Why are we bailing out snr bondholders again?

[Complainer]

I'm sorely tempted to wave the white flag and give up. It is kind-of hard to argue against the blend of 'I know a bloke' stories and sweeping claims that everything good is due to capitalism and everything bad comes from socialism. I really have better things to do with my time.

The iron curtain was east against west, socialism against capitalism. The east decided to base their economic system on Marxism/socialism for the good of the worker, where no private capitalist pig could exploit the poor worker. The problem with socialism is that it can only work under the explicit threat of force. This is why every socialist country past and present are totalitarian states with far less freedom than capitalist countries. And that is the reason why their poor are far far poorer than the poor in western countries. Please explain how it is that in these socialist states there was far less income inequality, but the lives of the people were and are miserable?

The iron curtain countries had nothing to do with socialism. They took the banner of communism, but they really had little to do with communism. It was just a convenient label for a small powerful group to exploit the majority.

Those scandinavian countries you refer to score far higher in economic and market freedom and therefore are success stories despite their welfare systems. And the American Dream, as in the idea of being able to go from having nothing to becoming wealthy, is not some sort of idealist utopia. Most people just do not grasp that it takes endless hard work, risk and personal sacrifice to achieve. But as long as nobody stand in your way, you are only limited by your abilities.

Sure – only limited by your abilities. Nothing to do with the colour of your skin, or your accent, or what school you went to, or what college you could afford to go to, or what politician you can afford to buy sorry donate to etc etc.

Because a growing economy has growing investment, which creates more job opportunities. More productivity means higher wages, that is why factory workers get paid more now than they did 150 years ago, relatively speaking.
Economically speaking everybody has a boat, unless you are significantly mentally or physically impaired. What you do with that boat is up to you. Everybody that wants to work would have work if it wasn't for government intervention. If you think that you are not getting paid enough for what you are doing then it is up to you to improve your productivity.

How did you jump from more job opportunities to more productivity? What’s the automatic connection there?
So if everyone has a boat, does everyone have the same boat?

No I am not quick to attribute the most significant social and economic advances to capitalism. The ideas of Socialism/Marxism were not set into action until the late 19th, early 20th century. The level of wealth and social benefit resulting from capitalism until that time was far greater than the level achieved during socialist periods.

So when specifically were the ‘socialist periods’ that you speak? Were they worldwide? Just curious yet again to see how you are measuring stuff.

The NHS is hardly an example of a good health system. It certainly is better than what we have here, but the best health systems in the world are in countries where it is not under total and almost full monopoly of government.

Yet again, what measures are you using here and what countries are you referring to here? You refer to ‘the best health systems’, so you do have a few examples in mind – not just those wealth-taxing Swiss again – right?

If anything unions have hampered the increase in total wages and jobs in the long run, as their forceful actions resulted in less profit and therefore less reinvestment in business expansion. If a worker can only get a certain amount of wages it is because there is a queue of people willing to work for that amount. And forcing up wages results in less employment, that's very basic economics of supply and demand.

That’s a very narrow view. You seem to be assuming that the only person capable of investing in a business are the business owners. You assume automatically that money earned by employees doesn’t get invested in businesses. It might surprise you to know that some employees do indeed run their own businesses, and do reinvest their earnings in their own businesses. It might surprise you to know that some employees do spend their earnings with other businesses, leading to further reinvestment. There are many ways to skin a cat.

Indeed some public universities have come up with good inventions

Did that hurt?

The greatest benefits that society enjoy today have all come from private enterprises not some omnipotent government entity. The increases in the standard of living have happened despite government intervention and socialism, not because of it.

Here’s more of those sweeping claims with no evidence. You can keep repeating these as often as you like, but that doesn’t make them true.

Of course private enterprises are subject to complaints, because you can never please everyone. But in the private sector people have choice where they spend their money. In the public service monopoly you do not have a choice how your money is spent. It is appropriated from you and then dictated how it is best spent. It is a one size fits all system, where the majority of people do not fit the size.
And unless a private company pleases enough people it will not stay in business, the very opposite is the case when it comes to public services.

