December 6, 2012

Why Government could learn a lot from the world of business

Posted in Irish Independent · 106 comments ·

One of the many great things about teaching an economics course is that you get as many ideas from your students as you give them. The other night, one of my students, who is returning to economics out of general interest but who has a wealth of experience in turning companies around, explained what he thought the budget strategy must be in the context of turning a company around from bankruptcy.

He said that the strategy must be one where the Government is getting its house of cards sorted in order to be able to default, not in order to be able to pay its huge debts. This is precisely the opposite of what is being articulated by the State. The State’s central policy, continued today, is that we will get our budget deficit down to zero in order to be able to borrow again and add to the national debt. But for this businessman, the message should be the opposite.

Here is the thinking that underlies his conclusion. A few years ago, he and his team were called into a company that was going nowhere. Initially, they thought the problem was in the profit-and-loss account (P&L), the ongoing day-to-day business.

Looking at the P&L, they went about what they normally did. They found fat and waste and tried to cut it back while at the same time they tried to see which business lines were profitable and which ones could be beefed up in order to generate most revenue. They looked at the day-to-day running of the business and gradually began to turn the ship around.

But there was still a problem. It was an enormous legacy debt, which the previous management had undertaken in better times in order to expand. They had been aware of this huge debt when they first went into the company but knew that they could only deal with creditors once they had cleaned up the P&L. Once they had turned the company around, they set about phase two of the recovery strategy. They called the creditors in and announced that the company would have to default on its legacy debts because it couldn’t carry them.

The importance of getting the P&L right was to prove that the company had a future. Now that they had done that they could cement the future by forcing the old creditors into realising that the new company would sink if it carried all the debt. They defaulted on all the debt. They calculated that if they were going to improve the balance sheet by defaulting they might as well do it spectacularly.

The company is now flying because, after all, you make a balance sheet that is crippled with too much debt better by less debt not more debt and if you can’t service all the legacy debt it just won’t be paid. This is not an issue of choice but an issue of the cruel, hard logic of capitalism.

NOW consider what our Government’s strategy, or at least announced strategy is. We will grind the P&L into shape by balancing our budget in order to borrow yet more and add to the already enormous odious legacy debt. This is precisely the opposite of what a company would be doing.

It will not make the country better off but worse off because more and more future revenue will be going to pay past debts. We will be back to the crazy notion of borrowing from tomorrow not to pay for today but for yesterday and all the sacrifices that we are making now will not buy us any debt relief.

In short, unlike the private company, there is no reward for fixing the P&L.

So even if you are an “austerian” and believe in austerity, you must have an idea as to why you are doing it. There is a horrible feeling that there is no plan in Ireland. We are not imposing austerity in order to reduce our debt burden once and for all but we seem to be imposing austerity in order to lumber our children with yet more debt.

This is why today’s Budget and the last five budgets appear to be the triumph of tactics over strategy.

We have no idea why we are doing it. There is no growth strategy tomorrow, which will be triggered by the “successful” implementation of austerity today.

If this were a corporate restructuring, the P&L tactic would be allied with a related balance sheet tactic.

This is not happening in Ireland. In fact, something much more bizarre is going on. We are supposedly trying to fix the P&L not in order to reduce our overall debt position, but to increase it!

David McWilliams’ new book ‘The Good Room’ is out now

  1. Adam Byrne


  2. Tiny Tim

    Countries don’t operate like companies.

    • NeilW

      The Eurozone countries are the nearest. They are more like the States of the US or Canadian provinces.

      Unfortunately without control of the central bank you are indeed income limited. You’re just a currency user like everybody else.

      In fact it is worse because although you get your income from every transaction in the economy, you have no mechanism under your control to increase the number of transactions.

    • Hi Tiny Tim,

      Fair point. I know what you mean but one positive point about getting your house in order should be to strike a deal on odious debts and all too big mortgage debts.



      • Perhapx

        I agree with Tiny Tim. It would be a whole lot easier for a non democratic un-elected ruler to impose a harsh discipline. And even such a ruler must get the P&L sorted first. And we’re still not there yet. Surely then would be a much better time to talk tough, when we are no longer ‘cap in hand’ looking for a bailout.
        Its all too easy for such a ‘smart’ business person to put a ‘gun to the head’ of the creditors and threaten bankruptcy today with a New-Owner-LTD tomorrow on the same site but with different suppliers (I nearly feel sorry for the creditor, and I bet few of them that caved weren’t banksters). In fact he’d not need smartness, so much as a double helping of good old ruthlessness should do the trick nicely.

      • Perhapx

        Oops!. “and I bet few of them that caved weren’t banksters”
        Should be “and I bet ‘most’ of them that caved weren’t banksters”

      • Tiny Tim

        There are many deals that could and should be struck; banking practices should have been dealt with especially the appalling manner in which they now pursue people even after being bailed out.

        Too often the debate lurches from one extreme to the next, do this way or do it that, if democracy and Republic are to mean anything then it seems to me we have to go for a blend of systems, where there is accountability and also where people are protected in the workplace (public & private), so people are not exploited by someone solely motivited by profit who retires at 49 after he/she has outsourced the firm or sold it on to some bigger (normally US) competitor – the great dream of so many, get in and get out. Despite the demise of the Celtic Tiger, the old ways linger, money is still worshipped while societal values have taken a hammering, individualism v community.

        I take your point on debt/mortgage relief, something clearly needs to be done given 170,000 mortgage holders are either in arrears or have had their mortgages restructured and yet the government decides to go ahead with a ‘property tax’ and puts out the line about €92 billion in savings which it is anxious to exploit.

        The problem with all the actions to date have been the lack of sustainability and vision, which you have long written about, the government yesterday went for the easy kill, and probably finished off a great number of struggling citizens (not consumers as one prominent ‘financial guru’ in the media refers to them) along with what remains of the real economy.

        The problem with defaulting or reneging our the debt is that the major countries who benefit most from the exploitative financial system would nail Ireland completely to the cross and probably threaten to pull the entire multinational sector overnight, that is the reality.

        As Thucydides wrote: “large nations do what they wish, small nations accept what they must”.

        We are clearly in the latter category with a political elite who will implement the programme while safe-guarding their own benefits and pay and those of their friends and family to the greatest extent possible.

      • Howya

        And if you listen to some of the commentary from Europe, a carror is being dangled – Europe has said it will “consider” debt restructuring for Greece but only after it has got its house in order. Maybe it is just empty promises but it does have some logic to it.

