Irish Economy and Budget Watch / / /Emergency Budget Announced for April 7th

johnfás wrote:

2% would be a rather significant recession, would it not?

It would indeed. It would however be quite mild compared to the approximate 15% fall-back experienced by the Finnish economy in the early 90s in a similar situation. I feel we're in for two years of negative growth before 2ish percent growth in 2010. This decade is going out on a rather bum note.

I'm just after finding out that construction accounted for 8.4% of the economy in 2007. The reduction in building is carrying on and I expect construction to bottom out at around 4.5% of the economy by around 2010.

johnfás wrote:

Ard-Taoiseach wrote:

Construction is now down to 7.2% of the economy compared to 9% in 2006. The correction is halfway through imo.

I thought it was higher in the first instance.

Well the CSO figure is the official and most authoritative figure.

Oh well I'm an optimist and banking on the notion that I won't be qualified in my chosen profession for so many years that things will have picked up by the time I am. Furthermore, that plenty of the people clogging it up at the moment will have moved into other sectors as well. I'll join it at the end of the trough just in time to ride the crest for a decade .

johnfás wrote:

Oh well I'm an optimist and banking on the notion that I won't be qualified in my chosen profession for so many years that things will have picked up by the time I am. Furthermore, that plenty of the people clogging it up at the moment will have moved into other sectors as well. I'll join it at the end of the trough just in time to ride the crest for a decade .

Exactimundo johnfás. If you're graduating a couple of years into the next decade then this recession will be firmly behind us, so you can ride the next boom. Ideally, things won't look tough for a person like you until after 2020. Just sit tight in that qualification cocoon and you should be fine!

I'll be retired by 2020 following my enriching appointment as chairman of the johnfás tribunal on corrupt payments to the Ecoleftist party, who naturally will have usurped power by that stage.

Indeed, on further reflection, the R word is hardly recession, more reversal. It's like the Irish economy has just stalled and is gone into slight reverse having been bombing down the motorway heretofore.

johnfás wrote:

I'll be retired by 2020 following my enriching appointment as chairman of the johnfás tribunal on corrupt payments to the Ecoleftist party, who naturally will have usurped power by that stage.

I think I'd be a star witness there!

"Ecoleftist Party" - now I like the sound of that one. Something like that could take us out of a recession couldn't it? Jobs for the poor, green construction, conservative use of resources, emphasis on education ... if we could foster a culture of tech innovation too then it might be the Next Big Thing. Capitalism killed it self and so did Socialism.

Could a hybrid like that work at all or should I get the f* off your nice statistical thread Ard?

Auditor #9 wrote:

"Ecoleftist Party" - now I like the sound of that one. Something like that could take us out of a recession couldn't it? Jobs for the poor, green construction, conservative use of resources, emphasis on education ... if we could foster a culture of tech innovation too then it might be the Next Big Thing. Capitalism killed it self and so did Socialism.

Could a hybrid like that work at all or should I get the f* off your nice statistical thread Ard?

Capitalism trumps socialism since it rewards hard work, encourages people to reach out and try harder and acknowledges the greed innate in the human condition. Capitalism ain't dead and as long as that's clear, you can stayy for as long as you want.

I saw all the bad stats on RTE Six One news - General George Lee said Capitalism was broke - maybe he meant 'broken' but he could have meant broke as in 'no money'.

Ard-Taoiseach wrote:

Auditor #9 wrote:

"Ecoleftist Party" - now I like the sound of that one. Something like that could take us out of a recession couldn't it? Jobs for the poor, green construction, conservative use of resources, emphasis on education ... if we could foster a culture of tech innovation too then it might be the Next Big Thing. Capitalism killed it self and so did Socialism.

Could a hybrid like that work at all or should I get the f* off your nice statistical thread Ard?

Capitalism trumps socialism since it rewards hard work, encourages people to reach out and try harder and acknowledges the greed innate in the human condition. Capitalism ain't dead and as long as that's clear, you can stayy for as long as you want.

Capitalism is rewarding a lot of people with unemployment at the moment. It delivers for certain people at certain times, but there are big negatives that are part of its overall performance - it has caused and is failing to deal with climate change, it is presiding over mass poverty, and it periodically involves very destructive wars over resources and territory. Socialism is at this stage not much more than an idea of how to replace it - its never been introduced in an advanced industrialised country. I wouldn't imagine for a minute it would be easy to make it work and the problems of bureaucracy and incentives would need serious thinking about. With capitalism disintegrating, there may well be no other alternative.