The one-size fits all is not necessarily true. For example, local authorities are getting better in showing flexibility when providing services to people with low literacy, or homeless people, or people with disabilities. They have learnt that ‘one size fits all’ doesn’t work from them. But yet, a wheelchair user can’t get into half the banks in the country due to stepped entrances – where’s the brilliant private sector service there?
Your claim about private sector companies going bust if they provide crap service will be of great interest to the many posters here on AAM who’ve got crap service from UPC and AIB and Mercer and Eircom and Vodafone and many many other private businesses. This theory about going out of business just doesn’t seem to work well in the real world.

I am absolutely certain that the private economy would be better served if the IDA's budget were returned to the private economy through lower taxes, and for the private sector to expand organisations like the SME Association or create new ones. The IDA is made up of civil servants and politicians that know little if anything about running businesses.
Maybe over the next few years an economist will get a chance to look at how many jobs the IDA created and at what cost to the taxpayer. Given the government inability and waste that has so far come to light I am more than certain that the costs were higher than the benefits.
You do not need an IDA to tell the international community that Ireland has a low cost base (and maintain it at a level that is competitive), which is the main reason for attracting foreign investment.

Your certainty about the lack of value in the work of the IDA is quite touching, but again, you show nothing to back up this personal opinion. You show no international comparator who has taken your approach. You ignore the fact that every commercial business in your beloved private sector has a sales dept, while being absolutely certain that Ireland Inc doesn’t need a sales dept. Do you tell the companies who supply goods and services to you to disband their sales depts and reduce their costs accordingly?
Your claim that the IDA is made up of civil servants and politicians is factually wrong. For a start, employees in state agencies like the IDA are public servants, not civil servants. But let’s have a look at some IDA people from LinkedIn;
http://www.linkedin.com/in/donaltravers
http://ie.linkedin.com/pub/melissa-o-connor/4/526/329
http://www.linkedin.com/pub/mark-devereux/20/335/75a
http://ie.linkedin.com/pub/rory-mullen/12/561/a00
http://ie.linkedin.com/pub/chantelle-mc-cann-kiernan/9/b35/861
http://ie.linkedin.com/pub/denis-curran/1/766/39
All of them have private sector experience. But of course, you know best and somebody like Trevor Holmes (Head of Corporate Communications at IDA Ireland, former Corporate Affairs Dir. at Intel Ireland, former EMEA Regional General Mgr - Post Sales Support at Intel Ireland, former Managing Director UK & Ireland at Bomi) ‘knows little if anything about running businesses’ – right?

This is not an over simplification. A college lecturer of mine spent the first part of his career advising companies on how to best merge and consolidate existing departments and new acquisitions. There was always easily 25% saving made at admin and managerial level.
McCreevy's "decentralisation" was geographical and did not involve consolidation of resources. And comparing the way a public service staffs its departments by arbitrarily saying that private organisations also have "duplicate" services makes no sense whatsoever and is not a valid argument. A private enterprise can measure the profitability, cost/benefit and thereby the necessity of each single department. This simply does not happen in the public sector. Even if there is a similar service available in the private sector that is more efficient and effective, the public one will just have more money thrown at it. It does not have to abide by any rules of conserving resources, as doing the opposite has no negative effect.

Lots more theory here, with little to do with the real world. The ’25% efficiency’ claim certainly doesn’t relate to my experience with private sector mergers and acquisitions. I’ve been involved in a few over my career. Some gave a lot more than 25% - some gave an awful lot less. Every case is different. If I had ever built an integration plan around ballpark figures like this, I’d have been laughed out of the ballpark.
Your claim that “A private enterprise can measure the profitability, cost/benefit and thereby the necessity of each single department” is pure fiction. I’ve run IT departments and PMOs. I’ve operated at board level in multinationals. I’ve never seen any “profitability, cost/benefit and thereby the necessity” for an IT dept, or a PMO, or a HR dept, or a marketing dept or any bloody dept. You get a bit of a budget, based on what you got last year and what’s happening in the market. If you screw up, you get reorg’ed. You might find some people get pushed out, maybe using the recession as an excuse. It’s really not that scientific.

Could you please elaborate on how it is beneficial to society to have loads of unessential services while the most important ones are totally in tatters? How is consolidation in resources not beneficial to the taxpayer? And how can you argue that I do not have a business case for consolidation? Every private company tries to employ as few resources as possible to achieve its optimum performance. At an ever increasing rate we are getting information about the wastage and duplication in government services. Look at FAS and the HSE alone. It is nothing short of scandalous how over-resourced and wasteful these organisations are. And there is no evidence that other service are in anyway less wasteful.

