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 The Wealth of the (Irish) Nation - Why not tax the rich ?

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PostSubject: The Wealth of the (Irish) Nation - Why not tax the rich ?   Thu Oct 30, 2008 7:17 pm

I came across this fascinating BoI report on the Wealth of the Irish Nation (2007)

Amongst other gems, is this:

We estimate that the top 1% of the population holds 20% of the wealth

the top 2% holds 30%

and the top 5% holds 40%.

The report mentions overdependence on property as an asset, and the very high personal indebtedness associated with it

Household debt in Ireland grew strongly in 2006, with €27 billion more loans added to the balance sheet, an increase of 20%.

At €161 billion, household debt increased to 178% of personal disposable income at the end of 2006, up from 160% of household disposable income in 2005. Ireland now has the highest per capita personal debt in the developed world, by a long way.

This wikipedia entry and Telegraph article adds to the picture: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/2785851/Irish-banks-may-need-life-support-as-property-prices-crash.html

During the boom, Ireland had developed a reputation as one of the most expensive countries in Europe. The ESRI predicts that the Irish economy will not grow this year at all and may retract by -0.5% in 2008, down hugely from 4.7% growth in 2007, but expects economic growth to near 2% again in 2009 and near 4% in 2010.[36] The huge reduction in construction has caused Ireland's massive economic downturn, if construction was not included in the economic outlook Ireland would still grow by about 2.5% however this is the first time in over 2 decades that the ESRI has applied the term recession to the Irish economy. Ireland now has the second-highest level of household debt in the world, at 190% of household income.[37]

Ireland is currently (2008) ranked as the world's third most economically free economy in an index created by the Wall Street Journal and Heritage Foundation, the Index of Economic Freedom.

http://www.finfacts.ie/biz10/WealthNationReportJuly07.pdf

And the IMF view of a year ago: http://www.imf.org/external/np/sec/pn/2007/pn07117.htm


Last edited by cactus flower on Sun Nov 02, 2008 3:44 pm; edited 1 time in total
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Thu Oct 30, 2008 7:22 pm

I've read that report by Bank of Ireland cactus and it certainly is fascinating. It certainly gives credence to the view that we are the second-richest country in the world. The high indebtedness is imo, a function of how we like to buy and own our own homes. We go and take a €400,000 loan to purchase our home compared to the €50,000 or so a German carries in personal debt and so on.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 3:43 pm

Government is talking about a levy of 3% on "higher earners".http://www.tribune.ie/article/2008/oct/26/super-rich-tax-planned-as-fianna-fail-support-dive/

What I don't hear being talked about is the possibility of a super-tax or even a one off levy for the top 5% who hold 40% of the wealth. Up to ten years ago this country was financially quite equal. Where have these people come by this wealth, and how much tax have they paid over the last decade? There are numbers of very wealthy individuals who have paid not tax at all as they have taken full advantage of tax incentives schemes.

Nor is anyone talking about what happened to the 80 billion plus loaned to property developers who bought land in the last 3 years. In some cases, it went straight to farm families who would not even have brought land to the market if they hadn't been pressurised. Capital gains tax on sale of development land in Ireland is at a very low level (20% for companies and individuals for residential land, 20% companies and 41% for individuals for commercial land). Where the land was agricultural, some would have bought for a couple of thousand and acre (or inherited the land) and sold for maybe half a million an acre.

Development land was sold several times over value in these last few years. Why not consider a substantial capital gains levy on all those who sold land for the development in the past three years (calculated on a sliding scale that takes into account any losses since then)? This levy should be used to recapitalise the banks, who loaned it out in the first place, in exchange for writing off part of the loan. In other words, go back and rectify the nonsense of the loans, and the amounts paid for land since 2005-6.

P.S. Just read that the Regulator says that 40 billion is on loan from Irish banks to buy commercial property. Presumably a good bit of this is outside Ireland, so no Irish capital gains tax would have been paid by the sellers.


Last edited by cactus flower on Sun Nov 02, 2008 5:19 pm; edited 1 time in total (Reason for editing : edit - corrected amount loaned by banks.)
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 6:38 pm

Good thread cactus flower. Cliff Taylor wrote in the SBP last week that it was 'nonsense to talk of taxing the rich'. Unbelievable stuff. You might be interested in this letter which was in the Irish Examiner on Wednesday this week:

http://www.irishexaminer.com/irishexaminer/pages/story.aspx-qqqg=opinion-qqqm=opinion-qqqa=general-qqqid=76039-qqqx=1.asp

Great minds!
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 6:47 pm

Keep the taxes low, allow business to grow and let free trade flow. It'll all work out from there.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 7:08 pm

Ard-Taoiseach wrote:
Keep the taxes low, allow business to grow and let free trade flow. It'll all work out from there.

