August 16, 2010

Costly wearing of the green

Posted in International Economy · 76 comments ·

Our boomtime ideology is alive and kicking – and our refusal to look to developing countries to build our economy again will be the death of us.

Can Irish football tell us anything about the state of the country, and just how far we have to travel to compete at the highest level? People might say losing 1-0 to Argentina is a respectable performance – and, in a sense, it is. But let us look at something different. Let us kick off with how much we pay the manager of our national football team.

Did you know that Giovanni Trapattoni’s salary is nearly three times greater than Diego Maradona’s was, when he was Argentina’s boss? Or that he is paid €600,000 more than Vicente Del Bosque – the Spanish manager who won the World Cup? He is paid more than the coaches of Germany, Italy and the Netherlands.

In fact, Trapattoni – whose team failed to qualify – is the second-highest paid national football manager in the world. If anything underscores the ludicrous gap between international reality and Irish aspirations, it is this.

Why do we feel the need to go down this road? Why, rather than saying we should pay for success, do we still believe that we are rich enough to fork out so much on a manager who is clearly in the twilight of a glittering career? Trapattoni naturally negotiated the best deal for himself, but when you match the quality of the team’s performances and our inability to qualify for the World Cup with his salary, we should ask some questions.

Quite apart from reinforcing the idea that the Irish are prepared to pay over the odds for anything even as the economy sinks, football tells us a bit about how the global economy works and, like so many things these days, all roads lead to China.

Last year, after a particularly miserable Trapattoni affair against Cyprus in Croke Park, I set myself the target of finding the factory that makes the thousands of Irish shirts that clothe the Green Army. I wanted to join the dots of the global economy, and see for myself how a goal in the last minute can have a profound effect on the employment prospects of millions of poor workers in China.

After many calls and false leads from retailers to wholesalers to dye factories and middlemen, I finally reached my nirvana in May last year. Away in a back street called Station Road, in the small Chinese town of Bilung – the knickers and bras capital of the world, where expensive La Perla, Myla and Agent Provocateur lingerie is churned out – lies the factory that makes our shiny, acrylic kit. The workers get €9 a day and the shirts leave this place costing less than €1 each.

The fact that they retail for about €50 at Dublin Airport means that someone along the way is doing very well. On either side of the street are dormitories that house workers. They get bed and board and spend all day in the local internet cafe¤ , which doubles as a snooker hall, a betting shop and a down-at-heel nail bar.

All the workers are from the same village in the interior of China. They appeared happy enough with their lot. They knew Robbie Keane from Roy Keane and Man United from Tottenham Hotspur. They didn’t, however, have a clue where Ireland was.

Like many cities in China, everything happens out on the street. All human life was there, eating, arguing, living and, above all, filling the air with that most Chinese of cacophonies, the great throat-clearing and public gobbing soundtrack.

Quite apart from the typical Chinese street scene,the other thing that caught my attention was that the sewing machines running up the Irish football shirts were made by a German company called Pfaff.

In fact, sewing machine enthusiasts would know that Pfaff is a German company from Kaiserslautern, and is over 140 years old. Having survived unification under Bismarck, two world wars, reparations and reunification under Helmut Kohl, this company – like so much of Germany’s industry – is thriving in China.

This is where the difference between Ireland and Germany is so stark. Ireland imports wildly over-expensive soccer jerseys from China and pays its football coach the second-highest managerial salary in the world for a team that can’t win. We pay for all this with money borrowed from Germany. Germany, on the other hand, supplies China with the means to rip off Ireland. That’s the difference: Germany’s industry is deeply embedded in China so that, when China makes money, Germany does too.

Germany has embraced the new growth economies of the world. It is Europe’s fastest-growing country; in contrast to Ireland, Germany’s unemployment rate has fallen in every one of the past 13 months. Three-quarters of the growth rate comes from exports – and half of those exports are going to China, India and other big, emerging countries like Brazil.

Nearly 75 per cent of all German machinery production goes abroad; China is now a bigger market for German companies than the US.

All this reveals a country with an industrial strategy based on not being left behind. The Germans have invested enormously in the emerging world and, as the west stagnates, Germany has backed China. In a sense, Germany is benefiting more from China’s export growth than China is itself.

In China, the emerging problems of rapid industrialisation are everywhere. There has been huge migration from the countryside to the cities; the cities themselves, like Bilung, are pretty filthy places; and property prices are beginning to wobble, which could have a huge negative impact on the Chinese middle class. The Bank of China ordered its banks last week to stress-test their property loans for a 60 per cent fall in the market. Now that’s what I call a stress-test.

What our few observations about football and economics tell us is that, in Ireland, we still know the price of everything and the value of nothing, while the Germans have figured out the way the world is changing far faster than anyone else. By the way, Trapattoni earns €650,000 more than Joachim Low, the German manager whose team came third in the World Cup. The Germans, with a population of close to 82 million, could probably afford to pay him more, but know that to do so would be a waste of money.

  1. PMC

    What a fantastic article – An excellent analysis of the gulf between our hillbilly simpletons and the Germans.
    The Germans are like good snooker players, always thinking three or four balls ahead….
    We’re the spectators, pissed in the bar…. hoping for a return on the wager placed on them earlier.

  2. Gege Le Beau

    Paying an international manager for illusive success is one thing, paying a Taoiseach for abject failure or worse something else……

    Also just on the Aviva stadium, the Irish citizen paid €200 million of the €410 million price tag but people complained about ‘rip off prices’, does the citizen enjoy half the financial benefit of the stadium? Get any return on the investment?

    Look at the Shell deal? What is the split there on a potential gas/oil find off the West coast between the company and the people as represented by the government?