Indeed, the FAS situation is absolutely scandalous. The abuse of positions on expenses and junkets in the public sector is absolutely outrageous, though it pales in comparison with the junketing that I’ve seen and enjoyed in the private sector in my time. And here you are with your ‘one-size-fits-all’ solution of consolidation. Consolidation might be good in some cases, but IBM doesn’t consolidate all its business units. Pfizer doesn’t consolidate all its business units. Why should the Govt rush down a path of consolidation with no evidence that this will be more effective? Maybe using shared services for admin functions would be more effective? Maybe changing legislation and corporate policies in some areas like pensions and HR would be more effective. There are lots of possible solutions here, but your blinkered view sees only one solution. You see the cost of everything, and the value of nothing.

You are also cherry picking a couple of government services that I never mentioned should be scrapped. And just because the government doesn't provide library services does not mean that there would be no libraries. The government does not provide food, but there is more than enough available for every budget.

The reason why it is important to continue to provide public services is because life goes on. Kids only get one chance at their primary education. The people in psychiatric hospitals today can’t wait for conditions to improve. The people who are planning to build their house this year can’t wait for conditions to improve. Public services are needed all the time.
Don’t accuse me of cherry-picking when you said that “And until these are decent (or even mediocre) the majority of other services should be scrapped or consolidated”. But suddenly, you starting seeing that services just can’t be scrapped to satisfy your ideological bias. So let’s get specific again – if you want to scrap services, which ones? What services to you want to scrap?

OK, and when you ring to make an appointment with the public service and are told that it will be in 12 months time do you still prefer not to go private?

More of your over-simplifications here. Maybe
1) I can’t afford to go private, or
2) I get a public appointment before I can get a private appointment, or
3) The public service provider has a better reputation than the private service provider.
You really should get past this ‘public bad, private good’ obsession. Life is just a bit more complex than that.

And what if that multi-national had to pay the actual full price over deliveries excluding government subsidies that the taxpayer is forking out for? As for quality and dependency of service An Post comes nowhere close to what private couriers offer. Only two weeks ago I gad to send a small parcel to Germany. It cost me €5 more with UPS than An Post who not even able to insure the package for the full amount of the value.

I’m pretty sure that the subsidy that goes to An Post covers the cost of maintaining the rural post office network. I know you’d like to wipe this out and leave entire communities with no coverage and service of course. But regardless, the An Post service in this sector is good enough for one multinational that I know of. I’m not claiming that An Post are the best couriers in the world of course. I know that things aren’t generally that simple.

Your idea nd my idea of crap service may be completely different. The only way a private company can survive (even if you personally think it is crap) is if more people think it is not crap. Otherwise it has no customers and therefore cannot continue to operate.

Yet again, nice theory – but it doesn’t work in the real world. There are lots of ways to get customers while providing crap service. Marketing, celeb endorsements, restrictive distribution deals etc etc.

I have looked at the info on the website and have to agree that it is an altar to those that are convinced. Maybe you can enlighten us as to those "compelling" arguments that we are missing, that you find so obvious, rather than just pointing to the website.

I’ve given the compelling message already. It’s not really that complicated. Countries that have less income inequality do better on a whole range of measures such as infant mortality, mental illness, imprisonment, teenage births, social mobility and obesity. It is that simple.
Chris – it is unlikely that I’m going to continue to debate this with you. It is just not productive to argue with someone who takes such an exclusively one-sided and selective view of the facts. Your theories are great on paper, but they really don’t relate too well to what is happening on the ground.

 

[Chris]

The iron curtain countries had nothing to do with socialism. They took the banner of communism, but they really had little to do with communism. It was just a convenient label for a small powerful group to exploit the majority.

How do you come to that conclusion? East Germany did not suffer over 40 years of state socialism did it? And Khrushchev didn't talk about spreading communism through ever more socialism on the other side of the curtain? Marx, Engels, Trotsky, Lenin did not talk of the socialist revolution to lead the way to communism?

