# Is Ireland ruined, or is there a way out?



## shnaek (1 Sep 2010)

It would be interesting to have a poll on people's opinions on this. We are borrowing 20bn a year to keep the show on the road, and 20bn (or more) on top of that to bail out the banks. Unemployment is at 14% and still rising. Taxes (and levies) are growing more and more burdensome. Irish companies are going to the wall every week, and mortgages are becoming harder and harder to service.

And yet there seems to be some sort of international recovery. The big European economies are going reasonably well. Irish companies with business abroad appear to be doing well. 

Like a man who watches the stock market, I can't decide whether Ireland is a buy or sell. The heart says hold, the head says sell. Where is 20bn+ a year going to come from?


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## tiger (1 Sep 2010)

shnaek said:


> Where is 20bn+ a year going to come from?


From you and me, Joe "Shmuck" Taxpayer


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## shnaek (1 Sep 2010)

tiger said:


> From you and me, Joe "Shmuck" Taxpayer



I don't think we, the taxpayers, have that money.


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## BK0001 (1 Sep 2010)

Everybody in this country has an extremely difficult job and deserves every cent they get, so the government will borrow it and our kids can pick up the tab down the line.


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## cork (1 Sep 2010)

Get compansation from the EU for harmonising tax rates.

The media seem to be ok with the country borrowing €20 billion a year.

Every cut the media jump on the bandwagon of opposing cuts.


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## shnaek (1 Sep 2010)

BK0001 said:


> Everybody in this country has an extremely difficult job and deserves every cent they get, so the government will borrow it and our kids can pick up the tab down the line.


The government won't be able to borrow it, just like a person with an income of 30k can't keep spending 60K every year without being called to account.


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## Chocks away (1 Sep 2010)

A look at the international money pages gives the thumbs up to Ireland's management of this economic hole. The WSJ has OK'd it, The Herald Tribune has wafted to and fro. But the overriding comments overseas is that Ireland's media and opposition parties keeps crucifying and regurgitating the bad news like a pernicious mother-in-law. Stephen Stanley says that USA's figures do not herald a double-dip ......... but that doesn't stop the homegrown soothsayers in the opposition from flinging this cliche around (like snuff at a wedding ). Ireland (and the world) will get over this ........ much to the chagrin of the Jeremiahs.


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## Markjbloggs (1 Sep 2010)

Chocks away said:


> A look at the international money pages gives the thumbs up to Ireland's management of this economic hole. The WSJ has OK'd it, The Herald Tribune has wafted to and fro. But the overriding comments overseas is that Ireland's media and opposition parties keeps crucifying and regurgitating the bad news like a pernicious mother-in-law. Stephen Stanley says that USA's figures do not herald a double-dip ......... but that doesn't stop the homegrown soothsayers in the opposition from flinging this cliche around (like snuff at a wedding ). Ireland (and the world) will get over this ........ much to the chagrin of the Jeremiahs.



I take it you are not including yestedays' NY Times article in your "analysis".  The thing is FF fooled us for long enough with their mismanagement, they are merely repeating the trick with the international media.  Bond rates would tend to be more indicative of what people who matter in international circles think of us....


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## RMCF (1 Sep 2010)

Although the situation is dire, there is an element of bad news selling papers and making TV programmes more interesting.

Most countries are going to struggle for many many years to pay off this mess, not just us. The UK is on its knees too, although it could always devalue its currency as a get out. We can't.

I think this country really needs to try to get some people working again, and try to make ourselves more competitive. We are a very expensive place to do business with. Wages were allowed to spiral out of control during the boom.


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## Howitzer (1 Sep 2010)

Deadly, a thread where all the economic truisms and cliches can be regurgitated. 

The UK did devalue last year. They also tried the money helicopter. Now they have to make genuine structural changes. There are no silver bullets. If your economy's broken it eventually has to be fixed. The problem is nobody, anywhere - this isn't an Irish thing - nobody likes taking the hard decisions.  

Personally I'm more optimistic now. Not because we're sorted anything, but because there's a greater acceptance of how deep we are.

None of this is just a figment of some news editor's imagination.


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## Chocks away (2 Sep 2010)

As usual, Ginger McMillions explains all with his rambling historical analogy (Anne Frank, Versailles, drinkey-poos canalside in Old Amsterdam, American civil servants and, er, he forgor Arfur Daley at al). This keeps up his profile and makes HIM money.


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## Purple (2 Sep 2010)

The American example is interesting. When they declared independence in 1776 there was no national constitution and a very weak federal structure. While there was a sort of economic boom in the individual 13 states it was really a bubble brought on by an inflow of emigrants and their money. The elephant in the room was the massive debt that the states had accrued to finance their war of independence (mainly with France). By the mid 1780’s the honeymoon was over and the creditors were knocking on the door. It was clear to the founding fathers that the union would not survive in its current form; Britain and France would eventually seek to influence individual states and inevitably the union would fail. 
In 1786 the Second Constitutional Convention was called and representatives from 11 of the 13 states spent nearly 6 months ensconced in Philadelphia trashing out how a cohesive functioning federal state should work. Twelve of the 13 states adopted the new constitution by 1789, Rhode Island holding out ‘till 1790, and the United States of America as we know it was born.

What’s interesting is that it was, primarily, in response to debt and how it should be handles (should it be shouldered collectively at a federal level of should each state deal with its own) and improving trade between the states (there were massive tariffs for many products between many of the states) that led to the birth of the modern democratic state. It was unprecedented that such matters be solved using politics alone and those involved had no template to work from; they were forging a new path. 

This is a small Island nation with nowhere near the problems financially, politically culturally or militarily that the Americans faced back then. There is no reason why we can’t (but lots of reasons why we won’t) not just overcome our difficulties but create a more mature and balanced country from our current adversities.


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## csirl (2 Sep 2010)

Not as bad as people make out. Ireland still has very low personal taxation with nearly half of all earners paying no net tax. So we have scope to raise a lot of money with some tax system reform and a more even spread of tax collection. We also had a very low debt when this crisis started.

