February 15, 2009

Turn crisis into opportunity

Posted in Ireland · 214 comments ·
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It is time to think about solutions. How are we going to get out of this mess and how are we going to keep the maximum number of people in work over the course of the next three years? More importantly, how can we create jobs, not just by keeping people in work who might not be affordable, but by getting the best out of all of us?

Such questions demand home-grown initiatives, in order to fix home-grown problems. There is no point playing the conservative game and waiting for the global economy to pick up. Either it picks up or it doesn’t. Equally, we should stop trying to be respectable members of a monetary union dominated by ‘‘balanced budget fundamentalists’’ when we are faced with an economy which is contracting by the hour due to a lack of demand.

The Great Depression was caused by trying to balance the books in the face of debt deflation. Listening to mainstream economic discourse in Ireland, it looks as if we are going to repeat the mistakes of history. This is social vandalism. If we actively accelerate the slump by slashing and cutting simply to balance the books, we will never be forgiven.

The key to rebalancing this country’s economy is to keep wages flat across the board and confine spending as much as possible on public infrastructure. To use the Americanism, we need to get a ‘‘huge bang for our buck’’. This comes from getting the same thing next year at half the price it would have cost you two years ago – be that a railway, a bus corridor or a motorway. Crucially, we have to avoid the mantra of increased taxes to balance the books. This canard, to which many economists amazingly subscribe, mistakes economics for accountancy. They are not the same.

If Ireland continues to make massive cuts in public spending, the country will simply contract further. No economy has ever deflated its way to growth, and the most important thing to bear in mind is that companies closed due to lack of demand do not reopen when times are better. Therefore, the most crucial objective must be to try to preserve employment.

Jobs are crucial because, long after the bond markets have had a hissy fit and the respectable financial press has forgotten its indignant editorials, the generational impact of long-term unemployment will be felt. The human costs of unemployment and idleness are family breakdown, mental illness, depression and crime. These costs go way beyond the financial costs of less taxes and higher spending.

This weekend, Ireland is home to thousands of wounded people who have been told that they are redundant. Their self worth has been reduced to a severance cheque, a squeeze of the shoulder and an insincere pep talk about the needs of the company. These are real people and they are humiliated and frightened. In many cases, they are in the middle of their careers, they have huge experience, contacts and networks. Yet they are being told that they won’t work again because they are too expensive or they are ‘‘overqualified for the job’’.

Many can’t face – nor do they have the energy to entertain – the enormous effort it takes to start again on their own. Their confidence is shot. Equally, many will hoard their savings and won’t have the courage to throw their precious ‘‘nest-egg’’ into a new venture. They will shrink from risk and become the walking casualties of the depression. We will see these middle aged zombies, the ‘‘might have beens’’ walking around our towns or glued to afternoon TV, wasting away. Yet they have so much to offer.

If only we could find away of using their years of experience constructively.

At the other end of the generational scale, we have thousands of young people ambitious graduates and school leavers who will not find a job. This is the generation of Irish people who have nothing to fear; they have buckets of energy and can set up on their own, creating businesses from ideas. But how will they commercialise this raw enthusiasm? What they have in energy, they lack in experience. What they have in vision, they lack in contacts, and what they have in stamina and technological savvy, they lack in business nous and sales smarts. This is where the older people come in. Would it be possible to fuse together the two generations, the recently redundant middle-aged and the hugely robust twenty somethings?

Argentina suffered a dreadful depression in 2001/2.Unemployment skyrocketed and, with no jobs around, young Argentinians were forced to set up their own small businesses to survive. These small businesses sprang up all over the place and, because the local economy was in tatters, the companies had to export to survive. (Precisely the same will be the case in Ireland.) But they didn’t know where to start. How could they? For most, this was their first venture. They knew nothing about marketing or banking and neither did they have contacts.

At the same time, thousands of middle-aged executives with tens of thousands of years’ experience were being laid off every day. They were destined for the scrap heap.

At the time, an economist friend of mine was brought in to be the chief of cabinet of the Ministry of Finance in Argentina. He told me he spent nights with his head in his hands trying to figure out what to do when everyone was telling him it was over for the country.

Then he came up with the idea of a state-sponsored ‘‘match-making’’ service to match ‘‘young companies with old heads’’. To do this, the Argentinian finance ministry used a website which matched old experience with young companies. The new companies interviewed the old, recently-redundant executives. The state, instead of paying benefit, paid a much reduced salary to the older guys who got some small equity in the new companies.

The scheme worked amazingly well. Thousands of companies were set up and thousands of people went back to work.

Most crucially, the older heads contributed enormously to the success of the new companies with their knowledge and experience. Their contacts with international counterparts and multinational systems of management and production were invaluable.

Yet, had it not been for this initiative, this invaluable resource would have been buried between the ears of thousands of people, never to be used productively again.

Many middle-aged executives even went back to work for nothing and were reinvigorated. They acted as custodians for the new companies that dragged Argentina out of the depression. In addition, thousands of companies were saved from making the elementary mistakes that tend to scupper start-ups. These mistakes can be more easily sussed by someone who has been in business for years.

Crucially, the older heads were not consultants. They worked for the new companies. If the relationship was working, after five months the new companies started to pay their wages in full and the state disappeared, having done its match-making job.

This is a perfect example of how a simple idea can translate into a fantastic outcome and of how using our noggins in the depression can transform a crisis into an opportunity. The key now for all of us is not to despair, but rather to focus on getting out of our mess.

If you want to discover more about this initiative see www.experienciapyme.mp.gba.gov.ar — it’s in Spanish, but you’ll get the drift.


  1. fordprefect

    I think that the time for sitting on your hands either waiting for the State to help you out or equally sitting in a large company fretting about losing your job.

    Small nimble business is where it is at. Being master of your own universe instead of relying on the whims of Wall Street or Kildare Street is a far better way to live your life. It is your life, your baby and your future.

    It is what I do and what needs to happen. You have nothing to lose but your chains.

  2. ste

    We need our Nokia. This might just work.

  3. I agree with your comments but dont forget we are still sliding down and it is only when and after you reach the bottom can you then contemplate ‘to raise to the Lord Allelulia ‘……..now Lets Rejoice

  4. Continue to enjoy your posts David.

    Have a look at http://www.bizcamp.ie – a voluntary (and free) gathering of entrepreneurs for a day to share our experiences and support people who are planning to become self employed. Currently over 170 attendees registered for Dublin on Sat march 7th and another planned for Limerick on March 21st.

    Speakers here:http://www.bizcamp.ie/speakers-and-talks/
    Attendees here: http://www.bizcamp.ie/whos-attending/

    Care to join us? :-)

    keith

  5. finbarr

    Everyone can wade in with creative ideas David. – I would like to see independent economists who care and want to do something about our situation hold an open public debate inviting policy makers and politicians to brains storm and research such new ideas. This would speed up the process of solution
    A call to arms David….

  6. Lorcan

    David > long after the bond markets have had a hissy fit and the respectable financial press has forgotten its indignant editorials,

    Sums it up perfectly. Crisis fatigue is starting to set in already.

    Brilliant idea too, let’s hope we are selfless enough to help ourselves.

  7. Johnny Dunne

    David, this is a great idea and for the ‘sceptics’ in the Department of Enterprise who are slow to adopt new ideas it has worked elsewhere. So they don’t need a long awaited ‘report’ to recommend its implementation as soon as possible.