Sure – only limited by your abilities. Nothing to do with the colour of your skin, or your accent, or what school you went to, or what college you could afford to go to, or what politician you can afford to buy sorry donate to etc etc.

Political corruption and inadequacy of your school are hardly something you can blame on capitalism or free markets. And racism is a societal behaviour not a market or economic behaviour while failure to enforce human rights is a failure of government. I am not an anarchist; I believe there are certain tasks that government has to provide with applying and enforcing the law being one of them.

How did you jump from more job opportunities to more productivity? What’s the automatic connection there?
So if everyone has a boat, does everyone have the same boat?

You are misquoting me there. What I said was that increased productivity leads to increased job creation. The more productive a company can be in providing a product the more customers they will be able to attract. Industrialisation of the west introduced ever more efficient machinery, which increased productivity. And instead of less jobs, this resulted in more jobs.
It is what you do with your boat. There have been plenty of examples on this forum about people succeeding despite growing up in poor families, and even some that have shown failure of people that grew up in well off families. You make it out as if there is no chance for the poor.

So when specifically were the ‘socialist periods’ that you speak? Were they worldwide? Just curious yet again to see how you are measuring stuff.

Socialism and wellfareism were prevalent since the start of the 20th century. Except for some short isolated periods or a few countries, government intervention in one shape or another has been the order of the day. Germany after WWII is probably one of the best examples of what society can achieve when government does not stand in the way and monopolises services.

Yet again, what measures are you using here and what countries are you referring to here? You refer to ‘the best health systems’, so you do have a few examples in mind – not just those wealth-taxing Swiss again – right?

Examples are Germany, Netherlands, Denmark and ofcourse Switzerland, which have national private health insurance systems where public and private providers compete for the same patients. And your attempt at ridiculing the Swiss system again by mentioning a wealth tax they have in absence of mentioning that all other taxes in the country are some of the lowest in the world, just doesn't make a good argument.

That’s a very narrow view. You seem to be assuming that the only person capable of investing in a business are the business owners. You assume automatically that money earned by employees doesn’t get invested in businesses. It might surprise you to know that some employees do indeed run their own businesses, and do reinvest their earnings in their own businesses. It might surprise you to know that some employees do spend their earnings with other businesses, leading to further reinvestment. There are many ways to skin a cat.

Of course some employees save and invest in businesses, but the majority of capital for businesses comes from wealthy individuals and business profits. I'm all for encouraging saving and investment at all levels of society, rather than increasing taxation on these activities.

Here’s more of those sweeping claims with no evidence. You can keep repeating these as often as you like, but that doesn’t make them true.

I don't know how many more times I have to highlight the period of the industrial revolution, where governments had little to no wrangling in economic activity, which resulted in the longest and most sustainable period of economic growth and improved standard of living in human history. But you seem to ignore this evidence every time I mention it.

The one-size fits all is not necessarily true. For example, local authorities are getting better in showing flexibility when providing services to people with low literacy, or homeless people, or people with disabilities. They have learnt that ‘one size fits all’ doesn’t work from them. But yet, a wheelchair user can’t get into half the banks in the country due to stepped entrances – where’s the brilliant private sector service there?
Your claim about private sector companies going bust if they provide crap service will be of great interest to the many posters here on AAM who’ve got crap service from UPC and AIB and Mercer and Eircom and Vodafone and many many other private businesses. This theory about going out of business just doesn’t seem to work well in the real world.

But when it comes to public services the consumer still has no choice! The money is taken from the taxpayer and then a solution is put in place which I have to accept, as my money has already been spent on it. This is a one size fits all system. When my daughter goes to school I will not be able to make a choice of school based on different curricula for example, as the state dictates it.
Just because there are people who think that certain services are bad does not mean that the majority of customers believe the same. I experienced bad service from Eircom, others have had a good one; I switched to Vodafone, and have been extremely happy with their service. I will never fly with Ryan Air again, but millions of people disagree with my personal opinion. That is what freedom to choose and free markets are all about.
A private company cannot reach into your pocket or force you to part with your money. The only organisation that can and does do that is government.