Countries like Germany, which have very high personal & corporate taxation, and a high national debt, have no means of raising extra money - not a good position to be in.


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## Teatime (2 Sep 2010)

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Thomas Jefferson


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## Howitzer (2 Sep 2010)

csirl said:


> Not as bad as people make out. Ireland still has very low personal taxation with nearly half of all earners paying no net tax. So we have scope to raise a lot of money with some tax system reform and a more even spread of tax collection. We also had a very low debt when this crisis started.
> 
> Countries like Germany, which have very high personal & corporate taxation, and a high national debt, have no means of raising extra money - not a good position to be in.


 
True but the issue here is the speed at which our national debt has increased. Not surprising given the black hole it's going into, but alarming.

The IMF reckons we won't default, but this is somewhat predicated on getting the national debt under control. This is being addressed, IMO, but it's taken that doomsday scenario for decision makers to get the finger out.

Too much spending, not enough taxation isn't the primary cause of this, the banking crisis - and our Govts handling of it - is. We won't tax or cut our way out of this, not in the short term anyway.


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## Purple (2 Sep 2010)

Teatime said:


> "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
> 
> Thomas Jefferson



This was one of the major stumbling blocks to the creation of a strong federal government in the fledgling United States. The second constitutional congress was made up of  two major philosophical blocks; those who wanted a loose confederation of agrarian based states, sort of a utopian puritan land owning model, and those who wanted to embrace a more capitalist system that acknowledges the power of the money men in places like Boston and Philadelphia and wanted a stronger central government. The former was generally favoured by the southern states and the latter by the northern states. In the end those at the convention with international experience and a more worldly view won the day. They realised that a relatively strong central government with taxation powers was necessary to defend the cohesiveness of the Union. 
In the lines quoted above Jefferson was arguing in favour of the establishment of a central bank (or more specifically the establishment of governmental mechanisms to control the state’s finances). Interestingly Jefferson was US ambassador (or Minister) to France while the second constitutional convention was taking place though he did strongly influence James Madison (known as the father of the US constitution) by sending him many letters and hundreds of books during the nearly six month convention he did not actually attend. Jefferson was heavily influenced by the French Philosopher Rousseau who first articulated the notion that governments derive their power from the people, not a divinely anointed monarch. Rousseau was very suspicious of banks and money men (he dies penniless and was an abject failure in every other aspect of his life).


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## lightswitch (2 Sep 2010)

"Rousseau was very suspicious of banks and money men (he dies penniless and was an abject failure in every other aspect of his life)."

Big judgement there Purple, can you provide some links please as I have never heard Roysseau discribed in such terms before.  God knows what one has to do to be successful in your realm.  Accumulating great amounts of money one has no practical use for does not constitute success for everyone you know.


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## Purple (2 Sep 2010)

lightswitch said:


> "Rousseau was very suspicious of banks and money men (he dies penniless and was an abject failure in every other aspect of his life)."
> 
> Big judgement there Purple, can you provide some links please as I have never heard Rousseau described in such terms before.  God knows what one has to do to be successful in your realm.  Accumulating great amounts of money one has no practical use for does not constitute success for everyone you know.



That's a bit harsh; money is just a tool, a means to an end. Anyone who judges success in the basis of monitory value is a pretty shallow person.

Rousseau, despite his fame, was frustrated artistically and struggled to maintain the lifestyle he desired for most of his life. His books were banned, his house was stoned and he was banned from living in France (he was born in Geneva but lived almost all his life in France). In his later years he was famous but his mental health deteriorated and he dies a reclusive paranoid.

For me he is possible the greatest philosopher since the Greek Classical era.


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## Chris (2 Sep 2010)

Howitzer said:


> The UK did devalue last year. They also tried the money helicopter. Now they have to make genuine structural changes. There are no silver bullets. If your economy's broken it eventually has to be fixed. The problem is nobody, anywhere - this isn't an Irish thing - nobody likes taking the hard decisions.
> 
> Personally I'm more optimistic now. Not because we're sorted anything, but because there's a greater acceptance of how deep we are.


I wouldn't go as far as acceptance, but there is certainly less denial. And you are right, the reason the hard and right decisions are not being made is because they are politically unpopular and involve a lot of sacrifice.



csirl said:


> Countries like Germany, which have very high personal & corporate taxation, and a high national debt, have no means of raising extra money - not a good position to be in.


But Germany is not trying to increase its taxation it is doing the opposite, and at the same time reducing the size of government. The reason Germany is and will continue to do well is because they are focusing on production while at the same time spending less, at private and public level.
While Ireland has the right idea that spending has to be reduced it is making the fatal mistake of increasing taxation and levels of debt. Taxation is a burden to productivity, which is the only thing that will bring this country out of this mess.



Purple said:


> This was one of the major stumbling blocks to the creation of a strong federal government in the fledgling United States. The second constitutional congress was made up of  two major philosophical blocks; those who wanted a loose confederation of agrarian based states, sort of a utopian puritan land owning model, and those who wanted to embrace a more capitalist system that acknowledges the power of the money men in places like Boston and Philadelphia and wanted a stronger central government. The former was generally favoured by the southern states and the latter by the northern states. In the end those at the convention with international experience and a more worldly view won the day. They realised that a relatively strong central government with taxation powers was necessary to defend the cohesiveness of the Union.
> In the lines quoted above Jefferson was arguing in favour of the establishment of a central bank (or more specifically the establishment of governmental mechanisms to control the state’s finances). Interestingly Jefferson was US ambassador (or Minister) to France while the second constitutional convention was taking place though he did strongly influence James Madison (known as the father of the US constitution) by sending him many letters and hundreds of books during the nearly six month convention he did not actually attend. Jefferson was heavily influenced by the French Philosopher Rousseau who first articulated the notion that governments derive their power from the people, not a divinely anointed monarch. Rousseau was very suspicious of banks and money men (he dies penniless and was an abject failure in every other aspect of his life).


