December 7, 2008

Harsh lessons of economic history

Posted in International Economy · 159 comments ·
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Admittedly, looking out towards the horizon of the Indian Ocean from the volcanic heights of the French island of La Reunion is not the worst place to be writing about any economic crisis.

Indeed, when you read the history of this tiny speck in the ocean, almost a thousand miles from Africa and another couple of thousand from Australia, you get the definite feeling that this place has weathered worse storms. (Before you think I’m rubbing it in, I am working here for the French government putting a plan together to get this economy onto a more stable long-term trajectory. This type of strategic thinking appears to be lamentably absent in Ireland at the moment.)

In our current difficulties, we in Ireland could learn quite a bit from the economic history of trading outposts such as Reunion and other countries that shone brightly, only to succumb to bad decisions in the context of global upheavals. Regular readers of this column will know that, whereas many economists are concerned with how poor countries get rich, this column has always been equally concerned with the opposite dilemma, namely: Why do certain rich countries get poor?

Some countries get caught on the wrong side of global events and, due to no fault of their own, become footnotes in economic history. Other countries, more egregiously, get similarly caught on the wrong side of global events, but make things worse by bad policies. Reunion is an example of the former; Uruguay an example of the latter. Unfortunately, Ireland is in severe danger of becoming the Uruguay of Europe.

What makes the comparisons between the three countries – Ireland, Reunion and Uruguay – interesting is that, in their day, they were the poster boys of the three major eras of globalisation. Reunion was the poster boy of the first period of globalization between 1600 and 1800, when the Europeans first rounded the Cape of Good Hope and made the Indian Ocean their souk. Everything was traded here: spices, timber, gold, guns, slaves and, later, countries – and even empires.

The Portuguese, French, Dutch and then British fought over the few volcanic scraps of land that jutted out of the ocean. Reunion was one of the most important islands and later, after it had been settled, it became one of the world’s biggest producers of sugar. Disaster struck with the opening of the Suez Canal, because the world’s shipping from Asia no longer had to pass the Cape. Reunion went into terminal decline. Only the colonial architecture reveals the echo of its illustrious past. In fairness to Reunion, there was little it could have done about the geo-political shock that was the Suez Canal. More worrying for Ireland is the story of Uruguay.

Last year, when we suggested that Uruguay could be a warning for Ireland, we were scoffed at by the panglossian economic shamans who, back then, dominated discourse in Ireland. Now the alert doesn’t look so outlandish and it is worth considering the story again. It may be hard to believe now, but Uruguay was the world’s fastest-growing country for almost 20 years. It was the poster-boy of the second age of globalisation, from 1860 to 1930,when the Americas began to export aggressively to Europe. It had one of the world’s most comprehensive social welfare systems, brilliant infrastructure and, like Ireland of the past few years, a rapidly rising population driven by immigration.

So advanced was this small Latin American country that it was termed the ‘Switzerland of the Americas’. Uruguay was, in truth, nothing of the sort. Like Ireland today, it was a supply region. In its case, it was a highly efficient part of the global trade in agriculture. Uruguay was one of the world’s most competitive suppliers of meat, wool and leather.

Its farms were among the most productive in the world and, with the huge revenues it gained from this pre-eminence, the government invested in a modern welfare system, great schools and a European-style transport infrastructure. Montevideo’s boulevards were home to the finest fashions of New York and Paris. The virtuous cycle seemed to have taken hold. Because it was so brilliant at agriculture, Uruguay did not see fit to promote other industries or innovations. Montevideo was content to process agricultural products, add value and export them.

In the 1930s, things began to change. Agricultural prices fell worldwide. Uruguay suffered its first recession. Then, after World War II, European countries – having flirted with famine in 1945-46 – began to crank up agricultural production. Australia and New Zealand emerged as significant players in the market, and Uruguay’s period in the sun came to a crashing end. Money ran through Uruguay like a dose of salts and, 60 years after its heyday, Uruguay went from being the seventh richest country in the world to the 78th richest!

The main domestic reason that Uruguay messed up was that it tried to insulate itself from the changing global realities by expanding government employment. Rather than invest in infrastructure, it decided to hire more public servants and pay them better, creating a constituency that has held up reform in Uruguay ever since. Now look at Ireland. We are repeating these mistakes. Our pre-eminence as the world’s favourite multinational production location has been undermined by our own slipping competitiveness and the opening up of cheaper locations, particularly India. Equally, the cheap credit that fuelled our housing boom is gone.

Instead of facing up to our potential bankruptcy, we continue to pay public servants as if they were somehow special. Look at the two tables attached. In tables one and two, we see that our public servants are wildly overpaid when compared either with the private sector or their counterparts abroad. If we want to avoid the Uruguay situation, this nonsense of paying public servants more than anyone else has to stop.

The state needs to renege on partnership now and look for cuts in public sector wages. This will save the country from bankruptcy. If we continue along this outrageous path, Ireland will make the same mistake as Uruguay and see decades of hard work evaporate in a mirage of bad policy.

Here in the Indian Ocean, the history of Reunion – the poster-boy of the first age of globalisation – tells us that there are certain things you can’t change. However, the warning from Uruguay – the poster boy of the second age of globalisation – is stark. If we want to be remembered as the Uruguay of Europe, we are going in the right direction. If we want to do something about it, the time to act on public servants’ salaries is now. The choice is ours.


  1. John ALLEN

    Pay Deals………noboddy needs to emigrate from Ireland ….we have the best Production Centers ( Added Value ) , Supply Centers ( nearby Markets ) and Sources of Supply ( Materials ) and Skills ( Labour ) ………all we need to do is ..ADAPT and ..Manage it Competitively

  2. My Lost Generation

    Good article. Well it looks like the pig farmers will be queuing in front of Dell to get a job so they are definitely out. ”If we want to do something about it, the time to act on public servants’ salaries is now. The choice is ours”, you wrote this a few times already and I have a feeling it might be too late and ‘now’ has gone for a lot of things at that stage. As regards the choice being ours it’s clearly not. What is our choice David? What can I do, me, humble citizen when none of what I think or say is being taken into account by an elite class of politicians and senior executives whose have no interest whatsoever in people like me? What is that choice of OURS David? Or is it a figure of speech, something you wrote without really thinking of it?

  3. Deco

    David – interesting article. Once again you have pointed the dangers of current trends in Irish policy and where they could ultimately lead. I do not know if our policy makers are taking note.

    The examples that you provide share certain elements in common on their road to demise. Firstly they were pretty smug and arrogant to begin with. Or as we say in Ireland, proud. And in Ireland a lot of people are very proud. A lot of the time in an undeserved manner. Secondly, inefficiencies started to get built in. Fine if they can be sustained. Next, and extrernal shock hit. Next there was a ‘rabbit in the headlights’ response. There was denial. Then there was a stunned acceptance. Then somehow or other there was a response of ‘everything is fine’. And finally there was an intellectual malaise. Basically there was an intellectual path followed, which prevented any effective response. And the driver of this intellectual malaise is the need to protect the vulnerable, overpaid, wasteful, and well connected in positions of authority.

    You are saying that the ‘everything is fine’ moment is delusional. I agree. Everything is not fine. 400 Billion Euro exposure to the Irish financial sector, when the same fools are in charge of it, as created the mess is a recipe for disaster. Basically the future of Ireland is tied to the way the Irish banks are run. Commercial property loans are cratering. Residential property lots are sitting unsold. The whole system is near insolvency.

    We need to do something we never did as society in 70 years of Independence. We need to root out the nepotism and corrupt networks that are riddling Irish society and generating the intellectual complacency and malaise. This means the bankers must be replaced. The state sector will have to get overhauled to sut out all the jobbing that we are seeing, and get rid of unqualified and unsuitable people having positions of responsibility as a result of nepotism and politics. Forget about cancelling vaccination programs. Overpaid directors and managers in the state sector are killing this country. 18% of the HSE is ‘management’. That amounts to over 20 000 managers. 768 of which is high level senior management, which did not exist eight years ago. We probably have more HSE managers in this country than general practice doctors. This is silly. And inefficient. And they are not very sure of themselves, because they hire management consultants do deal with everything.

    The Germans have a phrase -”in a crisis, first step, fire the leading managers”. That is a key element in reform. Then we can have a more open debate about the problems we face, instead of all the coverups and drip-drip information feed to the public. It would also make our democracy, as well as our economy much healthier !!

  4. Perhaps we could do an exchange programme where we get other european states to give us their brightest young politicians and we give them people like Mary Harney and Jackie Healy-Rae. We’d learn plenty from it.