    The following was outlined in the Irish Examiner in 2008 so deduct levies, pay cut etc but you still have an idea of the madness of the island of Ireland:

    Country Leader Salary Population(millions)

    Mr. Brian Cowen (Ireland) €280,000 4.8
    The President of Ireland €274,000
    Mr. George Bush (US) €258,000 304
    Mr. Gordon Brown (Britain) €239,500 60.5
    Mr. Nicolas Sarkozy (France) €223,200 64.4
    Ms. Angela Merkel (Germany) €205,150 82.2
    Mr. Vladimir Putin (Russia) €52,250 142
    Mr. Evo Morales (Bolivia) €13,900 9.1

    Average Irish industrial wage: €29,000.

    • Glengara

      Ah but how about our semi-state leaders?
      ESB 750K LOL

      and our ‘elected’ County Councillors all 800 and more of them who start at 30K each before expenses and junkets!ops, PC’s and more as soon as they got elected.
      And the perks, ask the Cork ones who got new lapt
      Why can’t the civil servants we are stuck with do their jobs?
      Why do we need them?

    • Zaphod

      Why don’t we get organized and kick the fecking lot out.
      It’s our country ffs

    • rizalradzi

      Let us not forget PM of Singapore earns more than The President of USA annually and the population of Singapore is around 2.5 to 3 mil.

  3. Green Backs – We need to change the colour of our flag to a strong determined and focused blend just like other European countries. The colour Geen now evokes jungle politics with monkies and bananas and some apes in the middle .
    Green is now nostalgic for the wider diaspora and can be used as a parallel identity but it will never evoke the ‘winning touch’ or the ‘the conqueror’ in any national strategy we aspire to do.Just look at Munster Rugby now look at Leinster Rugby .For them Green is something you run over.

    • Tull McAdoo

      @John Allen, very profound John. The people of Ireland ” is something you run over” me thinks!!! The amount of spin and deceit and bare faced lies being put about at the moment is staggering, and it all boils down to money with these chancers and it always has.
      My advice to people in Ireland is to look into their own hearts and to trust their own judgement and belief’s and demand justice and fairness for one and for all.I for all my years cannot match Paul Newman for eloquence or indeed good looks ,so heres how he summarised what I’m trying to say and believe.

  4. BrianMc

    Did you know that there were/are about 120 Indian business leaders in Dublin this week end, attending a seminar ast the Burlo. Here’s who they are:

    It’s funny that David Cameron, George Osborne & Vince Cable thought it worthwhile going an a trade mission to India recently.

    I can understand Brian Cowen, Batt O’Keefe etc feeling a bit put out by the thought of having to trek around a hot country looking for business on behalf of Ireland Inc., but y’know, when 100 top execs happen to be in town, would it not be too much trouble to show an interest.


    • Deco

      Brian Mc
      I think that Cowen, Gormless, Coughlan, Harney, etc.. were probably doing the country a favour by not attending. If the political lreadership showed up, the Indian executives would think we were a country of chancers, pretenders, wasters and alcoholics.

      Anyway, the political leadership is on vacation at the moment. They cannot be disturbed. They have more important things to do than to be interrupted by such trivial issues as attaining better trade relations with an up and coming Asian economic giant.

      • +1 Hide the government jet. lol

        • BrianMc

          Deco & cbweb,

          I note that Mary McAleese will lead a trade mission to Moscow & St.Petersburg Sept.6-9. Batt O’Keefe likewise to Rio & Sao Paulo Nov.21-24. However, how galling is it that while the leadership takes the economy on a sleepwalk over a cliff, there is neither anger or action by the electorate.
          It was the electorate who appointed these people.
          I also note that the media don’t seem particularly interested in this admittedly minor but, IMHO, telling instance of passivity.
          Perhaps what is happening in Irl now is deserved.


          • Deco

            There is something absurd about sending somebody to Russia, when here nickname is “McUseless”. She is another example of an overpaid lawyer living off the taxpayers, taking charge of an economics responsibility, in a time of serious economic difficulty.

            Better idea – send over George Lee in charge of it. For one thing, he is an economist. He knows what he is talking about. He will talk it seriously as a responsibility. He will not take it as some sort of “Jolly” with nice food, nice wine, and a long list of freebies. These projects should have definite objectives. and because Lee has a head full of common sense, he will not make a clown of himself. Lee will be able to answer questions when he asked and not respond with predictable patronizing speeches, etc….

          • BrianMc

            Ireland needs to engage with BRIC.
            If a recovery is to happen it will do so as a result of new industries & making stuff.
            BRIC is the export market of the 21st century.
            Trade missions are needed & I acknowledge that Enterprise Ireland appear to be doing something wrt this.
            I just don’t think it’s anywhere near what could be done.
            Our TDs are lazy & uninspired.
            Could it be that the electorate are lazy & uninspired too.


          • Deco

            I have been told that Enterprise Ireland, when performing a trade missions abroad, often get furious with some of the amatuerism from the policitians who accompany them.

            The Enterprise Ireland executives know that there are certain politicians and you literally have to interrupt them to shut them up in public and prevent them from making donkeys of themselves. Even more common are the occasions where politicians take part in trade missions to get on the TV, on a PR stunt for the electorate.

            Another excellent person to lead a trade mission to Russia would be Constantin Gurdgieve. First rate economist. No-nonsense approach. Very rational in his analysis. Clear communicator. Speaks fluent Russian. Understands Russian business. Lots of contacts in Russian Academia. Understands both Ireland and Russia. Perfect. And we know he would do the job. We cannot trust the politicians to do anything except have a good time.

          • BrianMc

            That’s interesting.
            I wonder if there is anyone in gov’t for whom EI has respect, regarding fronting Irish business abroad.
            If so, the electorate can do two things:
            1. Vote
            2. Support anyone available who could do a better job, via media & activism, to the extent that they could oust the incumbents.

