Is Ireland an Anti-Wealth Society?

later12 · 25-11-2010 09:39PM #1

It has often been said that in the USA, failure is a badge of honour; an American businessman will tell you proudly how he failed 99 times before he made his first million. In Europe, it is sometimes a badge of shame. Nowhere is that more true than in Ireland.

We seem to abhor financial failure. Even now, although things look extremely pessimistic for us, it is likely that we shall still muddle through, even if we do not remain part of the Single European Currency. Yet the discourse inevitably switches to failure, blame and talk of an impending apocolypse.

In my opinion, this goes far deeper, and a sense of begrudgery persists. In a time of financial downturn, we seem to have some sort of a problem with others making a profit. We seem to be able to talk of nothing but taxing the wealthy, austerity on profit, and the words barrister, investor and shareholder have become by-words for some unspeakable sort of traitor.

We routinely ignore the common man's role in the destruction of this economy, particularly through mortgage or other personal debt. The urge seems to be to deny and to blame, and to abhor wealth, and wealth creators almost as much as we abhor failure.

Even given as lucky an economic forecast as is possible, re-emergence of confidence in the European economy and any possible containment of the economic collpase passing through Europe, how will we ever emerge from this crisis without changing our way of thinking, and our whole approach to wealth creation?

Inquitus · 25-11-2010 09:43PM

later10 wrote: »

It has often been said that in the USA, failure is a badge of honour; an American businessman will tell you proudly how he failed 99 times before he made his first million. In Europe, it is sometimes a badge of shame. Nowhere is that more true than in Ireland.

We seem to abhor financial failure. Even now, although things look extremely pessimistic for us, it is likely that we shall still muddle through, even if we do not remain part of the Single European Currency. Yet the discourse inevitably switches to failure, blame and talk of an impending apocolypse.

In my opinion, this goes far deeper, and a sense of begrudgery persists. In a time of financial downturn, we seem to have some sort of a problem with others making a profit. We seem to be able to talk of nothing but taxing the wealthy, austerity on profit, and the words barrister, investor and shareholder have become by-words for some unspeakable sort of traitor.

We routinely ignore the common man's role in the destruction of this economy, particularly through mortgage or other personal debt. The urge seems to be to deny and to blame, and to abhor wealth, and wealth creators almost as much as we abhor failure.

Even given as lucky an economic forecast as is possible, re-emergence of confidence in the European economy and any possible containment of the economic collpase passing through Europe, how will we ever emerge from this crisis without changing our way of thinking, and our whole approach to wealth creation?

In Ireland you fail once and you are subject to brutal bankrupcy regulation and wave goodbye to 12 years of your life, in the US that doesn't happen.

later12 · 25-11-2010 09:45PM

Inquitus wrote: »

In Ireland you fail once and you are subject to brutal bankrupcy regulation and wave goodbye to 12 years of your life, in the US that doesn't happen.

Yes, but very few people actually go bankrupt in Ireland, even at present when the rules and statistics are being re-written, bankruptcy is a relatively rare event.

Inquitus · 25-11-2010 09:47PM

later10 wrote: »

Yes, but very few people actually go bankrupt in Ireland, even at present when the rules and statistics are being re-written, bankruptcy is a relatively rare event.

Ergo we don't fail because it's too onerous, so we don't speculate as wildly, and we don't get 99 chances to be a millionaire.

ThisRegard · 25-11-2010 09:48PM

What's this 'we' business ? Imo only a certain, but very vocal, section of society have an issue with wealth, usually union leaders, socialists and their ilk.

listermint · 25-11-2010 09:49PM

Well in Ireland we have much more 'legacy wealth', that is wealth that was passed down through generations. Its more apparent here. It comes from our colourful past. This is were the deep rooted begrudgery comes from.

In the US much of it has come from Self made wealth, through perseverance and developed opportunity. This is admired as it should be.

I would suggest that is the core difference.

shannonpowerlab · 25-11-2010 10:13PM

listermint wrote: »

Well in Ireland we have much more 'legacy wealth', that is wealth that was passed down through generations. Its more apparent here. It comes from our colourful past. This is were the deep rooted begrudgery comes from.

In the US much of it has come from Self made wealth, through perseverance and developed opportunity. This is admired as it should be.

I would suggest that is the core difference.