  3. gizzy

    Companies mus look after their customers and provide value for money. Governments can just take money from their customers.

    The Government will run their company as long as they can the same way because they know nothing else. We are the Harland and Wolfe of nation change.

  4. Deco

    There is no austerity policy in Ireland. There is a “look after our backers policy, by applying austerity on the rest” policy.

    The EU practices this, and it is practiced at national level also.

    If we had honest, and transparent austerity, the budget would get fixed. Instead you have a policy framework to suck money out of some people, in order to preserve money for nothing policies for others.

    The entire institutional state needs to be declared bankrupt, and then restart from begining.

    In any case, Noonan’s budget will make it absolutely certain that there will be a second bailout. There will be a supplementary budget. There will be excuses as the blame is placed on “the detiorating international economic outlook” and any other red herrings that can be thrown up.

    The increase in DIRT tax might also cause serious problems in an already shaky banking system.

    I am begining to suspect that this government is leading us into another calamity.

    With regard to the business analogy, the question arises “Does Ireland meand business ?”. The answer is no. Loads of hard sell, and hot air about encouragement of enterprise. But the reality is highly contractionary. And it is not Austrian contractionary in the sense of contractionary with the objective of achieveing efficiency. In fact it is the direct opposite. It is a policy framework that is contractionary with the objective of preserving inefficiency. In particular the objective is clearly the preservation of the institutional state, with it’s absurd largesse and waste.

  5. Deco

    My advice to everybody is to live very frugally, because the current economic policies are extremely reckless and dangerous to people who depend on working to pay their bills, and survive.

    The current economic policies are designed to accomodate a set of delusions about the effectiveness of the institutional state. These policies declare a crazy set of assumptions about it’s functional intelligence and moral righteousness which are deeply flawed, and highly self-serving to those who are part of the state system.

    The state is actually on a slow path to bankruptcy. And it is up to each one of you to prepare carefully accordingly. Bearing in mind that the EU/ECB will lose enormous face, if such a bankruptcy occurs (because they insisted on the entire program), you can expect that there be every assistance given to ensure that the trajectory is delayed as long as possible.

    But the debt loads are simply too large. The economic policies are built on an assumption of the priority of certain groups over others. We are heading in the directoin of a completely political economy. Politics itself has become reduced to a form of parasitism. This is not just an irish problem, but a problem in other Western European economics as well. We have a new age of Marxism. The state increases it’s control, and declares itself to be the arbitrator and reallocator of all resources in society. At the surface it is based on phrases like “fairness” and “equality”. Yet, in reality, people are not fooled, and they know that a massive circumvention of borrowed money is going on.

    The greatest disaster to befall us in our age, was to get a bailout program (which we were bounced into at the behest of the ECB). Because all it has done is created a structure to ensure increased societal unease, anger, deit, and indeed outright theft. It has preserved a state system that was woefully incompetent, inept and corrupt. And it ensured the survival of a banking value system that was clueless, and accomodating to the worst impulses of out modern contemporary culture with respect to finance.

    • gizzy

      wel said Deco

    • transitionman

      Well said Deco. Language is our reality. I remember listening to Pat Cox 2 yrs ago advisor to current govt comparing DMW to a terrorist holding a pin to a grenade of default. I qoute Shane Ross from 2/12 12
      “Athens has won a respite until the next inevitable skirmish; Angela is cunningly carried over the electoral deadline without being forced to make any politically dangerous decisions. Game, set and match to Greece. They played the role of suicide bombers. It worked. If they had pulled the pin out of the grenade last week they might have taken the euro with them. And maybe Angela too.”
      We are fools to dance to the tune thats being played for us by the political class.
      If in any doubt that the budget might be a step in the right direction read the best data cruncher -” economic coma”

      We have very little time to cast ourselves adrift before we sink into this coma.

      • Deco

        I am reminded of that stupid comment by Lucinda Creighton, when the Greek PM suggested a referendum about the “bailout” being thrown in the faces of the Greek people by Sarkozy and Merkel.

        She suggested that the Greek PM had thrown a hand grenade into Europe.

        He was immediately sacked by the creditors’ political puppets.

        There you have it. A little bit of democracy is no longer allowed in the country that invented the term, because it would be like throwing a hand grenade at the idiots in Brussels and Frankfurt who created this mess.

        • Peter Atkinson

          Has anyone figured out yet that we are just an economic laboratory experiment.If it works (which I strongly doubt) the model will be used to beat bigger and better countries into submission and if it doesn’t sure its only 4.5 million sacrificed.A bit like the foot soldiers in the trenches in WW1.Just keep piling them into the firing line and eventually one of the generals will realise its not working and change tactics.All the while the innocent are slaughtered in pursuit of the greater good thats called balanced economics.

          • bonbon

            Not quite – in pursuit of Empire. The Euro is a Bancor basket-case, Bancor being Keynes’s idea rejected at Bretton-Woods. In other words a currency trial for world governance.

            It cannot work.

            Sovereignty or be exterminated in the trenches of imperial crimes against natural law and the General Welfare.

    • mediator

      Excellent Deco,

      Marxism indeed – all to plan. This stuff has been signposted for over thirty years but as usual nobody is listening

    • Tony Brogan

      First class Deco except the end.
      Rather than the banks being clueless, which may be somewhat true for the chartered banks, The money lenders behind the central bank cartel know exactly what they are doing on the way to a one world authoritarian government owned and controlled by them.

  6. Pat Flannery

    Hi David,

    You quote a student who analyzed the Irish Government’s problem thus: ”the strategy must be one where the Government is getting its house of cards sorted in order to be able to default, not in order to be able to pay its huge debts.”

    Your student from the business world then offers a solution based on his business consulting experience: “They called the creditors in and announced that the company would have to default on its legacy debts because it couldn’t carry them.”

    In a similar corporate challenge some years ago I managed a company turn-around very differently. Perhaps it was because I was not hired as a consultant, I was hired as a permanent CEO who took a long-term view of the company.

    I too called in the creditors and explained that while default seemed inevitable as certain consultants had already advised, there was a better alternative. I pitched for an even bigger investment by the creditors, which was at first greeted with disbelief.

    This particular company was a department store chain. Defaulting and tightening up the P & L, as both its “Big Four” auditing firm and its associated briefcase-brigade consulting arm had advised, would have meant drab window displays, less store lights, fewer staff, fewer promotions etc. etc.

    The shareholders hired me instead to power them out of the debt rut their company was in. I did just that. If the shareholders had followed the consultant’s advice the chain would not be the thriving Irish company it is today. It would undoubtedly have withered and died on the vine.