            Note that may reveal some inside info on EI’s opinions



    Delaney earns 420k for his FAI gig!.Trapp won’t even attend games in England.If you play for Cork City, you cannot expect a Chelsea wage.We should peg our prices and salaries to Israel and New Zealand.Applies to all grades of employment.

  6. ThomasFergus

    David, you could also have pointed out that the CEO of the FAI, John Delaney, is earning €420,000 per annum, which is more than the annual salary of the CEOs of the GAA and the IRFU combined. No doubt it is a helluva lot more than the CEOs of the major football federations across Europe, Germany included.

    However, you do omit one glaring factor in Trap’s massive wages, namely, the contribution made by our “buccaneering” businessman Denis O Brien, infamous winner of the second mobile phone State licence turned instant tax exile, owner of half the nation’s media at this stage, including the indo for which you write, and equally successful businessman in other banana republics in the Caribbean. Insiders versus outsiders, as you might say yourself!

    • mcsean2163

      I have to agree with Thomas, namely Denis O’Brien is paying half Trappatoni’s salary. It’s unusual he doesn’t feature on any lists. I found the following from 2009:

      1. Fabio Capello ENG 8.800.000 €
      2. Marcelo Lippi ITA 3.000.000 €
      3. Joachim Löw GER 2.500.000 €
      4. Berter Van Marwijk NED 1.800.000 €
      5. Ottmar Hitzfeld SUI 1.750.000 €
      6. Vicente Del Bosque SPA 1.500.000
      7. Carlos Queiroz POR 1.350.000 €
      8. Pim Verbeek AUS 1.200.000 €
      9. Carlos Parreira RSA 1.200.000 €
      10. Javier Aguirre MEX 1.200.000 €
      11. Carlos Dunga BRA 800.000 €
      12. Diego Maradona ARG 800.000 €
      13. Takeshi Okada JAP 800.000 €
      14. Ricki Herbert NZL 800.000 €
      15. Otto Rehhagel GRE 750.000 €
      16. Paul Le Guen CAM 650.000 €
      17. Marcelo Bielsa CHL 575.000 €
      18. Raymond Domenech FRA 560.000 €

      Trappatoni’s salary was estimated to be €2 million before he took a symbolic pay cut. (No details on the pay cut.)

      Neglecting the pay cut, that would put his wage ex DOB at around €1 million, just ahead of Dunga. Still a lot.

      I’d be more concerned with Brian Cowen’s pay. As a political leader one would hope he’d try to set an example.

      • Gege Le Beau

        On our friend, Upton Sinclair’s line is most appropriate: “impossible to get a man to understand something when his salary depends on him not understanding”……

        • Johno

          My dad once told me when i was growing up that if i ever wanted to make a lot of easy money either try get elecated or get a job in the fai.

          I never done either but its true!

      • poyais

        Uruguay’s Oscar Tabarez clearly represents the best value coach:

        Salary: EUR 205,000
        World Cup place: 4th

    • Deco

      DOB does not control Indo News Media yet. The O’Reilly clan have outfoxed DOB on several occassions. And DOB has been hit financially hard by the entire saga. Yet, he continues in chase of the elusive prize of controlling most of the media in Ireland. It has cost him more than his various tax avoidance mechanisms. (HAHAHAHA…And because he did not pay tax here, he cannot write off the losses….HAHAHAHAHA)

      Yeah, the machinations of DOB are hilarious.
      Politically, DOB is FG. He had great time for the Ditherer. (though this does not make DOB a socialist). Just look at the line up on his radio stations. When George Lee spilled the beans on the Blueshirts, DOB’s talk radio stations went into overdrive criticising George Lee. Very few people say this about DOB, but it is in the interests of everybody that this is known. Before George Lee, FG were on course to get 70 plus seats and control the next government. So, naturally DOB’s blueflies got very worked up over Lee. They circled the wagons around the FG party.

      I cannot understand why the competition authority regards RyanAir taking over Aer Lingus as uncompetitive, but do nothing about DOB. He is on a campaign to dominate the media in Ireland. There is something inherently in having Denis ‘Malta’ O’Brien having enormous influence over public opinion, when he does not pay his taxes here.

      Is DOB on a road to becomming the Irish Rupert Murdoch ?

      The only possible undoing of DOB will come from either Tony O’Reilly or Michael O’Leary, who are both capable of undermining his moves. The journalists won’t offend him as he is a potential employer or an employer. IBEC reckon they can control who owns the media, so it will not be a problem for them. And RTE reckon they can be supported by FF, ILP politicians plus ICTU.

      Anyone have a copy of that hilarious cartoon “Fly to Malta – you only pay taxes” – with DOB beside it ?

    • coldblow

      Yeah, I read it yesterday. Drennan’s in sparkling form as usual(Cowen as the Sorcerer’s Apprentice etc) and he makes an important point about the govt ‘hiding in full view’ with the active collusion of the populace.

      This chimes with something I wrote last week (in response to David’s reasonable call to bring about some sensible changes, beginning with ending the Anglo bailout, and on the assumption that if Armageddon fails to materialize we will at least have made a start in the right direction, this being what successful countries do presumably) but I didn’t post it because not only is it OTT but when I looked over it I wasn’t even sure I agreed with it:

      “I have always seen it as an insider/hypothesis ‘model’, in the sense of concentric rings of insiders spreading out from the centre depending on the degree of wealth, influence and employment conditions. Over the past few years I’m sure many people, even most, to a greater or lesser degree clung to a collective memory of how it was always going to end badly, and they are now confirmed in their conviction that looking after number one is the only way to go because that is what worked in the past. While a collective act of will (there’s probably a German word for it) is needed to reorganize things the dead weight of individual fears wins out. (And it’s not helped by the fact that collective acts of will in Ireland often manifest themselves in crass and stupid behaviour – cf Deco et al passim).