Your certainty about the lack of value in the work of the IDA is quite touching, but again, you show nothing to back up this personal opinion. You show no international comparator who has taken your approach. You ignore the fact that every commercial business in your beloved private sector has a sales dept, while being absolutely certain that Ireland Inc doesn’t need a sales dept. Do you tell the companies who supply goods and services to you to disband their sales depts and reduce their costs accordingly?
Your claim that the IDA is made up of civil servants and politicians is factually wrong. For a start, employees in state agencies like the IDA are public servants, not civil servants. But let’s have a look at some IDA people from LinkedIn;
http://www.linkedin.com/in/donaltravers
http://ie.linkedin.com/pub/melissa-o-connor/4/526/329
http://www.linkedin.com/pub/mark-devereux/20/335/75a
http://ie.linkedin.com/pub/rory-mullen/12/561/a00
http://ie.linkedin.com/pub/chantelle-mc-cann-kiernan/9/b35/861
http://ie.linkedin.com/pub/denis-curran/1/766/39
All of them have private sector experience. But of course, you know best and somebody like Trevor Holmes (Head of Corporate Communications at IDA Ireland, former Corporate Affairs Dir. at Intel Ireland, former EMEA Regional General Mgr - Post Sales Support at Intel Ireland, former Managing Director UK & Ireland at Bomi) ‘knows little if anything about running businesses’ – right?

I have no doubt that Holmes is a competent business man. But at the end of the day he is employed by the state with no doubt a huge salary and pension, and will hardly speak out against the IDA.
You are also assuming that the cost of running the IDA and its subsidies is offset by income. Remember that that money is being taken out of the private sector to start with. I am still living in the hope that some economist will analyse how much each one of those IDA jobs has cost the taxpayer.

Lots more theory here, with little to do with the real world. The ’25% efficiency’ claim certainly doesn’t relate to my experience with private sector mergers and acquisitions. I’ve been involved in a few over my career. Some gave a lot more than 25% - some gave an awful lot less. Every case is different. If I had ever built an integration plan around ballpark figures like this, I’d have been laughed out of the ballpark.
Your claim that “A private enterprise can measure the profitability, cost/benefit and thereby the necessity of each single department” is pure fiction. I’ve run IT departments and PMOs. I’ve operated at board level in multinationals. I’ve never seen any “profitability, cost/benefit and thereby the necessity” for an IT dept, or a PMO, or a HR dept, or a marketing dept or any bloody dept. You get a bit of a budget, based on what you got last year and what’s happening in the market. If you screw up, you get reorg’ed. You might find some people get pushed out, maybe using the recession as an excuse. It’s really not that scientific.

No it is not fiction. In every company I have worked for, departments have had to constantly justify and explain their usage of resources. Inefficient services are identified and dealt with (or as you say reorg’ed), especially in IT where improvements are measurable a lot easier. This simply does not happen in the public sector and is precisely why we are hearing ever more reports of wastage.

Indeed, the FAS situation is absolutely scandalous. The abuse of positions on expenses and junkets in the public sector is absolutely outrageous, though it pales in comparison with the junketing that I’ve seen and enjoyed in the private sector in my time. And here you are with your ‘one-size-fits-all’ solution of consolidation. Consolidation might be good in some cases, but IBM doesn’t consolidate all its business units. Pfizer doesn’t consolidate all its business units. Why should the Govt rush down a path of consolidation with no evidence that this will be more effective? Maybe using shared services for admin functions would be more effective? Maybe changing legislation and corporate policies in some areas like pensions and HR would be more effective. There are lots of possible solutions here, but your blinkered view sees only one solution. You see the cost of everything, and the value of nothing.

But the junketing in the private sector is not paid for by the taxpayer.
Private enterprises consolidate as much as is possible to save costs. The same cost saving incentive does not exist when it comes to government services.
You are right in that I see the cost of everything, unlike our politicians, but I also look at the value received, and I do not like what I see. McCarthy looked at government expenditure and also didn't like what he saw. Guess what government have done with his recommendations.

The reason why it is important to continue to provide public services is because life goes on. Kids only get one chance at their primary education. The people in psychiatric hospitals today can’t wait for conditions to improve. The people who are planning to build their house this year can’t wait for conditions to improve. Public services are needed all the time.
Don’t accuse me of cherry-picking when you said that “And until these are decent (or even mediocre) the majority of other services should be scrapped or consolidated”. But suddenly, you starting seeing that services just can’t be scrapped to satisfy your ideological bias. So let’s get specific again – if you want to scrap services, which ones? What services to you want to scrap?