Wants that on a T-shirt.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 7:09 pm

AT - I can't believe there is a human being left alive who can seriously still believe that there is even such a thing as 'free' trade, let alone not realise the disasters that pursuing this false ideology has brought upon us. The very idea of 'growth' is doomed - we simply don't have the resources.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 7:49 pm

Aragon wrote:
Good thread cactus flower. Cliff Taylor wrote in the SBP last week that it was 'nonsense to talk of taxing the rich'. Unbelievable stuff. You might be interested in this letter which was in the Irish Examiner on Wednesday this week:

http://www.irishexaminer.com/irishexaminer/pages/story.aspx-qqqg=opinion-qqqm=opinion-qqqa=general-qqqid=76039-qqqx=1.asp

Great minds!
I'll just quote the letter in full:
Quote :
Let’s see some patriotic action by our tycoons
Yes indeed: a fine opportunity for them to demonstrate their patriotism to the full.

Quote :
HAS some sort of omerta been imposed on discussing the possibility of raising revenues from those who can most afford it — the 33,000 newly-made billionaires and millionaires the Government and media were boasting about only 12 months ago?
Yes. Clearly it has. The 3% levy on middle and high earners now being talked about wouldn't touch the really rich.

Quote :
This tiny group remained virtually untouched by the budget. Why is there no call to “patriotic action” for them?
Because they own the newspapers and pay for advertising copy?

Quote :
I’ve a few ideas for saving money:
* A 5% levy on all property developers who own more than two houses.
Government has put a 200€ levy on all rental houses. This will go straight onto the rent and may push people to buy when they shouldn't. I'm in favour of a one-off claw back levy on the development sector and this can only be applied to those who are still solvent.

Quote :
* A 5% levy on all income above €100,000 per year.
There needs to be a new tax band for the over 100,000 household, taxed appropriately

Quote :
* Termination of all taxpayer-funded Government contracts with management/PR consultants — the gurus of greed who are even now braying about how this crisis is little more than a poorly managed communications exercise if only politicians would pay them huge sums to hear them explain why.
There is little sign of communications expertise on the Government side at the moment. With the Polls giving them 27% of the vote, they may want to sack the spin doctors anyway.

Quote :
* End exorbitant subsidies and other taxpayer-funded concessions to vastly wealthy foreign investors.

Are you talking here about raising Corporation tax for Foreign Direct Investors? I am not in favour of tax havens, but neither would I want to see tens of thousands of people lose their jobs at the moment, which would be the outcome. There needs to be a global intergovernmental agreement to safeguard minimum corporation rates. The Irish government could start work on that.
Quote :

* Cut all elected representatives’ salaries — from the President down — to the national average. Likewise directors of bailed-out-banks, now the country’s most voracious benefit scroungers.
And bank management and loans executives? Give them a chance. Let them increase their wages again if they can restore profitability to the banks.

Quote :
* If there are public sector job cuts to be made, let it be among the bizarrely top-heavy and hugely expensive upper management structures of bureaucracies like the HSE — and not among frontline staff like teachers.

Overspending in the public sector is endemic. Ten years ago it was impossible to get anyone to spend on anything in the public sector. Now they won't do anything unless they can spend several times more than is necessary. I am just tendering for work and I know the price that they want to pay is four times the UK equivalent for the same project. It will distort the project as unneccessary work will be done in order to justify the size of the fee.

Quote :
Unless we see measures like these coming into effect, we are not in a mood to be lectured about paying, in effect, to help these people to protect their undeserved advantage.
Unless politicians first bring their wages, pensions and expenses down to at most the EU average for equivalent work, no-one should be prepared to listen to them.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 8:24 pm

Corporation tax is a knotty one for sure. With all of the development subsidies, tax concessions, start up grants etc etc - the country is actually a net loser in many instances - despite the number of people employed - Dan O' Brien of The Economist is in today's SBP saying that approx 1 in 10 Irish workers are employed by US companies directly or indirectly. He's rooting for McCain. The corporation tax rate is rotten value for money and as much of a nettle to be grasped as the top-heavy public sector. People like Harney are throwing money out the back door and even more so than in the public sector, there is no proper reckoning of what it is achieving. IBEC companies have their hands out so much of the time - it's scarcely talked about - funding is much, much more easily made available to certain commercial sectors that it ever has been for the public sector - even with all the overspend there. Take the large increase in R&D spending in the budget - that's actually an indirect, no-strings attached benefit to private companies on whose behalf virtually all of this research is being carried out - even within the universities. Pharmaceuticals and electronics are big beneficiaries eg.