  5. Ireland is much more like the headless chicken of the credit crisis. There is no leadership, no single pied piper to lead the way out of the crisis. With all due respect to the government they are seriously out of their depth struggling to find which way to turn.

    Sadly the opposition is no better and rather than helping seeks to undermine the present (elected) majority ruling party to feather their own nest, stoking up the same electorate with emotive proclamations of how bad the government is, rather than working to contribute of useful solutions. Their goal is to provide the mirror image of the current regime instead of a cross party think-tank to steer the way out of the mess.

    There is little to be achieved in pointing fingers at the reasons or the responsible parties. No one drives their car through a rear-view mirror and we can’t change what happened.

    The lessons of the past are clear from your two examples and lest anyone forget we are no further than a generation from extreme poverty, industrial schools and mass emigration in the future or the past.

    Likewise injections of billions into the banking system will do little unless that same money can be loaned out to those who will continue to support and create employment and not be used (as can be seen in the US) to bolster the balance sheets of the banks or buy up other banks. There has to be a focus for once on creative indigenous innovative job creation, not additions to the already bloated semi-states, crony quango public sector.

    It is only wealth creation that will eventually pay off the massive debt now being used to avoid Ireland Inc. becoming Iceland mark II. A focus on stimulating global growth from Irish companies is the only way forward.

    Examples would be no CGT on the sale of indigenous companies where entrepreneurs would start companies, create employment, contribute to the exchequer and be rewarded for their effort. There is no cost now for doing this single alteration, but the rewards to encourage creative, wealth creation, employment and tax revenue could go some way to see a direction on where we are going.

    Who is going to hire the unemployed when Dell leaves to Poland? Where is Intel going to invest for the next generation of processor? We need more encouragement for those who came out of Digital in the 80′s and created the indigenous technology sector in Ireland.

    The alternative, as you say is to go down the route of Uruguay. Strangely enough I work closely with some software developers from Uruguay, so Ireland do not have time to spare on technology wealth creation either…..

  6. David is right, the buying of public servants votes by Fianna Fail, over the past decade, was a policy which could only end in the country´s ruination.
    This prescient “futuristic”video I made in April 2007. The scenario I envisaged is uncannily accurate and is still unfolding.
    At least I was wrong about the elevation of Sinn Fein to government, and the survival of the PD´s..

    http://uk.youtube.com/watch?v=aL7mOOSK1rw

  7. Malcolm McClure

    David: You are a brave man to venture to Réunion with its Rivers of Fire, Chikungunya-bearing mosquitos and population that has doubled since the 1960s. Maybe Ireland should count its blessings.

    Uruguay would have had a much more enjoyable subject for your economic punditry. I spent a couple of weeks there many years ago and it was like living in a time-capsule of the 1930s, with the lowest cost of living I have ever experienced. In many places it also has an extremely high standard of living. To get an idea, zoom-in to Punta del Este on Google Earth. When I was there, the older part of that city was a bit like Portrush , a sleepy resort built on a peninsula. Now it has thousands of villas with swimming pools lining its glorious beach, demonstrating that development done with intelligence doesn’t have to produce the results we have seen in many parts of Ireland.

    As you say, Uruguay’s wealth was based on being one of the world’s most competitive suppliers of meat, wool and leather. Therefore your comparison with Ireland is very apt, but we have allowed our many natural advantages in food production to be debilitated by generations of mismanagement. The pig-meat débacle is only the latest disaster. The concentration of meat production in super-abbatoirs has destroyed local preference for local products, which was the foundation and mainstay of French and Italian pride in their cheese, ham, vegetables etc.

    Bring back local abbatoirs and farmer’s marts, teach people to make distinctive local comestibles like those of Simple Simon, etc. and give consumers the choice to buy cheap and tasty, high quality, local produce.

    • Anna

      Totally agree, we have been badly guided by the Anglo-american way of doing things instead of the European model, which we are more part of than the latter.
      Oh, forgot we wanted to stay neutral (what a joke!!) and thanks to Sinn fein who are more British than Irish, convinced the Irish public a long with Mr. Ganley to vote no.Yes we should go back to letting our farmers do what they no best instead of making them buy feed that is harmful to all. We should do as the Europeans and recycle household foodstuff for pig feed, ring a bell, how we used to feed our pigs.
      We should also seek for the HSE guidance from Europe not America as Mary Harney has been doing, is she crazy! No accountability as we don’t want to upset the wrong people!!!

  8. Deco

    We have to something about the cost of electricity in this country. The Greens seem delighted that electricity is expensive. Fianna Fail seem to be looking after unions, and politcally appointed managers. The cost of electricity is a factor in the cost competitiveness of every Irish enterprise, and household.

    Maybe it is time for Shane Ross to open the books on the ESB, and let us see what is going on in there ???

    • A wind turbine farm has perplexingly been turned down by Offaly County Council in Ferbane (about two weeks ago) even though it satisfactorily met all conditions.

      At the same time, the old Bórd na Móna site at Lumcloon a few miles away is being touted as a new gas-fired electricity plant. …… Right beside an environment park. When instead windfarms there also would have best utilised the grid infrastructure.

      The solutions to our energy problems (vis-a-vis electricity component at least) are frighteningly simple. Why then are we taking the long road around? Comparison to Germany above in Deco’s comment suggests that the executives that run our lives for us are inept at best or purposefully malign at worst.

      Anyone who cares to look will see that there’s hundreds of megawatts of planned windfarm output that’s not being fastracked, but being delayed.

      Its not the 100% solution of course, but given that its such a simple, easy and positive step forward, why are the mass of Irish households and SMEs being led on the road to nowhere by the usurpers who claim to be true republicans. Will An Bórd Snip make any suggestions re our ill-advised energy policies? Don’t think so.

    • Anna

      Has anyone thought about having their own wind turbine? there are small companies starting up here, and they will be suppy to housholds and small companies. The only problem is that you can not connect to the national grid to sell on the excess, yes corrupt Ireland, ESB rules. Start to think independant. It will cost to start with but you should get pay back in 5/8 years, or get neighbours involved. At least you would be responsible for your own generation of power.

      • Furrylugs

        Sorry Anna. Missed this till now and it’s my field.
        If you spend E15000 on a wind turbine for your house you’ll be able to power the house generally speaking but you’ll have to be careful abot turning on the kettle and the shower at the same time. That is if the wind is blowing strong enough to get the max out of the turbine. Alternatively you install back up batteries at great cost to store the electricity. Before anyone jumps down my throat about the statement, I’m quite happy to flood the blog with KiloWatt Hour stats etc. Just trying to help.

        The simplest thing to do ,almost free, is to install an ESB nightsaver meter. Half price electricity overnight so you can get everything like dishwashers working off timeswitches first thing in the morning before you get up. Washing, Drying and Dishes dry to start the day.
        The only unbelievable downside is that the ESB double your standing charge to be this efficient.
        Essentially, you start saving straight away without spending more than 200 yo yos on the whole thing.

        The flaw in all this eco energy propaganda is that we are being educated to spend rather than save. Think savings instead of making another FF company rich by buying expensive equipment. Ask anyone that was duped into buying a pellet boiler.

        Damn Shame DMcW won’t let me advertise.

        • Furrylugs

          Oh yes.
          You get your hot water tank heated for half price too without using the oil or gas boiler. Works great in summer.
          Powershowers for half price.

  9. John ALLEN

    Power of Now – the electorate know what political & business decisions should be taken but are imperceptable and formless on the political radar screen where the power of Now is .We the Irish Electorate are complacent in allowing a political void develop with foreign underlying tones .Sharia Law in Ireland is creeping in and very much alive within their own community because they have an elected community council by their own people and have a voice to act at national level to do what they want to do .In other words their shadow Irish House of Commons is more effective than ours because we fail to manage ours properly.

    • Ruairí

      @John Allen – Like many others, I now have no idea any longer where your ramblings are going.

      as another poster Gerry Brandon said here, focussing on solutions, not problems, is the way forward.

      You mention Sharia Law glibly when in fact if we did adopt a more islamic approach to our finances, we wouldn’t have the house of cards that is now starting to fall.

      at least Sharia is a set of strict rules. I’m at a loss, as are many others, to know what the set of rules is to get on in Ireland. More a case of who you know than what you know.

      But to reiterate John Allen, one would be best served in attacking the strong, not the weak in our present society.