You have some great knowledge of early US history, it's a fascinating topic. What I like most about the process that lead to the constitution is that it was written with the intent to limit the power of government while specifying what it should do.
But in regards to Jefferson being in favour of central banking I believe you are very mistaken. Jefferson was very opposed to a central control of the coinage, and believed it to not be constitutional. The US constitution specifically states that only gold and silver should be money, and in such a case there is no need to have it centrally controlled. Here is a more accurate version of the quote:
"The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
I've only read parts of Nock's book "Jefferson"(http://mises.org/books/jefferson.pdf), but it focuses a lot on the fact that Jefferson was very opposed to centralized government and control.



Purple said:


> That's a bit harsh; money is just a tool, a means to an end. Anyone who judges success in the basis of monitory value is a pretty shallow person.


This is a very good point that is generally misunderstood or misrepresented. Money is not wealth, it is only a means of making transactions easier. Wealth is what we are able to buy with money. If our money buys a lot of products and services, i.e. the currency is strong, then we have more wealth. Higher prices are loss of wealth, lower prices are increased wealth.


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## Purple (3 Sep 2010)

Chris said:


> You have some great knowledge of early US history, it's a fascinating topic. What I like most about the process that lead to the constitution is that it was written with the intent to limit the power of government while specifying what it should do.
> But in regards to Jefferson being in favour of central banking I believe you are very mistaken. Jefferson was very opposed to a central control of the coinage, and believed it to not be constitutional. The US constitution specifically states that only gold and silver should be money, and in such a case there is no need to have it centrally controlled. Here is a more accurate version of the quote:
> "The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
> I've only read parts of Nock's book "Jefferson"(http://mises.org/books/jefferson.pdf), but it focuses a lot on the fact that Jefferson was very opposed to centralized government and control.



I’m no expert on Jefferson, of indeed on anything much, but I do find that period from 1780 to 1800 very interesting (France, UK, USA and Russia).
From my limited knowledge of Jefferson he was strongly opposed to, and very suspicious of, the Philadelphia and Boston capitalists. The idea that Capitalists could be pro-democracy was an alien concept in the 1780’s (or the 1760’s) but Jefferson, from what I understand, while being a strong advocate of states’ rights did realise that without a strong central government the union would not hold. Jefferson’s heart was in the camp that supported a loose confederation of states which were based on an agrarian smallholding model but his head knew it wouldn’t work. In the end pragmatism won the day and the dislike of central banks was trumped by the dislike of private capitalists that could hold undue influence over the economic affairs of the state. The Federal Reserve is not called the Federal Central Bank for a reason. 




Chris said:


> This is a very good point that is generally misunderstood or misrepresented. Money is not wealth, it is only a means of making transactions easier. Wealth is what we are able to buy with money. If our money buys a lot of products and services, i.e. the currency is strong, then we have more wealth. Higher prices are loss of wealth, lower prices are increased wealth.


My point was that success should not be measured by the accumulation of material goods but by the development of the person, their relationships with others and their level of personal achievement.


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## lightswitch (3 Sep 2010)

My apologies Purple, I clearly mis-understood your first post as reading your response to mine would indicate. LS.


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## Pique318 (3 Sep 2010)

A bit OT, but can someone explain to me why Anglo could not be allowed to fold originally without any intervention by the govt?

If a business over-extends itself and runs up huge debts, it goes under. Why not a bank (or at least a bank like Anglo where very little of the deposits are held by the general public, I assume) ?

OK, so lots of private investors will lose their money. Is the fear that the govt could then let AIB, BOI et al do the same and so all investors will run and take their money out and leave the entire banking system insolvent?

Sorry for the OT query, but it's all related, isn't it ?


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## Markjbloggs (3 Sep 2010)

Pique318 said:


> A bit OT, but can someone explain to me why Anglo could not be allowed to fold originally without any intervention by the govt?
> 
> If a business over-extends itself and runs up huge debts, it goes under. Why not a bank (or at least a bank like Anglo where very little of the deposits are held by the general public, I assume) ?
> 
> ...



Because there are a lot of bodies buried in Anglo, and our political elite do not want us to know what they have been up to....


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## shnaek (3 Sep 2010)

Markjbloggs said:


> Because there are a lot of bodies buried in Anglo, and our political elite do not want us to know what they have been up to....



I was reading a bit about it at the weekend. Apparently the bondholders have about 15bn in Anglo, but have the same level of protection as depositors, so both would have to take a fall. This could make the Irish public nervous about having money in any of the Irish banks. Also, who are the bondholders? AIB and BOI perhaps? It is a real can of worms.


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## Chris (3 Sep 2010)

Purple said:


> I’m no expert on Jefferson, of indeed on anything much, but I do find that period from 1780 to 1800 very interesting (France, UK, USA and Russia).
> From my limited knowledge of Jefferson he was strongly opposed to, and very suspicious of, the Philadelphia and Boston capitalists. The idea that Capitalists could be pro-democracy was an alien concept in the 1780’s (or the 1760’s) but Jefferson, from what I understand, while being a strong advocate of states’ rights did realise that without a strong central government the union would not hold. Jefferson’s heart was in the camp that supported a loose confederation of states which were based on an agrarian smallholding model but his head knew it wouldn’t work. In the end pragmatism won the day and the dislike of central banks was trumped by the dislike of private capitalists that could hold undue influence over the economic affairs of the state. The Federal Reserve is not called the Federal Central Bank for a reason.


It is indeed a fascinating time, and a time when politicians did what they were meant to do, that is legislate and not interfere in the affairs of the public. You are right about Jefferson being suspect of the big capitalists, but more from the point of view that he feared crony capitalism and Hamilton's mercantilist ideas. He was in favour of free markets, opposed to The First Bank of the US, had read Adam Smith, Turgot and Ricardo, knew JB Say, and was outspoken against Hamilton's ideas of protecting corporations and banks.
While Hamilton got his way on many of these items, Jefferson decided that the constitution should specifically restrict the level of interference and power, through insisting on stating what it was and was not allowed to do.