I think there should be 5% levy on the value of all property (not farms) owned over and above the first two houses. It should be illegal to pass this cost on to tennants. This would be a direct tax on the property developers who have benefitted the most.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 9:30 pm

Aragon wrote:
Corporation tax is a knotty one for sure. With all of the development subsidies, tax concessions, start up grants etc etc - the country is actually a net loser in many instances - despite the number of people employed - Dan O' Brien of The Economist is in today's SBP saying that approx 1 in 10 Irish workers are employed by US companies directly or indirectly. He's rooting for McCain. The corporation tax rate is rotten value for money and as much of a nettle to be grasped as the top-heavy public sector. People like Harney are throwing money out the back door and even more so than in the public sector, there is no proper reckoning of what it is achieving. IBEC companies have their hands out so much of the time - it's scarcely talked about - funding is much, much more easily made available to certain commercial sectors that it ever has been for the public sector - even with all the overspend there. Take the large increase in R&D spending in the budget - that's actually an indirect, no-strings attached benefit to private companies on whose behalf virtually all of this research is being carried out - even within the universities. Pharmaceuticals and electronics are big beneficiaries eg.

I think there should be 5% levy on the value of all property (not farms) owned over and above the first two houses. It should be illegal to pass this cost on to tennants. This would be a direct tax on the property developers who have benefitted the most.

Personally I favour bringing back rates/property tax. It should never have been taken off in the first place.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 11:25 pm

A little more fuel for the fire:

http://www.finfacts.ie/biz10/irishtaxpayeselfemployedhighearners.htm
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 11:31 pm

ibis wrote:
A little more fuel for the fire:

http://www.finfacts.ie/biz10/irishtaxpayeselfemployedhighearners.htm

Thank you Ibis - this should get it crackling nicely:

Quote :
The Revenue has revealed that it estimates that tax breaks available to high earners are costing €8.3bn each year. The figures relate to 28 generous relief schemes provided by the Government including investments in hotels and holiday homes. However, the Revenue has not provided estimates of the cost of a further 33 tax breaks, including the exemption for stallion fees, donations to third level institutions and income from foreign trusts.

In October, it was revealed that 41 single and married people with incomes in excess of €500,000, paid no tax in 2001. Eleven of the 41 declared incomes of over €1m for tax purposes, and yet had a zero liability to tax.

On November 10, 2004, Frank Daly, Chairman of the Revenue Commissioners told an Oireachtas committee that up to 40 Irish individuals who claim to be domiciled abroad for tax purposes, are being monitored. Zero contributions are made to the cost of public services despite frequent visits here. Each is worth more than €50 million. Daly said that a further 250 individuals who are in the super-rich league are being monitored.

Tax exiles must remain outside the country for 183 days in a year. However, a day spent in Ireland does not count as a day, if the individual has left the jurisdiction before midnight e.g. via the convenience provided by a private jet.

Irish tax rates are amongst the lowest in Europe.

I wonder are there any figures for the more recent years? I would like to know how much was written off for the Beacon Private Hospital.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Sun Nov 02, 2008 11:35 pm

I have alot of sympathy for the position of levying higher taxes on the superrich and for the tightening of laws regarding domocile. However, it is worth pointing out that there are a vast number of reasons for there being a higher percentage of self employed persons earning more money. One contributing factor is that two of the most prominent professions in the country (i.e. solicitor and accountant) cannot form companies. Thus whilst the chief executive of a bank is an employee, as are all the senior managers, every partner in a solicitor or accountancy firm is self employed.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 12:04 am

cookiemonster wrote:
Ard-Taoiseach wrote:
Keep the taxes low, allow business to grow and let free trade flow. It'll all work out from there.

Wants that on a T-shirt.

Because laissez-faire capitalism works so well. Until you factor in the social costs of child labour, underemployment, wealth gaps, failing infrastrucutre, pollution, tax-payer bail outs etc etc etc.

You'll need an extra-large T-shirt.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 12:56 am

rockyracoon wrote:
cookiemonster wrote:
Ard-Taoiseach wrote:
Keep the taxes low, allow business to grow and let free trade flow. It'll all work out from there.