  10. Furrylugs

    For me the article is eclipsed by the authors circumstances. When, yet again, one of the finest economic intellects in the country is allowed to emigrate, albeit temporarily one hopes, to work on another countries rescue plan, I am left speechless.
    Uruguay is as Malcolm says and benefits from holiday traffic from BsAs across the Plate. It’s an excellent comparison to draw.
    One small poor State separated from it’s larger neighbour by a wide body of water.The odd thing about both countries, Uruaguay and Argentina, is that Irishness or being of Irish extraction is valued and respected.
    Unlike the ould sod where our masters are seduced by the silver tongues of exotic foreign consultants.
    Across the board it is now patently obvious that, on a staggering level, the ‘Pull’ factor has actualised, resulting in a morass of inability promoted far beyond capability in the Public sector.
    The question posed by My Lost Generation above “What can I do, me, humble citizen?” is being asked countrywide with the resonance of an approaching Light Brigade in full charge.
    People are getting angry now.
    Dispossession of homes, savings, pensions and basic standards is leading to a very unpleasant, if not dangerous, 2009.

    The government needs to listen and listen fast before the rumblings are translated to street action. We are much closer to that truth than people want to admit, with what I’m hearing around the country. Further ill conceived negativity in the form of cutbacks could well tip the electorate over the edge come this Spring..

    • Dr.Nightdub

      “Dispossession of homes, savings, pensions and basic standards is leading to a very unpleasant, if not dangerous, 2009.

      The government needs to listen and listen fast before the rumblings are translated to street action.”

      I agree Furry – but the spark that sets everything off may not necessarily be economic, it could be something entirely non-economic related that sends the tinder-box up.

      Look what’s going on in Greece this weekend. AFAIK, their banking system and government finances are in as much chaos as ours, and the population are probably living with the same fears about the immediate future as we are. The cops shot and killed a young kid and the whole of Athens has erupted, interior minister has resigned.

      A non-economic event taking the lid off the saucepan to let a whole load of boiling economic concerns start bubbling over…

  11. Garry

    While I agree 100% with Davids opinion on public sector pay, I think that the ESB crews who repair the lines etc after storms should be well paid, its tough work. I’m not sure how much on electricity charges is down to pay levels in the ESB, benchmarking etc……That said I dont know how the ESB compare with equivalents internationally, just that the price to consumers is higher than it should be here. I did hear that prices were higher because of the regulator trying to encourage new entrants/green technology but I don’t know the extent of this

    The ESB should be looked at but the regulator should also be accountable… Spot the pattern yet……………… there is a whole industry of regulators making a fortune, while producing nothing of value. Again, who’s handling the pork crisis, another well paid so called CEO…what does the department do?
    http://www.fsai.ie/about/organisation/about_orgchart.asp

    Either halve the staff in government departments or shut down the qangos. I have no connection with the ESB or anyone working there but I’d much rather see their repair crews being paid well than the makey uppey CEO’s that are multiplying at an alarming rate in the defined benefit public service,,,,,

    I strongly believe public sector pay needs to be slashed by the same amount the governments revenue has been slashed. and that this message is too important to be distracted

  12. VincentH

    Tables one and two ?.

    But what you failed to mention about Uruguay was that the place was being run by a cohort of native families who remained fairly rich at a global level. And also the fact the place was alive with anthrax and other nasty things.

  13. Fred

    “The main domestic reason that Uruguay messed up was that it tried to insulate itself from the changing global realities by expanding government employment.”

    The downward spiral in economy will continue indefinitely when we are ramshackled with such a high public sector wage and pension bill. These “root and branch” reforms seem to result in just more reports being published and more committes formed.

    We are constantly being bombarded with biased statistics defending the public sector’s pay vis-a-vis private sector so it is refreshing to see the table in article.

    It’s obvious that making token snips at top income public sector earners is not going to get us out of the woods. The public sector have no performance standards, are bloated beyond reason for such a small country. Also they earn ridiculous amounts of overtime (for example, the prison service) and even those close to retirement age, get time off / free tuition for education courses un-related to their work. Many of these administrative jobs are obsolete due to advances in IT but their HSE job security prevents reform.

    For example, powerful self-interest lobbying groups like TUI have the media’s ear sensationalizing regarding class-pupil teacher ratios and college registration fee hikes when not too long ago (mid-80s) the average class size was around 30-35 : 1 and college fees were 1,000 punts p.a. Teacher should be willing to take a pay cut if they are so concerned about their students, instead of spending all their time garnering support for their cause at student-parent meetings and stirring things up when they are more than their counterparts in the rest of Europe.

  14. Deco

    VincentH – ah yes I see your point. An elite in charge of Uruguay – who continued to live in comfort. Protected. Insulated from the hardship of the situation. In control of the state also no doubt.

    As Furrylugs says – just like here. Ireland is rotten with nepotism. What Shane Ross calls the incestuous network of Irish Commercial life. Banks. Retail groups. Merchants. Property moguls. Commercial property owners. Developers. We have the Economic Rent infrastructure(ERI). All elements are united by the same self interested principle – the attainment of market distorting position by the few, at the expense of the many. The brown envelop culture in the Planning Tribunals is the result. The professions and the public sector are doing the same thing. Plus all the self regulating industries. Obama in the US has resolved that it is the job of government to see the big picture. This has not been done in the US since Eisenhower.

    Not one single TD in Dail Eireann has worked in the foreign owned competitive sector. Not one. Lawyers. Publicans. Teachers at various levels. Social Workers. Student politicians who became career politicians. Even the farmers in the Dail are only representative of a small section of the farming population, like Parlon. The “choice” is often a joke. Only local issue independents like Finian McGrath actually represent a choice for the people-as they follow their constituents. I see that there is rising discontent from the FF backbenches-but still no revolt sufficient to remove all the clowns on the FF front bench. And in any case the Greens prefer the clowns on the FF front bench to everybody else-including especially back bench FF. So unless there is a FF revolt, we are stuck with what we have got for another four years. In the context of how quickly things can go from bad to worse-that is too long.

    In the local election – we canll have to apply ourselves carefully so as to root out the nepotism.

    • Furrylugs

      Horrific stats Deco. To think we’re in those hands. To continue the clown theme, as a kid, there wasn’t really any difference between Duffys and Fossetts. No-one noticed until The Moscow State Circus went on tour.

  15. Deco

    Fred – INTO president Joe O’Toole refers to the state as an ATM machine. The teachers can take as much as they want out, but they should not go too far in case they empty the account completely. (and then they get found out).

    You might find this link interesting

    http://www.irishtimes.com/newspaper/opinion/2008/1101/1225321621904.html?via=mr

    I reckon we have the most expensive teachers in Europe. They should take a pay cut and go back to the EU average.

  16. Tom Kirwan

    David,

    Your at your best when you draw lessons from the arc of history and geography – an Irish Thomas Friedman I guess.

    The most recent Economist Intelligence Unit Briefing on Ireland (http://www.economist.com/agenda/displaystory.cfm?story_id=12664671) should be required reading by everyone in the Irish Government and for anyone else who can potentially influence the economy and strategic thinking in the coming months. It reinforces David’s point that if the policy makers don’t get it right now Ireland is in for years of economic decline.

    Beyond stating the standard set of woes impacting the Irish economy – housing bust, rapid decline in domestic consumption, no relief from exports because of the International economic crisis and so forth, what struck me, and what separates the worsening economic situation in Ireland from many other countries battling the current economic crisis was this line, “the country’s public finances are now in a state of crisis unparalleled in any other developed economy”.

    Here are some additional nuggets from the same report:

    “a fiscal surplus of 3% of GDP in 2006 has turned into an estimated deficit of 6.5% of GDP in 2008, which on a comparative basis is by far the most rapid two-year decline of any euro area country since the single currency was launched.”

    “the extent of downside risk to the Irish economy is currently without precedent”.

    “our current forecast of three successive years of economic contraction could yet prove optimistic.”

    The Economist is generally not given to hyperbole which makes this prognosis all the more worrying for Ireland. The problem is clearly stated and now is the time for leadership in the country.

    • Johnny Dunne

      Tom – this analysis from the Economist’s Intellignece Unit briefing I’m sure was drawn from the “Economist Conference’s First Business Roundtable with the Government of Ireland held in Dublin last month attended by senior representatives from the government, business and academic sectors.
      http://guest.cvent.com/EVENTS/Info/Summary.aspx?e=47e7f4e5-f5c8-4a0e-9e37-b54f21669dd3

      if this is the summary from the ‘Economist’ after the day’s ‘discussions’, then everyone attending including the Taoiseach, Tanaiste and the Ministers for Finance should be well aware of the problems and open to solutions ?