So Ard Taoiseach, it doesn't bother you, being religious and all, that Capitalism is as one-dimensional as to be based on innate greed? What about other emotions like lust and coveting the neighbours wife?

Isn't economics founded on a broader base of emotions than just greed? What about the overwhelming need for control over environment, other persons, resources, animals, the weather? What about being better than your neighbour - having a bigger, better this that and the other? Or what about defeating your enemies, conquering land off the neighbouring tribe, rape, pillage, plunder ...

Isn't capitalism founded on those things or is it just innate greed? Because if you start on one strong primal emotion as an energy behind growth, industry and commerce then you might have to take a few more into consideration too like aggression, rage and so on.

cactus flower wrote:

Capitalism is rewarding a lot of people with unemployment at the moment.

That's called an economic cycle. For a time, things are good, the economy booms and unemployment is curbed to levels inconsequential. In the periods of retrenchment which follow, the unemployment level rises again. That is the natural order of things and the way that economies work. The fact that unemployment is higher than it was previously does not detract from the validity of capitalism as an underpinning of our economic system.

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It delivers for certain people at certain times, but there are big negatives that are part of its overall performance - it has caused and is failing to deal with climate change,

Not true, companies interested and motivated by the profit motive are inventing the goods and services we need to build an environmentally-friendly economy. From passive heaters to solar panels, wind turbines, electric cars and more efficient aircraft, private enterprise in the capitalist system is arming us with the weapons with which we need to fight climate change.

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it is presiding over mass poverty,

China, India and Vietnam who have all embraced elements of the capitalist system have lifted millions of people out of poverty. If the nations of the world all embraced the value of low taxes, hard work, enterprise, risk-taking, investment and so on which are part of the capitalist system, we will have the environment we need to deal with climate change.

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and it periodically involves very destructive wars over resources and territory.

Eh, that's human nature. Humans like to fight to seize things they want. Wars for resources and territory have happened since the dawn of humanity and will continue to be the case until it is no longer in our interest. That can be achieved by uniting the world into a single trading market. If we're buying and selling from one another, we will be too busy to fight each other. I could also say that Socialism led to the Purges, the wipeout of the Kulaks, famine, refugees, the Gulags, the death of millions in the Great Leap Forward and Cultural Revolution and the destruction of millions of lives in North Korea.

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Socialism is at this stage not much more than an idea of how to replace it - its never been introduced in an advanced industrialised country.

Yes it has. Russia, China, Cyprus, Korea, Vietnam, the Eastern and Central European states, Cuba and Venezuela have all tried it. None have done so with success.

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I wouldn't imagine for a minute it would be easy to make it work and the problems of bureaucracy and incentives would need serious thinking about. With capitalism disintegrating, there may well be no other alternative.

Capitalism is not disintegrating and socialism is an unworkable lunacy.

I'll come back to the other things, but watching Prime Time just now put me in mind of another difficulty of capitalism - the free market has never suceeded in making decent housing accessible for the whole population. It depends for profit on a section of the population working for low wages, that are not enough to pay for good accommodation, whether rented or bought. Homelessness, overcrowding and slums are a perpetual feature of free market economies. Social housing, whatever the problems of bad planning, has transformed people's lives for the better.

Auditor #9 wrote:

So Ard Taoiseach, it doesn't bother you, being religious and all, that Capitalism is as one-dimensional as to be based on innate greed? What about other emotions like lust and coveting the neighbours wife?

Isn't economics founded on a broader base of emotions than just greed? What about the overwhelming need for control over environment, other persons, resources, animals, the weather? What about being better than your neighbour - having a bigger, better this that and the other? Or what about defeating your enemies, conquering land off the neighbouring tribe, rape, pillage, plunder ...

Isn't capitalism founded on those things or is it just innate greed? Because if you start on one strong primal emotion as an energy behind growth, industry and commerce then you might have to take a few more into consideration too like aggression, rage and so on.

To be fair, 'greed' is wrong - self-interest is more accurate. If your personal self-interest happens to involve gratifying your lust, that too can be a market driver. In fact, if you look at advertising, the vast bulk of it appeals to the other deadly sins - primarily lust, sloth, envy, avarice, pride - then greed, then wrath. Politics tends to appeal in almost the reverse order.

Ard-Taoiseach wrote:

Quote :

It delivers for certain people at certain times, but there are big negatives that are part of its overall performance - it has caused and is failing to deal with climate change,

Not true, companies interested and motivated by the profit motive are inventing the goods and services we need to build an environmentally-friendly economy. From passive heaters to solar panels, wind turbines, electric cars and more efficient aircraft, private enterprise in the capitalist system is arming us with the weapons with which we need to fight climate change.