      “My concern is that, as the majority still have (or think they still have) a stake in the survival of the present setup, albeit a damaged and shrinking one, while they will see through the spin they won’t come out in support of reform, rather they will sit on their hands in passive opposition and, when the time comes, vote accordingly. There is fear and there is also guilt and remorse. As in the past, people will pose piously but be led by perceived self-interest. When they say goodbye to their children at the airports some of the tears will be for their own complicity. And the politicians and the media know only too well about this, for this is what they are really good at, there exists a mutual understanding and the people know that if they play their part at the ballot boxes no uncomfortable truths need be confronted.

      “Fair, rational and practicable alternatives must surely be available but there is a lack of belief that they can be made to work in Ireland. And the real insiders take advantage of this by pulling all the strings to stop them even being suggested let alone tried. We can then look forward to the manufacture of new myths, excuses and bogeymen in an attempt at self-justification.

      “All right, that’s over the top, but it’s just to make the point.”

      My biggest reservation with the above is that the ‘we’re all guilty’ hypothesis is at the most fundamental level just wrong. If, say, public workers (I imagine a great many households are made up of one public and one private sector employee and the former provides a minimum basic degree of security) find themselves with greatly reduced wages or out of work after an IMF style review then such an arbitrary assault on employment rights would surely also justify similar action on, say, property and monopoly rights – as if there were any chance that would happen. As Stephen Kenny wrote (I think)in an earlier post a rip it up and start all over again scenario would most likely result in less rather than more fairness and in an even tighter stranglehold by the real vested interests. But, having said that, there is already a competitiveness problem – and a fairness problem, as the unemployed will agree. So you punish (I mean ‘let go’) 60k public workers. Then what, cut the dole for everyone to save money? For whose benefit? IMO at the root of it the two things are linked, and this is most obvious in the land and ‘property’ scam.

  7. ste

    All this is good and well but there is only 1 Trappatoni, 1 Brian Cowen, 1 John Delaney etc. etc. etc.
    There are, however, over 300,000 people working for the state who collectively earn a bloody fortune well beyond the average industrial wage (never mind the perks). I’d be more concerned with a dash of reality there (because that is where my tax money goes) than anywhere else.

    • Deco

      We have a pay to performance divergence in the public sector. Before we get reform, we need a lot of transparency. If our public service delivers massive productivity then we can pay them accordingly. But the evidence is that this is not the case.

      I still reckon though we need to start at the top. Cowen, and pals need to half their pay cut down by 75%.

      The fish rots from the head. It is hard to see people in the public service take their job seriously, when they are led by a bunch of idiots and wasters. The state is more hierarchical than the private sector. And this is a redundant concept in this age. We have too many people in authority in the state, and it seems that none of them are ever responsible for anything when something goes wrong.

      Problem number 2, the state sector is rotten with nepotism and the employment of relatives. It destroys motivation in any organization where it exists public or private. Basically, it causes all sorts of dysfunctional behaviour, and results in people not caring about their work. Nepotism destroys the natural work ethic of people. It needs to be castigated whenever it is found. And, it exists in a lot of the companies listed in the ISEQ, and in practically all the organizations in IBEC. In the sector where exports are the source of revenue it is much, much rarer – mainly because there is a performance ethos. Therefore people on both left and right parts of the political spectrum have good incentives to tackle nepotism.

      Let’s get transparency as to what is really going on in the state sector. Who is related to whom, etc… And a starting point is the removal of the fee for members of the public who want to check inside the state sectors documented records. Shane Ross went digging inside FAS and found enough material to write a novel. FAS was headed up by a BIFFO who is a pal of the BIFFO.

      How about something similar happening with CIE. The head of CIE is a pal of Bertie Ahern. Dublin Port is headed up by another buddy of the Ditherer. The Dublin Airport Authority is headed up by the former Financial controller of Goodman International – and therefore he is also a crony of the maFFia.

      The best disinfectent is sunlight !!! It has removed some of the rot from FAS…

  8. Great article. Yep, its not just a matter of pay, its a question of what value for money we are getting back. There’s certainly one big
    inverse relationship between pay and value for money across the board in Ireland Inc at the moment e.g bankers, politicos, including Dennis O Brien/Bono tax exilers and what these guys earn, to name a few. Its corrosive and destructive of any sense of forbearance on pay throughout the whole of Ireland Inc society at the moment.

    OT on another note, why not pay people in Scillings instead of euros. To begin with, one Scilling = one euro. The difference between the Scilling and the euro is that the Scilling must be spent within one month of receiving it. Just to give the economy a boost:) All this to dump on scrooges putting their money into gold and hiding it under the floor boards. Lol

  9. Gege Le Beau

    Wasn’t one of David’s books ‘follow the money’……does the journey lead back to Anglo and the other big institutions, somehow I suspect so, ‘cosy capitalism’ at its worst as the Financial Times characterised it when boom turned to bust. No disputing that.

    Lack of reaction for general pop. is astonishing.


    I have to say I’ve been a little sceptical of the triumphant results on export led growth from Germany. There appears to be a lot of posturing going on. The following makes me even more sceptical

    “The tests — designed to restore nervous markets’ faith in European banks, shaken by the near-default of Greece this year — were supposed to be accompanied by full disclosure of each bank’s sovereign debt holdings.

    But six of the 14 German banks tested — Deutsche Bank, Postbank, Hypo Real Estate, mutual groups DZ and WGZ, and Landesbank Berlin — did not publish the expected detailed breakdown of sovereign debt holdings, although Postbank disclosed some information on Sunday. Every other European bank, bar Greece’s ATEbank, which failed the test, complied with the disclosure requirement.”

    The PIIGS have not gone away and German banks are in the forefront of exposure to a sovereign default. Maybe I’m wrong and they can surf the wave of default on a giant wave of export led growth, but …..!!Perhaps this needs more explaining.