Wants that on a T-shirt.

Because laissez-faire capitalism works so well. Until you factor in the social costs of child labour, underemployment, wealth gaps, failing infrastrucutre, pollution, tax-payer bail outs etc etc etc.

You'll need an extra-large T-shirt.
Whatever the solution to our own or the world wide financial problems, there is one thing you can be sure of, it won’t fit neatly into any one ideological box.
Tax the very rich by all means, just make sure they don't have any other options first.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 1:09 am

tonys wrote:
rockyracoon wrote:
cookiemonster wrote:
Ard-Taoiseach wrote:
Keep the taxes low, allow business to grow and let free trade flow. It'll all work out from there.

Wants that on a T-shirt.

Because laissez-faire capitalism works so well. Until you factor in the social costs of child labour, underemployment, wealth gaps, failing infrastrucutre, pollution, tax-payer bail outs etc etc etc.

You'll need an extra-large T-shirt.
Whatever the solution to our own or the world wide financial problems, there is one thing you can be sure of, it won’t fit neatly into any one ideological box.
Tax the very rich by all means, just make sure they don't have any other options first.

Patriotism and shared burden for the wage earner - Tax havens for the rich, per chance? Some tings never change. What a Face
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 1:15 am

rockyracoon wrote:
tonys wrote:
rockyracoon wrote:
cookiemonster wrote:
Ard-Taoiseach wrote:
Keep the taxes low, allow business to grow and let free trade flow. It'll all work out from there.

Wants that on a T-shirt.

Because laissez-faire capitalism works so well. Until you factor in the social costs of child labour, underemployment, wealth gaps, failing infrastrucutre, pollution, tax-payer bail outs etc etc etc.

You'll need an extra-large T-shirt.
Whatever the solution to our own or the world wide financial problems, there is one thing you can be sure of, it won’t fit neatly into any one ideological box.
Tax the very rich by all means, just make sure they don't have any other options first.

Patriotism and shared burden for the wage earner - Tax havens for the rich, per chance? Some tings never change. What a Face

Ibis's link showed that in 2004 there were 250 "non-residents" being watched by the Revenue to see if they were complying with the not very stringent regulations for non-residents. It also put a figure of 8 billion a year in taxes lost through tax incentives. One of the items from the 2009 Budget that stuck in the throat was the exemption of private jets from the €10.00 flight levy.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 1:18 am

Aragon wrote:
AT - I can't believe there is a human being left alive who can seriously still believe that there is even such a thing as 'free' trade, let alone not realise the disasters that pursuing this false ideology has brought upon us. The very idea of 'growth' is doomed - we simply don't have the resources.

The problem is that there isn't enough free trade. Free trade is a fantastic means through which countries can specialise and trade the remainder of their requirements and benefit. The "disasters" of which you speak are merely cyclical and work themselves out over time. Other systems, on the other hand, have led to disaster, from which they have been unable to recover. Growth isn't doomed, technological and organisational advance will continue to drive outwards the frontier of global economic possibility. We have been told time and again, "this far and no further". We have been told that, "all that can be invented has". We have been told, "this is the end of history". All these statements of finality have been shown to be merely lines drawn in the sand, blown away by the ineluctable march of human ingenuity.

Today is no different and I am entirely confident that we will get over this current juncture to emerge to something far better and far more advanced than that which we can envisage today. Our whole history has been a narrative of continual advance. I see no reason why that cannot continue. Nobody 150 years ago could envisage the breadth and depth of technology today. It is my view that we are in the same situation now and in 150 years the human race will be on to something much bigger and better.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 1:24 am

Ard-Taoiseach wrote:
Aragon wrote:
AT - I can't believe there is a human being left alive who can seriously still believe that there is even such a thing as 'free' trade, let alone not realise the disasters that pursuing this false ideology has brought upon us. The very idea of 'growth' is doomed - we simply don't have the resources.

The problem is that there isn't enough free trade. Free trade is a fantastic means through which countries can specialise and trade the remainder of their requirements and benefit. The "disasters" of which you speak are merely cyclical and work themselves out over time. Other systems, on the other hand, have led to disaster, from which they have been unable to recover. Growth isn't doomed, technological and organisational advance will continue to drive outwards the frontier of global economic possibility. We have been told time and again, "this far and no further". We have been told that, "all that can be invented has". We have been told, "this is the end of history". All these statements of finality have been shown to be merely lines drawn in the sand, blown away by the ineluctable march of human ingenuity.