    I offer a similar solution to the Irish Government’s current debt/austerity problem.

    I suggest asking the EU for an annual capital investment in Irish roads equivalent to the €3.1 billion Irish Central Bank’s Promissory Note annual payment.

    This would not be a loan. It would be an EU direct investment. Ireland is the only “developed” country in the EU without a modern road system. I think we as a people have proven that given the tools we can do the economic job as well as any nation on earth.

    The benefits of such an investment are obvious. Construction spending has the highest multiplier effect in all economics. The tax-take alone from the jobs created would go a long way towards paying off the Promissory Notes (which unfortunately, under current international economic theory, must be paid off).

    The European Regional Development Fund (ERDF) is already operating with a budget of €201 billion. It could easily be enhanced by a further €3.1 billion for Ireland. Don’t forget it was the ERDF that triggered the Irish economic miracle because its direct investment was not a loan and did not have to be paid back.

    I think this is a better suggestion from the real world of business perhaps because it is from a former CEO not from a briefcase-carrying “expert” who typically (to paraphrase a cute Kiwi joke) “eats, roots and leaves” i.e. they aggressively implant the wrong advice then just zip up and leave.

    • Hi Pat,

      Thats a very interesting post. Love the NZ description at the end!



      • Pat Flannery

        David: I would love you to run it up the flagpole sometime and see if anybody salutes it.

        • transitionman

          Building roads is the worse than walls during the famine.
          Unless you are party to PPS contracts to gat paid for non existent traffic.
          Marios Fianna Fails slogan- WE ROAD IRELAND

      • woodsey

        The only thing interesting here is the expectation that an almost broke Europe would see fit to invest its hard-won capital in a broke offshore island that lies off the coast of an island off the coast of Europe. Ireland needs to wise up. It has only itself to blame for its predicament and only itself to rely on for its extrication from that predicament. Reading the nonsense here leaves only a despair of that ever occurring.

    • Realist

      “I offer a similar solution to the Irish Government’s current debt/austerity problem.
      I suggest asking the EU for an annual capital investment in Irish roads equivalent to the €3.1 billion Irish Central Bank’s Promissory Note annual payment.”

      How you could possibly know what is the best usage for these e3.1 billion?
      Who will repay these e3.1 billion?

    • Joe R


      It is a bit utopian to suggest that giving 3 billion to politians in Ireland to spend what ever way they may will turn out well.

      Politicans in Ireland have a big track record with parish pump politics and you can be sure that a lot of the money won’t go to anything balanced, sensible and long-term. It will go to buy local votes and on vanity projects.

      If you could seperate spending from them and plan the investment well, well then maybe. But that just won’t happen anytime soon, I would guess.

  7. But aren’t ‘creditors’ businesses too?? What if the business the student was talking about had debtors in its P&L that decided, “hey guess what we’re not paying.” David always says that my spending is his savings and vice versa. That recessions happen when everyone is saving and not spending. So what would happen if everyone defaulted and that knock on effect???? Well, there is one business I know about designed around credit default –> The Credit Card business and it has severe & penal interest rates for its “good” creditors.

    This country has moved beyond an economic crisis, because people will do what they have always done through history and despite the previous 5 austerity budgets. Adapt & survive in spite of the austerity. €1 on a bottle of wine is good news to Northern retailers. Increase in PRSI will mean more health insurance withdrawals. Removal of pensioner services allowances will mean removal of those very services by same pensioners. The bottom line remains the same. Take money out of a beleaguered economy and people will continue to stop spending, hold onto whatever they have and make further cutbacks.

    The problem for Ireland now is a social one. The black economy will thrive, more businesses will close, more jobs will be lost, children will continue to leave and as a community we will become further divided. Also, dare I say it, but people will die unnecessarily in an overcrowded public health system or in the cold of their own homes.

    ALl of this under a government involving the Labour party who heralded it would be “Labours way or Frankfurts way”??? Well played Frankfurt!!!

  8. CAC

    Collective Action Clause in negotiating any foreign soverign debt ruled into a Loan contract has a premium cost and its unlikely Ireland has one with its creditors.

    On 15th December, 2012 Argentina must decide either

    a) Pay Up
    b) Default
    c) circumnavigate the original loans and conditions and do a settlement .

    Some time ago Argentina did a deal with 93% of its creditors to a settlement however 7% refused and were successful in a court case to seek full payment from the countries next schedule payment .Tehy have no CAC clause.

    Currently the country is trying to avoid this court decision by considering payment made only in Argentina to circumvent the USA as the place of settlement .

    So many Vultures now hover around for their carcass of near empty wooden chest .

    This is the alternative for Ireland without Austerity !

    • bonbon

      7% of those vultures prove the rule – they are a small number (all based in Britain possessions) and we are many. Sooner or later those vultures are going to be flightless, more than just tail feathers singed. That NY judge who made this ruling, awarding the holdouts for full payment while relatively reasonable deals look on – do vultures eat others cannibal style? We will soon see.

      Britain has declared war (again) on Argentina – will they collect debt by gunboat (again)? Have they threatened FG (FF easily caved in)?

      • Tony Brogan

        There is your anti british bigotry. Jewish people are involved as well as a miriad of others.kissinger, soros can be described as US citizens so why not. you dare not use the word Jew or you will be censored. so quit the word British in your accusations. just because the moneyed interests are centered in Britain(London, more accurately) does not entitle you to defame a complete nation. We do not label the WW11 miscreants German , they are known as Nazis.

        Bigotry in any form is stupid and uninformed.
        Now you can tell us who the real culprits are and inform us correctly.Misinformation is your special trade.

  9. straboe1

    Having studied the way our government has presented the recent budgets I can only conclude that the philisophy behind them is not too far from what the Republicans in the States believe in. The concept of the social contract is dead. The next move is for one of our conservative political parties to set up a tea party with the aim of completly destroyin our society and concentrating solely on an developing an economy.

    • Tiny Tim

      To paraphrase Orwell:

      “The economic and finacial problems are not meant to be resolved, they are meant to be continuous. Hierarchical society is only possible on the basis of poverty and ignorance. The economic war is waged by the ruling group against its own subjects and its object is not resolution but to keep the very structure of society intact.”

      That might explain why a nationwide campaign of mortgage relief/resolution has not been introduced and a property tax has, ideologically it fits with the prevailing neoliberal views while socio-economically it works as it keeps people struggling.

      2013 will be interesting because it will mark the 100th anniversary of the Great Lockout, Ireland is as divided now as it was then.