Pique318 said:


> A bit OT, but can someone explain to me why Anglo could not be allowed to fold originally without any intervention by the govt?
> 
> If a business over-extends itself and runs up huge debts, it goes under. Why not a bank (or at least a bank like Anglo where very little of the deposits are held by the general public, I assume) ?


Exactly, this is the main controlling and regulating function of the profit and loss system. Profits encourage risk taking, losses encourage prudence. Take a way the fear of losses and the system falls apart, just like it does in such regularity. This indicates a failure of government intervention, not of free markets, which simply do not exist.



Pique318 said:


> OK, so lots of private investors will lose their money. Is the fear that the govt could then let AIB, BOI et al do the same and so all investors will run and take their money out and leave the entire banking system insolvent?


This is exactly what our politicians would like us believe, that there would be a total and sudden collapse of banking and even society. Bankrupt businesses do not simply shut the doors, they are liquidated and sold off in pieces. Look at Quinn, it was declared insolvent, but for the customers it is pretty much business as usual.


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## shnaek (3 Sep 2010)

Chris said:


> Exactly, this is the main controlling and regulating function of the profit and loss system. Profits encourage risk taking, losses encourage prudence. Take a way the fear of losses and the system falls apart, just like it does in such regularity. This indicates a failure of government intervention, not of free markets, which simply do not exist.


This is a point that is often missed. People say capitalism brought us down and that we need more regulation - but we had plenty regulation, they were just utterly incompetent or corrupt. So what we are looking at is an increase in power and function for those that were incompetent or corrupt? Hardly the solution we need. 
It also amazes me that people want bigger government when our government has been shown to be so useless. Why would anyone want more of it?
So the origional idea, as you pointed out, was the best. A government which legislates and interferes as little as it can in the day to day affairs of the people.


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## Complainer (3 Sep 2010)

shnaek said:


> Why would anyone want more of it?


Because there is absolutely no hope in hell of the private sector providing equal access to essential services for everybody.


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## Purple (3 Sep 2010)

shnaek said:


> This is a point that is often missed. People say capitalism brought us down and that we need more regulation - but we had plenty regulation, they were just utterly incompetent or corrupt. So what we are looking at is an increase in power and function for those that were incompetent or corrupt? Hardly the solution we need.
> It also amazes me that people want bigger government when our government has been shown to be so useless. Why would anyone want more of it?
> So the origional idea, as you pointed out, was the best. A government which legislates and interferes as little as it can in the day to day affairs of the people.


Yes, but we don't separate the legislature and the executive and that’s the biggest failing of our governmental model. Our electoral system only exacerbates the problem but it doesn’t cause it. It’s amazing that the Founding Fathers of the United States, with no template or examples to work from, instinctively understood this 230 years ago and we still don’t. 
I’m a liberal so I am in favour of individual rights and minimal governmental interference. The problem here has been crony capitalism coupled with a ham-fisted attempt at social(ist) engineering aimed at an ill thought out “Social Justice” agenda.  You put it very well yourself in this  thread when you said “Equality is a term bandied about a lot, but the reality is that you either have equality or liberty - you cannot have both. And if that is the choice to be made, then the choice must always be liberty”.


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## Purple (3 Sep 2010)

Complainer said:


> Because there is absolutely no hope in hell of the private sector providing equal access to essential services for everybody.



Why would that require bigger government?


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## shnaek (3 Sep 2010)

Purple said:


> I’m a liberal so I am in favour of individual rights and minimal governmental interference. The problem here has been crony capitalism coupled with a ham-fisted attempt at social(ist) engineering aimed at an ill thought out “Social Justice” agenda.


I hold much the same views, and it annoys me that socialists have stolen the 'Liberal' tag and applied it to their own ideas of equality and social engineering. The real liberals need to reclaim this tag and put it back in it's place - that of liberty.


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## shnaek (3 Sep 2010)

Complainer said:


> Because there is absolutely no hope in hell of the private sector providing equal access to essential services for everybody.



And you think our government have been such a success in this regard that we should give them even more power?


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## Complainer (3 Sep 2010)

shnaek said:


> And you think our government have been such a success in this regard that we should give them even more power?


Nope - I don't.

Feel free to attack for my views, but please don't try to put words into my mouth.


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## shnaek (3 Sep 2010)

Complainer said:


> Nope - I don't.
> 
> Feel free to attack for my views, but please don't try to put words into my mouth.



I was attempting to ascertain the foundations upon which your view was based.


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## Chris (3 Sep 2010)

shnaek said:


> I hold much the same views, and it annoys me that socialists have stolen the 'Liberal' tag and applied it to their own ideas of equality and social engineering. The real liberals need to reclaim this tag and put it back in it's place - that of liberty.


You beat me to it. It annoys the hell out of me that when I tell people I'm a liberal, I have to annotate that I am a classical liberal. I am not sure whether the Orwellian Newspeak, i.e. liberalism, as in neo-liberalism = socialism, will be reversed any time soon, and personally I rather spend my time on arguing for the fundamental ideas. It's nice to see like minded people around that are putting in the effort to highlight that government is the source of not the solution to our problems.



Complainer said:


> Because there is absolutely no hope in hell of the private sector providing equal access to essential services for everybody.


But the problem with this is that governments have increased their size in order to take on the delivery or control of ever more "essential" services, resulting in all the services being at best mediocre.
Here are some of our "essential" services to name just a few:
1) Agriculture, fisheris and food
2) Heritage and Local Government 
3) Tourism, Culture and Sport 
4) Enterprise, Trade and Innovation 
And all of these are filled with committees, agencies, offices, etc. And while all these extra services are being provided, the most essential ones (health, education, justice/policing) are in such a dire state that you would think the boom of the last 15 years never happened. 
The main role of government should be restricted to protecting the citizens from foreign or domestic violence, and enforcing property rights. I'll even accept if they take on education, a Swiss style health system and some infrastructure. But until they manage to provide this at an adequate level, they should not be taking on extra responsibilities that they pay for through taxation in order to provide a crap service, and get their hands out of the free market.