      There must be ‘quick win’ policies which promoted correctly could have a significant impact on stimulating the economy by generating additional exports and employment opportunities greater than EI & IDA targets. National income is decreasing due to reduced consumer demand (VAT down 8% year on year), decreasing investment (Capital Gains Tax and Stamp duty down over 50% year on year) and less exports (corporation tax down 20%).

      Tax revenue is down €6 billion (13%) compared to the same period last year from €45 billion to €39 billion while current public service expenditure is up €4 billion 10% from €40 billion in 2007 to €44 billion so far in 2008 — that’s a swing of €10 billion. Health, Social Welfare and Education up €3 billion – there is now sign it won’t get bigger !

      How about trying to move the revenue line back up if we can’t seem to slow the pace and cut public spending ?

      - Increase the number of Multinational Companies (MNCs) trading from Ireland
      - Increase the number of Indigenous companies exporting and operating from Ireland
      - Provide Funding to the private sector to attract export oriented commercial activity in Ireland

      Good to see the reinstatement of the the ‘remittance’ tax regime for foreign executives working in Ireland. This is an important step in promoting Ireland as a destination for ALL international businesses. Let’s see the promotion ?

  17. John Curran

    Well done David. Keep it up, maybe someone will hear you eventually.

    To be honest, I despair. I fear that our country is being ruled by a not so elite and not so intellectual, but well connected and self preserving political class. This class have their roots and derive their allegiances from a politics that is long sice useless. That politics is the politics of the civil war. Why do our electorate have to chose between 2 right of centre parties with the same policies dressed in deiiferent clothes at every election? Why are our bright and talented young stars lured into this defunct game when they would be better served and indeed where they would serve the country better in a NEW POLITICS, without the begrudgery and bitterness of the civil war?

    Why are we being lead to hell by a bunch of cowardly and introspective fools? Why should we not expect leadership on the national pay deal until the new year? Why is there even a debate over the sale of Aer Lingus to Ryanair?

    I work for the HSE, as a non consultant hospital Doctor……we are probably going to be hit for a few hundred million of savings. Thats ok….we all have our part to play. But why are we being asked to provide the majority of savings when we make up just 5% of the HSE’s staff? Lets have an across the board levy on HSE pay, applicable to ALL GRADES. From senior manager, to senior manager’s dogsbody, to junior Doctor, to nurse, to ward clerk.

    I work for the public sector and I say CULL THE PUBLIC SECTOR. I say to my goverment, SHOW SOME COURAGE. Take the hard decisions……not in terms of withdrawing vaccines or imposing 1% levies or cutting english language teachers for non-national children……but more importantly, in terms of taking on the unions, in terms of cancelling the ridiculous national pay deal, in terms of selling non core state assets (as per MO’L).

    I despair. But who will I vote for in the next election?

  18. John ALLEN

    Ruairi – I believe I have made my statements clear …do you have any question ? why are you confused ?

  19. Al

    Bonsoir David,

    As my wife is from that part of the world, I’m curious as to how you see the Réunionaise economy developing. Will the plan you are working on be available to the public in the coming months?
    If things continue downhill here I may need to brush up on the old francais or learn some kréol…

  20. John ALLEN

    DMCW- its 40 years old today that Pearl Harbour was bombed……and of course u are on a peaceful mission in the pacific

    • b

      Sorry to be a pain but 2008 – 1941 = 67. The 40th anniversary of Pearl Harbour was in 1981 not 2008.

      Also now that I am being pedantic Uruguay is on the ATLANTIC coast of South America and Reunion is in the Indian Ocean. I have no idea where you get the Pacific from. I am sure in the Da Woo Woo code all these places are where you say they are.

      The public service is a millstone around our necks. The government insists on running semi state businesses badly and I need say nothing about the HSE that has not been said before.

      And yet after the hand wringing and the gnashing of teeth we won’t do anything apart from rearranging the deckchairs on the Titanic. We keep a hand in Aer Lingus to shore up the North Dublin consitiuancy and leave the ENTIRE job of the opposition up to Shane Ross who called them on Fas, Broadband and all the other obscene waste in the public service.

      We will whinge and moan to each other but we won’t stand up and say that this is not good enough. This fear we all seem to have of making a fuss is what allows the public service walk all over us.

  21. Garry

    As criteria such as ability to repay have again become important in deciding whether to lend, Biffo will run out of rope unless global events turn around very quickly. With declining revenue the figures will make bankers very nervous about lending to us should trends continue.

    Would you loan a company money to pay salaries in the present climate with no plan as to what those people will do to pay it back? That is what is going on at the moment in Ireland. There is a national development plan but that is just a figleaf for borrowing to pay salaries, it wouldn’t stand up to serious scrutiny.

    Personally I hope there is a dramatic global recovery starting early 2009 but failing that the best scenario is for the governments hand to be forced sooner rather than later with the global credit crunch. Somebody needs to take the shovel away from the idiots who are digging us ever deeper into debt.

    There are projects that need funding and would be good investments for which we should borrow but this inability to differentiate between good and bad public spending will cost us dearly…

    good post John Curran, good to be reminded that there’s great people in the HSE. I’m sure there’s loads of great people in there, but collectively the whole is less than the sum of its parts.

  22. Deco

    John Curran – there has been an information technology revolution in the private sector. This means that the number of employees involved in administration and management and other similar tasks has declined relative to their relative output. Software has replaced clusters of desks. It has also enabled efficient resource allocation. But this only came about as a result of competition. And the more competition you have in the sector, it seems the greater the productivity gains. For example in air travel, the internet and online booking has dropped the cost considerably to the benefit of people on very low incomes who can no fly to destinations only the rich could visit fifteen years ago.
    In the public sector we have had no productivity drive. I work in software. I can tell you that the same improvements are waiting to be applied to the public sector. And in some countries in Northern Europe, and certain US city governments and states, these have already been implemented. The HSE IT project is a joke, because the same project has been successfully implemented right across Europe in countless countries and cities that are larger than all of Ireland.
    But here we have a union group representing a massive constituency who do not want to improve the efficiency of the public sector. End result – no improvement, and money wasted on trying to change things. I actually blame the senior ministers. The likes of Dempsey, Cullen and Harney are not serious about fixing these issues. Reform will not happen. RTE and the Irish Times seem to be completely aghast at this happening. Personally I think it has to happen. I would rather see the managers and the admin staff in the HSE getting out of the way of the front line professionals, and then go on FAS courses to learn something useful. This would enable the nurses and the doctors get whatever support is necessary, in terms of funding, information, and equipment to solve the problems for the patients.

    But the problem is that the useless element in the public sector is connected to the political establishment. And this highly politicised group of people are attached to the front bench of two political parties in particular, Fianna Fail and Labour. It is an each way bet. It is a very clever way of controlling state policy and tax resources to maintain the nonsense. No matter what happens you will have a government that includes either one of these two parties.

    So we will have to live as healthy as possible and stay out of hospital. It is the only way that we as individuals can deal with a mismanaged, politicised, British Leyland like health services, with irresponsible unions and incompetent nepotist management.

    • Nono

      Deco,

      I agree with you in most of your post except when you say that the blame for the failure of PPARS and other IT projects in HSE is solely due to politicians and senior management of HSE. The senior management is certainly to be blamed but the doctors and nurses have a big part to play in the failure as well. I know someone who worked on PPARS and the resistance from doctors and nurses was unbelievable. The reason why is that they didn’t want of a system that would keep track of their hours and much preferred the old system (unreliable paper based) because they could play with it. They could basically get paid more overtime that way (after all, it was easier to lose paper and pretend you did the hours you didn’t do that way).

      • John Curran

        Nono,

        I dont like your tone. I have worked as a non consultant hospital doctor since 2001. I was never asked what I thought of PPARS. Nor was I ever shown any form of prototype or proposed electronic system which could track electronically my overtime. I never gave any resistance to the idea of PPARS, and I dont know of any junior doctor (or senior doctor-who dont get overtime) who resisted it.

        I dont know what you are talking about when you say that the resistence from Doctors and nurses was unbelievable. I think you are making it up. If there had been such resistance, dont you think that Harney and co would have referred to it with their well-oiled PR machine when the whole thing was exposed as the 170 million euro farce that it was?

        Wake up.

  23. Philip

    Like many of you have said in agreement with DMcW we’ve no strategy and basically we need to fire the top management. It needs to replaced fast.