Ohhh! it is so true!!!

bluefinger · 25-11-2010 10:34PM

later10 wrote: »

It has often been said that in the USA, failure is a badge of honour; an American businessman will tell you proudly how he failed 99 times before he made his first million. In Europe, it is sometimes a badge of shame. Nowhere is that more true than in Ireland.

We seem to abhor financial failure. Even now, although things look extremely pessimistic for us, it is likely that we shall still muddle through, even if we do not remain part of the Single European Currency. Yet the discourse inevitably switches to failure, blame and talk of an impending apocolypse.

In my opinion, this goes far deeper, and a sense of begrudgery persists. In a time of financial downturn, we seem to have some sort of a problem with others making a profit. We seem to be able to talk of nothing but taxing the wealthy, austerity on profit, and the words barrister, investor and shareholder have become by-words for some unspeakable sort of traitor.

We routinely ignore the common man's role in the destruction of this economy, particularly through mortgage or other personal debt. The urge seems to be to deny and to blame, and to abhor wealth, and wealth creators almost as much as we abhor failure.

Even given as lucky an economic forecast as is possible, re-emergence of confidence in the European economy and any possible containment of the economic collpase passing through Europe, how will we ever emerge from this crisis without changing our way of thinking, and our whole approach to wealth creation?

250 billion of fail. why don't we pat the wealth creators on the back? tough cheese chaps. better luck next time.

insanity-doing same thing expecting different results.

Permabear · 25-11-2010 10:40PM

This post has been deleted.

later12 · 26-11-2010 06:48PM

bluefinger wrote: »

250 billion of fail. why don't we pat the wealth creators on the back? tough cheese chaps. better luck next time.

insanity-doing same thing expecting different results.

All of this mess cannot be blamed on the wealth creators.

Remember the reason why we lost a competitive export market was due to Government public spending from about 1998 onwards. If our export market was today at pre-2001 levels, we wouldn't be in this mess.

Secondly, you can blame non-regulation for much of the banking crisis. It was the veritable absence of any real banking regulation combined with the hyper-competitive nature of the market (sparked by Anglo) that has proven disastrous for the housing market.

Thirdly, the debt: GDP defecit can be put down to Government irresponsibility towards the end of the boom: stupidly decreasing income tax levels (all parties can be blamed here), along with stamp duty income that could never realistically continue.

So while nobody here is giving wealth creators a get-out-of-jail-free card, neither can they be blamed for all of our woes. And we must remember that just as we cannot abolish the banking and the political systems - for upon them we are reliant for the machinery of our future growth - neither can we turn our backs on wealth creators.

Without them the machinery of future growth will lie idle forever.

Amhran Nua · 26-11-2010 07:13PM

later10 wrote: »

Remember the reason why we lost a competitive export market was due to Government public spending from about 1998 onwards. If our export market was today at pre-2001 levels, we wouldn't be in this mess.

Eh?

In that follows we will be presenting evidence which shows that Ireland’s exports rose more quickly than most of Ireland’s main trading partners during the 2000s, that Ireland’s unit labour costs in the key manufacturing sector actually fell relative to our main trading partners in this period, and that while, overall, Ireland’s share of global exports slipped back somewhat between 2002-2007, this varied between sectors with many sectors experiencing significant growth in export share. We will also provide evidence to show that labour costs had no obvious influence on the varying export performances of the different export sectors over the last decade and that, indeed, labour costs comprise only a small proportion of the total costs of most export sectors. The paper then goes on to point to the wide range of considerations which have a bearing on national export competitiveness, and to argue that the reduction by economic commentators of competitiveness to a matter of labour costs is not only grossly simplistic but also potentially profoundly damaging to Ireland’s long-term export growth prospects.

Measuring Ireland’s export competitiveness

The two standard methods of gauging a country’s export competitiveness are to compare trends over time in either export growth (or decline) or in export market share vis-à-vis other countries. Data relating to the former method are provided by the OECD and for the latter by the World Trade Organisation (WTO). Figure 1 shows the trend in volume growth in exports of goods and services from Ireland and the OECD as a whole between 2000 and 2007 (prior to the onset of the current recession in Ireland). Volume growth adjusts overall value growth for changes in prices. This shows that Ireland’s exports grew much more rapidly than for the OECD at large in 2001 and 2002, with the gap then narrowing somewhat up to 2006 and widening again in 2007. Thus, at end-2007, Ireland’s exports, in volume terms, were 48.4% greater than in 2000 compared with an overall figure for the OECD of 39.1%.