    • bonbon

      To be more precise, the GOP are a hive of Austrian School economics – the Dems too. This is not American, rather European! In fact straight from the London School of Economics.

      Getting a bit close to home what? Surprised?

      • Realist

        Only Ron Paul knows about Austrian Economy, so I assume your statement is totally wrong.
        And by the way you said you did not read 1 book from Austrian economists, so why you are talking about them ?
        From when you are expert on austrian aconomy or aconomy in general, while only knowing your tripple curve thing :)

        • Tony Brogan

          Well done Realist. Keep the record strait.
          Keeping bon bon on the strait and level is nigh impossible. He prefers the circutuous and twisty path.
          That’s why he promotes the triple curve. It is known only to acolytes of Larouche.It is not an economic concept.

  10. george

    This Government is as bad as the colonial masters of the past. Labour is gone with the Greens. And Fine Gaels are side by side with Fianna Fail.
    FAMILLY HOMES DON’T GENERATE INCOME, SO THE PROPERTY TAX IS THE MOST UNFAIR AND CRIMINAL TAX. People in Ireland should organise soon a protest in every town and city, at the same time and date, and show this corrupt Government to reverse it or to get out!!!
    Yesterday I mentioned the honesty of Roisin Shortall by resigning from this corrupt Government, and for not taking the Severance Payment she was entitle to.
    We should tell this Government who we want to represent us!!!
    So if anyone of the Ministers or Junior Ministers in this corrupt Government, wants to show us the People, that they are honourable, and they think they want to be part of the new Ireland , THEY HAVE TO RESIGN NOW, or risk the chance that History and People will be unforgiving with them; as People and History was in the past, with the former masters and their entourage.
    Here there is another honest Politician who is ready to fight for us! Use the social media to name honest politicians, that can fight with and for the People!

    • transitionman

      They aint going to resign.( Not without the pension for life payout )
      Given the budget involved the Troika plus a four man economic council Kenny, Noonan ,Gilmore and Howlin. The Irish parliamentary process with party whip system is completely undemocratic.
      Any new political parties are only joining a rigged game.
      I propose as I did last week replace the four above with the cast of the Four Angry Men and a few special advisors.

    • woodsey

      … and there you are now! There was I stupidly thinking that an election was how you told who you wanted to represent you? Did we elect a corrupt government? Ah, stupid us! We’re ALWAYS doing that. ‘honest politician’ is an oxymoron. Ireland doesn’t expect its politicians to be corrupt. It demands it!

      • transitionman

        Yep now you got it
        `”There was I stupidly thinking that an election was how you told who you wanted to represent you? “

        • Grey Fox

          Would you hire someone to represent you if you didn’t have the power to fire them if they immediately conspired against you?

  11. Tony

    I’ve been saying this for 4 years. There’s no real plan, but simply a way to get “back to the markets”. (How many of you can hear Noonan’s drawl just there?)
    This is the result of electing right wing school teachers. For me, the right wing part is fine. The problem is the school teacher part. Most of our politicians have no experience of running anything, not even a school. Their idea of fiscal responsibility is keeping to the budget they’ve been given, having little consideration for the component parts that make up the actual cost.
    Business budgets are developed alongside projections. These are projections of revenue and profit, based on previous experience and results. So there’s a connection between the two. But when profits fall, the budget is reduced, while attempts are made to provide an efficient or better service. If it all fails, the business goes to the wall.
    Government budgets are based purely on cost, as there’s no incentive to deliver a profit. (In the case of government, the “profit” could e measured by how successfully the service is provided). But when the costs begin to outweigh the revenue stream, which doesn’t come as a result of providing a service; but comes from forcing people who may or may not use the service to pay for it, the natural inclination of government isn’t to cut the cost of providing the service, it’s to simply cut the service.
    So why would we expect the politicians to have any other goal? The objective is to get out of the bailout so that they can go back to business as usual of borrowing and spending without any consideration of the consequences. Because most of them come from the unproductive public sector politicians operate under the premise that there’s no such thing as going bust. “Sure we’re a country (school), at the end of the day somebody will give us the money we need”.
    Austerity would be great if it was delivered with a reduction in cost, but all we are seeing is the reduction or elimination of the actual service itself while they increase the revenue stream through more taxation.
    It compares to running a shop with no stock, and mugging people for their cash as they walk by.

    • bonbon

      No, we are seeing Austerity, plain and simple, and you praise the idea. This is the problem with Hayek et al.

      There is not “good austerity”. Pinochet is the model.

      DMcW claims inability to understand the behavior – it’s Austrian School, pure textbook stuff. Straight from the LSE. It is not difficult at all – as Mr. Blair said at Chatham House last week, it is really simple. Brutal realpolitik!

      • Tony

        Hayek, LSE, Austrian school, Pinochet model? You might as well be speaking German to me. I assume you’re we’ll versed in economics, I’m not so I’ll just finish with this.
        Governments, in the main don’t pay back debt. They roll it over and over and over and add new debt to the old. The conspiracy theorist who tells you we are heading for a world of slavery, in my opinion, means some sort of fiscal slavery as opposed to chains and bracelets. If we allow debt to keep climbing as it is, generations to come will end up paying it at some point in time, all the time paying interest on decades old borrowing. They’ll have sky-high tax rates and nothing to show for it.
        We’re borrowing to pay the bills. No good business borrows to pay the bills. A strong business piles up profits to cover leaner times. Bertie & Co. should have done the same.
        The fact is, we don’t have enough austerity. This state cannot afford the social welfare system it refuses to change, it cannot afford the health care system it refuses to reduce the cost of, and it cannot afford to pay what it owes.
        As David has suggested previously, we need some sort of default on the debt, but we also need to abandon the “giveaway” and “spend it while we have it” mentality prevalent in government.
        Your kids and grand kids depend on it.

        • Realist

          Bonbon’s idea is to talk nonsense.
          Austrian’s are actually talking logic, similarly what you said.
          They are against this statism, socialism and all this nonsense.
          Austerity is not 15 billion more into debt :)
          Bonbon is still dreaming of big national projects, to bring prosperity and employment.
          He does not care how will that be paid for of course :)

          • Tony Brogan

            bon bon
            You do not need austerity with austrian economics. simly , if followed there is little boom followed by little bust.
            Free the markets and live within your means is the key.
            go on a credit induced boom and there will be a correspondingly big bust.

