Ireland's debt deal: What will the Left do now?

KyussBishop · 03-07-2012 12:27PM

I'm curious from a debate on another thread: Is there a way to determine what the minimum is people can get by on monetarily, judging mainly by consumer/utility etc. prices?
The consumer price index helps in figuring this out, but doesn't really adjust for lifestyle, so isn't necessarily the best way to determine the minimum needed to get by.

Basically, would want to figure out from this info, in reducing SW, what is best to reduce and by how much, and how much would that leave by if you get a figure for the above?
I don't mean a general "we spend too much there need to be cuts" argument (which I generally agree with in Irelands case, as we're screwed and don't have options other countries may have), but am interested in above for sake of estimating social cost.

Also, what feasible policies are there to reduce the cost of living? What areas affecting that are inflated in price still?

Monty Burnz · 03-07-2012 12:34PM

KyussBishop wrote: »

I'm curious from a debate on another thread: Is there a way to determine what the minimum is people can get by on monetarily, judging mainly by consumer/utility etc. prices?

The problem with this is that some people will feel that sun holidays in Spain, cigarettes and Sky Sports are essentially human rights and should be included in the minimum people 'need'.

KyussBishop · 03-07-2012 12:37PM

Okey but that would be a tiny minority who would insist on that; when I say minimum people can spend to get by, I mean basic groceries and bills etc., and then comparing that absolute minimum (if there is a good way to determine it) vs what welfare is like now, and what it would (aught) to be after cuts.

creedp · 03-07-2012 12:59PM

Tipp Man wrote: »

bloody hell - there are people who actually think this??

So can I take it from the statement above that you think that the private sector had absolutely no contribution to the mess we find ourselves in? You, for instance, don't think that the massive increases in property prices which caused inflation and wage inflation which was driven by developers, and which landowner (incl farmers) benefited massively from, did not contribute to this mess? The problem as always in these discussons is the absolute drawing of ideological lines, particularly the public/private line, which of course serves no purpose other than for e.g. to continue to bloat the circulation of the Sindo.

creedp · 03-07-2012 01:00PM

Monty Burnz wrote: »

The problem with this is that some people will feel that sun holidays in Spain, cigarettes and Sky Sports are essentially human rights and should be included in the minimum people 'need'.

Yes all these are included in the CPI and increase in such result in calls for wages increases in line with CPI increases and consequent calls for similar increases in welfare benefits.

Dr Galen · 03-07-2012 01:06PM

Heads the ball wrote: »

A number of cuts (but indeed the wider policy of austerity*) followed have had the effect of further reducing demand.

* I genuinely genuinely try not to use that word as it is way overused - perhaps an economics student to could suggest a better word - i dunno fiscal conservatism or something

So you are saying that because of the cuts, demand has been reduced and ergo, people have gone bankrupt? Am I getting you correct here?

Monty Burnz · 03-07-2012 01:14PM

creedp wrote: »

Yes all these are included in the CPI and increase in such result in calls for wages increases in line with CPI increases and consequent calls for similar increases in welfare benefits.

What has that got to do with whether or not they are minimal requirements?

Workers are entitled to use any argument they want to try to increase their wages.

Permabear · 03-07-2012 01:17PM

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Heads the ball · 03-07-2012 01:26PM

Dr Galen wrote: »

Heads the ball wrote: »

A number of cuts (but indeed the wider policy of austerity*) followed have had the effect of further reducing demand.

* I genuinely genuinely try not to use that word as it is way overused - perhaps an economics student to could suggest a better word - i dunno fiscal conservatism or something

So you are saying that because of the cuts, demand has been reduced and ergo, people have gone bankrupt? Am I getting you correct here?

More or less yes

daltonmd · 03-07-2012 01:27PM

Permabear wrote: »

This post had been deleted.

Yep and not to be picky but the base rate of 185.80 was from December 2006, the height of the boom.

"Between 2001 and 2003, social welfare payments have increased by 17% for both the basic rate and the old age pension, well ahead of the 8% rise in the Consumer Price Index ( CPI), and the 13.8% increase in gross average industrial earnings. Child Benefit rates increased by some by some 45% in the same period (2001-2003) and between 2001 and 2005 that increase has risen further to 65%. Over the period 2001 to 2005 the lowest social welfare rates have increased by 40% while the CPI has increased by just over 13%."

This bit shocked me (from SW website)

"As a result of Budget 2005, welfare payments have increased by 3 times the expected rate of inflation. Each week welfare payments go out to 970,000 people that directly benefit 1.5 million of the population."

Dr Galen · 03-07-2012 01:30PM

So you must be basing that assumption on something then?

What has led you to believe this?

I'm not saying you are wrong here, just that I'd like to see how you arrived at this position.

Kinda like a Maths question, it's the working out that counts as much as the answer

djpbarry · 03-07-2012 01:41PM

creedp wrote: »

You, for instance, don't think that the massive increases in property prices which caused inflation and wage inflation which was driven by developers...

How did developers cause price increases? Surely increasing supply will depress prices, if anything?

Consumers cause price increases – everything is worth what the purchaser is prepared to pay.

Heads the ball · 03-07-2012 01:44PM

Dr Galen wrote: »

So you must be basing that assumption on something then?

What has led you to believe this?

I'm not saying you are wrong here, just that I'd like to see how you arrived at this position.

Kinda like a Maths question, it's the working out that counts as much as the answer

That presupposes we are in a teacher/student relationship and that may be true... But its certainly not me who is the student.