Very interesting article actually, which should be read by anyone complaining about Irish labour costs.

later12 · 26-11-2010 07:20PM

Amhran Nua wrote: »

Eh?

Very interesting article actually, which should be read by anyone complaining about Irish labour costs.

That graph does not give a real picture of the situation. Between 2001 and 2009 we lost our competitiveness through increased wages and prices which hiked up to a rate well above twice that of the rest of the SEC zone. The Celtic tiger export boom from about 1995 to 2000 doubled our share of OECD exports. From 2001 - 2009 it fell back to 20%.

Nobody is doubting that we have regained competitiveness, poster. Our unit labout costs have been slashed. In the same vein, nobody really doubts that our competitiveness was lost in the first ten years of this century, and that was ultimately to our great detriment. If we hadn't been so frivolous with public sector pay and spending, this would never have arisen, or would have arisen to a much smaller magnitude while at a much slower rate.

Amhran Nua · 26-11-2010 07:25PM

later10 wrote: »

Between 2001 and 2009 we lost our competitiveness through increased wages and prices which hiked up to a rate well above twice that of the rest of the SEC zone.

That very well researched article says the exact opposite to what you're saying, though. Have you read it?

later12 · 26-11-2010 07:30PM

Well I looked and i looked and I looked and I couldn't see anything that accounted for the disparity between our competitiveness and our export market in the years 1993 - 2000, and the years 2001 - 2009. In fact the pre 2000 years were hardly mentioned, and certainly not adequately discussed.

I wonder why. Fancy a guess?

krd · 26-11-2010 07:43PM

Calling Ireland an anti-wealth society or a pro-wealth society is a gross oversimplification.

I've never had a problem with anyone who's worked hard and made their wealth through something positive. These people enrich us all on many levels. But this isn't how Ireland works or the wealth in Ireland works.

Irish people tend have the most contempt and begrudery for people who've made their wealth honestly.

They prefer it when someone gets rich through some cute hoor stroke. That's why they loved all the builders getting rich - because they knew there was a stroke involved and someone was going to get shafted (most people never thought it through to the point they realised it was them who was going to be shafted.)

The cute hoors were never "wealth creators" - it's proven now they were always wealth destroyers.

And then there's class.

There's a ludicrous amount of snobbery that's always choked enterprise in this country.

If the law was a working class profession - do you think for a minute they would pull down the cash they do.

And the same applies to many of our "entrepreneurs". It's nearly impossible to do serious business in Ireland unless you're accepted into the Irish business community. A community of fat wambling idiots. The multi-nationals have always done well in Ireland because they've had the ability and resources to side step that brigade. For anyone else it's virtually impossible. Or you have to get the boys on board.

Not going into where I have this from - but in the past, if you took a very solid business plan to one of the development agencies or banks, they'd get on the phone to some fat plumoxes in the "business community" and try to shaft you out of it.

It's very difficult to get anything going in this country. The Scandinavian countries can create tech giants like Erricson and Nokia, and we have dog food manufactures.

It's not an anti-wealth problem we have here - the problem is having an admiration for greasy cute hoors who eventually bring us all down.

Amhran Nua · 26-11-2010 07:50PM

later10 wrote: »

Well I looked and i looked and I looked and I couldn't see anything that accounted for the disparity between our competitiveness and our export market in the years 1993 - 2000, and the years 2001 - 2009.

Er, that would be the point of the entire article.

Clearly, therefore, Ireland’s export performance was significantly better than that for the OECD as a whole over the period. There is no evidence here of the sharp loss of competitiveness postulated by many economic commentators. Ireland’s export growth rate was superior to that of 19 of the 29 other members of the OECD, including the UK and the USA.

later10 wrote: »

In fact the pre 2000 years were hardly mentioned, and certainly not adequately discussed.

Did you miss this bit while you were looking?

The Irish government has mainly relied on inward investment by TNCs as the means of expanding Ireland’s export base, with foreign firms accounting for 89% of all exports of goods and services by 2000 (a proportion which has remained constant in the 2000s). In that year, eleven sectors accounted for three quarters of all exports (Table 1), with Office Machinery & Data Processing Equipment and Organic Chemicals between them accounting for almost 36%. The 1990s in particular were a period of spectacular export growth, the annual compound growth rate of 13.8% (in volume terms) being exactly twice the GDP volume growth rate of 6.9% – itself a very high sustained growth rate over such a long period. Thus, while GDP almost doubled in volume terms in the 1990s, the corresponding volume growth of exports totalled 265%. This saw Ireland’s share of global exports doubling, from 0.64% to 1.22%, between 1991-2000, according to World Trade Organisation (WTO) data.

later10 wrote: »

I wonder why. Fancy a guess?