      • Realist

        Wrong as usual about everything.
        I am not seeing Austerity anywhere while Ireland is adding 15 more billions to the debt.
        Read this:

  12. Stiofan

    Interesting idea. My younger brother used it, on me. I lent him some money that he quickly spent. Some time later, when I inquired about its whereabouts, he ‘announced that the company would have to default on his legacy debts because he couldn’t carry them’. He ‘calculated that if he was going to improve his balance sheet by defaulting he might as well do it spectacularly’. He defaulted on our mother as well. The nature of our relationship has changed, as might be anticipated. Our mother still loves him, although he defaulted on her too. Brothers must be different I guess. I tell everyone with ears to avoid him like venereal disease. Now that your P&L is fixed give me my money back Phóil.

  13. Norman Speight

    I’m pretty ancient (78) therefore I remember well how businesses were run in my youth. The difference between then and now was that the very last thing you did was to borrow money, especially from banks. I remember one plumbing company founded by the owners grandparents, they had £1 million in the bank, £1 million out in loans and unpaid (yet) bills to plumbers and the last £1 million in unsold stock. One thing they didn’t do was grow (why did they or indeed, anyone need to?) Because of family fall-outs the business was sold to a finance business. They brought in some management ‘whizzers’ who sold off the stock, sued and recovered all outstanding debts, drew the bank cash out and within four years the business was finished.
    Typical management today, those at the root of all business problems. Doubt me? Well ask those who work in businesses on the factory floor. The common hatred is of ‘managers’ something which was extremely rare sixty years ago and most certainly never ever in the quantities we see today. Everybody is an ‘expert’.
    My Local Authority is borrowing money (£93 millions) to build new offices. What money do offices and office staff produce, earn, contribute? Bugger all. ALL administration is parasitic to the business to which it is applied. Yet, that is the ‘growth’ area.
    In Ireland the government is not solving problems, it is ‘keeping the game going’ until they retire. Then. It’s someone else’s problem. I don’t pretend to know what the answer is. Trouble is, too many think they do and want to try various solutions. Solution failure isn’t a reason for sacking anymore.
    I’m not broke. Very far from it. I’ll not live long enought to spend what I have. How come? I haven’t borrowed – ever! Never would. Never had a mortgage, own my own house. Most of all, never trusted others, particularly governments. I also can see a hell of a way to make a fortune in the next five years. Sure you’d like to know, but you won’t get it from me. It’s actually blindingly obvious.

  14. Good article

    The government hails the budget as ‘heroic’. They are sharing the glory when they roll out the ‘we are in this together’ mantra … generous to a fault of them to share the pride. They will be pinning medals on us on O’Connell Street next for being the best boy in class

    We are all heroes now is the message and presumably in fifty years time the incumbent version of the wolfe tones will be penning ballads about our collective courage and bravery

    Maybe this is our very own ’1916′ moment. It’s just that we don’t know it yet and don’t have our pulses on The Zeitgeist guys. Come on now get the green jersey ironed and wear it with pride. Putin saves but McWilliams scores on the rebound!

    It is comedy because this is what the minister was more of less suggesting. These people think history will be kind to them but they are on a hiding to nothing. They are already worse than Maggie Thatcher and it is a good job for FG that labour are there to share the blame

    41 Billion spent in 2011 with net savings of 26 Million says it all particulary as most of the savings came from the capital expenditure budget. Maybe next year they will turn nasty and put the iron glove on

    The biggest sound of the afternoon came when cuts were announced to TD’s expenses. I think that says it all about these obnoxious and nauseating people

    177,000 people in mortgage arrears and they tax them even more! Whose bright idea was this?

    Unemployment is rising, not falling as the govenment claims and there are no jobs. There is no incentive for people to start a business because the risks are too high and you can end up homeless

    Self employed people are treated deplorably for having a go and this deters unemployed people from aspiring to a level of self reliance

    All you are going to end up with is inefficient businesses relying on unpaid ‘interns’ rather than pay living wages. That is the govenments jobs initiative for you and there are not many people like Hugh O’Regan today. It looks very bad

    • george

      Pauldiv exactly, lies, lies and more lies!
      Howlin said that we were ranked first in the EU regarding e-communication between government departments and businesses. But very conveniently he forgot to mention, that if you live in Cork City, and you have the misfortune of being broke, and unable to pay a fine; you’ll be put in jail, in a cell without a wash hand basin or a loo, and you’ll have to eat your meal, with the pot full of shite in front of your eyes.
      In the meantime they praise themselves for not asking Corporations for 0.5 % extra in tax, and they put Property tax to family homes, which is another of their lies. Because the system it’s open to be abused by the State, and because soon we’ll be paying 2% of the total value, not 0,18% as it stands. With the added risk, that this eejets can be lead by the nose by their masters, to create another housing bubble, and they’ll screw our lives completely.
      And they present it as a progressive tax, when it is one of the most immoral and unjust taxes you can have, even if most of the world implement it. Most of the world implements abortion on demand, and we don’t. So why cant we have a referendum on the Property Tax?
      Because nothing makes sense, because they are a bunch of liars looking after themselves, with no courage or pedigree, other than the one they get from history books. Well polished charlatans and nothing else, afraid of confronting the Banks, the Rich, or the Coorporations, who want to keep their privileges screwing the People.

      • Grey Fox

        Striking coincidence that the estimated yield from budget cuts and new taxes and the interest payments on this years Anglo promissory note with BOI and next years 3.06 Billion are pretty much the same, if thats not a clear indication of whose interest is at the centre of government I don’t know what is.

        • bonbon

          The “interest” is to bail out the British Inter-Alpha banking group. This is not difficult to verify for a Tiger who does a little homework, serious study.

  15. george

    David this Government doesn’t have an strategy, because they are doing what to do by their masters, and they don’t have the guts to fight for us. They are a bunch of well polished cowards, who are ready to screw the people of this Country, to get their pensions and privileges at any cost. And the electorate, that gave them a mandate, can only be excused, because most of them at the time, were so worried with day to day familly crisis , and believed all their lies.
    Compare this bunch of eejits, to the Government that lead Iceland out of recession, and gave the people at least partial debt forgiveness, and kept intact the social welfare system, and told the bondholders to make the Banks work for them, if they wanted to see a penny back.
    If any Minister or Junior Minister of this Government, has a shred of honesty left, they should resign straight away, as Roisin Shortall did without taking a Severance Payment she was entitled to. Or risk the chance that History and People will be unforgiving with them, as People and History was in the past, with the former colonial masters and their entourage, and the members of the last FF and Green Government who took their lump sums and fat penssions and “run away”.