    Some thoughts – FAS should be doing this with their €1 billion budget but would probably take months to out the ‘program’ in place. As for Enterprise Ireland, they had a recent program for matching ‘grey haired’ business people with state backed research projects. Nearly 200 applied, the fee is €20k per person, equivalent to the dole. So it shows there is demand for such a service from people with experience of commercialising ideas
    http://www.enterprise-ireland.com/ResearchInnovate/Research+Commercialisation/Business+Partnering+Programme.htm

    An idea – why not just set up a simple ‘matching’ website, maybe someone reading this blog who could ‘translate’ (plagiarise) the Argentine website. Then go back to Minister Coughlan when ‘up and running’ and look for funding for the ‘old heads’ working with the young companies. What we need is a bit of ‘entrepreneurial political’ policy making !

    Again, I don’t think this should necessarily go through a state agency to get the best impact. Bureaucracy and form filing will not get the maximum number of participants on both sides. How about she allocates €4 million to this initiative allowing 200 ‘unemployed’ experienced business executives get back working with young entrepreneurs. Then again this might have to ‘doubled’ as they would lose their social welfare benefits under the current system ?

    The message could spread like the http://www.bizcamp.ie which seems to have generated a significant number of members in a relatively short time – this ‘matching’ program could be a ‘complementary’ initiative to this and state sponsored programs such as the ‘Halo’ business angel network and Enterprise Ireland’s Mentor programme.

    David, do you plans to progress this idea? Any takers ?

  8. I had been waiting for years for the opportunity to start a business idea, while running an architecture practise. It couldn’t have happened without the downturn because people were too busy frantically making money for the big government/ developers/ corporations/ banks. I was too busy myself delivering an excellent service to my customers and going completely bust in 2008. The downturn in work has allowed me the time to start a 3d drawing training business with an IT consultant.

    Now that we have a chance to re-think maybe people will finally go feck this I’m going to put my money where its going to make a difference instead. All those big (mostly stupid inefficient) houses and 4x4s were the rewards of working for the banks and the developers (ie giving them all your hard earned cash). If you weren’t rich, then you simply weren’t pulling your weight, never mind that you might actually be doing something useful for society.

    The downturn is the biggest opportunity the world has had to do something really exciting for a change. ie to STOP working for the bloody corporations and work for yourself and your community.

    Start a business if possible, but don’t bother going for a startup grant. The paperwork involved means that you spend most of the money on your own time preparing it and the rest of it goes on paying your accountant for their assistance in preparing detailed accounts. Complete waste of time. Instead, open a sole trader business and don’t take a penny out of it, and go on jobseeker’s assistance. Let the business account pay business expenses. Also register for VAT. This is the only way to get a business off the ground in this backward country.

    If there were no downturns there would be little or no innovation. This is the greatest opportunity since 1929! If you are an entrepreneur get moving… if you aren’t, then get out to meet as many entrepreneurs as you can.

    • Tim

      Paul Lee, How right you are! I am constantly sickened by the free-market, profits-up-wages-down, globalspeak, going-forward stuff spouted by the likes of Mary Harney and others who refer to teachers and nurses as “the unproductive sector”.

      They are “doing something useful for society”, as you say; yet they have been referred to as “parasites” by these people and IBEC fat-cats.

      Let all endeavours, small indigenous business and those who contribute to society, education, health and our future, work TOGETHER. Thank you, Paul.

  9. Tim

    David, Thank you for this article; it may help prevent the education cuts my children will suffer. It suggests that even cutting public sector jobs is deflationary, which is an oft-made point of mine; it also bolsters my stern belief that education is the key to everything and we MUST NOT cut it back if we are to be ready for any eventual upturn. The young heads you speak of putting together with the experienced heads MUST BE educated well.

    Folks, For those of you interested in reading the spanish link David has provided, here is a free online translator:

    http://www.worldlingo.com/en/products_services/worldlingo_translator.html

    Just copy and paste into it and it will do the work for you.

    • paddythepig

      Tim, cutting superfluous labour improves productivity ; you get the same output for less input. This needs to happen in Ireland.

      Casting my mind back to my own education ; second level, I’d some very good teachers, and some complete wasters. Third-level ; the majority were lazy sods.
      I’m sure trimmings could be made without any decline in standards, if the will was there.

      Paddy.

      • Tim

        Paddy, no; don’t “trim”. Fire the wasters and replace them, but don’t cut or my children end up in impossibly large classes/ Damp prefabs, getting sick, etc. It is disgusting, third world stuff in our shameful schools.

        • paddythepig

          Well at least you agree to fire the wasters, that’s a start. Tim, it’s likely we’ll need to trim as well unfortunately. The reason is the perilous financial position of the state, who pays teachers & all public servants. If we don’t get a grip on this, we could end up in a situation like California, see link below. There are other ways to achieve trimmings that those you mention. Hopefully, the best possible service can be maintained whilst doing this, as education is very important.

          http://www.cnbc.com/id/29229786

          This is the point you repeatedly choose to ignore.

          Paddy.

        • Tim

          Paddy, I am not ignoring the point; I am simply trying to insist that we find a way OTHER than cutting education/teachers/nurses.

          The Penal laws drove us into the “hedge schools” under our political oppressors at the time.

          We MUST NOT allow the replacement oppressors (Bankers/Golden circle) to drive us back there, after screwing up their “hedge-schemes”.

  10. Harve

    David,

    David,

    Great article and I agree wholeheartedly that we need to start focusing on the solutions. I also think that your idea of a match-making system linking experience with youth is a potentially powerful one. I also agree with the other comments that we need to take the initiative ourselves and not wait for the government or state agencies to convene their committees and their consultants to produce out-dated reports. We need something more dynamic, organic and that strikes a chord with people immediately.

    Perhaps, we could incorporate the match-making service as you describe into the Bizcamp website, and David, I think that your website should also have a direct and explicit link to the Match-makers/Bizcamp site as well. I also think we could use the help of your economist friend in Argentina to help get this up and running. In a time where leadership is lacking, its time for each of us to lead by example. And I think that an initiative such as this would set a great example for all those nay-saying critics and so-called experts in ivory towers whose best skills are throwing hissy-fits.

    Once again, great article, the challenge now is to convert the concept from another “interesting idea” into something tangible that can make a difference. What do the rest of you think? And perhaps, more importantly, is there anything you can do to help in making this initiative a reality?

  11. Tim

    David, If Ronan is interested in setting this “Match-Maker” idea a reality on YOUR site, I will offer my IT geek services for free.

  12. A great idea David, I want Seanie Fitz to come work with me on my ultra sonic cleaning machines and my wind solar light and cctv traffic control systems.
    A wonderful idea the up side is all the mice girls in P.R. will get to keep their jobs too. …… In ‘Sin E’ in Malaga Hola

  13. Tim, You have no skills and too much time on your hands to create any thing .

    • Tim

      Ce ta den por culo, cabhron!

    • Tim

      Brendan, Keep wasting your energy and your time with these ad hominem attacks on me, if you wish. I am impervious to insult (I am in FF, for many years, remember?) and shouldn’t you have better things to do in Malaga? When you return, you might consider helping our economy by, finally, hiring someone with skills such as mine to finish your “Consultancy” web site (don’t ask me, though; I am too busy with my two jobs to help a “consultant”. David and Ronan, I will help, if they need it, though I doubt they do, as their web site works – just offering, to be decent, because they are decent; remember that? “being decent”?).