Maybe it would be as well to stick to the armchair psychological analysis about the mental state of four million people?

Nolanger · 26-11-2010 07:55PM

More of an anti-intellectual society?

krd · 26-11-2010 07:59PM

Amhran Nua wrote: »

Eh?

Very interesting article actually, which should be read by anyone complaining about Irish labour costs.

Competitiveness isn't simply in wage differentials.

You could go to some depressed part of rural India, and pay people a few pence per day to stitch footballs by hand. Or you could go to a plant in Scotland, where everyone is on a higher wage, and they have machinery that can stitch a football in a fraction of second.

Competitive advantage is far more complex. High wage economies do have the ability to produce many goods and services at a lower cost than low wage economies.

High wages in an economy can actually be a sign that that economy is competitive. In fact, that is the reality. If Intel, thought they could run their plants with malnourished illiterates as their workforce they wouldn't be in Leixlip.

later12 · 26-11-2010 08:00PM

Amhran nua - do you agre, or not, that Ireland became less competitive in the years 2001-2009 when the celtic tiger export boom ended?

"89% of all exports of goods and services by 2000 (a proportion which has remained constant in the 2000s" - eh, yes, fine, but that says nothing about alterations of the labour unit costs or our competitive edge. The fact is that we lost our competitiveness.

Do you agree , or do you argue the fact that our public spending and our employment rates led to a wage and price rate well above double that of the rest of the eurozone?

Taking that into consideration, now go off and google Ireland's share of OECD countries' exports from 1993 to 2010 and then get back to us.

Amhran Nua · 26-11-2010 08:10PM

later10 wrote: »

Do you agree , or do you argue the fact that our public spending and our employment rates led to a wage and price rate well above double that of the rest of the eurozone?

Public spending was completely out of control, no question there. Its being reined in now, however, and will be even more harshly cut before this is all over. There is a significant difference between that and labour/export competitiveness - export industries are not paid from the exchequer. You may have missed this, but that's actually a three part article. Another excerpt is from industry leaders who also support the concept of the other factors involved in international competitiveness:

Thus, speaking at the announcement by ABB of an expansion of their Irish operations in 2003, company vice-president Dinesh Paliwal said “It is not low costs that attracts international companies to invest in certain countries. It is high productivity, quality and innovation that are crucial to their decision – and Ireland clearly stands out in these areas” (IDA Ireland: Business Ireland 2003 No 3). Similarly, in an Irish Times article on July 4, 2008, Paul Rellis, General Manager of Microsoft Ireland and then President of the American Chamber of Commerce in Ireland wrote: “We need to add value faster than we add costs…Faster productivity growth provides the clearest route to higher living standards in the future – the time is now appropriate to design and implement clear and co-ordinated policies that will quicken productivity growth in the years ahead”.

Other leading American industrialists have recently gone further in spelling out what Ireland needs to do in order to strengthen its position as a location for export activities. Writing in the Irish Times on September 17 last, Martin Murphy, Managing Director of Hewlett Packard Ireland, called for the formulation of a national industrial strategy focused on the creation of an enterprise culture and education system capable of making Ireland “a global hub for knowledge, innovation and know-how” characterised by enterprises built on high-quality and high value-added exports of goods and services. Murphy pointedly added: “Competitiveness will not be achieved by cutting costs alone. We have to also deliver a better service at a lower cost through innovation.”

These ideas were echoed by Craig Barrett, former Chairman of Intel Corporation, in an address to the Royal Irish Academy in February of this year. Decrying the notion that Ireland could recreate the Celtic Tiger by simply cutting costs, Barrett emphasised the need to concentrate on the creation of value-added jobs requiring major increases in investment in education and research & development (R&D). Expanding on this theme in a subsequent interview in the Irish Times (February 12, 2010), Barrett argued that in the modern global economy, “the only ways you compete are in the new industries, the value-added jobs where intelligence and training and skills are important”,

The need for increased investment in education and R&D was also the focus of an article in the Irish Times on November 13 last by Jim O’Hara, General Manager of Intel Ireland, Ireland’s largest industrial employer. The thrust of O’Hara’s argument is encapsulated in just two pithy sentences: “Unless there is the foundation of a highly educated workforce and an internationally recognised commitment to and reputation for research and innovation, Ireland will not be considered competitive… We must have a world-class, digitally connected education system and a clear government strategy across all four levels of education and on into lifelong learning.”