    We need a few more FAS/ Pig Feed Dioxin cockups before this will be countenanced.

    My sincere hope is that no one will face physical injury or worse before the firings begin. The fact is that the outrage out there is real. Loved ones are now being cried after as they leave our shores trying to get a job abroad. People with serious qualifications and experience are out of a job for the last 6 months or so – and they are not in construction!!. But the toll roads are still ringing up the cash registers (wrongly! in many cases) as people desperately hunt and commute to new jobs.

    We are not now and never really have made use of the brain capital of this country.

    Strategy now needs to be very different. Recovery to the same as the last 20 years is not possible. The incompetence we have had over the last few decades has hidden what is an emerging Malthusian vista brought about not just becasue of environmental issues, but because the productivity of people has if anything dropped off to near zero. Effectively, our rush to the bottom to be more cost effective has simply meant leveraging cheaper and cheaper labour forces while never really innovating to keep ahead of emerging scarcities. The west fell in love with cheap toys and used a property bubble to pay for it while real science and tech stayed still. Why build electric cars when you can build the crap ones at lower cost abroad stick an MP3 player into it to make it appealing. Why build a proper rail infrastructure or health service when you can sell even cheaper old tech cars charge VRT and have private companies charging tolls for using them (nice use of managerial talent there eh?). The whole system is geared around collecting money to feather the beds of economic rent collectors – and it’s not just in Ireland.

    I think comparison with Uruguay is valid to the point of not being able to stand a changing competitive landscape where Ireland only is impacted – as per the Economist. But I think we are witnessing something even more sinister. This looks like everyone’s Uruguay. No one is escaping and it’s happening very fast and globally. The unemployment numbers in the US are far more shocking than expected. The impacts in China are such that we could be looking at oil prices dropping to below 30USD/barrel by mid 09.

    For me , it seems ridiculous that mere demolition of “money” freezes up the human capital of billions of people. But it does. People are prevented from using their talents for the pursuit of money. If you freeze up talent like this, large scale, you are risking billions of lives, becasue the malthusian reversal effects of talent and innovation has been squeezed out – and the 1930s depression will look like a summer picnic in comparison.

    Since joining these pages, I have been regarded as very negative. No quibble with that. But I am optimistic that this crisis will precipitate a proper change away from the nonsense of the last few decades and that the educational quotient of the population may help prevent that change from being a violent one.

    • Furrylugs

      I wouldn’t agree with you being negative Phillip. Pragmatism derived from exposure to diverse attitudes may lead less enlightened souls in Mother Ireland to stamp you negative but shurely that attitude has left us in this tribal mess?
      Take a pat on the back for being realistic.
      The man stamped as being the most negative good for nothing who should have committed suicide, to quote our previous Leaderene, actually hosts these pages.

      You’re in good company my friend.

  24. Declan Osler

    Heads need to roll.

    Explicit comparisons of pay scales in Ireland in comparison to our European neighbors/competitors must be made available for all jobs and professions. Though pay is much more generous for many jobs the difference for consultant doctors is particularly remarkable.

  25. Garry

    The port crisis has exposed another quango to the public eye, FSAI, a staff of 90 and yet didn’t catch a major food scare that has resulted in ALL Irish pig meat having to be taken off the market…. apparently the Italians were the ones who found it and told us.

    A look at their website shows the prototype quango, grandiose titles, boards of directors all very expensive people, backed by government law/unaccountable and all lost in the twilight zone of defining best practises, standards and advertising while avoiding doing any real work.. We would be better served with the same number of staff but some inspectors, lab equipment and graduates.

    The hidden cost of this quango is their best practises are so aspirational that starting a small scale food business in Ireland is prohibitively expensive. But no matter, the website looks great and the aspirational nature looks good on the powerpoints, and suit the established players just fine.
    This is what happens when you give bureaucrats too much money they invent more bureaucracy.

    • Furrylugs

      And we had this before Garry. Bonemeal feed caused Mad Cow or as my Argentine friends call it, “El Bife Loco”.
      What happened on the Cooley Peninsula in ’79? Anyone that was there knows how and why the Bife went Loco.
      But we got away with blaming the Brits.

      FSAI my a**e.

  26. [...] than the public sector’s: in Britain by 8%,Germany 5%,Denmark 8%,Finland 12% and Netherlands 0.4%. Harsh lessons of economic history | David McWilliams The bad news in these figures is that RIPOFF Ireland is going strong in public sector pay. If the [...]

  27. While Uruguay is of course a good economic model from the past to make a comparison with why not stick closer to Europe and use Romania ? , As today here we have a very similar set up to what they had less than two decades ago, we have an elite group right across the board milking the country from our over paid politicians through to semi states, quangos our Bank Managers the HSE management and our Educators the university Management.
    Many articles ago when Mr Williams was talking about the property slow down and what will happen here in the next few years I wrote it would happen sooner , and I also called for a revolution and upset Lorcan in doing so but now it’s happening any way.
    Ireland Inc for the last decade has been living a lie ,the American dream we all thought we were better than we actually were and with the advent of cheap money our leadership creamed off the profits while the majority didn’t question it as the ‘I’m all right Jack! ‘ attitude prevailed. So we just accepted the corruption as we were at least getting a taste of the cake and were all clapping each other with each house we made a killing on and became more arrogant and too big to do jobs in the services industries when we could pay Eric from Poland our minimum wage or Zina from Latvia to bring us our cafe lattes. And Bertie sure he was a great fella attending all the Dublin games and also supporting Man United and sure wasn’t he ‘sorting out’ northern Ireland ?.
    Now the hypocrites that we are there is an out cry with the volume of ‘Irish’ going over the border to do the weekly shopping , these hypocritical class are no doubt the same bunch who were praising Bertie the crook that he has been shown to be , and it’s scary that their is today a group looking for him back , which baffles me as he is responsible for the economic mess we are presently in !
    We have been living in an never never land for too long and the bubble had to burst , what has the F.F back bencher’s worried now is the realization that this new order is beginning to see we need a change here , a break from the ‘old school’ parties and if they have any balls or if they want to surrive in a political position they cannot sit in the dail and wait for four years it will not be Uruguay we’ll be like but Uganda will be a better comparsion.
    A radical change is now required here from the scrapping of state pensions to retired politicians and public servants to the capitalization of our main banks and the sacking of the present management teams there who believe they deserve their million plus salaries along with a complete over hauling of how our public services is operated.
    And the likes of Michael O leary should be allowed take over Aer lingus , while some may not like him at least he tells it like it is and stays here to pay his taxes.
    Ireland has to wake up and wake up soon and sober up to what we are facing , we are after all a small island and we can get our selves out of this mess.
    The party is without doubt over it’s just a shame when we were eating our share of the cake we didn’t think of saving some of it for the day after !

    • Furrylugs

      Another well thought out article Brendan. O’Leary however, in my opinion, is another populist non-intellectual . Another version of the silverback bull appealing to the great unwashed.
      It’s a very healthy thing to upset Lorcan though. I find his posts meaningful and incisive. This is what this forum, to me as a relative newcomer, is all about.Thorough mature debate. Giving as good as you get.
      We here, may change nothing on these pages. The powers that be dipping in here may see some middle aged people with nothing else to do but post vacuous opinions, but that is a grave mistake.
      I always leave here the stronger for reading opposing debates. It’s a credit to our host that we are allowed this forum. I go away from here with a balanced opinion and when I’m asked that opinion, I can give it in a meaningful and informed way.
      I knew nothing of economics prior to finding this site, I still know nothing of economics, but now I understand what economics is supposed to deliver to a socially inclusive Juristiction. We are the better for the debate.

      Lorcan will eat the head of me now.
      Nite folks.

  28. Colin

    I blame feminism.

    If the women had stayed at home instead of having careers, house prices would have been kept down, which would have meant lending was lower, which would have meant the banks would not be in the mess they are today.

    Fellas these days brag about how much their wives earn. Men should instead be bragging about how good their wives cook, look after their looks, parenting skills, supervising the kids homework etc…

    I envy my father and his generation so much.

  29. Furrylugs

    Important news before I log off.
    It’s 79 degrees with light winds and occasional cloud in Reunion tomorrow but fine for the week after.
    Lucky B*****d.
    Slan

  30. The Mediator

    Yes Colins comment is suicidal but there is an element of truth in there. We’ve moved on wholesale in this and other countries to a different model
    of society where all “must” work and in particular where women “must” work out of necessity not choice. Its now so ingrained in the public mind that if
    one wishes to have a one bread winner with mother at home model (not for life but during the childrens formative years) one is seen as being foolish/ignorant
    and undereducated.