      Tip: your negative statements on the web do not vanish into the ether; they are part of public record.

      Definition: “Slander” is where you make a false negative statement about a person, witnessed by others; “Libel” is where you write a false negative statement about a person.

      Do you still fancy getting yourself elected in June? Do you represent the people of your local community?

  14. Philip

    This latest idea from DMcW sounds good to mop up a few percent of idle hands. But…

    1) Argentina was blown out while the rest of the world thrived. It had a market it could export to. in Early 2009 I wonder how it’s doing now?

    2) We have a huge proportion of our skillset biased towards construction. We need different ones perhaps. But it’s not clear what. Who is publicising what we need? Yes, I hear someone say..we need engineers and scientists…but these are getting clobbered as well.

    Perhaps we should be saying, we need better value for money. Let’s stop talking about wages. Right now the chief problems we have here are cartels and lousy value for money Public Service (and that includes the education system – all the depts in fact are generally useless). Management competence and accountability are rubbish…same old mantra – ho hum.

    Ireland has to dig it self out of this mess. There will be little or no outside help. The market is how we can help the global market and by derivation, ourselves. Maybe a good first start is to insist from day one total ethical behaviour on all business dealings. A zero tolerance for all dodgy activity…from paying bills on time to professionalism in customer interactions (something the PS is very poor at and by derivation the bulk of cute hoor business practices we all turn a blind eye to).

    I think DMcW’s idea will fire up something very good if we can get an honest agreement on rules of the road for business here. Otherwise, it’ll just be more frustration and fewer will want to play ball. We are all getting a bit too cynical to be bitten again.

    • Tim

      Philip,

      “We have a huge proportion of our skillset biased towards construction. We need different ones perhaps.”

      Don’t forget that, before these workers (10s of thousands of them) became construction workers/sub-contractors, they had other jobs (and skills) that they left in order to earn the higher incomes available to them during the building boom. Mechanics who became “brickies” for the higher wages will be needed now to fix and service the older cars that people are keeping instead of buying new ones – new car sales are down over 60% and garages will probably switch focus a little from sales to maintenance, just to survive.

      Many people still have their old skills; They are not, necessarily, “unskilled” for anything other than construction. It is not as bad as you think.

    • Tim

      BTW, Philip, you might read the successive PISA reports by the ESRI, which say that the Irish Education system, euro per euro invested, produces the “Highest Educational Dividend” in the entire OECD area.

      You will find it difficult to get any better “value for money” than that.

  15. Dr.Nightdub

    Bord Bia are already running a similar programme for the food industry, whereby successful individuals provide a mentor-type service to fledgling start-ups. I know the CEO of the company for which I work already fulfills such a role for a small but thriving (and international award-winning) company based in Munster.

    Mind you, for all their entrepreneurial flar, rock-solid brand development, use of cutting-edge technology and product innovation, they’re simply FUBAR’ed when it comes to dealing with the Tescos of this world.

    “Hello money” may be dead and gone but it lives on in the form of “Long Term Agreements”, whereby retailers extort a kick-back of anything up to 30% off the normal invoice price – and that’s BEFORE they apply their mark-up (typically 15% or more of what Joe Public pays at the checkout). We’re market leaders in our product sector which you’d think would confer a certain amount of negotiating muscle, so if that’s what we’re paying, god only knows what the little guys are being screwed for.

    “Every little helps”…Glanbia 210 job losses…Jacob’s 220 job losses…Cadbury’s 450 job losses…Tayto 300 job losses…the list is terrifying. By the way, this isn’t an anti-Brit Tesco rant, the indigenous players (Dunnes, Superquinn, Supervalu and the rest) are no less rapacious – they’re just stuck at Vampire-ology 101, that’s all.

  16. Philip

    Dr Nightclub, you have hit the issue on the head. Unless you can break the ridiculous procurement muscle of these giants, we are wasting our time. Supply chains are very dangerous as they impoverish all who work within the chain to the benefit of the chain owners. The customer gets no extra value. But once a supplier leaves the value chain, they loose their market.

    Suppliers have to become smaller and learn to walk away of these value chains. Their over focus on volume for revenue is deeply damaging to all of them except the winners.

    I’d go so far as to say that the act of buying in a Dunnes Stores, Tesco etc actually threathens ones own future security. My hope is that a yound bright mind of two might have a very practical way of subventing these damaging operations.

    • fordprefect

      The thing is Irish business doesn’t pay its bills. It is socially acceptable to bankrupt your suppliers and this trend will increase.

      We need jail time for passing bad cheques like the US and adherance to credit terms which is not happening.

      This is one of the reasons why small business struggles in Ireland. Non payment by delinquant creditors who can pay but won’t.

  17. You dont tax your way out of a recession, granted, but you do tax your way out of ruining a country’s solvency and reputation. We dont have the luxury of stimulus spending at the moment. That will have to wait until the public finances are in some sort of order.

    http://nicescenery.blogspot.com

  18. Nostradamnusalltohell

    great idea, my brother’s business is an example of one such company that would benefit from this. He been searching for ages for someone to get on board with an objective point of view, and an axe to grind (in a positive fashion – being retrenched with a brain buzzing with ideas means she or he’d have something to prove). Someone with years of big picture experience and who knows nothing about his (quite niche) business thus offering perspective, and who isn’t going to skip for a few dollars more. Someone with a long view, and excitement about what they are doing.

    I totally buy the crisis = opportunity line, however hackneyed it may seem. I use it every day, and I know for damn sure that there’s enough talent to work through the crisis. It’s not being allocated.

    I really believe that it’s a people issue now. We’re beyond clever massaging of figures. We need sharp bold action at the top to realign, and a fluid population willing to fall in, and take the blows as they come, without sweating the small stuff.

    All that’s required is a leadership (many people, not just one) brave enough to make the decisions, talented enough to see the way through, patient enough to make small victories one after another and patriotic enough to not care about re-election in 5 years’ time.

    Would that we all had 5 years to make a change to our society before passing on the baton. I’d gladly do my part without thanks and slide into oblivion.

  19. redsor

    The welfare system at home has to be overhauled. Employing extra workers to ensure that we are not being robbed has the double effect of putting extra cash into the economy whilst basically paying for itself. Those who are legitimately on welfare should then be given food stamps issued by the government. Food stamps are proven to be the fastest way the multiplier effect tales place in an economy. Every penny of them is spent jump starting what is a dead economy at the moment . We really have to look carefully at our welfare system. It is not addressed enough, but we have to be compassionate at to what is cut out of it. It really is time that we started taking care of Irish citizens. This might sound cruel but as always it is the people on the lower end of the socio economic ladder who are suffering the most.
    The government has to spend its way out of this mess. Get the constuction industry moving again not by build ing any more houses but by supplying cash to fix every public building in the country that needs to be fixed: schools, roads , bridges etc. Give Irish people jobs at a fair price. Contractors and land developers, who in my opinion, coupled with the banks weare a major cause of this mess have to be regulated to a greater extent. Actually they were never regulated so let’s begin. This sounds extremely protectionist but there is no other way as of now as far as I can see.
    Our GDP will rise. There will be a lag period of course but hey , a liitle later is better than never. Tax revenues will start to flow back into the government coffers.
    Now is not the time for fiscal conservatism. These are extraordinary times and need extraordinary measures.