I have done so in previous posts: http://www.askaboutmoney.com/showpost.php?p=1089029&postcount=35

But if you want a specific example, then how about consolidating the 28+ motor tax offices into a couple of regional ones. People can pay motor tax online, over the phone, in the post office or by post. There is absolutely no need for each county to have one, and in some cases two.

More of your over-simplifications here. Maybe
1) I can’t afford to go private, or
2) I get a public appointment before I can get a private appointment, or
3) The public service provider has a better reputation than the private service provider.
You really should get past this ‘public bad, private good’ obsession. Life is just a bit more complex than that.

And all these issues seem to be down to a the two tier system that I am against as much as you seem to be. But more government and taxation is not the answer here, when there are so many success stories around Europe with private national health insurance systems.

I’m pretty sure that the subsidy that goes to An Post covers the cost of maintaining the rural post office network. I know you’d like to wipe this out and leave entire communities with no coverage and service of course. But regardless, the An Post service in this sector is good enough for one multinational that I know of. I’m not claiming that An Post are the best couriers in the world of course. I know that things aren’t generally that simple.

I never said anything against rural services. But I would rather see An Post competing against private companies without subsidy. The German postal service was privatised a few years ago, and this has proven to be a very positive move.

Yet again, nice theory – but it doesn’t work in the real world. There are lots of ways to get customers while providing crap service. Marketing, celeb endorsements, restrictive distribution deals etc etc.

Of course they can do these things, but they cannot force you to avail of the service, you have to do so by choice. And as long as many people make that choice those companies will stay in business. This is exactly the way it works in the real world. In the government world it is the opposite, where your money is taken and there is nothing you can do if you disagree with the way politicians spend it.

I’ve given the compelling message already. It’s not really that complicated. Countries that have less income inequality do better on a whole range of measures such as infant mortality, mental illness, imprisonment, teenage births, social mobility and obesity. It is that simple.

Actually you haven't. You have ignored requests by me and other posters to highlight the compelling evidence that measures to make income more equal, or less inequal, actually work. But all you have done is point us to a website. Orka provided more than enough feedback which you have chosen not to address: http://www.askaboutmoney.com/showpost.php?p=1089404&postcount=53

Chris – it is unlikely that I’m going to continue to debate this with you. It is just not productive to argue with someone who takes such an exclusively one-sided and selective view of the facts. Your theories are great on paper, but they really don’t relate too well to what is happening on the ground.

That is of course your choice. But accusing me of being one sided at a time when there can be no doubt about failure and wastage at government level is pretty meaningless. As I have said, I am not an anarchist, but the services that government monopolises are wasteful and bad.

 

[Complainer]

1) The Iron Curtain countries had nothing to do with socialism, and little to do with communism. They were oligarchies.

2) You explain away racism, corruption and inequality with a bland 'not my fault'. Sounds a bit Bart Simpsonlike. But indeed, your proposal to wipe out public services and privitise everything will deepen these problems. Good education will be restricted to those who can pay - deepening inequality.

3) You tell us that industrialisation has brought more jobs, not less. Would you like to go down to your local dole office and tell them that message? Jobs in manufacturing are shrinking every day.

4) You give the health systems of "Germany, Netherlands, Denmark and of course Switzerland" as great examples. Would you take their tax levels as well? Each of these countries have higher income tax rates than Ireland, and I promise not to mention the wealth tax issue again.

5) I confess to knowing little or nothing about the industrial revolution. I'm not sure that a system that had children working from the age of six and ordinary workers having 14-hour working days is a great model for our future. I guess you may differ.

6) You make a big fuss about the lack of 'choice' with public services. This is not some deep intrinsic fault in the system. It is just the nature of the beast. Do you want two HSEs and two Enterprise Irelands and two Competition Authorities, so you can pitch them against each other in some gladiatorial battle?

7) You will indeed have several choices for your daughter's school - some public and some private. You will be able to choose from different curricicum options, including Montessori and Steiner schools All these choices exist today.

8) You move the goalposts with your complaint about Enterprise Ireland. First you claimed that they were all civil servants, but I've proven that you were wrong. Now you claim that the Director 'won't speak out' as if this is some fundamental flaw. Do the directors of AIB speak out about their problems? Do the directors of Microsoft speak out about their problems? You're just tilting at windmills here.