    Our society is falling apart at the seems with people talking of being unhappy and marriages failing under stress and pressure of commuting/working while
    our children are being raised in pens (I mean creches). A long hard look at ourselves and our society is required but I think we’re too far gone at this stage
    to realise just where we’re at and where we’re headed.

    • Furrylugs

      Agreed Mediator. Twas the form of words rather than the sentiment I was referring to. I had a discussion with an ardent feminist once and my argument was that “womens lib” served business well by throwing cheap labour onto the market under the guise of “freedom”. The flaw was that women couldn’t get away from childbirth so they ended up doing two jobs instead of having a real choice.
      I too think we’re too far gone. Economic necessity means having as many jobs as possible to survive while the kids are dragged up rather than reared.
      Pauls comment below is very valid.
      The next generation may have to deal with the level of sink estates that Britain had to contend with after the planning fiasco of the Sixties. Many towns there have ethnic no-go areas, a distinct lack of understanding of the need for collective policing and little loyalty to authority.
      I think we’re heading that way at breakneck speed.
      Shame.

  31. Philip

    I read that over a third of Poles have plans of heading home in 09. Of course some might say, great! we’ll have loads of empty vacancies we can fill with paddies. Think again!

    Traffic was cruel this morning. M1 was chockers going at 1 metre / hour seemingly from Belfast to Dublin. Plenty of fuel tax heading into the coffers while productivity heads further south.

    Gormley & the lads would do this country a great service by stepping down now. The longer they hold out, the worse it will be for their party. They were supposed to be the agents for change and little has happened except mess around with some taxes. Boy! are they so not going my vote if this goes beyond the New year.

    Backbenchers must be getting nervous. Keep calling them and letting them know how cheesed off you are. This is how change happens. The guys at the top have to go. NOW.

  32. A friend of mine forwarded this link on to me about the “cost of checks” in a software organisation. http://www.paulgraham.com/artistsship.html
    The gist of it is that sometimes checks that are introduced in a company specifically to increase efficiency have the opposite effect. The specific example is a piece of software that has to be sold at 10 times the cost for a smaller company due to the overhead of dealing with a large company’s process.
    This kind of thing is rife in our civil service and need to be refomed. There’s a trendy private sector loathe-fest going on now where various public sector groups are attacked as being lazy or greedy. While it’s definitely true that there are some elements which are both but often those in the private sector simply don’t appreciate just how much red-tape is required to do something simple.
    I’ve worked in both and I couldn’t afford to employ people to follow the process expected in the public sector. Public procurement in particular can be highly problematic and apparently inflexible.
    Most of these checks have been introduced in good faith but they contribute to the number of administrative staff required. The other issue is that the checks for those at the top of the public sector, as evidenced by the FAS debacle, can be quite lax. It’s dubious that FAS underlings could have travelled first class as they’d have to provide written justification for doing so. They might get away with a business class trip for an emergency meeting where no other flights were available but otherwise the state body could refuse to pay. Rules exist to prevent these things happening but who is going to tell the countries top civil servants they can’t have perks that they’ve come to expect.
    Also, performance related pay needs to be instituted throughout the civil service. If you’re working hard you’ve little to fear from it. If you’re an organisational passenger then why should you automatically expect a pay rise.

  33. The Eye

    Its very simple David give us a leader with Balls, to guide us not cowardy Cowan…..its all about confidence and FF or FG are so busy fighting over bullshit that they have missed the point of whats going on… U turning on everything just makes me think that everything with Cowan is an afterthought. People must understand that our boom years had nothing to do we F.F (Slapping themselves on the back) and everything to do with cheap money and business knows that during the goodtimes you keep a stash of money away for the bad times and not spending everything to buy friends.
    The Answer is bring out the leader for War before we all die.

  34. The Eye

    Philip wait till you see what happens after Christmas when 200k Polish and Eastern Europeans dont return head off to London and elsewhere and watch how far rents drop leading to alot of people paying two or three mortgages forcing a further property meltdown.

  35. Michael

    David,

    I agree that we are in danger of becoming a Uruguay of Europe. I also believe that we have the capabilities and resources as a people to prevent this from happening. Just wondering whether the Irish government have ever approached you on helping them to put an economic plan together to us get through this mess? It seems to me that the only consultants that the government seem to appoint are those who tell the government what they want to hear. It is time for a reality check and we need people like you to be in the influential positions to bring about the necessary change this country needs.

  36. Garry

    exactly Shane.. We create bureaucracy to provide governance and oversight. They do exactly that, spend weeks and months drawing up ever more perfect systems that sound great when presenting to their peers but just add huge costs to anyone who has to deal with them.

    And we act surprised; but the bureaucrats have done exactly what we asked them to do. The problem is you cannot charge for going through their process, its a hidden cost on the supplier. At least in your example a small company can chose not to sell to such organizations or at least jack up the price. I supply to a big company and worked around it by signing whatever bullshit their bureaucrats wanted. Risky but either that or work for nothing for months going through the process..

    With the quangos, add in the corruption of the English language…. Their “customers” are no more customers than purchasers of Tony Sopranos protection services, the qango is backed by law, if you want to stay in business you must deal with them and go through their process. And they are not shy about letting you know this as they jack up the prices.

    Its all aspirational, sound wonderful but its all bollocks. Some businesses succeed despite them, some get worn down.

    If the software industry was regulated, there would be no small software companies in Ireland. the quango would have everyone at CMM 5 or some such ‘standard’ that encourages the consistent production of mediocrity while doubling the cost base. It works for India or places where costs are low enough to throw dozens of people at the problem.

    I don’t blame the people in the quangos, but the fact remains they are part of the problem.

    • Yep, I agree with you. I guess it’s important to understand though that the public sector isn’t populated with cartoon baddies who are out to rip off everybody in the private sector. It’s just not the case. Public sector problems are often frustrating for those working in the civil service and those dealing with them. It often feels like there’s a huge superstructure that is serving nobody but the system itself.

  37. eoin

    Cowen, Lenihan, Coughlan and Kenny all inherited their safe seats from their father.The lack of talent in Dail Eireann is frightening.Cowen is so out of his depth, you may as well ask him to play rugby for New Zealand!.As ever emigration will rescue the public finances and the rest of the economy.The lack of action from our “leaders” is unbelievable.Who gives a toss about Lisbon?.

  38. un Reunionnais en Irlande

    I think our gouvernement in Paris got it cul volte-face, M. David. It is you of whom we are in need here; let les deux Brians untrammel the trajetoire of our little economie. I am even in the process of arranging the sale or location of a bijou pied-a-terre (prix negociable) in which the two gentilhommes might be permitted to be, how shall I say it,
    incarecere a longue terme on our isle of paradis.

  39. Paul

    I live in a middle class housing estate in Dublin, the kids have everything they could want, they don’t know what a hard life is. But, they all act like little knackers, we have trouble on a weekly basis, and god help you if you try to tell them off for damaging cars, and property, they get offended, when you tell them “NO”. The attitude from the community though is just as bad, the attitude from parents and neighbours is “its not my problem”, but then again their parents are at work all day, and I don’t think they give a rats ass what their kids are up to as they are too busy paying off all that personal debt. This is not scare mongering, this is everyday life on an Irish housing estate. I was over West at the weekend, most people I spoke to are either already on the dole, or they expect to be on the dole in the new year.
    I get the impressedion in Ireland that there is this attitude where everyone is out for themselves, there is no community anymore, so we are pretty screwed.

  40. The Eye

    Will somebody please explain to me why nearly all the Government keeps pushing the Lisbon Treaty business on us again and again , Lets be honest they do not have our best interests at heart if they did they would listen to the vote of the people, Its a bit like although F.F won the last election maybe F.G should have so if they change a few policies can we re run the Election?
    .I honestly suspect that in their warped power grubbing minds that to be perceived as a non Lisboner could mean the end of a ride on the Brussels gravy train at the end of their Irish careers. (The Mc Creevy Factor)
    Somebody show me the light.

  41. MK1

    Hi David,

    I hope the nicer weather in Reunion is treating you well.