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## UFC (3 Sep 2010)

Chocks away said:


> A look at the international money pages gives the thumbs up to Ireland's management of this economic hole. The WSJ has OK'd it, The Herald Tribune has wafted to and fro. But the overriding comments overseas is that Ireland's media and opposition parties keeps crucifying and regurgitating the bad news like a pernicious mother-in-law. Stephen Stanley says that USA's figures do not herald a double-dip ......... but that doesn't stop the homegrown soothsayers in the opposition from flinging this cliche around (like snuff at a wedding ). Ireland (and the world) will get over this ........ much to the chagrin of the Jeremiahs.


 
Do you know why they think we're doing well? Because the Government has chosen to protect foreign investors. Their analysis has nothing to do with what's best for Irish citizens.


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## Complainer (3 Sep 2010)

Chris said:


> But the problem with this is that governments have increased their size in order to take on the delivery or control of ever more "essential" services, resulting in all the services being at best mediocre.
> Here are some of our "essential" services to name just a few:
> 1) Agriculture, fisheris and food
> 2) Heritage and Local Government
> ...



Your faith in the free market is quite touching. I have absolutely zero faith that the free market will take any role in keeping BSE out of the Irish cattle herd, or protecting our national heritage, or keeping 'bungalow blitz' planning out of our rural areas. I'm no expert, but I'd imagine there is a pretty good return on the Govt services to tourism and sport. We've seen the US take on 'small Govt'. Small Govt is great for those who have the funds/resources/networks to ensure they stay on top of the pile and exploit the rest. For those not on top of the pile, it doesn't tend to work so well.

Some public services are indeed crap, and fundamental changes and improvements are needed. But that is no arguement for a fundamental shift towards Small Govt. You don't fix an ingrown toenail by amputating above the knee. You fix the toenail.


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## Chris (4 Sep 2010)

Complainer said:


> Your faith in the free market is quite touching. I have absolutely zero faith that the free market will take any role in keeping BSE out of the Irish cattle herd, or protecting our national heritage, or keeping 'bungalow blitz' planning out of our rural areas. I'm no expert, but I'd imagine there is a pretty good return on the Govt services to tourism and sport. We've seen the US take on 'small Govt'. Small Govt is great for those who have the funds/resources/networks to ensure they stay on top of the pile and exploit the rest. For those not on top of the pile, it doesn't tend to work so well.
> 
> Some public services are indeed crap, and fundamental changes and improvements are needed. But that is no arguement for a fundamental shift towards Small Govt. You don't fix an ingrown toenail by amputating above the knee. You fix the toenail.



By what reasoning would the free market not keep BSE out of the system? If a farmer's herd is infected, it will have to be killed off meaning a major loss and possible bankruptcy. Therefore there is every incentive to ensure that the herd does not get infected. The free market punishes bad behaviour. The role of government would be to protect citizens from physical harm, and if BSE in cattle is scientifically proven to harm human's then any action taken to bring infected beef to human's would be akin to poisoning, which is a criminal offence. This is actually a role that government should have.

The problem with claims of "good return" on government spending is that you cannot possibly calculate what the actual return is. Take tourism, while I don't have their budget figure at hand, they do spend millions sending people abroad to "promote" Ireland and in other campains. How many people actually come here because of this advertising is not knowable. The tourism industry would be better served with less taxation and leaving it up to individual businesses, or groups of businesses, to promote their services directly. Governments are the biggest wasters of money, I don't think anyone can argue with that. If the tourism industry used their own funds, you could be damn sure they would make the best use of it.

Why do you assume that society wouldn't protect "national heritage". If society or part of society believe it worth protecting then they will do so, making better use of available funds.

The US is hardly an example of small government, it is one of the largest and most bureaucratic systems in the world, with an impossible maze of government agencies. If you want an example of small government working well, then take a look at Switzerland.

But how do you fix a service that when it misallocates money and provides a crap service, is rewarded with more money. It just doesn't work! Private companies often introduce new products and services, but if they cannot get them right they abandon them. Government does the exact opposite, it throws more money at it, and in many cases creates another bad service to counteract a bad service. To extend your analogy, if the ingrowing toenail has caused infection and gangrene, then there is only one option.


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## Markjbloggs (7 Sep 2010)

You know that bit in "Titanic" where the ship hit the iceberg and broke in half, but then stayed afloat for a while.  Well I think we are at that point - and based on credit stress indications this morning, this may well be the time to jump overboard before the rest of it sinks.  

Have a look at the Irish 10 year

http://www.bloomberg.com/apps/quote?ticker=GIGB10YR:IND

Bad and getting worse by the minute .......


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## VOR (7 Sep 2010)

> Union leaders are aiming to put two million protestors onto the  streets and disrupt rail and air traffic, as well as schools and  hospitals with stoppages that began yesterday evening. Opinion polls show two-thirds of voters think Mr Sarkozy's plan to  raise the retirement age from 60 to 62 and make people work longer for a  pension is unfair. However, two thirds also think the strikes will make  no difference.
> The conservative government says the reform is essential to balance  pension accounts by 2018, reduce the public deficit and preserve  France's AAA credit rating.
> The strikes are expected to force the cancellation of half of rail  and underground services and short-haul Air France flights, and 25% of  Paris flights by other carriers.


I accept this is not entirely on topic but it is interesting to see the differing approach of the Irish public versus those of Greece and more recently France.
I am not arguing the rights or wrongs of such actions but surely, by our actions, we have accepted that austerity measures must be taken? Otherwise, would there not have been hundreds of thousands on the streets when the retirement age notched up to 68? It was accepted here with not more than a shrug, as if it were a fait accompli.