9) You tell me that private companies do cost/benefit analyses of every department. So show me one example - show me how you quantitatively evaluation the benefits of a HR department, or a PMO, or an IT dept?

10) Believe it or not, I agree partially with your proposal about motor tax offices. At a bare minimum, the 40+ back office operations that are currently processing postal and online renewals should be immediately merged and rationalised. But that's not justification for wiping out public services - that is just one step on the path of continuous improvement.

12) Some Govt services are indeed wasteful and bad. Some services are lean and good. This is no basis for a 'wipe out public services' arguement.

 

[shnaek]

1) The Iron Curtain countries had nothing to do with socialism, and little to do with communism. They were oligarchies.

That may well be true, and in the same vein the running of this country had little to do with capitalism also. We had our own brand of rubbish governance based on incompetance and corruption - which goes to show that in all these cases it is not the system but the people that needs changing.

4) You give the health systems of "Germany, Netherlands, Denmark and of course Switzerland" as great examples. Would you take their tax levels as well? Each of these countries have higher income tax rates than Ireland, and I promise not to mention the wealth tax issue again.

Our tax rates are higher than most of the countries you mentioned if you earn above 35k and below 100k. Our rates are lower alright if you earn less than 35k.

 

[Chris]

1) The Iron Curtain countries had nothing to do with socialism, and little to do with communism. They were oligarchies.

They certainly turned out that way, but they started with socialist revolutions with the call for "Workers of all lands, unite". But it very quickly became clear that ever increasing state control of economic life required force "for the good of the people".
This simply is not possible in free market capitalism, where what you do with your property is not dictated by government, and is only restricted by not being allowed to infringe on other people's property rights. Anything that restricts or limits property rights by force is an infringement on freedom and liberty. This is exactly what happened on the other side of the iron curtain through ever increasing scialism.

2) You explain away racism, corruption and inequality with a bland 'not my fault'. Sounds a bit Bart Simpsonlike. But indeed, your proposal to wipe out public services and privitise everything will deepen these problems. Good education will be restricted to those who can pay - deepening inequality.

This is a typical socialist claim, that if something is not provided by government and left to capitalism and the private sector, then many people will not be able to afford it. This simply does not hold up to all the examples I provided in an earlier post which show that products and services that come out of private industries, where government doesn't interfere, are affordable even by people on low wages. It is not in the interest of private enterprises to exclude people. The exact opposite happens in the real world. Food is one of the most important things to a human being, but it's production and distribution is left to the private sector, yet there is food for every budget. Socialist countries in eastern Europe controlled food production and distribution resulting in lack of supply in number and quality. Sounds an awful lot like our government services.

3) You tell us that industrialisation has brought more jobs, not less. Would you like to go down to your local dole office and tell them that message? Jobs in manufacturing are shrinking every day.

The reason unemployment is on the rise is because (a) Irish wages at the low end are held artificially high, and (b) because too many construction workers found employment during the artificial boom. This has nothing to do with more efficient industrial machinery being used, but with companies leaving due to costs of doing business.
The fact that more jobs were created through increasing productivity during the industrial revolution, in the absence of government control and intervention, is pretty damning evidence of the negative side effects of even well meaning government action.

4) You give the health systems of "Germany, Netherlands, Denmark and of course Switzerland" as great examples. Would you take their tax levels as well? Each of these countries have higher income tax rates than Ireland, and I promise not to mention the wealth tax issue again.

You're claim is only true when based on Budget/GDP figures. But this is a terribly inaccurate way to measure the burden of taxation in Ireland. In 2008 German Budget/GDP was just over 40%, and there is not a huge difference to GNP in Germany. In Ireland in 2008 Budget/GDP may have been only 25% but budget/GNP was about 43%. It is a total fallacy to claim that Ireland is a low tax economy. And as shnaek has already pointed out, the higher tax rates in these countries do not kick in until you earn considerably more than the Irish €36k threshold.

5) I confess to knowing little or nothing about the industrial revolution. I'm not sure that a system that had children working from the age of six and ordinary workers having 14-hour working days is a great model for our future. I guess you may differ.