    • jim

      Your right about the food stamps, them unemployed are forever spending their 200 euro’s a week on frivolities.Sack cloth and a bell I say for them robbers.I’ll be with you all the way Redsor after tomorrow,that is when I’m sure my own job is safe.

  20. jim

    Well now David you must have had a Moses type of experience when you went up Killiney Hill and Im glad someone is suggesting using the Taxpayer funded Graduates newly aquired skills for the benefit of Ireland and not to be exported for others like we had in the 80′s.I know the so called middle classes and D4 brigade are worried about their offsprings future now that there’s nowhere to hide Internationally.They cant sow their wild oats and come back to take over the Family firm in a few years when this “recession thingy that hubby bores us with at rugger doo’s” is over.If Brian Linehan reads your article (not a great reader these day’s our brianey) Im sure he wont be tempted to pull his daddys old rational from the archives,after all who will forget those famous words ” were a small island and we cant all expect to live here”.I do see problems for start-up’s given that Mary dumbass Coughlan is Minister for Trade,Commerce and Employment,so I suggest all would be applicants should sign up to the local FF Cumman with a written guarantee of all future no 1′s to speed up the grant’s,after all you know how tribal these people are.David your spot onn,you do need someone with experience to avoid all these BANNANNA SKINS no pun intended.If we could just clear all the rubbish out of the way and give ourselves room to work I’d be a bit more confident.P.S. Are we sure that Roddy is gone for good from Fas and he will stay gone not like DAG Gallagher coming back after a few days,the reason this concerns me is that fella will have us Menfolk all building space rockets from plans he bought in Florida and the Women folk will all end up doing hair and nails and we will just finish up with a hairy rocket bubble,with the rockets manned by big red haired buachall’s from the Gaeltacht,who could’nt get jobs on the bildins in England.Sorry I digress,its the devil in me.Lets clear the decks and give it a go.

  21. GerKennedy

    That is actually something that could work.

    Another thing that could work. Previously David has talked about the diaspora. I myself am a member of said diaspora. What about involving experienced successful members of the diaspora in a similar manner to mentor businesses in Ireland and develop export markets for products and services for Ireland. I think many of the diaspora (including myself) would like to help out our country men and women and provide a future fro our brothers, sisters, nephews, nieces and other family and friends back in Ireland. Ireland needs to export its way out of this s__thole. I can see a time in the near future, when costs have come down substantially when professional services can be exported out of Ireland to the US.

    For example in the software arena, India are doing this right now. They are cheap. However they have some problems. They are minimum 10 hours away by plane. They are 8 -11 hours away by time difference. They find it hard to get visa access to the US. Their English language skills are not always at an acceptable level, even when well educated. We have got them beat on all these points. If our costs come down a little we may be able to get a sniff of this type of business. We are only a small country. We dont need vast amounts of business to live successfully. The scale of the US economy and US business in general dwarfs Ireland. If we only get a sniff it would provide Ireland with a much needed export market. However costs would need to come down to make this work.

    Of course I am looking at it from my own narrow business experience. I am sure that there are many others out there like me living in different countries and in different business areas who would like to help out our “old” country while developing business and money making opportunities for ourselves.

    The only thing I would worry about is that the cute hoor brigade (FAS et al) would try to hi-jack this type of effort in some way. The other thing I would worry about is quality issues and the “That’ll do” attitude prevalent in Ireland. (“That’ll do” will not do in the US anyway. The that’ll do thing is sort of related to the cute hoor/do as little as possible for maximum gain/pull wool over the eyes of your client thing that seems so prevalent and acceptable in Ireland. However I digress.)

    Someone earler said we need a Nokia. I would like to see many Nokias. Many mini Irish Nokias would be just as good (and better even) than one large Irish Nokia.

    Anyone else have similar ideas?

    Ger

  22. brighteyes

    Great idea, I agree with Ger too, there needs to be an inclusion of our widespread diaspora. We can’t wait for the government on this one,even if we did wait for them I’m sure they’d only pawn it off in someway to benefit their “buddies”. It should be started asap and linked to this website. There are many options we could export almost immediately while we still have connections in global business.

  23. Garry

    An excellent idea, really like the idea of the mentors having skin in the game, its all very real for everyone then from the matchmaking on….

    The current system has mentors paid by EI but because they are paid anyways, its all to easy to just phone it in.

  24. Deco

    David McW. Once again you are looking for examples that show how we should be doing it here. It is now the case that an explicit Banana Republic like Argentina can be ahead of an implicit Banana Republic like Ireland. (Officially Ireland does not regard itself as a banana republic – but in many aspects Ireland does function like a banana republic – status obsession, corrupt politicians, politicians like Cannon who jump on anything that will preserve their career, inept regulators, wholescale nepotism, insider scams, laws that are as porous as sives, narco-capitalism, corrupt police like in Donegal, and unrestricted oligopolies.

    David’s suggestion is exactly the way we should be thinking.
    Also Dr. NightDub has made comments that are absolutely correct, and 100% relevant to this country.

  25. Entrepreneurs always tend to have skin in the game. They win and they lose, but mostly they are skilled at survival and usually never give up. They are the Monty Python head on the ground in “The Holy Grail”…. Come on you chicken, fight.. I can head butt you, can’t I?”

    There is another skill set in executives who survived well and thrived in corporate systems that are now redundant and tend to think only in terms of corporate structures which is not exactly conducive to early stage start-ups so I would be cautious about engaging a 20 years veteran in business if you are looking for support for new ideas. I have known people (a person) who blew $50m on a start up projects in 18 months and failed because they had to have what they were used to in order for them to “think” they were going to be successful.

    Yes you need conservative members of your team on start-ups to keep your feet firmly on the ground but you also need the odd obsessive compulsive neurotic idiosyncratic member who has 100 ideas and even if just one worked it means 50-100 employees.

    I recently attended the Spider Awards and seen that it was an Irish version of Little Britain. “A local shop for local people”. Thinking big is not something Ireland really does well and this aspect of start-ups needs encouragement. I am 100% behind this idea but would caution on hiring a grey suit without making sure that there is value to be made for both sides.

  26. My Lost Generation

    >Argentina suffered a dreadful depression in 2001/2
    >Then he came up with the idea of a state-sponsored ‘‘match-making’’ service to match ‘‘young companies with old heads’’

    Argentina 2001/2 VS Ireland 2008-9-10-11-12-13 …
    Completely diferent economic contexts.

    English economy will contract by twice the previously 1.7% predicted.
    Steps towards the solution had to be taken a long time ago.

    Immaturity, irresponsibility and unaccountability prevented and still prevents Ireland from finding its own solution.
    In my humble opinion there is too much cleaning up to do and too little time left.
    There is very little Ireland can do but pray for the rest of the world to move on and as the english economy where most of the irish exports are sent, is contracting, the future looks very bleak.

    • Garry

      Sure the future looks very bleak and all points are valid but nobodies going to solve the problem and hand us a functioning economy to destroy all over again. We need to rebuild it ourselves

      I really like the spirit of Davids idea, its what a country with no cash but a people who aren’t beaten would do. Thats the way we need to think

      Philips comments about supply chains and manufacturing are interesting though I suspect they are ahead of the curve….its worth thinking like that as we could be very surprised by the type of new businesses that would be successful here.