  11. econarchist

    The article highlights a side of the German exporting success that gets rarely mentioned. When most people think of German exports they think of consumer brand names like cars and household gadgets, but not the machine tools and other equipment that are used to produce Chinese exports.

    So it’s so much the case that “Germany has backed China” as David says, it’s more that China has backed Germany by choosing its products over those from other countries. It’s true that some German companies are investing there, for example car makers building factories, but more often it’s the Chinese who are going to German companies who can charge a premium for high quality. The only marketing that often needs to be done is to stick a “Made in Germany” label on a machine.

    It’s ironic that the country whose cheap mass-production helped to decimate much of German industry is now one of its biggest customers. Germany learned the lesson from globalisation and realised that it could not compete on cost, and instead it made use of its unique expertise to make things that nobody else could make.

    Unfortunately Ireland has not learnt any lessons from the past few years. The only industry that is taken seriously is still the making of buildings. It’s taken so seriously in fact that it deserves tens of billions of euros of bailout, sorry investment money, from the taxpayer. It’s just a pity that those buildings cannot be exported and that their home market is shrinking because of over-supply and emigration.

  12. Deco

    Excellent article. Top drawer. Bullseye.

    A real pin point drive at the stupidity inherent in how we are organized for the age we live in. Our biggest problem is the fact that so much is organized in Ireland to feed and sustain delusions.

    Paying too much for wasters is an inherent part of the Irish concept of management. And it needs to be completely poleaxed until we reach the point that we have competent people in positions of responsibility, or else we are replacing them.

  13. coldblow

    OT, here’s a good article about the travails (mais pas de ‘travail’) of the US middle class from yesterday’s Observer:

    You get 99 weeks of benefits apparently and then you’re on your own and there are waiting lists at the shelters. The feckless so and sos.

  14. coldblow

    Hudson contends that house prices rise to whatever the banks will lend. A long time ago I mentioned here that I, and presumably others, have an internalized idea of the value of things, including houses, based on the value of related and other commodities and services. So even if you can easily afford to pay say x plus 20% for something you will simply refuse. In his Gen. Game, I think, David referred to a new law of ecnomics which his researches indicated had been discovered by the Irish, namely that as prices go up so does demand. (And see where that’s got us.)

    Now, according to the afore-mentioned internalized value apparatus you get a certain, always modest, return for each investment of labour, or skill, or even pain. Another way of attempting to describe this weird and recondite idea is by means of recourse to abstract metaphyics, which has this (seemingly ridiculous) term called ‘fairness’. (I know, it’s a a silly example of convoluted jargon, but just try to stay with me here.)

    Now, bear with me as I pursue this model, which I know will appear irredeemably quaint and naive to all educated economists, this rarified, abstract world of ‘value’ and ‘fairness’. Apparently, if you were to take a primitive form of ‘society’ (this term means a collection of individuals which actually stand in some meaningful relation to each other beyond their rational programming to gamble extremely) which you could organize to play by a (hypothetical) value system whereby the prices of things stand in a fluctuating but ‘stable’ and ‘meaningful’ (I know, more jargon) relationship to each other, if you were then to impose the ‘normalized’ property model (of rational extreme gambling and self indulgence), then the primitive society instead of adjusting in a predictable manner to the new paradigm actually (and get this) fails to perceive its obvious superiority and collapse into cognitive dissonance (!). Moreover the role of risk-takers will incur widespread mistrust (!!) Under the primitive model the reasonable expectation of a couple to pay 20 times their combined salaries for an average 2 bedroom semi in Longford or of a skilled plumber for €120 for a 20 minute call out is ACTUALLY CHALLENGED (!!!) And society (ie a collection of atomized normalized individuals) will cease all productive activity. I know, mad ain’t it!!!

  15. adamabyss


  16. Deco

    The story above is a story of a society with delusions of self-importance, where delusions fuel all sorts of mis-allocation of resources. And on the back of this many make a profit. Making a profit fuelling the illusion, and pocketting the change. And it becomes an article of faith in the believers. And one is not allowed question the inherent stupidity that is the reality of what is happening. Until it all falls apart. In the middle of this is a chase for something for nothing. Pride for pride’s sake. Pride as the supreme virtue of the society. It is inherently backward, but is advertised as being the most forward of virtues. And it results in us being ripped off.

    There are many similariities with the national obsession about property which has bankrupted us. That was also a pride trip. That was a lemming rush to nowhere. It was a damn bad allocation of resources. And somebody somewhere made a massive profit.

    Now, we are getting to the psychological root cause of our underperformance as a society, and our tendency to lose the plot and undo anything good that comes our way.

    The anti-dote is humility. As a society we are going to have to eat a lot of humble pie. And some people are really going to eat humble pie with a shovel, it is that badly needed.

    You have to hand it to the Gunthers. I bet Gunther opted out of buying apartments in Sunny Beach also.

  17. Deco

    With regard to overpaid FAI bosses, and national team managers – plus over paid HSE bosses, overpaid ESB bosses, overpaid AIB/BoI bosses, overpaid IBEC clique lobbyists, etc.. etc… Here is an interesting peice from the US.

    Currently it is clear that the Irish Labour Market is not functioning properly. In fact this has been the case for several years. And much of the distortion has come as a result of the ECB low interest rates. Maybe something like this is the answer.

    I think that the start of this should be in the state sector, at the top layers. We should literally be calling for a “competence revolution” in the state sector.

  18. Malcolm McClure

    Unlike Birmingham for instance, Ireland never developed a cohesive workshop mentality, whereby a whole range of small-scale industrial skills developed in sheds in back yards. In modern Ireland the nearest approach is on working farms. In a generation, farmers have progressed form the little grey Ferguies through 4WD tractors to monster diggers. Needing to keep the full range of machinery in working order, they have had to learn a lot of mechanical, electrical and welding skills. They are often inventive and modify bought machines to suit their needs.