Child labour and long working hours were present prior to the industrial revolution and not a result of it. What the industrial revolution brought was increased productivity, which resulted in increased real wages, which resulted in adults and children needing to work less. The number of hours worked by adults and children went drastically down during the industrial revolution without the need for government intervention.

6) You make a big fuss about the lack of 'choice' with public services. This is not some deep intrinsic fault in the system. It is just the nature of the beast. Do you want two HSEs and two Enterprise Irelands and two Competition Authorities, so you can pitch them against each other in some gladiatorial battle?

Competition within the public sector just isn't possible. What I am against is government having carte blanche when it comes to taking my money and spending it, especially on services that the state can either not afford or that can be offered cheaper and better by a competitive private sector.

7) You will indeed have several choices for your daughter's school - some public and some private. You will be able to choose from different curricicum options, including Montessori and Steiner schools All these choices exist today.

Well that is somewhat reassuring. But I very much doubt that I have choices like strong focus on personal finance and economics, or languages like Japanese or Mandarin being offered.

8) You move the goalposts with your complaint about Enterprise Ireland. First you claimed that they were all civil servants, but I've proven that you were wrong. Now you claim that the Director 'won't speak out' as if this is some fundamental flaw. Do the directors of AIB speak out about their problems? Do the directors of Microsoft speak out about their problems? You're just tilting at windmills here.

Just because there are some former private sector business men working for the IDA doesn't falsify my claim that it is an organisation of public servants. The difference to the heads of private organisations is that they do not spend my money unless I choose to be their customer. And when they do a bad job the board of directors will be very quick to show them the door. In the public sector you get full support of the top man in charge and are allowed to resign/retire with a nice golden handshake.

9) You tell me that private companies do cost/benefit analyses of every department. So show me one example - show me how you quantitatively evaluation the benefits of a HR department, or a PMO, or an IT dept?

1) compare costs to outsourcing options where possible
2) every IT project I have worked on required a cost benefit analysis which influenced the size of the project. Based on that, resources are allocated and surplus resources and costs have to be justified.
3) You only employ as many project managers (I assume that is what you mean by PMO) as you have projects. If for whatever reason the amount of projects are cut back then project management resources are either reallocated or cut.

10) Believe it or not, I agree partially with your proposal about motor tax offices. At a bare minimum, the 40+ back office operations that are currently processing postal and online renewals should be immediately merged and rationalised. But that's not justification for wiping out public services - that is just one step on the path of continuous improvement.

I believe you, except for a local councillor I have yet to meet someone who disagrees with this. But do you not find it incredible, that such obvious wastage exists and is not mentioned as a cost saving now, or even in the boom years? Does this fill you with confidence that any other government service is not hopelessy over-resourced? 2 years into this total and utter mess and there has been no serious attempt at prioritising, rationalising or consolidating services.

12) Some Govt services are indeed wasteful and bad. Some services are lean and good. This is no basis for a 'wipe out public services' arguement.

Well I have yet to see some evidence of a lean and good service. Actually I have found the revenue's online services quite good and efficient; as for lean, they fall into the motor tax office category of too many local offices.

 

[Firefly]

Well I have yet to see some evidence of a lean and good service. Actually I have found the revenue's online services quite good and efficient; as for lean, they fall into the motor tax office category of too many local offices.

Interesting that..oh wait..maybe perhaps it's because they're taking money rather than providing a service?

 

[Chris]

Interesting that..oh wait..maybe perhaps it's because they're taking money rather than providing a service?

Good point, here the government actually have a very good incentive for efficiency. Saying that though, I was owed money and I had a cheque within about a week.

 

[shnaek]

Been looking up a bit on Switzerland, seeing as how it is often given as a good example of doing things right. On taxes I have read:

"Most taxes are direct and low. The average Swiss citizen pays about 16% of his income in taxes, and average company taxes are about 20% of profits. Switzerland's national debt and inflation rate are low. Total government spending for all three levels has averaged only 22.6% of GNP since 1946, yet expenditure on welfare and education per capita is high. This is because government revenues are spent effectively rather than wasted on a bloated bureaucracy. "

Also other interesting points here:

[broken link removed]

I have put a suggestion in the LOS forum that we could follow this system to see how it would work out for us. Can't be any worse than the system we have.