Today is no different and I am entirely confident that we will get over this current juncture to emerge to something far better and far more advanced than that which we can envisage today. Our whole history has been a narrative of continual advance. I see no reason why that cannot continue. Nobody 150 years ago could envisage the breadth and depth of technology today. It is my view that we are in the same situation now and in 150 years the human race will be on to something much bigger and better.

Auguste Comte would be proud of you Ard-Taoiseach. I think it is possible that human ingenuity will solve a lot, that we will be lucky, and that we'll adapt, but it is by no means inevitable. A meteor could take the whole thing out next week. The once constant about human history has been change.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 1:28 am

cactus flower wrote:


Auguste Comte would be proud of you Ard-Taoiseach. I think it is possible that human ingenuity will solve a lot, that we will be lucky, and that we'll adapt, but it is by no means inevitable. A meteor could take the whole thing out next week. The once constant about human history has been change.

Humankind was down to its last 70,000 individuals during the last ice age. We have been knocked, sickened, zapped, fried and indeed hit by a meteorite(if it hits the Earth, it's known as this, not a meteor. Razz ) and we have emerged from each knock stronger. People have a standard of living unimaginably better than that which went before and through the system of capitalism allied to a well-developed liberal democracy continued advance can be made. I can think of no other system which has brought anything approaching the same social, economic and political advances in the world.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 1:40 am

Thanks Ard-Taoiseach. We might be hit by a meteorite. Surprised

What I'd point out is that in order to develop liberal democracy, a series of violent revolutionary upheavals were necessary. I would agree with you that we haven't reached the "end of history".

I don't agree that it has all been a march forward. A lot of the gains have been made, but at a terrible environmental price, with forest/rainforest ravaged, desertification of lands and a rapid loss of species.

What we don't know yet is can we have a large human population over a prolonged period, or will the limits of food and fuel knock us back down in size.

We are again living in a time in which innovation, upheaval and conflict will need to take place: out of that its possible that something better will be achieved, but not without profound change in the way we do things.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 1:47 am

All possibly true but you can't base the fact that upheavel and conflict were necessary in the past as an argument that they are inevitable in the future. I say this precisely because as you say, we live in a period of innovation. Particularly in regard to the media, communications, globalisation, the world is now a very different place to previous times, our form of upheavel will likely be as different.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 1:52 am

cactus flower wrote:


What I'd point out is that in order to develop liberal democracy, a series of violent revolutionary upheavals were necessary. I would agree with you that we haven't reached the "end of history".

But wouldn't you agree that the pain was worth it? Democracy alongside capitalism helps drive a country forward both as an economy and a society. The gains of freedom and self-expression compensate for the struggle required to establish it.

Quote :
I don't agree that it has all been a march forward. A lot of the gains have been made, but at a terrible environmental price, with forest/rainforest ravaged, desertification of lands and a rapid loss of species.

What we don't know yet is can we have a large human population over a prolonged period, or will the limits of food and fuel knock us back down in size.

What we do know is that we have continually pushed the envelope to the extent that an enormous amount of people have been able to live a lifestyle enormously better than ever before imagined possible.

Quote :
We are again living in a time in which innovation, upheaval and conflict will need to take place: out of that its possible that something better will be achieved, but not without profound change in the way we do things.

We will go on to something better because I cannot see the human race settling for the present state of affairs. There is a hunger for something better that will drive the human race onward, regardless of the diversity faced.
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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 2:03 am

Mindless consumption holds its dangers:

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PostSubject: Re: The Wealth of the (Irish) Nation - Why not tax the rich ?   Mon Nov 03, 2008 2:05 am

There is no such thing as "free" trade in either the literal or figurative sense. All trade is transacted through costly legal frameworks; or through lack of legal framework which result in externalised costs; force of arms; or just mere pilforage. There is no free lunch.

The Free Trade Ideology is just that - an ideology. It chooses to ignore that countries, cartels and even small groups of people choose to act in wholely selfish ways that distort the ideal and result in further inefficiency costs to the global society. Free Market ideology, allied with capitalist ideology, has to date resulted in ever more influence and power being concentrated into fewer and fewer power-broker blocs through the accumulation of capital and manipulation of scarce resources.

If the free market ideology actually worked, resource rich areas would have the highest standards of living per capita anywhere in the world. This is not the case and often quite the opposite. Those areas of the world that are often resource wealthy also often experience the worst excesses of clientism and war.


Last edited by rockyracoon on Mon Nov 03, 2008 2:17 am; edited 1 time in total
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