    Most of the agricultural machinery in the third world is fairly primitive. Think of a two-stroke rotovator that can haul a trailer. Building that sort of machine for export should be well within our industrial capacity. Also cheap disposable shallow draft plastic boats and tents that can be bulk airlifted to disaster areas.

    Even sewing machines are probably beyond our current skills level so lets begin simple and build an industrial base from there.

    • coldblow

      You would think that a basic minimum level of small scale engineering production and repair for basic needs would be a strategic requirement. How to bring that about is another matter: very high cost of living here, high food prices etc.

      My understanding is that native industry was wiped out in the 19th century by competition from our nearest neighbour, then the Workshop of the World. Protected industries after Independence were even more inefficient and as a quid pro quo for EEC entry (enthusiastically supported by the farmers who got higher prices) this industry (labour-intensive like textiles and shoes) was in turn wiped out by competition with cheaper 3rd world imports, which got access to the EC markets as a quid pro quo for accepting high technology exports from the likes of Germany.

      I have seen travel programmes on foreign tv (not RTE I hasten to add – let’s not be silly) where the natives of the likes of Madagascar are ingenious in adapting and repairing the ancient vehicles on which their economies depend. Many of these attempted Rostowian take-offs through industrialisation and exports. I don’t believe anything came of any of them, except more debt.

      I think your average rural and possibly small town dweller was always pretty good at doing a variety of work. My father in law, a small farmer, built his own house though I never heard him talk about building or architecture. Another man, from Laois, went from block construction (in his back yard) into the mushroom business and made a success of it. Are these a dying breed? If so, events will force a comeback.

      But I think you might be thinking more of engineers tinkering in their sheds with motors etc with a passion for the subject, like the old man in that feckin’ Ukranian Tractor book.

      Whatever the story is, people in rent-seeking occupations, plus clerical and factory workers etc would be at a disadvantage. Is there any faint hope of getting in skills from returning emigrants or the diaspora? (And then they’d need a chance to use and develop them…)

    • coldblow

      I should have made it clear, but what would Ireland have in common with other undeveloping countries which has made it so hard to develop its own high (or even low) value-added (to borrow the jargon) industry? We could start by looking at debt, costs of land and housing, cost of living, restrictive practices, the various factors highlighted here by Deco and others, fussy regulation (I caught some of today’s Joe Duffy programme about this today). We could begin with the debt and the land, and NAMA.

      My wife tells me that there are yet more conditions and regs being introduced for learner drivers. This will soon become a degree subject. Wouldn’t it be far better just to abolish the driving test? It’s an old hobby horse of mine, but seriously, these are not fighter planes we are talking about. What IS all this sh*t about?

      There are probably regs (health and safety) being prepared for the use of garden sheds right now.

  19. Philip

    As a labour market we are under utilised and over paid. I suppose that’s really what the competition question is all about. We simply do not get it.

    Question: How do we match the right skills to the right tasks that need to be done in Ireland that would make us competitive. Answer? We cannot because we simply do not possess the skill mix to generate/ create the value to earn sufficient that would allow us to pay for the services we currently have. We possess a service / rent seeking structure which is out of proportion with our ability to pay for it in the first place. Even the Germans and the French are appalled at what we pay for the basics.

    This is now coming to a crunch point. Foreign lenders are getting worried. Any truth in the rumours that the ECB is buying up our debt to keep the rates down? No matter. Our exposures are looking worse than Greece and Portugal. The nonsense will be brought to an end because better yields are available elsewhere. Mass firings of those who managed and warped the country ‘s finances will be the order of the day….mainly because, they will no longer to able to afford to buy the flouride to put in our water to keep us all passified ;)

    We should be one of the cheapest places to make anything. Ireland is an easy place to live in. It should be cheap. It soon will be.

    • @Philip

      NTMA Bond auction today. High risk they won’t get the interest rate they want and ECB will have to intervene and dip into its warchest to extend us a 5% preferential rate. If it happens, means we are on ECB life support. Its likely – with Anglo cost currently €24.3 bn 5 tranches to be completed by February 2011 with what further losses and we are only on the second tranche, NTMA will get the market rate. Nationwide likely to post higher losses, the €40 bn plus extra cost of Nama, markets getting more worried on top of global double tip possibility, interesting times ahead. The squeeze on Greece and Portugal ratcheting up as well the PIIGS have not gone away but live to fight another day?

  20. Philip

    We should be the Island of Robots and Windmills.

  21. foi foi moi moi

    agree 100% with you there Philip with our coastline we should be the market leader in alternative energy sources,
    On another note totally unrelated, why is it we need a seanad? why is it we need local government? surely elected TDs should surfice, seems since we are on the topic of money wasting i thought this would be a good topic. We have the population of a small city 4 million or so, it baffles me as to why we need these unnecessary departments, and can someone tell me why there is no redundancys being made in the planning departments in local governments. Its not like we need them these days or for the forseeable future. Intrested to know how many people work in the department of housing / planning in Newcastle or a city with a similar population to Ireland.

    • StephenKenny

      As Gege Le Beau put it above, Follow The Money.
      In who’s interest would cuts be? Not the political class’s, not in the state sector’s – so where would any impetus to cut come from?
      It will only happen when it is forced upon them, when it becomes literally impossible to borrow any more money, and that isn’t going to happen until the banks are brought into line and their, effectively unrestricted, money creation curtailed.
      I suggest that what we will see all over the place is great announcements of high profile cuts, aimed at pleasing the pro-cutting group, with little real cuts actually taking place.
      Until they have to, and then it’ll be far, far, too late.