...

A continued preoccupation with cutting labour costs will have little impact on the competitiveness of our existing export sector in the short term, but will inevitably undermine Ireland’s ability to create and maintain an innovative, high-productivity and high-income economy in the long run. In the short run, the main beneficiaries of a policy of labour cost reduction will be the owners of small, labour-intensive, low-tech indigenous firms operating in sheltered (and frequently cartelised) business sectors. In the long run, even these firms will find that it is not in their best interests to simultaneously reduce the incomes and spending power of most of their customers.

later12 · 26-11-2010 08:16PM

I'm not sure what the relevance is of some of those quotes - some of them don't appear to support the position that in terms of ULCs Ireland was all that competitive at all, in fact.

All i am saying is that ireland saw a slowdown in growth of its its exports market after 2001 compared to what it had seen after 1993 and up until the millenium, that much is fact.

In any event, our unit labour costs have now been slashed convincingly and impressively - forecasts confidently assert they will continue to do so. However the idea that we did not lose competitiveness in the post export boom era of 2001 onwards, when housing became our national obsession, is quite incredible.

The rising graph you posted obscures a more successful and more impressive precedent which had been, and in some quarters remains, largely ignored.

cleremy jarkson · 26-11-2010 08:24PM

The wealthy should be taxed 98% of their income...they're rich, they dont need it... the rest of us struggle to make ends meet. I can't even afford a holiday to disneyland for my kids this year

/ sit's back in social welfare funded council house with sky digital and 37 inch tv and laptop and fridge full of beer and car in the driveway... healthcare paid for....kids necessities funded by government...

(not really by the way..sarcasm ya know)

SkepticOne · 26-11-2010 08:42PM

In Ireland, you've "made it" when you get a high paying permanent and pensionable job with a large, established institution, preferably state owned. Making a few bob through small scale entrepreneurship is considered a bit dodgy, a bit fly-by-night so to speak. This may change with the current economic unpleasantness where the ability to make money independently of state institutions will be valued.

It is interesting to speculate on why this is the case. Possibly the reason for this cultural bias against private enterprise may be due to our legacy of having a governing (and later entrepreneurial class) through history composed of a different culture to us "natives". Therefore, we tend to see success in terms of rising up the structure that has already been put in place by others rather than creating a structure of our own. Hopefully this is changing slowly.

I know that when I was at school, all the career advice to everyone was in terms of joining institutions of varying degrees of prestige (civil service, banks, gardai, military etc). Get yourself into a secure job, then retire in 40 years. Let others worry about how money is to come into the country.

Brussels Sprout · 26-11-2010 08:46PM

later10 wrote: »

In my opinion, this goes far deeper, and a sense of begrudgery persists. In a time of financial downturn, we seem to have some sort of a problem with others making a profit. We seem to be able to talk of nothing but taxing the wealthy, austerity on profit, and the words barrister, investor and shareholder have become by-words for some unspeakable sort of traitor.

We routinely ignore the common man's role in the destruction of this economy, particularly through mortgage or other personal debt. The urge seems to be to deny and to blame, and to abhor wealth, and wealth creators almost as much as we abhor failure.

Even given as lucky an economic forecast as is possible, re-emergence of confidence in the European economy and any possible containment of the economic collpase passing through Europe, how will we ever emerge from this crisis without changing our way of thinking, and our whole approach to wealth creation?

krd · 26-11-2010 09:23PM

And here comes the Ayn Rand brigade.

Molly coddled through state funded education and security. Family wealth through something similar.

And here they come to claim they pulled themselves up their own britches - like Baron Munchasen's claim to have pulled himself from a swamp by the scruff of his own neck.

A crock of steaming crap.

The two greatest obstacles to political progress in Ireland - the nutjob far left and the nutjob far right. The nutjob far right are more dangerous, because some fluke has managed to make some of them wealthy.

Ireland's economic situation, Europe's economic situation, and that of the rest of the world is very complex. There isn't some failure in theory. Economic realities are always miles ahead of the text books. Especially ahead of some Ayn Rand reading fat boy whose family got rich on some government cheese business.