However, the firms in question are responding primarily to perceived and actual changes in the regulatory environment, without which they would remain fringe endeavours. Left to its own devices, the market will not assume the burden of externalities.

Ard-Taoiseach wrote:

Quote :

it is presiding over mass poverty,

China, India and Vietnam who have all embraced elements of the capitalist system have lifted millions of people out of poverty. If the nations of the world all embraced the value of low taxes, hard work, enterprise, risk-taking, investment and so on which are part of the capitalist system, we will have the environment we need to deal with climate change.

The last two decades of shift away from socialist economics towards market economics worldwide have also seen one of the most dramatic reductions in poverty worldwide. From 1987 to 1999, the proportion of world poor (under $1 a day) fell from 24% to 20%, while world population rose. It was socialist economics that largely presided over mass poverty.

Ard-Taoiseach wrote:

Quote :

Socialism is at this stage not much more than an idea of how to replace it - its never been introduced in an advanced industrialised country.

Yes it has. Russia, China, Cyprus, Korea, Vietnam, the Eastern and Central European states, Cuba and Venezuela have all tried it. None have done so with success.

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I wouldn't imagine for a minute it would be easy to make it work and the problems of bureaucracy and incentives would need serious thinking about. With capitalism disintegrating, there may well be no other alternative.

Capitalism is not disintegrating and socialism is an unworkable lunacy.

+1. The 1930's didn't kill market economics, nor did the 1970's. It's fun to claim that the current crisis is the end of the world, but it doesn't have any real credibility. What the current crisis does prove is that unregulated financial markets are prone to serious endogenous crises.

ibis wrote:

To be fair, 'greed' is wrong - self-interest is more accurate. If your personal self-interest happens to involve gratifying your lust, that too can be a market driver. In fact, if you look at advertising, the vast bulk of it appeals to the other deadly sins - primarily lust, sloth, envy, avarice, pride - then greed, then wrath. Politics tends to appeal in almost the reverse order.

ibis but they are all Deadly Sins ! To keep the wheels of commerce spinning we must engage the Shadow for some impetus, drive and inspiration.

The lovey-dovey, Sermon on the Mount isn't a great foundation for a world-spanning and vibrant economy I suppose. But aren't there other emotions too? Those ones are extreme that we've named and they primarily get used by advertising ("Sex Sells Everything") but they are more or less what capitalism is based on.

The other emotions might be patterns of behaviour moreso - cultural or biological like couples nesting (not just humping) putting the children to school, getting them to brush their teeth, clothing themselves against weather, indeed aren't some of the drivers of economics based on the elements? Some of these things are predictable because they are relatively static over time ... There must be a sizeable proportion of industry dedicated to that stuff.

And then what about feelings like curiosity, invention, adventure, geekism, trainspotting, engineering lust ...

Auditor #9 wrote:

ibis wrote:

To be fair, 'greed' is wrong - self-interest is more accurate. If your personal self-interest happens to involve gratifying your lust, that too can be a market driver. In fact, if you look at advertising, the vast bulk of it appeals to the other deadly sins - primarily lust, sloth, envy, avarice, pride - then greed, then wrath. Politics tends to appeal in almost the reverse order.

ibis but they are all Deadly Sins ! To keep the wheels of commerce spinning we must engage the Shadow for some impetus, drive and inspiration.

I'm afraid advertising is a fundamentally wicked business.

Auditor #9 wrote:

The lovey-dovey, Sermon on the Mount isn't a great foundation for a world-spanning and vibrant economy I suppose. But aren't there other emotions too? Those ones are extreme that we've named and they primarily get used by advertising ("Sex Sells Everything") but they are more or less what capitalism is based on.

The other emotions might be patterns of behaviour moreso - cultural or biological like couples nesting (not just humping) putting the children to school, getting them to brush their teeth, clothing themselves against weather, indeed aren't some of the drivers of economics based on the elements? Some of these things are predictable because they are relatively static over time ... There must be a sizeable proportion of industry dedicated to that stuff.

And then what about feelings like curiosity, invention, adventure, geekism, trainspotting, engineering lust ...

Good points. There's also a huge amount of human effort that revolves around the virtues. Almost certainly it's larger than the whole market economy altogether - churches, charities, housework, caring for children, relatives, being nice, etc etc.

In fact, if you measure things, the market economy is a very small part of even the formal economy. The vast majority of transactions take place inside companies, not in the open market - and companies internally are planned/command economies.

