bench mark it, so the harder they work, the more you'll make"

But Uncle Bertie was very clever, he never told these people that they had to warrant or earn these salaries, he said you can just have them, but when those silly cheeky chappies in the nice cars started being evicted from their homes and started to need money to help feed their children, those lovely benefits Bertie had in place had to come down, as now that genuine people needed them, and there wasn't as much money coming in, the workers out of work can't get what mummy had gotten for doing nothing during a full employment boom.

So now mummy and everyone is very annoyed at big bold Enda for cutting back all of these benefits that obviously work, as Bertie kept putting them up! And now the civil service people are even more annoyed! Just because we didn't create any output and we felt silly because we weren't making as much money as those who were, now that those people who were making all that money we were bench marked against are unemployed, why should we still not be paid at the level they were being paid when they were propping up the economy?? My level of output hasn't changed, but the economies had, so when the economy’s output was really high, I cried and stomped my feet until I got money that was really high, now that the economy is really low, why should I not continue to get paid really high? In some cases twice the industrial average wage of the private sector I was so jealous of!

So, back to your original point, imagine this country managed to offset paying back the principal of these loans for 25 years, this would mean that they could still afford to have SOME money available to attempt to stimulate the economy back growth. Mr. Public sector could still be paid about 50% more than he's worth as opposed to 100% more, and mummy on the dole could still get about 200% more than she should instead of about 500% more than she should, and then these people can still be given handouts which will help them get to the voting booth to tell Mr. Kenny how much of a naughty man he is by voting him out, but, always just in time for the economy can be stabilised, so Mr. Kenny did all these awful things, plugging the holes in the sinking ship, Mr. Cuddly Bertie gave us all the money, and then we'll get smirky Mr. Martin into Government when we have returned to growth and he can start to raise all these benefits again and then all will be forgiven until 10 more years down the road, one of dirty Mr. Kenny's friends will have to come back and do all these awful things to us again, until we get back to growth, and one of Mr. Martins friends can come in and make us feel better again by giving us more money for nothing.

Or, a shorter answer, imagine you got a business loan to grow a business, should you use this loan money to pay off your business loan as soon as possible, i.e hand it straight back to the bank as soon as you get it. Your business will fail immediately as you will have no money, but on the plus side, you'll be debt free, or if you could get the money as interest only for 25 years, should you try and use that time to grow your business that isn't now crippled by debt repayment to the point that when the principal payments come around in 25 years (and greatly devalued by 25 years worth of inflation making the amount borrowed significantly less) you will comfortably be able to afford them as you'll be making lots of money.

realitykeeper

[Jackass] wrote: »

Or, a shorter answer, imagine you got a business loan to grow a business, should you use this loan money to pay off your business loan as soon as possible, i.e hand it straight back to the bank as soon as you get it. Your business will fail immediately as you will have no money, but on the plus side, you'll be debt free, or if you could get the money as interest only for 25 years, should you try and use that time to grow your business that isn't now crippled by debt repayment to the point that when the principal payments come around in 25 years (and greatly devalued by 25 years worth of inflation making the amount borrowed significantly less) you will comfortably be able to afford them as you'll be making lots of money.

The problem with taking out a loan is that you have to be certain your business will be able to pay it back with interest. In other words, you would need a really brilliant idea or a fantastic product to sell. Otherwise, you end up like Ireland with a lot of debt. At present, we are borrowing to pay the salaries of the public sector which is a bit like the owner of a failing business going to the bank and asking for a loan to pay his own salary - the guy would be laughed out the door! There is only one way to kill this beast we call debt and that is to stop feeding it - even if we have to starve ourselves in order to do it.

KyussBishop

The business analogy, while superficially appealing, really doesn't work for governments/countries; government doesn't have customers, does not depend on turning a profit with its expenditure (the very reason sectors which should prioritize social values over money/profits, are publicly run), have a guaranteed income (from taxes) and government can increase an entire economies demand/activity by spending, and counteract bubbles with targeted taxes or regulations, whereas an individual business can not do either.

You don't run a country like a business. Not in finances/economics, or in principle; a country is run for the benefit of its people, a business is run for the benefit of its owners/management first, its employees second (if even).

realitykeeper

KyussBishop wrote: »

The business analogy, while superficially appealing, really doesn't work for governments/countries; government doesn't have customers, does not depend on turning a profit with its expenditure (the very reason sectors which should prioritize social values over money/profits, are publicly run), have a guaranteed income (from taxes) and government can increase an entire economies demand/activity by spending, and counteract bubbles with targeted taxes or regulations, whereas an individual business can not do either.

You don't run a country like a business. Not in finances/economics, or in principle; a country is run for the benefit of its people, a business is run for the benefit of its owners/management first, its employees second (if even).

A trading business can do all the things you mention on a smaller scale. The difference is that the consequences are more immediate for a business if they are imprudent. No company, industry or country is too big to fail.

It is often assumed that non profit organisations deliver better value than a profit orientated organisation. If that were the case, everything would be non profit like in North Korea. That said, I do think the state should have non profit quangos for certain things, e.g. anything that is corrosive to the welfare of the citizen`s like the sale of alcohol products. It doesn`t matter if the some inefficient/incompetent state white elephant does that on a non profit/non subsidy basis - it works well in Scandinavia where the customers indemnify the state before buying alcohol. However, anything that is important should be delivered competently and cost effectively. If this can only happen by handing the operation to a profit driven private entity - then I for one wish them success.

KyussBishop

realitykeeper wrote: »

A trading business can do all the things you mention on a smaller scale. The difference is that the consequences are more immediate for a business if they are imprudent. No company, industry or country is too big to fail.

Well, a trading business fails to meet these conditions: doesn't have customers, does not depend upon turning a profit and has a guaranteed income (not dependent upon customers i.e. trade).

realitykeeper wrote: »

It is often assumed that non profit organisations deliver better value than a profit orientated organisation. If that were the case, everything would be non profit like in North Korea. That said, I do think the state should have non profit quangos for certain things, e.g. anything that is corrosive to the welfare of the citizen`s like the sale of alcohol products. It doesn`t matter if the some inefficient/incompetent state white elephant does that on a non profit/non subsidy basis - it works well in Scandinavia where the customers indemnify the state before buying alcohol. However, anything that is important should be delivered competently and cost effectively. If this can only happen by handing the operation to a profit driven private entity - then I for one wish them success.

Ok, but that doesn't relate to the original point though; I wasn't talking about non-profits, but the overall functioning of government.

realitykeeper

KyussBishop wrote: »

I wasn't talking about non-profits, but the overall functioning of government.

Some government ministers seem to think that function of government means running the civil service. Another school of thought is that the civil service should be renamed the self service - after the people who "work" in it. My own view is that services provided by the private sector are much better value for money.

carpejugulum

realitykeeper wrote: »

Some government ministers seem to think that function of government means running the civil service. Another school of thought is that the civil service should be renamed the self service - after the people who "work" in it. My own view is that services provided by the private sector are much better value for money.

Value for money is not the only thing though. It also offers more freedom. That of course means the freedom to choose wrong.

Paulzx

realitykeeper wrote: »

Some government ministers seem to think that function of government means running the civil service. Another school of thought is that the civil service should be renamed the self service - after the people who "work" in it. My own view is that services provided by the private sector are much better value for money.

*axe to grind alert*

barneystinson

Paulzx wrote: »

*axe to grind alert*

This thread would've been so much better with a judicious comma in the thread title:
"Leader wanted: Yes, men need not apply"