    • Deco

      Their strategy is do what you are told, and take yer pay.

      The strategy of the gombeens.

      It served the gombeens well during British rule. Because let’s face it, it was the gombeen class that enforced, gorged, and profitted from British rule – often more than the British themselves.

      Gombeenism is the cancer of Irish society. It is the reason for intellectual paralysis, and a stangancy in the public debate.

      • bonbon

        Odd defense of British rule, what? That rule created a “gombeen” caste for sure.

        Seems to me you advocate demonizing the caste, rather than its master? Hmm?

  16. Original-Ed

    If the house of cards isn’t sorted there’s little point in restructuring our debt as more debt will be build up requiring more restructuring and on and on.

  17. joe sod

    it was the sixties generation that banjaxed ireland, they are now the sixty somethings, they were the the top dogs in the banks, the professions and public service that made the decisions that ruined ireland. They were also as david mcwilliams pointed out the luckiest generation to live in ireland. The previous generation may have run an austere and dull country but at least it was solvent and independent and was master of its own destiny. Maybe it was growing up in the sixties and the liberal ideas then, they thought rules and systems didn’t matter. Of course this is a generalisation.

    • bonbon

      Ah yes the sixties of the Beatles, rock, drugs, sex. You got it. 1968 was a turning point – aimed straight at the hell now being put in place. It is transatlantic, and set in motion by the murder of JFK. An outright onslaught on the mind itself. This is Empire in action as they always have done.

      Any response must be to roll back that enforced decadence, naming it for what it is – an assault on civilization itself. Obama right now is the embodiment of this imperial lunge witness Benghazi, Syria. The “budgeteers” are doing what Obama is at on a grand scale to the USA.

  18. Falls

    i am guessing the austerian word is a none to subtle swipe at the Austrian school. well lets try to add up what decades of your Keynesian economics has given us. lets look at the streets to see the effects shall we…oh wait no need i see the Keynes approach to solving the issues which Keynes created is in full swing..jesus i mean what could go wrong. here is one thing, in 6 months we will get the story that the taxes didnt bring in what they expected. wow i mean seriously who would have thunk it…and their solution…you guessed it lets tax some more and coming soon, print baby print which is yet another tax on you. they actually think we are so dumb that we dont see there is no difference between a charge and a tax. oh look this is a charge not a tax…well why come i still have no money i have earned?

    heres a thought, how about we try something we know works but of course doesnt suit all the types who fundamentally believe they know whats better for me with my money then i do. there is 2 types of austerity, the moronic one we have where we are paying for banks that were failed private companies and should have been sold off. then there is the real debt, the one where the government gorged on a tax on houses and borrowed by proxy from the market via its citizens to extend the already bloated civil service. the government simply pimped out its citizens to europe and now decides it needs our kids as well. well you know what…fuk you, im done. spare me the sad ole buy oirish, deedly diddly doe thatched cottage bullshit. i am done propping up a rotting edifice of disease.

    whats really sad is all it takes to start fixing it is to begin doing 2 simple things.
    1. we stop spending what we dont have. how about, and i am just throwing this out there, we, oh i dont know, stop supporting a form of centralised government system we simply dont have the money for? how about we cut spending rather then take more in taxes? we do NOT have a money issue in Ireland from the citizens, we have an orgy of spending in government…still. they are simply whoring more of us out to keep the party at the top going. thats what yesterday was. lets take more. do you really think the garda stations closing is an accident announced on the same day? no that is to instil fear in the countryside so they get people to mistakenly believe that only government can save you. exactly the same in the health service with 70% on payroll. you are simply oil for the health care machine for votes and control to dictate what you can and cant do. mix in the usual progressive ‘crisis’ that needs to be solved and hey we are.

    2. stop taxing and wondering where the money has gone. there is no money left. they have taken it all. to those of you who believe there is the 1% who have it all, santa isnt real and neither is this group. one thing about the rich you may have noticed…they are rich. tax too much and they take their money and jobs somewhere else. we should be trying to create millionaire not vilify them. of course its easy to target and blame as it absolves you of responsibility for your actions. throw in the usual liberal/lefty feel good about yourselfism participation medals blame mentality and we always have a solution just over the hill, once you just give a little more of course. you know what, fuk you, im done.

    so far this year i know of 3 families who have simply left or are leaving. these are the types who pay for everything in Ireland. 1 gone to Australia, 1 somewhere in the middle east and 1 heading to the US in the new year. they have had it, they are done, fed up, pissed off paying for everyone else first and having no money for one group– themselves. go ahead and call them names, moan , have at it, fuked if i care, because you know what, i no longer do. at this stage the progressive policies are going only one way right down the fuking tubes. quite frankly having worked through the depression in the 80′s in Ireland, having learned from that and watched our spending during the boom, now here we are, getting pimped out– version 2. lets tax all the way to the fuking moon. 4 million people cant live on 30 billion? seriously, thats the story now. we have absolute eu tit sucking government gravy eating civil service trained circus clowns and as an alternative we have a communist ex-drug running ex-terrorist party, straight out of the 1950′s USSR in opposition with the original morons and a tax dodging builder who believes he is standing up for the poor and standing up to da man by wearing a pink shirt or that other bufoon who smokes dope. for the first time now, my wife is saying maybe its time to get out. between a permanent unemployed class, a permanent civil service class, a permanent government class, a permanent banking class all gorging at the trough, i think she is right. spare me the sad stories, you know what we all have them and i am all out of caring, you took it all at the office, try next door…

    • bonbon

      Austerian = Austrian, Totalitaian = Keynes. To keep it simple, that is.

      Now for the clincher – both are London School of Economics! Both are Imperial. To keep it simple as Mr. Blair said at chatham House Royal Institute of International Affairs.

      We are going to more than singe the feathers of this flightless vulture – a Pterodactyl Dino if there was ever was one. How it ever flew is academic.

      Burn the bondholders, Glass-Steagall style and let’s reconstruct, massively.

      • bonbon

        Totalitarian – Keynes 1936 preface to the General Theory could only be implemented in such a state. Austrian School’er Hayek called for an “international agency” to “enforce free-trade” rules.

        • Realist

          First of all Hayek was one of the prominent of Austrian school.
          Austrian school is total enemy of Keynesians and nowadays economy driven by keynesianism.

          Hayek admitted his biggest errors before dying are:
          1. To destroy Keynes in public (due to him not believing anybody will read/believe such nonsense of Keynes book). He wrote only a short article doing such, instead of a book destroying each mistake one by one.
          2. To destroy Friedman and monetarism in public (due to them still wanting free-market and having some good stuff).