Al Jazeera has just announced that Ireland is the first eurozone economy to go into recession.

Ibis, I'd like to share your optimism, but most of the older economists say this doesn't compare to the 1970s. The 1930s slump ended in war.

ibis wrote:

Auditor #9 wrote:

ibis wrote:

To be fair, 'greed' is wrong - self-interest is more accurate. If your personal self-interest happens to involve gratifying your lust, that too can be a market driver. In fact, if you look at advertising, the vast bulk of it appeals to the other deadly sins - primarily lust, sloth, envy, avarice, pride - then greed, then wrath. Politics tends to appeal in almost the reverse order.

ibis but they are all Deadly Sins ! To keep the wheels of commerce spinning we must engage the Shadow for some impetus, drive and inspiration.

I'm afraid advertising is a fundamentally wicked business.

Auditor #9 wrote:

The lovey-dovey, Sermon on the Mount isn't a great foundation for a world-spanning and vibrant economy I suppose. But aren't there other emotions too? Those ones are extreme that we've named and they primarily get used by advertising ("Sex Sells Everything") but they are more or less what capitalism is based on.

The other emotions might be patterns of behaviour moreso - cultural or biological like couples nesting (not just humping) putting the children to school, getting them to brush their teeth, clothing themselves against weather, indeed aren't some of the drivers of economics based on the elements? Some of these things are predictable because they are relatively static over time ... There must be a sizeable proportion of industry dedicated to that stuff.

And then what about feelings like curiosity, invention, adventure, geekism, trainspotting, engineering lust ...

Good points. There's also a huge amount of human effort that revolves around the virtues. Almost certainly it's larger than the whole market economy altogether - churches, charities, housework, caring for children, relatives, being nice, etc etc.

In fact, if you measure things, the market economy is a very small part of even the formal economy. The vast majority of transactions take place inside companies, not in the open market - and companies internally are planned/command economies.

Interesting point, Ibis. I don't want to second guess Ard Taoiseachs ripost, but it is tempting.

ibis wrote:

In fact, if you measure things, the market economy is a very small part of even the formal economy. The vast majority of transactions take place inside companies, not in the open market - and companies internally are planned/command economies.

I was just about to ask you where the market was located inside the real economy because I'm guessing it's a subset anyway. Generally it doesn't operate at all in our daily lives - water, electricity and other such utilities that themselves exist because of tools in the system allowed them to be created but often they are not facilitated to the customre in a free market.

So the machinery which delivers a lot of stuff to us does generally get created through a free market or some kind of market. And often we have a choice of doing it without those products - you can bake your own cake, pedicure your own finger nails and dog pelt, garden without real tools using your bare hands etc. thus avoiding the market and its products. Government and public need must have a big enough role in asking the market to create something or does it and we are just fed a system we're not fully sure we really want... I'm picturing Russian dolls with companies on the inside and government on the outside, the outside ones driving the insides ones on, but it might not be that way in reality - maybe the whole thing is flatter and there's no real hierarchy.

Jesus I'm off to bed I don't know what I'm saying anymore

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cactus flower wrote:

Al Jazeera has just announced that Ireland is the first eurozone economy to go into recession. Embarassed

Ibis, I'd like to share your optimism, but most of the older economists say this doesn't compare to the 1970s. The 1930s slump ended in war.

Is that why I can't post an image on any of the irish websites grrr

ibis wrote:

Ard-Taoiseach wrote:

Not true, companies interested and motivated by the profit motive are inventing the goods and services we need to build an environmentally-friendly economy. From passive heaters to solar panels, wind turbines, electric cars and more efficient aircraft, private enterprise in the capitalist system is arming us with the weapons with which we need to fight climate change.

However, the firms in question are responding primarily to perceived and actual changes in the regulatory environment, without which they would remain fringe endeavours. Left to its own devices, the market will not assume the burden of externalities.

But it is still true that private sector organisations are the main method through which climate change can be tackled and the profit motive one of the main drivers incentivising that tackling?

Ard-Taoiseach wrote:

ibis wrote:

Ard-Taoiseach wrote:

Not true, companies interested and motivated by the profit motive are inventing the goods and services we need to build an environmentally-friendly economy. From passive heaters to solar panels, wind turbines, electric cars and more efficient aircraft, private enterprise in the capitalist system is arming us with the weapons with which we need to fight climate change.

However, the firms in question are responding primarily to perceived and actual changes in the regulatory environment, without which they would remain fringe endeavours. Left to its own devices, the market will not assume the burden of externalities.