  27. Malcolm McClure

    David: In this article you are beginning to show signs of real leadership but your approach is still tentative. Please forgive me if I condense the first few paragraphs to emphasise the positive in your message:

    “It is time to think about solutions. How are we going to keep the maximum number of people in work over the course of the next three years? More importantly, how can we create jobs, not just by keeping people in work who might not be affordable, but by getting the best out of all of us?
    Such questions demand home-grown initiatives, in order to fix home-grown problems. There is no point playing the conservative game and waiting for the global economy to pick up. The key to rebalancing this country’s economy is to keep wages flat across the board and confine spending as much as possible on public infrastructure.
    We have thousands of young people ambitious graduates and school leavers who will not find a job. This is the generation of Irish people who have nothing to fear; they have buckets of energy and can set up on their own, creating businesses from ideas. But how will they commercialise this raw enthusiasm? What they have in energy, they lack in experience. What they have in vision, they lack in contacts, and what they have in stamina and technological savvy, they lack in business nous and sales smarts. This is where the older people come in. Would it be possible to fuse together the two generations, the recently redundant middle-aged and the hugely robust twenty somethings?”

    You continue from there with the main part of your message which is excellent, positive, visionary, stuff. Hopefully you haven’t lost your readers in the verbiage I have eliminated.

    Leadership demands concise positive messages backed by some semblance of a scalable organization. The present parties have disenchanted organizations and have a complete dearth of ideas, never mind solutions; falling back on the old mantras of education, smart economy and taxation, without giving any indication of how it all fits together.

  28. DH

    Some well needed optimisim there David.

    I’m thinking of applying for a business loan, maybe starting my own Bank… hopefully the government can pair me up with some recently redundant bankers who can lend me some of their expertise.

  29. Philip

    Malcolm, you make an excellent point on leadership and being positive while at the same time being wary of poorly conceived mantras on education, smart economy and taxation etc. And that one on on scalability means we need to ensure that the shoes we wear are the ones that are fit for purpose are we climb out of this hole we are in.

    I hate to say it, but we need another mantra for the country…something a little meatier than “yes, we can”. Maybe…serve others before you serve yourself? To often we over focus on a mission of making money at the expense of making a quality of life improvement for others. It’s a common mistake I see in a lot of Irish companies (including the public service).

    To those of you who have businesses, I guarantee you that if you only focus on the bottom line, you will fail. It shows you have no faith in your future and that your business foundations as a fundamentally weak. Adjust your focus on improving the lot of your customers. If they are not paying on time, never deal with them…leave them to your competitors. Every penny you make should have a good memory attached to it both for you and the customer. There’s no magic to it. Just a bit of faith.

  30. gadfly55

    This must be getting to you David. Take a break, chill out, watch Slumdog Millionaire on the biggest screen with the loudest surround sound cinema audience you can find. Note the set of 4 answers to choose from at the beginning of the film and note the answer at the end of the film, in a blank screen, except for the answer at the bottom right. The role of an Irish economist is now a redundancy, face it, because you are all discredited as leaders, as prophets, as mechanics, and this inane column suggests that the world wide collapse somehow can be escaped by a bit of mentoring. No one wants the junk we sell because there is enough junk and its too expensive to produce, distribute, consume and dispose of in an environmentally balanced and sustainable manner. We, the burgeoning explosion of human animals are the problem, as is obvious to anyone who can see the Earth from a satellite at night, or sits in traffic for hours, or is bombarded relentlessly by endless noise, physical and mental, or has to attempt to live an existence of dignity, compassion and respect in a society with total disregard for these values, because greed is God, and Mammon is the master of the universe, and there is no justice, only law enforcement, and nothing is fair, and everything is a total scam, by the elite who will do absolutely anything to keep themselve in power. Well, guess what, the people have sussed this scam, and they are now seriously and substantially upset and circumstances are going to continue to worsen until the bums are thrown out, and leaders who speak for the people are put in charge, not just here but generally. This is the shift, away from the global elite, toward fair and balanced distribution globally in sustainable systems of human organisation. To start with, we should try to become as self-sufficient as possible, but this requires a change in education, values, culture, the meaning of life in effect, in which the obscenity of creating an elite of wealthy justified by the neo-liberal propaganda in the mainstream corporate media, is finally and forever buried as the best and highest reward of individual existence.

  31. MK1

    Hi David,

    Yes, you are right – it is time to think about solutions.

    Whilst the Argentina crisis was in a different environment than our current “storm” (and the global “storm”), there is a case for facilitating experienced people with those with fresh and innovative ideas, etc. Ireland is quite entrepreneurial anyway (GEM report) and we can leverage our people who are reasonably talented. However, a plethora of start-ups that do eventually trade succesfully wont be our saviour due to the scale of our problem.

    For one, the global market is not demanding products/services right now. Japan have just had the worst crunch on that front since 1974 (http://www.rte.ie/business/2009/0216/japan.html) which was ‘oil shock’ related.

    Secondly, its hard to get some of these ’boutique’ ideas into an export generating and succesful business from a standing start.

    To complement your idea, I think we could help and support those companies that are already in business, and have shown some success. For example, the diaspora was mentioned but do we have sufficient diaspora in target markets such as the EU countries? Probably not enough who have the skills time and energy etc. We could therefore share sales staff (those recently made redundant in ireland) who would act as product/service sales people in various geographies and represent several companies, such as 4. They could be partially paid for by the state, officed in cheap ‘Ireland House’ offices in the target countries, etc and of course not spend all their time outside the country and spend time at home in Ireland as well. The key is that the costs would be shared, and its more efficient. Their job wont be easy however as they have to represent 4 companies fairly.

    Another area you touched on were costs. However, we really do have to bring them down. Our cost base is way too high for this current global environment. For every euro per hr we can take out of our average wage, it makes the selling and margins and number employed much more higher. And you are right, jobs and activity is where its at.

    Someone mentioned India. There is no way we can compete on costs with India. Is there any SW developer who is willing to work for less than Irelan’ds minimum wage or even our dole??? Nah, I didnt think so. But we should not be competing with the India’s anyway nor should we reduce our cost base to that.

    Yes, I agree that taking costs out (deflation) can have problems of its own, but as we dont have a currency to devalue, we have to tackle it head-on in another way. We therefore need to increase efficiencies, increase productivity and output, and reduce costs. And that means salaries. And yes, that also means costs in the Public Sector Tim.

    It also means we should not be pouring huge amounts of concrete or borrowing to build infrastucture that wont have a short-term net return. I agree we need to invest in education in terms of churning out smart people, but NOT in pouring concrete and new school buildings. That is a complete waste for the times we live in.

    Getting people to work harder will be important too.

    MK1

    • Tim

      Mk1, I am still ruminating, but I can tell you that your explanation the other day is the closest to convincing me that you are right or at least have a very good point. I could agree with you more quickly, of course, if the levy were equitable; It is not. (3% if you earn only 15k, 8.5 if you earn 85k and only 9.4 if you earn 300k).

      We have no morals, if we allow the levy to be introduced on that inequitable scale!

      • Robert

        No Tim, People like you – members of FF – are the ones with ‘no morals’. Don’t include the rest of us with your “we have no morals”

        This is the most corrupt and incompetent government in the history of the irish state.

        You’ll be knocking on doors soon looking for the support of members of corrupt-FF so as to seek a continuation of these policies.