So I guess I am saying that we must have some hope as a nation if the public begrudgingly accepts that actions must be taken.


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## PaddyW (7 Sep 2010)

That's the thing with the Irish public. Sit back and accept it, "sure there's nothing we can do anyway". It's always been that way, as long as I can remember.


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## shnaek (20 Sep 2010)

So I was reading there at the weekend that Sweden's economy is booming (4.6%) and they have broadly avoided the recession hitting most of the rest of Europe. The credit for this is being given to the finance minister who cut taxes and cut spending. Basically - he followed the advice that works. He incentivised work. Why is it so hard to do what works?


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## Latrade (20 Sep 2010)

shnaek said:


> So I was reading there at the weekend that Sweden's economy is booming (4.6%) and they have broadly avoided the recession hitting most of the rest of Europe. The credit for this is being given to the finance minister who cut taxes and cut spending. Basically - he followed the advice that works. He incentivised work. Why is it so hard to do what works?


 
That's not the whole story with Sweden, I'm sceptical when journals or the press only highlight a couple of aspects of economic success. Sweden has only just privatised a couple of major state monopolies. To use a few examples: Pharmaceutical, banking, alcohol, real estate. All up until last 18 months state owned. That's enabled lower taxes due to the billions it has taken in, plus the expected "cost control" measures that will follow privatisation haven't taken place just yet. And for all their great social welfare system, they use a very restrictive measure to qualify as unemployed, their actual unemployment rate is closer to 10% than the 2% they often quote.

It's also an example of very big government, so is that a model to follow?

Just to stick up for the modern use of Liberal, I too would be more of the classical liberal, but it should be noted that it became attached to what we now call "liberals" after FDR publicised social liberalism following the depression. It then became a form of abuse by the right at anyone who had any belief in social liberalism, especially with the advent of the cold war. So basically, it only became attached to the modern liberalism by some of the very people who today lament it's modern use.

Moving away from that, the issue of big government is a concern. However, many of the examples provided like tourism, enterprise, fisheries, etc are, to me, important. The problem stems not from the idea of supporting and promoting those aspects, the problem is the implementation. That's where I don't have any confidence in any government to tackle or improve.


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## TarfHead (20 Sep 2010)

latrade said:


> i'm sceptical when journals or the press only highlight a couple of aspects of economic success.


 
+1

Also, according to today's Irish Times, the parliamentary balance of power may lie with an anti-immigration party. Do we want to import that idea from Sweden too ?


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## onq (20 Sep 2010)

Chris said:


> By what reasoning would the free market not keep BSE out of the system? If a farmer's herd is infected, it will have to be killed off meaning a major loss and possible bankruptcy. Therefore there is every incentive to ensure that the herd does not get infected.



Allow me to jump in here in relation to the free market.

My recollection is that the Irish herd got infected by Mad Cow disease because rogue prions from sheeps brains infected wth Scrapey were not purged from animal feed imported from England. 
Why anyone ever thought that feeding animal carcassed to herbivores was a good idea in the first place was a good idea has never been properly explained to me - is it some "Green" thing?
The prions remained in the feed because of a british government relaxation of regulations that allowed the meal to be processed at 70 degrees C instead of a higher, purging temperature.

This cheap feed was offered to the Irish "free market" and the market reacted on a price basis without discretion being employed.
This resulted in the disastrous PR for the National Herd and Irish farming.
Some free market principels being applied without judgement.

You see the same thing in the building industry at the moment where contractors are apparently cutting their own throats to get jobs, pressuring for up front payments, then going bust.
Blindly following "deals" in the free market is not good business sense.
If it looks too good ot be true, it usually is.

Some architecrural practices are keeping going against all the odds in the middle of a recession because they don't depend on their professional work for some of their yearly income.
The operation of the unregulated free market means you're going to end up looking at; -


products not fit for purpose
below cost selling leading to bankruptcy and
subsidised prices in some sectors of the services market.
all in the private sector.

Its not enough relying on the law to offer "remedies" to fatal deseases.
This isn't something relatively minor that could "upset" you, like a worm in a bottle.
BSE and the human equivalent is a sentence far worse than death and no perps have paid a penalty.
It was eminently forseeable that improperly processing animal feed for cows could lead to problems, who paid the price?
You need regulation and monitoring and testing especially in anything relating to the human food chain and you need severe enforced penalties.

Believing in the free market is like taking things on trust - it creates a fertile breeding ground for criminal activity.
Any market needs regulation and oversight to protect consumers.

-------------------------

To return to the topic for a moment [Shock! Horror!] I believe Ireland and the world will benefit from a tax on the over the counter/derivatives market - let it be the price for it remaining unregulated.
Otherwise it should be regualated AND taxed - even just taxing it will take a lot of the speculation out of the market and dampen the wilder market oscillations.
The money can go from the very rich [the speculators] to pay for the government debts bailing out the banks and take it off the shoulders of Joe Taxpayer.

These unregulated gits have had it too good for far too long - just look at the figures we're talking about here.

$14,000,000,000,000,000 market value per annum and rising.

I have to check that again to make sure the "0"'s are right.

Not Fourteen Million Dollars = $14,000,000

Not Fourteen Billion Dollars = $14,000,000,000 (American Billions, heh)

Not Fourteen Trillion Dollars = $14,000,000,000,000.

Fourteen Quadrillion Dollars = $14,000,000,000,000,000

Fifteen zeros "0"'s after the figure amount.

Totally unmonitored

Unregulated.

Untaxed.

That's some free market y'got there, boi!

ONQ.


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## Chris (20 Sep 2010)

onq said:


> My recollection is that the Irish herd got infected by Mad Cow disease because rogue prions from sheeps brains infected wth Scrapey were not purged from animal feed imported from England.
> Why anyone ever thought that feeding animal carcassed to herbivores was a good idea in the first place was a good idea has never been properly explained to me - is it some "Green" thing?
> The prions remained in the feed because of a british government relaxation of regulations that allowed the meal to be processed at 70 degrees C instead of a higher, purging temperature.
> 
> ...