But it is still true that private sector organisations are the main method through which climate change can be tackled and the profit motive one of the main drivers incentivising that tackling?

The situation with electricity is a mess. There is a volume of new, enterprising wind and other alternative energy production wanting to sell to the Irish grid but the ESB accepted bids on a price and "first come" basis and got tied in to coal and gas, both of which are insecure.

Up until now, most research has been supported by public funding one way or another, and benefits enormously from public funding of universities.

Left unregulated, oil companies would drill anywhere and everywhere so long as it is viable and leave a god awful contaminated mess behind them. Society has to decide if it wants to make a strategic shift to sustainable energy and if so, make a plan and do it, if need be over the prostrate bodies of private commercial interests. People who bring forward the resources and ideas to make it work should imo be rewarded, but not made grotesquely wealthy.

Were the Roman viaducts built by the private sector, Ard-Taoiseach?

Ard-Taoiseach wrote:

ibis wrote:

Ard-Taoiseach wrote:

Not true, companies interested and motivated by the profit motive are inventing the goods and services we need to build an environmentally-friendly economy. From passive heaters to solar panels, wind turbines, electric cars and more efficient aircraft, private enterprise in the capitalist system is arming us with the weapons with which we need to fight climate change.

However, the firms in question are responding primarily to perceived and actual changes in the regulatory environment, without which they would remain fringe endeavours. Left to its own devices, the market will not assume the burden of externalities.

But it is still true that private sector organisations are the main method through which climate change can be tackled and the profit motive one of the main drivers incentivising that tackling?

Hmm. Actually, many of the private companies are simply putting into practical production the results of government-funded academic research. However, they are doing so in many more ways than the government would try it, and their failures are cost-free from the point of view of the main research effort.

However, I don't know whether private companies can operate at the necessary scale, and put large-scale solutions into place sufficiently quickly, to achieve what will need to be achieved - because, frankly, we're not really taking this anywhere near seriously enough.

I was walking out of the St Stephen's Green Shopping Centre at lunchtime and I could hear a conversation between a few lads behind me. One of them was repeating to his friend that the Euromillions had to be won tonight so they were almost guaranteed to win if they entered this week.

His friends were so convinced they decided to pool 20 euro each (60 euro total) together and spend it all on Lotto tickets given this apparent guaranteed 130 million they are going to win tonight.

Clearly all is not lost on two fronts. First, our knowledge economy is still producing some of the greatest minds around. Second, if we all enter the lottery this evening our economic woes will be over. Guaranteed.

cactus flower wrote:

The situation with electricity is a mess. There is a volume of new, enterprising wind and other alternative energy production wanting to sell to the Irish grid but the ESB accepted bids on a price and "first come" basis and got tied in to coal and gas, both of which are insecure.

ESB is a publicly-owned firm and not part of the private sector. Airtricity is a private sector electricity provider and if it wasn't for the intransigence of our government in freezing them out of this market, they would have helped enormously in reducing our dependence on imported oil as a source of our electricity generation. Airtricity is a private sector company with the ideas, people and money needed to fight climate change.

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Up until now, most research has been supported by public funding one way or another, and benefits enormously from public funding of universities.

Kingspan is another example of a company who come up with most of their environmental goods, as described here by themselves.

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Left unregulated, oil companies would drill anywhere and everywhere so long as it is viable and leave a god awful contaminated mess behind them. Society has to decide if it wants to make a strategic shift to sustainable energy and if so, make a plan and do it, if need be over the prostrate bodies of private commercial interests. People who bring forward the resources and ideas to make it work should imo be rewarded, but not made grotesquely wealthy.

When did I ever say anything about leaving things completely unregulated? There of course needs to be a certain level of regulations, but that needs to small, smart and subtle. Society will also only move if it is in its economic interest and we need to shape the situation so that it is. And what do you mean by, "grotesquely wealthy"? When do we decide that it is grotesque or merely large? Such vagueness leaves me uneasy.

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Were the Roman viaducts built by the private sector, Ard-Taoiseach?

Why do you ask? Indeed in Roman times, "public" and "private" were largely interchangeable, most projects were completed merely as an act of patronage by rich Romans. The army were used as the labour force for these tasks. The idea of a State wasn't as clear cut then as it is today as politics was dominated much more by individuals with their own mandates and client networks. Nationalisations, privatisations and such like wouldn't exactly correspond to the Roman world and in any case even if you can prove that they were completely the work of government then I can simply point you to the fact that revenue collection was privatised. We can't apply our own circumstances to the Roman world exactly.