I am operating under the assumption people here have a basic grasp of economics and that they can see how reduced demand in the economy has lead to bankruptcy.

Heads the ball · 03-07-2012 01:53PM

Permabear wrote: »

This post had been deleted.

The CPI at end 2011 stood at 104.4, marginally lower than at the end of 2007 (104.7). The base rate of the dole was €188 per week in 2011, compared with €185.80 per week in 2007.

The elderly, who have seen no cuts in their state pensions, have more purchasing power today than they did a few years ago.

And yet people continue to bleat about the "massive social costs" of so-called "austerity."[/Quote]

Why should the eldery see cuts in their pensions? Moreso why should they see such cuts in a state that paid out unsecured bank bondholders?

Monty Burnz · 03-07-2012 02:00PM

Heads the ball wrote: »

Why should the eldery see cuts in their pensions?

Or, conversely, why should the elderly not see cuts in their pensions?

Permabear · 03-07-2012 02:00PM

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Laminations · 03-07-2012 02:03PM

Well you did ask what the left will do now

A: Invent 'massive social costs' ignoring the actual data

daltonmd · 03-07-2012 02:04PM

Heads the ball wrote: »

Why should the eldery see cuts in their pensions? Moreso why should they see such cuts in a state that paid out unsecured bank bondholders?

Because the state that paid out to unsecured bondholders is broke.

Permabear · 03-07-2012 02:10PM

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Heads the ball · 03-07-2012 02:11PM

Monty Burnz wrote: »

Heads the ball wrote: »

Why should the eldery see cuts in their pensions?

Or, conversely, why should the elderly not see cuts in their pensions?

Because most of them have been hit with the same indirect and direct taxes which we have.

Because people have a right to grow old with dignity in this country.

Because they are section of society in which there may be a high number of vulnerable people without a support network who have worked all their lives.

But maybe because if we really really needed to save a few bob we should not have guaranteed the banks or paid unguaranteed bholders.

But all that aside i dont think budget policy is determined in a "why should we not cut them" style approach.

So I ask you why should they suffer a further cut?

antoobrien · 03-07-2012 02:12PM

Heads the ball wrote: »

I am operating under the assumption people here have a basic grasp of economics

Given the statement below I'm wondering how much of a grasp you have on economics

Heads the ball wrote: »

why should they see such cuts in a state that paid out unsecured bank bondholders?

You do realize that the senior bonds are legally higher precedence that deposit holders right? If you do you'll be aware that failure to pay out senior bondholders (secure or not) means that the banks do not have to do something as trivial as allow you to access your current account funds. So screw up the bondholders, you're going to screw up the pensioners - among others

Heads the ball wrote: »

they can see how reduced demand in the economy has lead to bankruptcy.

They can, but it appears (to me and apparently a few others) that you're blaming the drop in demand on government cuts - which is fallacy of the first order considering in 2011 the current expenditure was higher than it was in 2007.

SW, despite reigning in on entitlement for new entrants under the age of 25, has raised by €5bn (15.5 to 20.5) - so we can't say that we're neglicting people - in fact they're still at/about the same level of income relative to inflation as they were in December 2006.

Permabear · 03-07-2012 02:18PM

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Heads the ball · 03-07-2012 02:20PM

Permabear wrote: »

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What your graph doesnt show is that the €16 a week drop in SW (€832 a year) has a much greater effect on those who are receiving that payment than those in the middle and upper classes.

Monty Burnz · 03-07-2012 02:25PM

Heads the ball wrote: »

Because most of them have been hit with the same indirect and direct taxes which we have.

Because people have a right to grow old with dignity in this country.

Because they are section of society in which there may be a high number of vulnerable people without a support network who have worked all their lives.

But maybe because if we really really needed to save a few bob we should not have guaranteed the banks or paid unguaranteed bholders.

But all that aside i dont think budget policy is determined in a "why should we not cut them" style approach.

So I ask you why should they suffer a further cut?

Because they get lots of money and the state is broke?

Heads the ball · 03-07-2012 02:26PM

antoobrien wrote: »

You do realize that the senior bonds are legally higher precedence that deposit holders right? If you do you'll be aware that failure to pay out senior bondholders (secure or not) means that the banks do not have to do something as trivial as allow you to access your current account funds. So screw up the bondholders, you're going to screw up the pensioners - among others

Thats a bit oversimplified: you are assuming an actual bankruptcy and wind up of the bank where there is a queue of creditors lining up to get their payments. This is not the case here.

Do you endorse the terms of the bank bailout?

Permabear · 03-07-2012 02:27PM

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Heads the ball · 03-07-2012 02:28PM

Monty Burnz wrote: »

Because they get lots of money and the state is broke?

Whats your definition of "lots of money"?

Monty Burnz · 03-07-2012 02:29PM

Heads the ball wrote: »

Thats a bit oversimplified: you are assuming an actual bankruptcy and wind up of the bank where there is a queue of creditors lining up to get their payments. This is not the case here.

It's not the case because bondholders were repaid.

Permabear · 03-07-2012 02:34PM

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Blowfish · 03-07-2012 02:36PM

Heads the ball wrote: »

What your graph doesnt show is that the €16 a week drop in SW (€832 a year) has a much greater effect on those who are receiving that payment than those in the middle and upper classes.

As Permabear pointed out, SW increased by €104 p/w since 2000. In essence, that's the equivalent of 6.75 increases of €16, compared to a single decrease of €16 since then. Taking into account the increase in taxation, the 'social cost' for people on SW really wouldn't be any more onerous than it was in 2006.

Ireland's debt deal: What will the Left do now?

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