Your recollection of events could well be right and I have no reason to question them. But the fact that the producers of the feed and the owners of the herds that were infected, because of choosing the feed, did not go out of business is because they were subsequently supported by government payments. In a free market environment the owner of an infected herd, which had to be put down as it would otherwise have poisened the consumer, would have lost the herd and taken a financial hit. And those that didn't use such feed would have had a financial benefit due to higher demand for their products.
This would have been more than enough incentive for feed buyers to be a lot more careful when making choices based solely on price.
And the reason that nobody has been punished for poisoning the food chain is a failure of government!



onq said:


> You see the same thing in the building industry at the moment where contractors are apparently cutting their own throats to get jobs, pressuring for up front payments, then going bust.
> Blindly following "deals" in the free market is not good business sense.
> If it looks too good ot be true, it usually is.


And such behaviour is akin to fraud which is a crime. And I agree that people have to be careful when making business deals. But if both sides enter the deal by free choice, without coercion and absent of any fraud then there is nothing wrong with the deal. Paying upfront always has a risk, but it is up to individuals to assess that risk and maybe choose to pay more for a deal that sees payment after the job is done.



onq said:


> Some architecrural practices are keeping going against all the odds in the middle of a recession because they don't depend on their professional work for some of their yearly income.


I'm not sure what you mean by this, could provide more details?



onq said:


> The operation of the unregulated free market means you're going to end up looking at; -
> 
> 
> products not fit for purpose
> ...


1) I'm sorry, but this is a whole load of nonsense that cannot possibly be backed up by actual observations. If a product is unfit for purpose then people won't buy it. Yes, sometimes bad products come on the market, but they quickly disappear. This is one of the biggest strengths of free market competition, where the best product for the cheapest price attracts the most buyers, as per their own, personal, subjective opinion without any interference by governments. 
I would go as far as saying that for the vast majority of products and services there are no fitter products available than those provided by private enterprises, and that government services are the ones that are not fit for purpose.
2) Of course below cost selling will lead to bankruptcy after a certain period of time, but how is a cheaper price to the consumer a bad thing? And why should a business owner stay in business for making bad or even stupid decisions.
3) Government subsidies are a form of government intervention and *not* a phenomenon of the free market. And I am firmly opposed to all forms of subsidies.



onq said:


> Its not enough relying on the law to offer "remedies" to fatal deseases.
> This isn't something relatively minor that could "upset" you, like a worm in a bottle.
> BSE and the human equivalent is a sentence far worse than death and no perps have paid a penalty.
> It was eminently forseeable that improperly processing animal feed for cows could lead to problems, who paid the price?
> You need regulation and monitoring and testing especially in anything relating to the human food chain and you need severe enforced penalties.


Could you provide something to back up the comment that "It was eminently forseeable that improperly processing animal feed for cows could lead to problems".
The main study on the transfer of BSE to humans in the form of CJD, that was used in the UK to cause the mass scare has since been discredited. I am no expert in the field but even assuming that there is a connection, then there is no necessity to spend millions in tax payer money to create agencies, offices, expert groups, you name it, to enforce existing laws that protect people from harm.



onq said:


> Believing in the free market is like taking things on trust - it creates a fertile breeding ground for criminal activity.
> Any market needs regulation and oversight to protect consumers.


Criminal activity is not the result of a free market but a failure of government. If governments spent half the time and resources to enforce basic laws as they spend on the various regulatory bodies, society would be one hell of a better place.



onq said:


> To return to the topic for a moment [Shock! Horror!] I believe Ireland and the world will benefit from a tax on the over the counter/derivatives market - let it be the price for it remaining unregulated.
> Otherwise it should be regualated AND taxed - even just taxing it will take a lot of the speculation out of the market and dampen the wilder market oscillations.
> The money can go from the very rich [the speculators] to pay for the government debts bailing out the banks and take it off the shoulders of Joe Taxpayer.


First of all speculation is the one thing that keeps markets more stable than they otherwise would be. Speculators make money out of buying something they believe is cheap and selling it when they believe it is expensive, and vice versa. This levels off the movements of the markets and does *not* exacerbate them. It also provides extremely important feedback. Imagine if there had been no speculators in Greek bonds earlier this year. News would have come out that Greece had been fiddeling the books and the next bond auction would have completely failed with a very sudden jerk in the yield resulting in a very sudden disaster.
Secondly, all that will happen is that the taxes introduced would increase prices for consumers. The main employers of speculators are banks. If the banks profits drop they will increase their charges or the risks they take. Neither of which would be benefitial to the public.



onq said:


> These unregulated gits have had it too good for far too long - just look at the figures we're talking about here.
> 
> $14,000,000,000,000,000 market value per annum and rising.
> 
> ...



Yes indeed the potential liabilities in the derivatives markets are huge beyond anything imaginable. But the figure of 14 quadrillion dollars is not the value of transactions, as derivatives are leveraged products, with huge levels of leverage, often in excess of 100 to 1. By far the largest market is the foreign exchange market, where an estimated $4 trillion are exchanged each day. Of this only about 10% are forward contracts used by speculators, where a lot of brokers allow clients a leverage of 500 to 1. So the taxable amount is miniscule compared to the headline figure.
And guess what will happen if or when the derivatives market collapses? The governments will jump and *not* allow the free market to function. This is all failure of government intervention and interference.


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## Firefly (20 Sep 2010)

Chris said:


> Your recollection of events could well be right and I have no reason to question them. But the fact that the producers of the feed and the owners of the herds that were infected, because of choosing the feed, did not go out of business is because they were subsequently supported by government payments. In a free market environment the owner of an infected herd, which had to be put down as it would otherwise have poisened the consumer, would have lost the herd and taken a financial hit. And those that didn't use such feed would have had a financial benefit due to higher demand for their products.
> This would have been more than enough incentive for feed buyers to be a lot more careful when making choices based solely on price.
> And the reason that nobody has been punished for poisoning the food chain is a failure of government!