        Quite frankly, you lack credibility. So I don’t see why you bother leaving remarks on this forum.

  32. MK1

    ps: I just heard that the markets now think that Ireland WILL default …. !!!
    Feck that for a game of soldiers, if it does come to pass. Because if we (Government) cant get money, and lets face it, we havent been getting it cheap in the last while anyway, then the situation here is gonna get much much worse.

  33. SLICKMICK

    Within 3 years all of the net increase in private jobs created in the past decade will vanish.The Irish market is too small
    for Dave’s idea to work, and thanks to weak sterling ,export opportunities are being and will continue to be lost.Employment will fall back to the same level as it has always been-circa 1.15 million.

  34. Malcolm McClure

    David: Recent polls suggest that the country wants fundamental change, so an election is needed to clear the air. If the government refuses to call this, then perhaps you could be asked to lead The Long March.

    To set the ball rolling, Dr. Joe Mulholland and Austin Curry would be enrolled, and with their support Brian Friel and Seamus Heaney. With that set, an extraordinary meeting of the ‘MacGill Summer School’ would be organized in Glenties. There, you would outline the crisis and challenge those present to join you on a peaceful long march from Brian Friel’s House in Inishowen to Leinster House. If you had 100 people following you when you came though Barnesmore Gap, you would have the world’s press on your heels, and by the time you passed Sligo, there would be at least a thousand peaceful followers.

    The government would resign before you reached Dublin.

  35. Harve

    I think that Gerkennedy’s suggestion of including the diaspora within this match-makers concept is a great idea. Maybe we could have a three-way partnership – the young entrepreneur, the experienced Irish business person, and an Irish expatriate who can act as the eyes & ears in an export market in question.

    Several people have mentioned why David’s idea might not work and you raise valid points. However, what is the alternative, sit-around and let others kick the sh_t out of us? I don’t think so. When our backs are to the wall us Irish are fighters, we are resilient and we find a way back even in the worst circumstances. As David said before we are a nation in a war of sorts. Our greatests weapons are our brains – we need to start using them. True, Ireland ’09 is different to Argentina ’02. Maybe the world is in a recession, but that cannot be an excuse not to act, or more appropriately an excuse not to think and act. There is still lots of money out there that is waiting to be invested in ideas that deliver real value. Our challenge is to think of ideas, products, value propositions that we can provide that offer real value. That’s not going to be easy to achieve. Anything of great worth is rarely easy to achieve. But ,with the benefit of hindsight, once it is achieved it seems to be simple and easy.

    In a war situation, there is a time, in the darkest hour when all seems to be lost. It is in these times, that people must decide to fight on, to keep on fighting. In Ireland we are approaching the darkest hour. In WW2, the British were up against an even more formidable foe and when it seemed that all was lost in the darkest hour they kept on fighting and evenutally prevailed. If the British could do it in WW2 we can do it now. Thinking and Action are our greatest weapons. One will not work without the other, we need both. This website shows the great potential of thinking but until it is coupled with Action, it is not really worth anything. David’s idea is a really good one, now the challenge is to take action by implementing it and I think that with the people who read David’s articles on this site, we have what it takes to take the positive action and make a difference.

    • Dilly

      Harve, one problem we have, is that our communities are fractured by consumerism and greed, we are all working against one another, and no one trusts their neighbour anymore. Also, many people have had to move far away from there traditional neighbourhoods, just so they could afford a house. The last ten years have driven people to look down on each other, from their new home, or SUV. I see it every day in my neighbourhood. When I had trouble with vandals (very common in our middle class neighbourhood), the attitude from neighbours and parents was “it is not my problem”, just so long as their property was not targeted. So, it will take a hell of a lot of work to bring people to work together again, because they seem to have grown used to working against one another.

  36. Harve

    Dilly, valid point and I can see where you are coming from. I also agree that selfishness (greed and consumerism) has grown and trust has diminished quite a lot over the last 10 years. In many ways, we may have become rich materially but we have become poorer with regard to community and helping others. The boom promoted the myth of independence and that we can have it all on our own. In reality, we are all interdependent and, in that context, beginning to trust each other again will be a challenge – one of the many we face. However, given the scale of the problems we face, we will have little choice but to work together if we are going to get ourselves out of this.

  37. Tim

    Dilly and Harve, it only takes one person in an are to start to make a difference. In my area (12 years built), people help eachother out every other day: jump-start a car, loan a ladder, mow a lawn, loan each other thier cars when someone is stuck. During the big snow the other week, I was unable to drive up the hill because I got no grip in the snow and two neighbours from around the corner came and pushed my car to help me.

    Of course we can work together; decency and generosity are alive and well.

  38. pera

    I have to admit that at this stage it is almost too depressing to watch news and read papers. So I try to look on the bright side. I think this is the first time that we can really test and see if the move into the knowledge economy and the high amount of skilled graduates available in Ireland will be successful.

    Somebody once mentioned that it is a sad state of affairs that some of the brightest science graduates have found themselves in sales focused roles in the finance industry. And maybe that is similar to what has happened in Ireland. For years the focus was on multinationals and then increasingly on construction and construction related industry. This combined with a relatively low unemployment has made sure that there are very few resources available to startup companies (that are not catering to the multinational or construction business) So the resources that are now available could be of help to new industries and research.

    Several countries have seen technological, demographical or cost-based shifts, that make certain traditional industries no longer viable. So could that have been the case in Ireland, with the coming of the multinationals and the construction industry basically blocking the evolution and startup of Irish companies, that can compete on the international stage?

    But what really worries me is the ever increasing suspicion that I have that Ireland in not run on the basis of Capitalism or socialism, but rather on two other -isms. Nepotism and Cronyism

    I am wondering if there are some serious flaws in the system. Some examples that I have noticed:

    When a teacher gets elected to the Dail, he gets to keep his job. I have no problems with that. I think this encourages participation in democracy and should probably be extended to all workers who get elected to the Dail. But that the same TD should get a payment equal to “his salary – replacement teachers salary” This is to me completely absurd, and I question any system that:
    1: implemented this rule in the first place
    2: Has not removed this
    Anybody know why this rule exists? except for the personal enrichment of the TD?

    The finance minister can not show a report to Taoiseach, because it contains sensitive customer data. The finance minister can not express his opinion on a board decision because as he put it “I do not want to put the state at risk of litigation” But he will gladly underwrite all their debts! The solicitors have definetely too much power if they are able to dictate the information flow and the free speech of elected officials

    I dare not think about how much power they then must have over journalists

    There seems to be a hereditary political system, and the candidate who places out some free skips with his logo on it close to election time, is probably going to win the election

    Senior civil servants seem to have a disproportionate amount of power over the minister. So I am unsure if a change of government is going to make any difference.

    And people in power do not seem to have the capability to be embarassed and do the honorable thing and resign. The amount of brassnecks seems to be very high

    Sorry I seemed to have gone into rant mode. These are just a few examples that lead me to believe that there seems to be a very strong establishment. I am starting to think that any changes in this country will have to be in that establishments interest to be implemented, whether we like it or not. So is Ireland really that agile and adaptable to change

  39. Philip

    Pera, you are also hitting a very big and debilitating issue in Ireland. The lack of professionalism in our business dealings whether political or commercial. I saw a reference today by one of our esteemed journalists where he highlighted an example of this of PWC working for the Minister of Finance and Doing an Audit on a bank. 2 clients – conflicting goals and different aims. Conflict of interest seems to be ignored. The idea that we are all friends no matter what and we can always paper over the cracks has been effectively institutionalised.