There are many arguments. One our inflation fetish over the last few decades has distorted market realities. China is largely an advanced industrial nation, yet their costs are much lower than the rest of the industrialised world. Is this because they can cosh their workers down better, or is it because we've been systemically facilitating this distortion.

It's not simply China, it's our relationship with these countries. It would not take much for the Chinese industrial wage to come close to ours. This is something that probably needs to happen and will happen. Just there are strong interests in putting that time off.

A few adjustments and the Chinese workers wage comes within parity of the European workers wage.

Godge · 26-11-2010 10:59PM

later10 wrote: »

All of this mess cannot be blamed on the wealth creators.

Remember the reason why we lost a competitive export market was due to Government public spending from about 1998 onwards. If our export market was today at pre-2001 levels, we wouldn't be in this mess.

Secondly, you can blame non-regulation for much of the banking crisis. It was the veritable absence of any real banking regulation combined with the hyper-competitive nature of the market (sparked by Anglo) that has proven disastrous for the housing market.

Thirdly, the debt: GDP defecit can be put down to Government irresponsibility towards the end of the boom: stupidly decreasing income tax levels (all parties can be blamed here), along with stamp duty income that could never realistically continue.

So while nobody here is giving wealth creators a get-out-of-jail-free card, neither can they be blamed for all of our woes. And we must remember that just as we cannot abolish the banking and the political systems - for upon them we are reliant for the machinery of our future growth - neither can we turn our backs on wealth creators.

Without them the machinery of future growth will lie idle forever.

Agree with a lot of what you say but the bit in bold takes away from it and undermines you. One party has been in power since 1987 apart from a short two-year period. They are to blame.

kaiser sauze · 27-11-2010 05:05AM

bluefinger wrote: »

250 billion of fail. why don't we pat the wealth creators on the back? tough cheese chaps. better luck next time.

insanity-doing same thing expecting different results.

Capitalism is not the reason why we are in this mess.

True capitalism would have mean that our government did not underwrite the banks losses using the taxpayers' dime.

We need to try it again, but do it properly, with regulations tightly enforced.

donegalfella wrote: »

This post has been deleted.

Your constant barracking of Burton is getting tiresome.

The fact of the matter is that she has been more right than Lenihan about this mess.

Your portrayal of her is also extremely disingenuous.

SkepticOne wrote: »

In Ireland, you've "made it" when you get a high paying permanent and pensionable job with a large, established institution, preferably state owned. Making a few bob through small scale entrepreneurship is considered a bit dodgy, a bit fly-by-night so to speak. This may change with the current economic unpleasantness where the ability to make money independently of state institutions will be valued.

It is interesting to speculate on why this is the case. Possibly the reason for this cultural bias against private enterprise may be due to our legacy of having a governing (and later entrepreneurial class) through history composed of a different culture to us "natives". Therefore, we tend to see success in terms of rising up the structure that has already been put in place by others rather than creating a structure of our own. Hopefully this is changing slowly.

I know that when I was at school, all the career advice to everyone was in terms of joining institutions of varying degrees of prestige (civil service, banks, gardai, military etc). Get yourself into a secure job, then retire in 40 years. Let others worry about how money is to come into the country.

You're spot on here, all my growing up life I was told to get into the civil service when I was ready to go working.

Thank fúck I didn't listen to that advice.

Amhran Nua · 27-11-2010 09:22AM

later10 wrote: »

All i am saying is that ireland saw a slowdown in growth of its its exports market after 2001 compared to what it had seen after 1993 and up until the millenium, that much is fact.

You can't expect permanent high growth, that's impossible.

later12 · 27-11-2010 04:33PM

Amhran Nua wrote: »

You can't expect permanent high growth, that's impossible.

No but you can expect sustained growth - we allowed our growth to slip out of high public spending and domestic inflation which led to an increase in labour unit costs. if you don't take my word for losses of potential on our manufacturing industry, then you might take on board those of Porfessor Patrick Honohan.

Until about 2000, the growth had been on a secure export-led basis, underpinned by wage restraint. However, from about 2000 the character of the growth changed: a property price and construction bubble took hold.

and

But the Irish crisis from 2007 on was not merely an aspect of international pressures. Ireland was relatively poorly positioned heading into the global recession for three distinct but related domestic reasons: a home-grown banking crisis, a trend loss in wage competitiveness that had been underway since 2000 and a tax structure whose yield was far too heavily dependent on a continuation of the boom.