          He luckily lived to see Communism dead with USSR, but he could not predict such reverting of socialism in recent decades.

          • cooldude

            A good book in which Keynes’s ideas are examined from a sound money perspective is “The Failure of the New Economics (An Analysis of the Keynesian Fallacies)” by Henry Hazlitt. It’s a bit technical but he addresses each of Keynes’s theories one by one and exposes them for the hogwash that they actually are. What we are currently witnessing is the endgame of this experiment with floating unbacked currencies which are being debased into oblivion in a futile attempt to reflate another bubble. The next bubble will be government bonds (get out NOW) and the last bubble will be what we currently use as money. This will probably be in a bout of extreme inflation. The only protection will be hard assets which cannot be debased the best of which is gold, silver and land.

          • Realist

            Thanks cooldude.
            I am sure the book is good, but also sure I know about almost all their fallacies too :)

            I read Hazlitt’s “Economy in one lesson” a long time ago that made me aware of Austrian’s school.
            That brought me to some masterpiece volumes from Mises and Rothbard.

          • bonbon

            Here is an interview with von Hayek from 1983“I’d like to see a crash before I die” in his very own words for all to read.

            I will post the letter from Hayek to Simon on Mandeville next. He created and promoted the Mont Pelerin Society, giving us the Pan-Europe of Coudenhove-Kalergi we see today – the EU.

            Unfortunately this does not support the fine words – in act that interview gets to the heart of the matter.

            On Keynes, we know he promoted totalitarianism too – peas in a pod, amusing to see them scrapping.

      • Realist

        All people came from Africa many years ago (at least by latest theory).
        Does this mean we are all the same?

        You cannot use fallacy to put Austrians and Keynesians that are totally different in the same basket.
        Stupid and nothing else from you.
        You are really becomimg idiotic.

        “let’s reconstruct, massively.” – how is this different than what is going on for decades now by spending more by the state ?

      • Tony Brogan

        Austerian was a clever use of word by Mr Keynes McWiliams, seize upon by our evil bon bon.

        The reference to Hayak and totalitarian control is deliberate misinformation and a blatent lie.
        Heyak simply observed that it likely would take an authoritarian one world government to enable a sound money sistem to operate.
        In otherwords he recognised that the the political class would never let it happen as they benefit too much, so far bought and paid for, from the fiat money system.

        QQuit the lies and deceipt bon bon.

  19. Grey Fox

    Ireland is Bankrupt!
    Our Debt will continue to increase!
    This budget will throw countless thousands of families over the edge!
    Next Year, revenues will resume at pace, a downward trajectory.
    The Financial Institutions will accelerate the transfer of private assets to the banks!
    Social effects will become more pronounced!
    Government will become totally ineffective!
    The privatisation of State assets will continue with zero benefit!
    The ESM is a travesty of monumental proportions
    We now have the ESB and Bord Gais borrowing in the markets on behalf of the state
    Europe as it is, does not have Ireland’s best interests on any agenda.
    Our elected trustee’s do not have Ireland’s best interests on any agenda, their agenda is split between self interest and their European/Banking masters.
    To accept that any of the recent actions by either the last government or this one are in the interest of the Irish people is delusional, we are living in the era of spin and barefaced lies, how can any good come of that?
    Everyone here refers to different schools of thought when the facts are clear, Ireland has been sold down the river by government, vested interests and the financial institutions, this can neither be excused or forgiven but rather dealt with on the contrary, bringing the full rigors of the Law to prevail on all concerned.
    Ireland is nothing without its people, the tide is turning, as more and more families are tossed on the scrapheap they are waking up and realising they do not have to accept the status quo according to our inept government, banks and judiciary. Ireland belongs to its People not the Government, they are merely servants of the people and they had better re-aquaint themselves with that fact and act accordingly.
    All Bank debt socialised by the Blanket Guarantee of Sept 2008 is Odious Debt and is classed as such under UN Law, the banks broke their own rules and banking laws of this sovereign state, everyday the government continues to spent taxpayers money on Odious Debt and this is illegal under Irish, EU and UN Law, the challenges are mounting in the Courts and eventually some will be successful, the truth is assaulting government and the banks on a daily basis and the truth will prevail! Government Ministers and all Public Trustee’s will be measured and remembered by the toll their actions have and will take on the People of Ireland, of this I have no doubt!
    History will not be kind to any of them!
    We are smart and educated, more and more people everyday are saying no more! and taking back their lives!
    Time to Wake Up,
    Time to Return the Power Back To the People.

    • bonbon

      The financial empire is bankrupt, terminally so. An oligarchical system of millenia stands before a cliff. It is over, done, finished, dead never to be revived.

      The undertakers are attempting to revive a corpse – not a wining proposition.

      Lets have a real Irish Wake, and start the new era. Embalming the living is a bit daft, undertakers on steroids.

      • Tony Brogan

        TThis comment above has nothing to do with the greyfox post.
        empty words whistling in the wind

        Better to take a positive step and revive the constitution that still allows referendum and recall. Think of it. The right to fire the TD not doing the job. Power between elections. what’s to object to in that.

    • woodsey

      The power is already with the people. ‘Return’ it to them and they’ll just waste it again. The people fail to understand that it’s they who are in charge. ‘Wha’s de guvment goin’ to do abou’ dat den?’ is a familiar mantra. Politicians trade on this and have been doing so for generations. The government is NOT the problem. The problem lies MUCH closer to home.

  20. Deco

    There is no tolerance for Austrian economics in Ireland. Merkel’s underlings might be suggesting it as part of the improvement process. But the gombeens running the state system here, will not tolerate it because it does not fit their requirements.

    You cannot have economic policy based on objective principle, when the political system is rotten with participants whose goal is to have the state system as subjective and as powerful as possible.

    Therefore we have a superficial version, a good room version of policy that looks slightly Austrian. With Kenny appearing on magazines and getting awards.

    And they run the state for their own profit, in a highly corrupted form of Keynesianism that would have Keynes turning in his grave, it is so selfish.

    The whole “recovery” is a facade. Ireland is going to deeper into debt.

    Make sure that you and your family, and your locality are prepared for the calamity that will come from the EU program for Ireland.

    • bonbon

      Austrian economics is exactly what is going on! How could you not notice what is in front of your nose – cuts in anything to do with the Public Good, a murderous attack on healthcare, teachers, an absolute refusal to issue credit for massive reconstruction for a Marshall Plan and New Deal?