    To be fair (as best I can), I think there is a genuine belief among the PS/ Gov TDs etc that if we do not air the dirty washing and can somehow sidestep awkward issues, we can “all” get through it. I think it is not meant to be damaging and indeed there can be cases where such an approach can speed work along…but such cases are specific with a low risk impact. The sad reality is that the judgement of our leaders and those of our professional organisations is very poor to the point of childish/criminal stupidity. This is exactly the type of management style that causes planes to fall out of the sky or trains to crash or bridges to crumble. It is actually life threatening and indeed threatening to the fabric of society.

    So what do you do? The reality is that the Government will do nothing and the global economic climate does not support standard responses either.We are trapped. As for pay, levys etc. PS inefficiencies. etc. this will become completely academic if we default. The best thing you can do now is start to serve your customers as well as you can. There are a lot of day to day problems out there and they need solving and we have the brains to do it. But, whether you’ll be using Euro as legal tender is another matter. I think Gadfly’s comment on how broken the whole system is correct and we need to face up to it sooner rather than later. We are well past reviving this mess. Move on.

  40. Time to find out what is the cause of depression, and not get hyperactive to pretend there is no reason for it.
    That’s the basic understanding in psychology.

    The world is overloaded with – that’s what happened – business speculation and the debt it created to keep it all going. It has been a rollercoaster pyramid ride. The likes of Madoff (contrary to what most think) is a microcosm, and not the macrocosm.
    This is definitely the opportunity, to rethink the madness of what has really happened, and not rethink how to start it all up again. Morality must be brought into the equation.
    The real problem is how can we possibly imagine life without the prospect of having more. I know you are in a way suggesting this but (with respect) only in the short term with a view to becoming a ”TIGER” once again.
    I think we have to go on realizing progress/expansion as we know it is not possible. The greater economical scientific minds who you well know have already outlined this fact, just like you David outlined why the financial collapse was coming some time ago.

    Small business (I said it many times before commenting here) has the financial system wrecked; seldom does it make a profit, and if it does, the profit is needed to show the bank to borrow to expand, to borrow, to expand to bankrupt.

  41. My Lost Generation

    I have no idea of what Irish entrepreneurial spirit and achievements were before Ireland joined Europe and before Europe funded most of the essential infrastructure a country needs to compete and trade with other countries.

    What was Ireland worth economically before then is the question I am asking myself because the past 10/12 years do not seem to be very economically convincing as most of the growth was, for most of it, reliant on financial subsidies from Europe and borrowed money from foreign investors.
    So where are we now? and who were we before the 90s? Because it is undoubtedly where we a re going back to.

  42. Garry

    The thing is folks the levels of debt in existing organizations and companies could well be their achilles heel. Remember the suggestion of a new bank with the 7billion?

    Well this whole mess has tipped into the real economy and real companies selling real products to real customers are in real trouble. And that means opportunity. I know demand has dropped but it cannot drop for everything… Yeah you don’t need a 5′th pair of trainers but there stuff everyone needs, peoples taste changes…Whether small companies can take advantage of it is another question but its not all doom and gloom…

    We will look back at this time and slap ourselves and say “I should have done that!”

    • Malcolm McClure

      Garry: The future is not about stuff, it’s about time. There will be the people who have well paid jobs but no time to enjoy life and the others who have occasional, or no jobs, plenty of spare time, but little money with which to enjoy life.

      Assets will be regarded as just a source of headaches for those with good jobs, but free time will be a luxury, as they will need to be alert to what happens to their money. They will consider themselves custodians of ‘homes’ that they will prefer to rent rather than buy; they will use taxis, public transport or rent a car when needed. Furniture and kitchens will be minimalist as they will eat out for most meals, or they will snack in the company cafeteria, as they will be required to work 12 hour shifts.

      If the salaried are a couple with children, they will have to have a full-time live-in couple to organize their lives; the female combining functions of children’s nurse, cook and secretary and the male being chauffeur, gardener and handyman. The latter couple will probably have a more satisfactory existence than the salary earners, who will be flying all over the world, trying to keep their “good” jobs and the perks dangled to keep them at it.

      Thus the whole concept of having ‘servants’ will be a return to Victorian values and a couple who are servants in a prosperous household will have a fairly agreeable lifestyle.

      Any takers?

      • Garry

        have no free time myself these days, trying to do one job and create some other income but to be honest am enjoying that also but its something that cant be done for too long
        back in the late 80′s the country was divided between people working overtime and those looking for work

  43. My Lost Generation

    I dont think the last 3 people in my family made redundant by Sr Technics are wondering about a 5th pair of trainers and their disposable income will determine their needs which in turn will be very easy to identify, so if you are thinking of Aran jumpers, it has already been done.
    Sorry for being so gloomy but I am getting annoyed with people who are trying to make it better, we have elected and are paying politicians and economists and a crowd of public servants, bankers and so on to make it better. It is their JOB and they are getting great money for it.

    If you are not happy, get rid of them, demonstrate, show your faces and anger. But then again I would tend to believe that most of the people on this blog have not lost their jobs. The day they will, they wont be spending so much time on Dave’s blog, they will be on the streets.

    You can waffle all you want, some people in the real world are getting pissed off and for all its worth I can predict some serious industrial disruptions to make things a lot worse because an increasing majority have nothing now to lose anymore.

  44. MK1

    Hi Tim,

    > I could agree with you more quickly, of course, if the levy were equitable; It is not.

    I agree, there is unfairness.

    As to my other point about ‘capping’ PS pay at 100k by bringing in a new tax/levy that would divert anything above 100k to tax: would PS workers agree with this if the money saved, etc, was used to ensure better conditions for PS workers?

    I also think that the targetting of special needs assistants was a particulary soft one.

    The private sector needs to be tackled too and the first one will be to curb pay in the nationalised and capitalised and guaranteed banks.

    and then …

    and then ….

    MK1

    • Tim

      MK1, I agree with your idea of capping PS pay at 100k and diverting anything above to tax; but that should mean that lower paid workers pay less. Charging someone on 15k a levy of 3% is not just ridiculous; it is immoral.

      But, BEFORE you do these things, and , certainly, please Do them, curb the pay of the fat-cats on mega-salaries.

      Do that FIRST. Start at the top; then work your way down.

      I know a PS worker, on a gross salary of about 40k (worked up to it over 30 years, mind you) who was planning to hire a local carpenter (who is out of work at the moment) to build some book-shelves for her. Because the levy will hit her next month, she has decided that she can no longer afford to pay him to build those shelves. Both people lose; the economy loses. If other people she works with could afford to build shelves (don’t ask me why women always want shelves – I do not know the answer to that), and she could recommend him to them because she was happy with the shelves, he could come off the dole and become a net contributor again.

      Simplistic example, I know, but real and true. It is what I have been trying to say about the levy taking money out of the economy. I agree with your earlier point, though; except for the assertion that the levy will reduce the tax paid by the private sector worker. It will not; the government will not reduce the private sector tax take; it will just retain the levy – not “pass it on” to the private sector worker as a tax break that he can spend. So, the economy will be starved of this money.