      • Gege Le Beau

        Elites would rather see the country go down in a flame of raging debt and IMF intervention than make ‘self-cuts’, it runs contrary to their entire ethos and general world view, which is so entrenched, it is such a means of life that such a thought is entirely outside and quite frankly beyond their comprehension. There are so many examples. Public interest among the many is a running joke while there are honourable exceptions.

        Look at the elites down through the centuries, the Bastille had to be stormed, the Winter Palace sacked, the Reichstag burned to the ground before they got it and even then…..Moreover, when your average TD, Minister, Councillor hear and see people struggling I bet they take even greater comfort from the fact it is not them, and ensure that every expense possible is claimed to boost the income and further safeguard their position, aspect of human nature.

        Let them eat cake indeed, the buck does not stop, it is taken from everywhere but where it should be.

        • StephenKenny

          But in all cases they were followed by horrors at least as bad, or greater, than had previously been seen: the rise of the Nazis, Stalinism and the Soviet Republics, and the French Revolution.
          Interestingly, they were, of course, all a result of economic turmoil, and a political movement taking advantage of it.
          Democracy is a better process, but even this is a delicate flower, with a need for much more than the general population supporting the elites of this movement, or that.
          I’m not convinced that the current crop of media-drenched politicians actually have a any beliefs other than staying in power, and, as far as they can get away with it, enriching themselves. As a result, they will support cuts in state expenditure when it is politically possible to do so, i.e. when it becomes apparent to the majority of voters that there really is no option. See the then UK Prime Minister’s speech to UK Labour Party conference in September 1976:

          “We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.”

          • Gege Le Beau

            @ StephenKenny – true democracy is undoubtedly the way to go but as folks around my neck of the woods said about the Celtic Tiger:

            “we have yet to see that cat’s paws”

            The end of the Nazis’ was followed with German efforts at democracy, so not always necessarily bad……….

  22. Deco

    Concerning the Metro North link, here is a critique by Kevin Myers.

    Strangely, enough the critique completely forgot about the ridiculous stops to two rural hamlets (are they even villages) north of Swords which ramp up the bill by nearly 20%.

    Once again we are overpaying in an area where it might not be necessary, and where the dynamic is down not up. One of the key influencing factors concerning the economics of the Airport link is the volume of traffic through Dublin Airport. Because of the quango running Dublin Airport (all political cronies) the cost of Dublin Airport is against it being used as an airport.

    Myers it right – perhaps a better bus service would be a better idea. It would certainly be cheaper. The current bus service is prohibitivitely expensive. It is not as fast as it could be either. It would make more sense to have bus links to other key transport hubs, or even a short bus service between Dublin Airport and Howth Junction. Heck, even extending the Dart from Howth Junction to Swords and Dublin Airport would be cheaper. NAMA will probably own all the land along the way, before another 12 months have passed.

    Once again, the dominant school of economics form the Binge era is firmly implanted in the skulls of the people running this country.

    The link from Heuston Station to Pearse makes sense because it would reduce traffic from Naas. And it is a national project. Basically we have two rail systems in Ireland. (And I don’t see Sinn Fein protesting about the two fact that the island cannot have a unified train track….sic).

    • adamabyss

      Build it and they will come! One day it will get used. Better than what happened when they built the M50 under-capacity and then had to improve it while it was in heavy use (or at a stand still), although I agree with your budgetary concerns.

      • adamabyss

        Good article by Myers though. Hard to know who to believe. It’s all opinion. Who can interpret the figures correctly?

  23. Deco

    Those of you wondering if there will be an election have been thrown a lifeline, by Dublin City Council. This is as a result of Dublin City council’s decision to issue a compulsory purchase order for the site of the Ringesnd incinerator.

    Gormless will now be putting massive pressure on Cowen to countermand the City Council. The City Council is dominated by ILP and FG. Therefore they will be in no rush to make things easy for Gormless and Cowen. They have the power to create a festering wound and to also make FF look like as if FF are a side kick to the GP’s running of the country. This has the effect of further underming the FF vote. And the further this goes on the worse it gets for FF. You can expect Mattie McGrath, John McGuinness and other sceptics of Cowen, to use this as a means to undermine Cowen. In effect creating a public rift within FF, as Cowen makes a donkey of himself trying to placate Gormless.

    Maybe Gormless will handle this like he handled the M3 motorway. “My hands are tied…there is nothing I can do”..

  24. Deco

    Unusual request. It is good to some people are becomming practical about the “First Bank of Imperialist Irish misadventures”.
    I suppose it will be hard to find anybody who is prepared to own up to having purchased AnIB shares.

  25. Deco

    There are remarkable similarities along the lines of obsession with reputation between the national soccer team, and the banking sector. We are stuffed full of our own self-importance, and significance. And we do anything to make our own myths look real.

    The Germans only seem interested in rudimentary, practical matters. And the Chinese seem only interested in making money, saving money and investing money. It seems that a lot of sophisticated Irish are too keen to poo-hoo such basic and hard-reality style thinking. The binge economics model has a pscycholigical basis which is still fairly intact. In other words, despite the talk from Cowen, the recovery is neither stable nor certain.

    • paddythepig

      There is no mythology, or masking of the truth, in sport. You compete and you either win or lose.

      Is it a crime now to support the Irish soccer team?

      • Deco

        No, it is not a crime.

        And likewise it is not a crime, to say that unconditionally supporting the soccer team is a waste of time and money.
        It is not a crime to say that those who encourage this sort of behaviour are not lionising heroic deeds but instead complimenting lemmings.
        It is not a crime to say that Irish fans are on a similar psychological trajectory to the clowns who bought apartments in sunny Beach or Budapest.
        It is not a crime to say that the same delusions of pride and excessive love of own significance are omens of disaster.
        It is not a crime to say that we have become a beer and circuses society, with widespread illusions and belief in mythology that are not met by underlying reality.
        It is not a crime to say that at least 200000 idiots decided that a French soccer player should be lambasted for doing something that sports people do, while none of the aforementioned idiots seemed to regard politicians bailing out Anglo as something to get concerned about on Facebook. (as if the Irish needed a French footballer to show the Irish how to cheat, when we have so many cheats ourselves). It is not a crime to call such people sheep. Well maybe it is a crime against sheep.