      You have demonstrated remarkable superficiality.

      Austrian School economics is fascism with University legitimization. No surprise there – Heidegger was a Professor.

      There is little tolerance for this in Ireland.

      • Realist

        Austrian economics is exactly what is not going on.
        They are for spending what is saved previously.
        They are not for money printing.
        They are not for central banking monopoly.
        They are not for statism.
        They are not for socialism/fascism/communism.

        Anybody can see what austrian school is without bonbon’s nonsense:

        or read articles in here instead of listening to bonbon. Always nice to read:

        • bonbon

          Austrian mantra’s are all about monetarism, the leading current dogma resulting in the applied politics of these oh-so-academic hints and suggestions.

          The utter incompetent failure is made stunningly clear when one looks at the real world – the Triple Curve and the needed 3-fold action to be taken immediately. Austrian dogma is monophonic chant in a polyphonic world. It is a linear approximation to a much more advanced economic metaphor. It is simply something of the past.

          Clinging to these prejudices is what is driving the economy into the pit.

        • Tony Brogan

          Agree plus 10

      • Tony Brogan

        Bull shit to that whole post bon bon.

        you are the fascist with your global policies overiding the state in favour of mega corporations financed by a central bank with credit added to the national debt so to further impoverish the people.

        you are one of them Mr facist bon bon , Larouche apostle.

    • mediator

      how to prepare deco?
      its not like we have a lot of spare cash to stash

  21. bonbon

    Pearse Doherty’s inspiring end to his floor speech on the budget speaks of Rosa Parks “1955 Rosa Parks refused to give up her seat on a bus in Montgomery, Alabama.
    As a woman and as an African American she had been taught to accept her lot in life; to accept second class citizenship; to accept that there were no alternatives.
    But one day she decided that enough was enough. She refused to give up her seat to a white passenger.
    When she was interviewed afterwards she said ‘The time had just come when I had been pushed as far as I could be pushed.’

  22. molly

    Where do we go from here.
    This government has proved that it does not have the best interest of the low to middle class family’s and as these groups are in the majority the time has come to change the government , because anything would better that the last and the present shower if self serving tossers.

  23. bonbon

    a href=””>Mary Lou McDonald on the Budget: This government does not do fairness

    “This is the sixth successive austerity budget, the sixth occasion on which government ministers announce a vicious attack on the living standards of low and middle income people and their families.

    This Labour/Fine Gael government shares the same perverse instincts as the last Fianna Fáil lead administration; Shares the same unshakable belief that punishing struggling families is somehow fair.”

    No “meekness” there, just truth.

  24. Beaver

    The country is spending 13 billion a year more than it earns. 5 years of that and the running costs of this country creates a bigger debt than the bank rescue ever did. The bank rescue is probably over, the 13 billion a year is stacking up merrily. The legacy debt in this country is not just the the bank rescue but the commitment to ridiculous wages and pensions given to our civil service in previous years. Its personified in the ridiculous Croke park agreement where the government signed up to commitments it cant fund´without borrowing. Only when we repudiate the croke park agreement can we balance the budget. And only when that budget is balanced can we repudaite the bank debt because once we do it there be on one to borrow 13 billion a year from for a good few years.

    • StephenKenny

      If the bank crisis and rescue was really over they’d be back to their job of making money – aka lending to businesses.

      They aren’t, so the suggestion now seems to be that, contrary to all the evidence of 20 years, once they start actually operating as banks, they they will do it well.

      The problem with the banks, pretty much worldwide, is that their business models are effectively gone, pushed out by the zero-sum games that make up the activities Wall Street and of the London. Why lend to a business that might go broke when you can lend to a an EUR/JPY investment entity that is leveraged 50 or 100 times and is guaranteed from failure by the taxpayer?

      The problem with the banks is simply that they have almost no purpose – we may as well have government backed wheelwrights.

  25. Realist

    Finally one nice article David.

    Just not sure you are still on the right path as every few articles you are changing sides :)

    This one is spot on, no doubt!!!!!

  26. gizzy

    There is a lot of talk here in favour of one or another economic or political system. Some contributors are now getting hung up on it and annoyed by the contrary views of other contributors.

    The truth is like a football system whether you play 442 or 451 doesn’t matter if you have bad players.

    We do not have the right people in the Dail or in permanent government regardless of their economic or political beliefs.

    They do not have the skill sets or confidence even though as in Fine Gaels case they mask that insecurity with arrogance.

    They do not understand the real world. They do not believe they are overpaid, they believe they deserve every penny they get.

    There was a 1 in 5 chance of getting elected to the Dail in the last election. In maths probabilities they were the easist jobs to get in the country. That is the crux. We need the right people to run to get elected, to gain power who do not want reelection so they are prepared to make the right structural changes to how the country is run.

    If Direct Democracy is serious about change one candidate one term. If people seek reelection it alone becomes their focus not change.

    • Realist

      The problem is you cannot have good players with bad economic principles.
      I would compare this as Ronaldo playing football on ice.
      In football you also have competition, other clubs. there is no such with public services and state control

      Democracy is something between libertarian, free society, on one side and Communism/Fascism/Socialism on the other side.
      It is not stable as it leads, as we can see, to Socialism and similar with public domain being >50% of the cake.

      I would like to see smaller government, if no government at all, more freedom, more competition and so on.
      I like to decide for myself, while not harming anybody else. I do not want to decide for others like in current democracy, nor I want somebody else deciding for me.
      At the moment the state is taking your money by coercion and doing anything they seem appropriate.

  27. Padz001

    These conversations about economics, deficits and austerity confuse me. Money is an abstract representation of “stuff” and “what people do” to facilitate exchange, accumulation and investment in making more better stuff or doing new useful things. The world is (for now) a closed system and its economy is therefore by definition exactly in balance. There are two big problems 1) extreme local variations in the economic balance and 2) Systematic problems restricting the flows of money, leading to people doing less things and making less useful stuff, thus decreasing the pool.

    These 2 big problems can be solved by designing better systems. That is the challenge. Conservative forces fighting to preserve the status quo get in the way.

    • Tony Brogan

      The world economy would be closer to equilibrium if the central banks quit adding to the money supply and adding to the interest charging national debts of all peoples governments.

  28. [...] D. Reply. Perhapx says: December 6, 2012 at 3:06 pm … … View original post here: David McWilliams » Why Government could learn a lot from the … ← Organize Your Finances With These Helpful Tips – [...]

You must log in to post a comment.
× Hide comments