      I can tell you this: that carpenter vehemently disagrees with the levy; I met him this evening. This is not economic theory for him – the levy has prevented him from earning real money from real work, with pride in his work; and it has prevented him from “spending-it-on”, through the real economy further through others like himself.

      Your 100k cap idea is a good one. Please keep talking to everyone you meet about it. No-one needs more than that to live a decent life. I am reminded of Monty Burns, of “The Simpsons”:

      “Ahhh, …. “sitting”, ……. the great leveller!”

      • paddythepig

        You’re getting there Tim ; keep connecting the dots. Yes the Government will retain the money, because it owes the money, with interest on top, to someone else. Big problem now, less and less people want to lend to us. If they do, they’ll charge us more and more until we get our day-to-day spending in line with our revenue. They mightn’t even lend to us at all. Then what will we do?

        California dreamin …..

        Next time you meet that nice fella Brian at the cumann meeting, ask him why he sat idly by as Bertie and Biffo, and all the footsoldiers, cheered on the Celtic Tiger bubble. Why did he not ‘fight the good fight’ while the problem was being created?

        Funnily enough, I had reason to visit a hospital the other week. God bless the nurses in A&E, what a fine and important job they do. But as for some of the nurses on the ward, well they were very good (bar a few stalwarts) at chatting, laughing, standing around, and drinking coffee. Cuts can be made, in places you would never dream of, if you look at something objectively.

        You’re right about getting tough on the bankers though. They should be culled and cut down to size before any other sector.

        Paddy.

  45. Match-making idea would be excellent if markets existed for the products/services provided. But where are they? Dubai? Japan? GB? Germany?

    The reality is that the global financial meltdown is assuming the characteristics of a black hole which will suck us all in within months. What we require is a siege economy which will ensure that every citizen enjoys food and shelter. The latter should present no problem as there are thousands of unoccupied houses/apartments which could be requisitioned. Feeding ourselves could be a problem as our farmers have probably forgotten how to grow wheat and a major retraining programme might be required (we still know how to grow potatoes and the spud could well resume the position it enjoyed in pre-famine days).

    D O’D

  46. I attended my local societie philosophique in Nice today . Included were Notaires & Banquers . Ireland dominated the theme and they are pessimistic and expecting our default . Also they said that Sarkosy is making excuses and saying that France never became what Ireland has now become and that he saved France.
    They stated a fact that Dublin is the capital of Banana Isle off the coast of Sierra Leone …. what a coincidence

  47. CREST

    Perhaps the economic situation that Ireland is in at the moment might be a blessing for the ordinary Irish people, if they are able to take advantage and purge the corruption from political, legal, and religious areas, systematic since the foundation of the state.

    Let the New leaders come forward and take control.

    No the disease is terminal and too deep rooted in the system.

    Regarding the large payouts to the regulator on “independent legal advice”
    Which friend of the regulator gave the advice?
    The Regulator was working for the tax payer, and did not do his job, should be sacked full stop, and not be allowed to have early retirement on his CV.
    The Minister should let him sue the State if he thought he had any entitlement.
    No. He will be back later, like all the others, with his nose once again in the trough.

    Maybe its time for another 10 year plus long Tribunal.

  48. Tim

    CREST, no. It is time to bring back Internment-without-trial.

    Arrest first, investigate later, trial to follow, when ready. They are already talking about censoring the Pricewaterhouse-Coopers report.

    No censorship – let’s know it all, now.

  49. Robert

    The levy is also a form of double taxation.

    The levy money paid is then taxed again under the PAYE system.

    I have a bucket of water at my door and I can’t wait for the first FFer to knock on it shortly.

    • Tim

      Robert, that is not correct. There is, actually, tax relief allowed on the levy – otherwise, there would be riots.

      • Robert

        On the soon to be introduced public service pension levy there is tax relief.

        On the 1-3% levy introduced on the 1st January there is no tax relief.

        So many levies . . . . .It’s hard to keep track.

  50. Lorcan

    MK1 > The private sector needs to be tackled too and the first one will be to curb pay in the nationalised and capitalised and guaranteed banks.

    Aren’t they paid from the public purse now too, or at least their pay packets exist because of the public purse? Hardly private sector anymore!

    Government intervention in private sector wages, other than through taxation, may not be the best idea.

    I think in these discussions it is important to highlight the distinction between financial capitlaism and real capitalism (for more on this see Martin Wolf’s excellent ‘Fixing global finance’)

    Financial capitalism, and all it’s associated silliness, is an accounting excercise. Money is moved around, created and destroyed. But nothing is actually produced. It is only when the money (the only reason finance exists) is moved to the ‘real’ economy by means of investment, and thusly put to work that the system starts to make any economic sense.

    In ireland’s recent past the money coming from the banks hasn’t really left the financial system, the banks allow people to take on debt (I hate to hear of people ‘getting’ a loan like they have won some sort of prize) and then extracted repayments direct from their bank acounts until their usurous need is satisfied.

    Contrast this with investment in business, where money is actually extracted from the financial system and really put to work in building something that provides a return. Whether this is seed capital for a business, or money for cap-ex, it is the only money in the system that capable of producing ‘real’ growth.

    Growth in property prices is not ‘real’ growth because it is funded through financial ‘flipping’.

    Sorry about the longwinded post, but the point is, if David’s idea is to be given a chance it will need a good source of capital, a financial institution that is not in the business of financial capitalism, but rather one that is a source of finance for the start-ups. Thusly we come full circle to Sean Lemass’ 1933 Industrial Credit Corporation, an idea who’s time has come. Again.

    • Dr.Nightdub

      There’s got to be something in the credit union model that could be applied to what Lorcan’s talking about here.

      Unlike the normal (!!!) banks, credit unions lend not just on the ability to repay, but also, and more importantly, on foot of a track record of saving – in other words, you first have to form a habit of not spending every penny you earn. A multiplier is applied to what you have saved and that’s as much as you can borrow, provided you can demonstrate an ability to repay while continuing to save as well. There’s all sorts of loftier notions behind this – prudence, thrift, a sense of balance and so on, the philosophy isn’t that hard to figure out.

      I’m not sure how that’d apply in a commercial sense – perhaps a track record of keeping profits in the business rather than paying dividends or exorbitant directors’ salaries? A threshold level of working capital which the business had to maintain under it’s own steam without recourse to borrowings / overdrafts to fund the whole lot?

      I haven’t a clue how you’d deal with loss-making businesses, as I’m just thinking out loud here…

      In the same way that traditional credit unions are run, not with the aim of generating profits but of fostering mutual financial self-reliance between the members (I prefer the term “people’s bank” myself), I s’pose a commercial credit union would have to be based on the principle that the primary purpose of enterprise is to provide employment, NOT profits. In which case, losses could be tolerable once they weren’t ruinous and without hope of being reversed at some point.

      That’s a sea-change that I’m not too sure many people are willing to contemplate just yet. Nowhere near hardcore enough to get Richard Boyd Barrett’s pulse quickening yet not so radical that it’d scare the rest of the world into thinking we’ve gone all Chavez without the oil reserves to back us up.

      Somewhere in there I think there’s a need to realise what a lot of people on these pages have been unwittingly edging towards over the last while – if you like, the -ism that dare not speak it’s name: that private capitalism, of the kind that we’ve known in the past, is simply too dangerous to allow it a place in our future.

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