 
I think gov intervention is needed here for the following reasons:

1. BSE by it nature is spreadable. Farmer A who only buys "good feed" is adversely affected by farmer B who buys the "cheap" feed 

2. Farmers are not scientists. They are busy enough without having to be experts in the feed they purchase. This should be regulated in the same way food producers have to specify the details of food we buy.

3. BSE affected the trade for the entire Irish beef industry. Allowing 1 farmer or food producer to cut costs thereby affecting everyone else, IMO should not be allowed


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## Chris (20 Sep 2010)

Firefly said:


> I think gov intervention is needed here for the following reasons:
> 
> 1. BSE by it nature is spreadable. Farmer A who only buys "good feed" is adversely affected by farmer B who buys the "cheap" feed


No BSE does not jump from one cow to another or one herd to another.



Firefly said:


> 2. Farmers are not scientists. They are busy enough without having to be experts in the feed they purchase. This should be regulated in the same way food producers have to specify the details of food we buy.


Of course farmers aren't scientists, but it is farmers business to know more about quality and adequacy of feed. There is a farmers association where farmers as a collective can share the cost of scientific research. This is not something that government should should be doing, as governments are inherently wasteful and incompetent in pretty much all areas they claim a need to intervene in.



Firefly said:


> 3. BSE affected the trade for the entire Irish beef industry. Allowing 1 farmer or food producer to cut costs thereby affecting everyone else, IMO should not be allowed


Yes it did, but more due to the over reaction that resulted. As already mentioned, BSE does not jump from herd to herd, so there is no reason for one farmer's mistakes to have a negative effect on others. The fact that farmers were reimbursed for the culling did not incentivise safer practices.


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## Firefly (20 Sep 2010)

Chris said:


> As already mentioned, BSE does not jump from herd to herd, so there is no reason for one farmer's mistakes to have a negative effect on others.


 
Didn't some countries bouycot the purchase of Irish beef?


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## Chris (20 Sep 2010)

Firefly said:


> Didn't some countries bouycot the purchase of Irish beef?



Yes indeed, and that was due to a total over reaction by European and individual governments, by creating one of the biggest and most costly scares of recent times.


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## Firefly (21 Sep 2010)

In the end it may have been over-reaction. However, at the time, would you have been happy for British beef to be on the shelves here?


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## Chris (21 Sep 2010)

Firefly said:


> In the end it may have been over-reaction. However, at the time, would you have been happy for British beef to be on the shelves here?



Yes indeed. What should have been done, instead of wasting money through mass banning and culling and scaring the hell out of people, was fund independent scientific research. As it also turns out, the one scientific study used by the British and European government to justify the BSE to vCJD scare has since been discredited. It was known at the time that BSE does not transfer directly between animals, so a blanket ban on all beef was completely unnecessary. A ban on beef derived from potentially infected animals is a different thing.
As I said before, businesses that knowingly allowed BSE infected animals to enter the food chain should suffer the full consequences of the legal system, which did not happen.


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## z107 (21 Sep 2010)

> These unregulated gits have had it too good for far too long - just look at the figures we're talking about here.
> 
> $14,000,000,000,000,000 market value per annum and rising.


Is that the new TD wage agreement?


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## Firefly (21 Sep 2010)

Chris said:


> Yes indeed. What should have been done, instead of wasting money through mass banning and culling and scaring the hell out of people, was fund independent scientific research. As it also turns out, the one scientific study used by the British and European government to justify the BSE to vCJD scare has since been discredited.


 
I take it you mean that the government should have funded this research rather than the farmer - what about perfect capitalism? Would Egypt have not banned Irish beef if they just thought that research was on its way? (As you mentioned yourself some of the research used by governments was discredited anyway).


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## Chris (21 Sep 2010)

Firefly said:


> I take it you mean that the government should have funded this research rather than the farmer - what about perfect capitalism? Would Egypt have not banned Irish beef if they just thought that research was on its way? (As you mentioned yourself some of the research used by governments was discredited anyway).



The way I see it farmers should have funded research in feed, which could have led to a reduced occurrence of BSE to start with.
As for government's role this is the way I see it. When BSE appeared in large quantities many independent studies were performed as to the causes. What happened subsequently is that both the media and the government jumped on one scientists opinion and first declared that it was likely, then probable and then definite that there was a link between BSE and vCJD. This was the fateful mistake. The scare originated in Britain, not abroad. The situation was not that there was one scientist claiming the link, with every other scientist staying silent. There were plenty of scientists that doubted both the approach and conclusions of the research. 
But just for arguments sake, let's say there had been some sort of consensus. Then yes, I believe it is the government's responsibility to protect the public and spend money on research.
Free market capitalism is not anarchism. Government has a very important role to play in society by protecting people and their property from harm. But this should not be done through creating a scare in the public to justify intervention.


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## Firefly (22 Sep 2010)

Chris said:


> Government has a very important role to play in society by protecting people and their property from harm.


 
Perhaps the government were protecting people. Given that there was conflicting views on it, surely it was better to be prudent when it comes to people's health?


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## Chris (22 Sep 2010)

Firefly said:


> Perhaps the government were protecting people. Given that there was conflicting views on it, surely it was better to be prudent when it comes to people's health?



I agree on the part that you have to be prudent when it comes to people's health. But at the time there was nothing remotely near a consensus. Government used the opinion of one scientist to unfold the scare that followed.


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## Firefly (22 Sep 2010)

Whatever about the motives for people's health, Egypt banned Irish beef until we got rid of our BSE cattle. In a purely capitalist model, a farmer with infected cattle could do whatever he liked. He could be just about to retire anyway and decide, rather than gothrough the pain or expense, to hell with it I'll just let the cattle die "naturally", thus affecting the trade for the industry as a whole.
We've probably moved off topic and happy to end it here.


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