    > creating a constituency that has held up reform in Uruguay ever since

    We already partially had this Public Sector problem. In the 1970′s, when the public sector got ‘ahead of itself’ (ie: got paid too much for what it did) it held the country back. This remained for many decades and the remnants of it are still there although there was some repair made during previous hard times. We have a poorly performing public sector now, and indeed arguably always have. The country gets by in spit of the public sector. Then when a period of real economic success did come to Ireland about (1995-200?), the public sector brought in so-called ‘benchmarking’ which was ‘unwarranted salary increases’ by another name. They cahnt lose, they run the system, they make up the rules as they go along. Little wonder that so many have joined their lazy (collectively) ranks.

    I think many in the various political parties do now realise we have created our own problem, when its clear to all and sundry that the sh_t has hit the proverbial fan, but its a nettle that few in power are willing to grasp and resolve. 60,000 protestors on the w/e were an example of how difficult it is to make changes in the public sector, and the people tasked with cleaning up the public sector are polticians which are closely linked with the public sector itself. Farmers do not cull their own ‘pigs’ willingly! And this current government doesnt have the stomach for it I would expect.

    Like the proverbial dog, we have made our bed now and we more or less have to lie in it, as change (fixes) to the public sector will only happen slowly and will be fought tooth and nail every tiny baby-step of the way.

    Enjoy the break ….. and bring back your remaining euros to Ireland – as well as some not-so-common-sense !

    MK1

  42. Philip

    The further from Dublin and main urban centres you are, the more Ould Ireland it becomes. That’s becasue it never got off the ground – so little changes. And most of our Politicians hail from these regions and are used to looking down on the common local yokels. No wonder they do not understand or want to understand modern Ireland. It’d be like explaining democracy to a medieval monarch. Does not compute!! and you ‘d wind up in a dungeon for the criminally insane.

    Little changes in the civil service as well. In spite of new IT, they still use old practices – process reengineering is a case of turkeys voting from Christmas. I know departments and semi-states (FAS being one example as well) where it is forbidden to do your own typing. All must go via a unionised typing pool !

    There is one worrying aspect to the Uruguay example mentioned by Malcolm M. and others and that is the present day existence of an elite still living in the lap of modern luxury. This might happen if a sufficient brain drain from the Pale and urban centres takes place thus preserving the status quo. Bord Failte will be the new foreign ministry front ending a big European Golf Course on the Atlantic managed by the current elite. We could have David McW, Shane Ross at the GXxx Conference in 2015 here while low cost over educated paddies serve canapes to the new super elites. No doubt our wonder command of the english language and the well read nature of the peasants here will be marvelled at.

    • Malcolm McClure

      Philip: It is possible that we are experiencing the final demise of Communistic (and American Constitution– “All men are born equal”) egalitarianism. Perhaps a hierarchy, with its ‘super elites’ at the top is actually the most stable way for society to organize itself. In fact it forms the social foundation for non-communistic countries the world over.

      In Ireland we rebelled against the foreign-dominated super elite in the rebellion and broke up the big estates with the Land Acts. Now we are reverting to the previous pattern, but with our own home-grown super elite controlling the big estates and pulling the political strings, so maybe we shouldn’t complain.

      Back is the days of the Celtic high-kings there was a well-ordered heirarchical society in which, according to the Senchus Mor, everybody had their appropriate place . Indeed it is common experience that some people are born with more natural advantages than others, which just reflects the validity of Darwin’s theory.

      Complaining about ‘super elites’ and seeking to establish an industry-based egalitarianism is merely reverting to those solutions advocated by Karl Marx but subsequently discarded as unrealistic. You can’t change human nature, so perhaps some of us will always have to subsist on the crumbs that fall from a rich man’s table.

  43. Jan

    I have noticed over the past week or so how several media organisations appear to be putting forward the idea that we should pay more taxes for more services…………They have done voxpops with people who say “I dont mind paying more tax…..”. Meanwhile, theres a boffin in the studio from the govt who adds “This is a low-tax economy”……….

    Meanwhile, I am still waiting to hear somebody, anybody at all talk about a stimulus package. Does nobody else in Ireland think that we should actually try to raise our income as opposed to just cutting costs? We need to encourage productivity and growth so we can actually sell something to the world. However, with tax rates like they are and the metality that raising them will cover the financial mess, this will not happen.

    The biggest lie that was spun in this country in the last 10 years is that it is a “Low Tax Economy”. It is not a low tax economy. It is in fact a high tax economy. A very high tax economy. And raising those already criminally high taxes for no return will be the straw that breaks the camel’s back. Productive people will emmigrate.

    In Ireland, we have taxes on a level that no other country in the EU suffers without return, Health Insurance, 21.5% VAT, VRT at 35% of the price of a new car, €600 Road Tax annually, Stamp Duty of 9%, Stamp Duty of 1% on share transactions, €55 to see a GP, €100 to enter A&E, €1000 per month childcare etc etc.. Nobody else pays such outrageously high taxes. Just because Health Insurance is not called “Tax” doesnt hide what it is. In Ireland today, you MUST have health insurance just to be in with a shout of having a semi-humane service. You MUST have a car as public transport is of 3rd world standard. You MUST live somewhere. You MUST go to a GP sometimes. There is no way out of those costs. The fact that we get little or no return for what we pay is where the real problem is. People will point to Corporation Tax and it is true that its low. But how will that help when Dell etc leave? Answer, it wont.

    Theyre sitting around now waiting for the building bubble to start again…………..Its laughable……….Until they grasp the nettle that encouraging real productivity and entrepeneurship through taxation is the only way forward, we are doomed.

  44. John Q. Public

    Jeasus David, people like you should be working here at home trying to solve our own problems and why can’t the government recognise this? You are a good example of a brain drain from Ireland. Most Irish TDs wouldn’t know that place even existed never mind the fact that one of our own is out there making a difference in the Indian ocean of all places.
    Why can’t you get a job here advising the government or something? I wish you would. Bring us back a bit of common sense from La Reunion will ya, the country is going to pot!

  45. Deco

    I read the comments on this page because they are far more honest and true than contained in one months “media coverage”.
    Paul – the traveller kids are actually more civilized than the middle class brats. Traveller kids don’t act maliciously, just out of roughness. I blame the parents. Not that they did anything wrong or were bad parents. They simply made the choices that were fed to them from our mainstream culture. They believed all the BS that has dominated our society since CJH took over from Jack Lynch. I blame them for their obedience to the Economic Rent Infrastructure. The ERI has a hold on Irish economic and social life, and a twisted morality that causes problems to pop up in all sorts of places. And it is not just an Irish problem. But it is really bad in Ireland. The parents had so many bills to pay, that they worked until they felt hopeless, in organizations that were rotten with nepotism. The level of apathy was emdemnic and they brought it home. They did not correct the system. Instead they coped by substance abuse-booze, and delusion. Paying off the massive mortages is a deadbeat game, when you have to support National Toll roads, the ESB, ANIB-AIB-BOL-ILP hundreds of self regulating industries, 400 quangos, the HSE, SIPTU, IMPACT, IBEC, the maFFia, retail cartels, RTE, etc…. And then try and live the Irish expression of the American dream. It is unsustainable. But people are doing it. The board is loaded with dissenting voices, and those who have disobeyed the ERI. But the maddening crowd are steered and controlled. We have an enormous amount of control in our society. If you want to see the level of intellectual control in this society, just logon to wikipedia and edit anything relating to Ireland which you know as being inaccurate. It will be quickly changed back. The Irish are being punished for their obedience to a corrupt self-serving culture. The way out is to disobey. To drive a banger. To live without Guinness. To have simple meals. To avoid all the pretenscious BS dominating our society. To be a dissenting voice.
    Paul – you see things for what they are, and call them as such. That is far more patriotic than somebody wearing an Eircom shirt, spending their last penny in Dublin 2 and then getting drunk on Diageo mixture.

    The more control in a society, the more delusional it’s mindset.
    You are right – the selfishness in Irish society and the concept of acceptable irresponsibility is the root of the problem. We can use this to admire Ahern, CJ, etc. and celebrate what we have become.
    In fact we spent the last ten years ‘Celebrating’. Ten years creating a complete mess. No we will just hope that the Poles will stay long enough, to clean up the vommit from the celebrating Irish on the streets.

    Garry – you are right about these quangos. They should be rationalized. Maybe we should just remove the top four levels of all 400 quangos, and replace with cardboard cutouts ? It would be cheaper, and probably more effective. And we would at least would be free of many delusions.

    Eoin – emigration will not rescue the public finances. It will act as a safety valve to ensure that the crooked layers of wasters and profiteers who are robbing the rest of us blind, do not get taken out of their privelege. Emigration has always been a safety valve for the safe, the privieged, the corrupt – saving them from an angry people.