        What use is all the nonsense about pride, and the obsession with chasing our over inflated concept of our own concept about how great Ireland is…..when the young people are leaving ? The fact is that our stupid collective lemming like behaviour has resulted in these people having to leave.

        It is not a crime to make the case that the same lemming-like tendencies are shown in sports following practices, the Eircom shares debacle, the residential property debacle, the commercial property overbuild, the ISEQ shares boom and bust, the election of Bertie Ahern several times, the various other episodes. Press the Green button and an awful lot of idiots get together and form a herd of lemmings.

        It is not a crime to do something constructive and point this out.

        It is only a distraction to prevent people from seeing the reality of the situation that we are facing. No wonder Dermot Ahern, who had nothing to say about the financial crisis except “it was nobody’s fault” went on a PR offensive to let the Irish public know how annoyed he was with the French. Clearly it is not Dermot Ahern’s job to get annoyed with Irish people, because he has not brought about any criminal prosecutions of any of the Anglo Golden Circle, or the Anglo directors, or the parties to the Permo Loan, etc. etc…

        There is too much emphasis on the virtual, and not enough grasping of the real. The reality is getting grimmer because not enough people are trying to fix it. And sport is riddled with cheating.

  26. Our nation is full of the colour Green .We live on the earth to take from the earth and what we take we give away for nothing when we should be making a profit to keep for ourselves.And we don’t seem to care.We hold the minds of peasants and learn to share that pain in each generation.We dwell on the pain to create tolerance and to put back into the earth again.We die as peasants .We are very Green .
    We don’t look around us to find a rainbow of many colours or to chose a strong colour that will gives us a feeling of Regal Status rather instead we bow to our neighbours and genuflect in their presence and allow their powers extend to our patch of green fields .We are blind in our own presence and cannot feel our social strengths as a unit or our ambition to do greater .We are lost in a desert of own deceit, deception and greed .We have no leaders and no dreams.

  27. We are The Tribes of the Sea.

  28. Pedro Nunez

    This 1st v third world construct is archaic, there are so called third world encnomy conditions in parts of so called ’1st world’ countries now!

    Ireland get real, (sponsored by “be with AIB”, cause is leatsa e!!!

  29. Tull McAdoo

    Its nice to see the “carry trade” in Irish Government bonds is alive and well and was boosted by the launch of 1.5 billion more today. Anthony Linehan say’s the appetite for Irish bonds is still strong, and why the hell would’nt it be Antonio when they are paying 5.4% in an Economy suffering from deflation. I mean Antonious 5.4% plus deflation rate gives a “real interest” rate of what exactly. Anthony by the by started his career in the Dept. of Finance before joining the private sector to “sow his wild oats” so to speak before returning to plant his feet above on a desk at the NTMA and entertain us all with these pearls of wisdom. Anthony also tells us that the reason the spreads have increased between Irish bonds and German bunds, i.e. 3% approx. is because the German bunds are trading at a lower level….. well no fooling Sherlock…just goes to show that people who serve their time at the DOF can count.
    I wonder could Antonio from the people’s republic of Cork tell us who bought this latest offering, or any of the bond issues this year. Would Antonio be cynical like me and think that some of the Bond holders who got their money back in Anglo and elsewhere at the people’s expense were now recouping some of their losses at our expense.
    From property bubble to carry trade, as Daithi is often heard to say “ you could’nt make it up”.

    • Deco

      I am relieved to see that DoF can count. Because, sometimes it appears as if they don’t. The Indian Central Bank are doing a great job with the Indian economy.

      Can we outsource the running of the Irish DoF to them? I bet they would be cheaper and more effective. They are several thousand miles away, but I bet they would still manage to see stuff our clowns are missing. Like the fact that the debt holes in Anglo and Nepoto seem to get deeper and wider.

  30. Costly wearing The Green:
    I agree .Had Trappatoni became food poisoned in Ireland and not Italy ,mama mia we then would be in an Irish Stew.
    There are forty shades of Green in Ireland and only one in Italy.Should we eat our Pastas green now?

    • adamabyss

      If you read the papers, despite Trappatoni being ill, he sees it fit to give daily advice to players as to which clubs they should leave, join etc. Amazing! These guys have their own careers, families and happiness to consider without his interference. Some of the advice and decision making in the soccer ‘business’ is truly bizarre, not to mention the obscene wages and terrible role models for children.

  31. Bamboo

    “our refusal to look to developing countries to build our economy again will be the death of us”
    A sick person can receive medical treatment. This treatment may or may not be helpful for survival but now it turns out that this is the 3rd leading cause of death among Americans. So called Iatrogenic illness
    Our economic and/or financial system is also sick and it is certainly becoming to be a Iatrogenic illness. Is our government capable or entitled to give medical treatment to our sick economy?

  32. Malcolm McClure

    China has now overtaken Japan as the world’s second largest economy. How long will it take or them to become Number One?
    Maybe we’d all better learn how to Hawk and Spit as Mandarin seems quite a difficult language.

  33. StephenKenny

    “So Neo, which do you chose……..the red pill will show you reality outside the Matrix…. or the green pill……”.

  34. joflynn

    I’d urge anyone interested in the wider economic debate to read Michael Hudson economist; his thesis is that we are seeing the rolling back of 250 years of post enlightenment proletarian progress, with a new financial rentier class exploiting the rest thru debt paeonage.

  35. Is it so hard to step back and rationally assess the value of things? It would appear so in Ireland! Our politicians are only the most blatant example of the overpaid and underperforming.

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