Link: http://www.tcd.ie/Economics/staff/phonohan/What%20went%20wrong.pdf

Godge wrote:

Agree with a lot of what you say but the bit in bold takes away from it and undermines you. One party has been in power since 1987 apart from a short two-year period. They are to blame.

True, I was specifically referring to tax reduction however. You will recall that it was the opposition who triggered the tax reduction promises of the 2007 elections, and a reluctant Fianna Fáil who followed suit. So like I said, the opposition share responsibility with Fianna Fáil here.

Nodin · 27-11-2010 04:43PM

It has to be said that looking at my own experiences working in non-union private sector for Irish companies, compared with others working in non-union private sector for 'Foreign companies', its hardly suprising. The amount of snobbery, nepotism, cronyism, contempt for and ill treatment of, staff I've come across over 20 years is truly horrific when I think back on it.

Amhran Nua · 27-11-2010 06:53PM

later10 wrote: »

if you don't take my word for losses of potential on our manufacturing industry, then you might take on board those of Porfessor Patrick Honohan.

Why stop there? The very article I linked to lists a few more high profile economic commentators...

Alan Ahearne:”if we are to regain competitiveness, we have to do it the difficult way – through wage cuts.” (Sunday Tribune, January 11, 2009)

Alan Barrett: “wage falls are vital to the restoration of competitiveness” (quoted in The Irish Times, April 29, 2009)

John Fitzgerald: “Wage cuts of 5 per cent in both the private and public sector are needed ‘to achieve the necessary improvement’ in the economy’s competitiveness” (quoted in The Irish Times, Oct 17, 2009)

Morgan Kelly: “The economy will not begin to grow until real wages fall to competitive international levels” (Irish Times, January 20, 2009)

Jim O’Leary: The competitiveness of the Irish economy will be “enhanced” by “the emergence of lower private sector wages” (Irish Times, August 7, 2009).

Undoubtedly the most ardent proponent of the thesis that Ireland lost export competitiveness through excessive labour cost growth in the 2000s has been former Taoiseach and UCD economist Garret Fitzgerald, who has advanced this argument repeatedly in his Saturday column in the Irish Times.

...and then goes ahead and proves them wrong. Also you keep talking about labour costs being driven by public sector spending, can you clarify that.

Liam Byrne · 27-11-2010 07:36PM

krd wrote: »

I've never had a problem with anyone who's worked hard and made their wealth through something positive. These people enrich us all on many levels. But this isn't how Ireland works or the wealth in Ireland works.

Irish people tend have the most contempt and begrudery for people who've made their wealth honestly.

They prefer it when someone gets rich through some cute hoor stroke.

Odd generalisation, and yet another one where I find myself being the complete opposite to a view of Irish people.

I would, however, put on the caveat that I normally do; wealth should be created by adding value to something, and it should be proportional to the effort and value added.

So being a government-condoned monopoly (radio stations, mobile phone licences, waste disposal contracts, tolls roads, etc) is excluded for the most part, as are people who simply buy / hoard stuff to manipulate demand.

If someone invents/creates/transforms something based on their time and skill, then they deserve to make a living and a profit.

Peanut · 27-11-2010 08:05PM

Amhran Nua wrote: »

Also you keep talking about labour costs being driven by public sector spending, can you clarify that.

Isn't it a basic economic concept though, that an increase in money supply into a system will generally lead to inflationary pressures, even in other sectors not directly associated with the increased spending?

Investments into the road network etc. may have given some small cost benefits to Irish exporters, but I suspect this would have been outweighed by wage/rent/utility inflation during that period.

So we may have had Intel and co. justifiably arguing against a low-wage economy, but that's fine, because these jobs were wealth-generating. The problem started when non-wealth generating salaries became inflated by the oversupply of credit.

later12 · 27-11-2010 09:02PM

Amhran Nua wrote: »

Why stop there? The very article I linked to lists a few more high profile economic commentators...

No offence, wasn't that a blog as opposed to an article - an article being something that is typically deemed worthy of publication.

I've already said why it's irrelevant - it doesn't draw any serious comparisons, graphic or statistical - between Ireland in the manufacturing boom phase and Ireland in the construction boom phase.

Also you keep talking about labour costs being driven by public sector spending, can you clarify that.

Seriously? As another poster has just said, this is a very basic concept in economics.

Is Ireland an Anti-Wealth Society?

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