    Philip – most of the Poles that are leaving are already unemployed, and bored. They would rather be at home. Replacing hardworking Poles, with lazier Irish people will reduce economic output. Though it might help the gov massage the unemployment figures.

    Mediator – an interesting point concerning Feminism. I always thoutht that feminists were preoccupied with control and power. We are seeing the long term effects of feminism in the societies, where feminism is most influential. Having a factual discussion, or any scientifically accurate analysis is absolutely heretical and forbidden. Any discussion of consumerism and the feminist angle to excess consumption is also severely prohibited. Within both of these social movements there is a lot of selfishness, dishonesty, and irresponsibility. In fact there are inhumane elements in both, which are barely ever discussed. The fact that a feminist, will be the next US secretary of state does not enthuse me. We knew with Ms. Rice, that she got the job based on her ability, because we could see her ability. Mrs. Clinton seems to be there as a result of assertive behaviour. She will use her power to push feminism on countries that have been sceptical about it. And she will not entertain debate about the issue. Ms. Rice would not waste time on such trivial concerns. You will see in coming months an increasing push for political correctness coming from Washington. We can expect sharp differences of opinion with Asian leaders and Mrs. Clinton as a result. Asian societies are more concerned with balance, and tradition, than with Western social experimentation.

  46. Guillermo

    Gentlemen

    Although David is right, what happened in Uruguay is what he describes, I hope in the future Ireland will not be termed “the Uruguay of Europe”. I can´t give my opinion of what´s happening in Ireland, as I live in Uruguay, but can give some elements to be analised.

    Uruguay is not actually what it was between 1930 and 1974, it´s changing and moving towards what it was 150 years ago. Finnish investments in pulp mills, aprox U$S 1 billion. US investments in plywood mills aprox U$S 300 million and increasing, Belgiumns in port activities, Riotinto with it´s Iron Ore port, worth U$S 320 million and so on. What about Irish investments ?

    150 years ago, my ancestors the O´Neills and my wife´s ancestors the Lawlor´s landed in Uruguay, they worked hard, earned money, and in less than a decade, one family owned 25.000 hectares and the other 12.000 hectares. To have an idea actually that land is worth about U$S 100 million. Indeed, DMcW visited one of those farms.

    Why doesn´t Irish investors follow the same steps ancestors did, and did well?

    In my opinion, you should also take into account not only foreign investments in Ireland, but also Irish investments around the world. That will give Ireland a great opportunity, as Glanbia did with it´s JV with Conaprole the uruguayan milk company, to attend the mexican market.

    Best to all

    GdC

  47. Deco

    Jan – why do we pay both PRSI and VHI ? I mean you pay PRSI, and the service is abysmal, unreliable, and the queues terrible. Therefore you get VHI. And the VHI is to a government run company. And they charge what they like. And the hospitals and consultants can charge the VHI more than the charge the PRSI for the same service. The VHI is a government run company to get you through a government run system.

    In 1992, I was in college, and a classmate of mine got injured playing football. It was a Sunday evening. He left the match early, and got on the Cork bus to Galway. As the adrenilin slowed, the pain suddenly started. By the time he got to the house he was in pure agony. So I said, listen, ‘let’s go to the doc and get this checked out’. We checked the student documentation and seen several listed doctors. The reckoning was that these doctors dealt with students, and therefore sports injuries. First doctor was closed. Second said he was not taking any new patients. Unusual I thought. There seemed to be a common element. None of them wanted students. And this was in suburban Galway, in a student district. I tried to understand why these people seemed to turn away business. Then we got to the last doctor on the list, and the nearest by location to NUIG. My friend was in agony, standing there in the cold, with a massive swelling around his ankle, and his left boot unlaced. Rang the doorbell. My friend started describing the condition. The receptionist cut my friend short in his description and asked only one thing “do you have VHI ?” And my mate said – “Well no. I am a student. I am not on the VHI”. The receptionist then replied with “Sorry – but you must have VHI. No VHI, then we are not for you”. My friend was about to explain that he got money from the bank machine. But the door was slammed in his face. So my mate shouted back ‘greedy ……rs’. My mate checked into the A&E in UCH at 20:00, and queued up. He got looked at 00:30. Then they gave him a trolley. No painkillers until then. The VHI bill is being massaged upward by greed.

    I don’t want ‘change’, a ‘voice’, or ‘politicians who will listen’. These have proven to be empty promises.
    Just somebody put an end to all this BS, and start to fix this dysfunctional society. An Obama, as David pointed out in previous weeks, to go above all the vested interests, for the common good. In America, it is possible. In Ireland, forbidden.

    • Jan

      Exactly Deco. Thats what I mean. Health insurance is a tax because to avail of the most basic human right, you must have it. Your story is a very familiar one and unsurprising. You say Insurance rates are being driven up by greed and youre right. Put very simply:

      - Consultants get €240,000 pa. while in the UK they get €130,000. In Germany, they get around €70,000. Apart from that, they can use our public hospitals to conduct their private practices.

      - The Heads of Semi State bodies are getting up to and over €400,000 pa basic

      - The GPs are getting €641 pa for every single pensioner on their books, whether they visit or not.

      This system is basically a protectionist system. The same is found in almost every strand of Irish life, eg Legal System etc. The barrier to entry is so huge that they have us over a barrell. And we pay for it through our taxes.

      Unfortunately, those who we now expect to sort out the economy are also part of this gravy train. They are embedded into it from day 1 and in fact, I wonder if they actually really understand what the real world of competition is like. Their actions(eg the Medical card issue, FAS etc) prove me that either they do not understand at all. Or, they fully understand and are doing their best to protect that system.

      I cannot see any hope there when the country appears to be run by a cabal and the opposition benches are full of the same.

  48. My Lost Generation

    I think that blog is coming to an end.
    David’s vision was once insightful and exciting because someone might have taken his views into consideration. No one did. The ‘prophecy’ is now unfolding. It was very simple after all.
    Nobody listened to him or to all of you reaonable and honest commentators, your comments were dismissed and sometimes mocked.
    The events have caught up with the necessary tactics/measures to avoid the miserable times we are about to live. It is now too late. David or anyone else; Deco, MK1, Furrylugs, Philip etc… you need to find another topic or lead a revolution, make up your own website, newsletter, leaflets, organise meetings/demonstrations but you cannot keep on going about it, I think everyone got the point at that stage and you all start to sound like the politicians themselves, words and no action. I do not mean it in a bad way, I really enjoy your comments, I actually look forward to them! What’s next…

    • Perhaps, like the Ryanair generation, a bright tomorrow was only a plane ticket away and David seized the moment to answer the fervent prayers of a like-minded web forum on the island of Réunion; a parallel dimension to ours where there’s a Furrylugs, Malcolm Deco et al en Francais…..

      You wouldn’t blame him.

      • Furrylugs

        Ruairi,
        My Reunion doppleganger has a mane of blonde hair, straight white teeth, a flashing smile, sharp suits, women falling around him but thick as a plank.
        I can’t stand competition. I’m Irish.

        My Lost,
        It sometimes seems we blather on amongst ourselves but there are many lively points of view also. Like I said above, I have a better, more informed opinion by being on here.
        For example, the over reaction to the pig thing had to conceal something; and here is that something

        http://www.businessworld.ie/bworld/rankednews2.htm?s=index.html;s2=rankednews2.htm;r=4;a=2346053

        Not a mention about this on 6-1 or probably the RTE 9oc news. But the people on here, I guarantee you, will have a take on this well worth reading.

  49. ger

    Cowen is a disgrace, rattling off job losses with about as much compassion and concern for the newly unemployed as a headless chicken.

    This man has no leadership qualities – he turns bully when he is asked a simple question (the last refuge of the inept) – hardly Barack Obamaesque. The man has neither charm nor presence – he is getting paid to find solutions but all the government in their different outfits can think of doing is to open call centres for US multinationals – hardly quality or long term jobs. The Poles et al know better – they’re all off home.

    I visited a ‘new’ housing estate on Friday night – construction has ground to a halt, rumours of the builder in trouble, some 30 ‘unit’s, as they like to say, have been built, and the handful occupied according to local rumour have sewage and drainage problems, the rest of it is just a giant building site with not a sinner around. What is going on?

    I would have to agree with the line on the public service, I work in the public service (not on a high salary) but there are others who are making major bucks, they are not accountable, have permanent and pensionable positions and they are bleeding the country dry – there is no way these people will take a 10% cut in the national interest – they should be compelled to by government though (if we are serious about living beyond our means)!!!

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