# Why are we bailing out snr bondholders again?



## Jim Davis (1 Oct 2010)

All joking aside, what exactly is the ethos for us bailing out these senior bondholders? Wasn´t the original reason we were given because we couldnt let our banks fail because of our international reputation and our ability to raise finance on the markets?

What would be the potential consequences at this point in time not to bail the banks out any further?

Also, can someone tell me why does the government think that this is the best option? I mean at this stage surely the game is up, cant we just say no and do a deal with the bondholders or am I being to simplistic?


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## Brendan Burgess (1 Oct 2010)

Hi Jim

Read the FAQ on Bonds and it might help you understand it. 

http://www.askaboutmoney.com/showthread.php?t=121157

Brendan


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## z107 (1 Oct 2010)

Very informative link.

I still don't understand why we're bailing out the bondholders either.
It seems there is a risk to being a bondholder (hence the return).

Did Lehmans not have bond holders?


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## Padraigb (1 Oct 2010)

umop3p!sdn said:


> ... I still don't understand why we're bailing out the bondholders either.
> It seems there is a risk to being a bondholder (hence the return).



It is the senior bondholders whose claim is being respected. They have the same standing as you or I might have if we held our savings in the same institutions. Subordinated bondholders get a higher return, and they have been burned.

There seems to be no legal way to protect my savings and not the deposits of the senior bondholders.


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## z107 (1 Oct 2010)

Why are we protecting senior bondholders then?

(I don't expect my savings to be safe.)


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## jpd (1 Oct 2010)

umop3p!sdn said:


> Why are we protecting senior bondholders then?
> 
> (I don't expect my savings to be safe.)



I do! at least up to € 100,000


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## Padraigb (1 Oct 2010)

We are protecting senior bondholders because people in general expect their savings to be safe, and because the consequences of allowing all bank customers to be wiped out are horrendous. If you think that things are bad as they are, it is nothing to what they would be like if we let the banks collapse.


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## z107 (1 Oct 2010)

Things aren't too bad at the moment for a large amount of people.
It'll be interesting to see what you think after the next budget, or indeed in 2014. That's when things will be bad. Once all the the money has been drained out of the economy and given to these senior bondholders.

Let the banks fail. It's happened before.
How are Iceland and Argentina doing these days?

As for the €100,000 guarantee - well good luck to you. I don't trust it because I can't see how the government can possibly honour it.


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## sunrock (1 Oct 2010)

The government could very easily let the senior bond holders be wiped out...after all Anglo was a bankrupt private bank. It could always have given compensation to the depositors up to a certain limit.
To say that it is protecting the senior bond holders because it wants to protect the depositors is in my view not true.
First it was protecting the senior bond holders because of systemic risk... that the rest of the banking system would collapse. Well the rest of the banks have collapsed.
The real reason I suspect and I will be blunt about this ...is that the government prefer to keep onside with the moneymen in the city of london and the elite in this country who have a vested interest in these bonds being paid back.
The trouble is the people of Ireland will be subjected to savage cuts and no jobs and forced emigration for our young people for a generation because of Lenihans decision.


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## z107 (1 Oct 2010)

> The real reason I suspect and I will be blunt about this ...is that the government prefer to keep onside with the moneymen in the city of london and the elite in this country who have a vested interest in these bonds being paid back.
> The trouble is the people of Ireland will be subjected to savage cuts and no jobs and forced emigration for our young people for a generation because of Lenihans decision.



This makes the most sense.


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## Sunny (1 Oct 2010)

sunrock said:


> The real reason I suspect and I will be blunt about this ...is that the government prefer to keep onside with the moneymen in the city of london and the elite in this country who have a vested interest in these bonds being paid back.
> .


 
Imagine that. Who do you think lends the Government the €20 billion that it is short of to run this Country this year?


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## z107 (1 Oct 2010)

> Imagine that. Who do you think lends the Government the €20 billion that it is short of to run this Country this year?


This doesn't mean that we'll never get lent money again.
If senior bond holders think they will make money, then they'll lend money.

Who lends to other countries that have defaulted in the past?


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## sunrock (1 Oct 2010)

Sunny said:


> Imagine that. Who do you think lends the Government the €20 billion that it is short of to run this Country this year?


 
Comparing a private bank with sovereign debt is not correct

Anglo was a private bank that went bankrupt. The government could easily have left it go to the wall with no repercussions to the government finances, just as the government let thousands of private companies go bankrupt all over the country.

The money that the government owes,that is soverign debt and which is paid back to fund our e20 billion deficit we incur every year , is totally different from a private bank debt.
To link the two is totally disingenius.


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## Sunny (1 Oct 2010)

sunrock said:


> Comparing a private bank with sovereign debt is not correct
> 
> Anglo was a private bank that went bankrupt. The government could easily have left it go to the wall with no repercussions to the government finances, just as the government let thousands of private companies go bankrupt all over the country.
> 
> ...


 
Not comparing the two. I am simply pointing out the fact that you want to force losses on the very people who lend the Government money and you think there won't be consequences for Government funding?

There is a reason no European Country has defaulted on senior bank debt and now people have decided that Ireland should be the lab rat to see what the consequences are. To be honest, I am tired of having this debate with people. I have no problem with bondholders taking losses but I do have a problem with people believing that forcing them to take some of the pain is a painless excerise and that the only reason it hasn't been done is because of come conspiracy between the Government, international financial markets and the elite in this Country.


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## Duke of Marmalade (1 Oct 2010)

_sunrock_ you were suggesting that the government's actions were motivated by a base desire to keep international moneylenders onside. _Sunny_ pointed out the rather obvious that there is nothing base about this at all, it is a matter of the country's survival. You have now changed tack by saying that welching on Anglo would not after all have angered these evil foreign usurers.


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## NOAH (1 Oct 2010)

The bit about senior bondholders is a red herring they are only in hoc for about 4 billion.

No one and  I mean no one is saying where is all the money that was lent by anglo.

We are working in a far murkier environment that one is led to believe and we may never get a true answer.

The ECB are waiting in the wings and ......

To be honest when we look at our wage/salary structure in the various services I am not surpirsed we have ended up where we are. Lets be real we are paying people fortunes for what??

noah


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## z107 (1 Oct 2010)

> To be honest when we look at our wage/salary structure in the various services I am not surpirsed we have ended up where we are. Lets be real we are paying people fortunes for what??


Well I know the answer to this one.
We are paying a fortune for votes. This is how FF have stayed in power.


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## sunrock (1 Oct 2010)

The U.S. government left Lehman Bros go to the wall and billions of dollars are still invested in U.S. treasuries and bonds.
Investors would still invest in irish government bonds if Anglo was left go. Investors would know their money was safe with the government and the interest on the bonds would be much lower.
Lenihan is playing nice guy to the anglo creditors to the tune of 45 billion.......that is e 10,000 for every man woman and child in the country just to cover anglo alone.
If it turns out that if the depositors in Anglo are protected, then the senior  bond holders must be protected too, then I say let them all take the hit.
We will have to endure a generation of hardship for the vast majority of irish citizens and I just think that is too high a price to pay for something that the Irish government does not legally have to pay for.


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## jpd (1 Oct 2010)

If I had my savings in Anglo, I wouldn't be very happy if the Gov't reneged on its promise.


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## bluemac (1 Oct 2010)

How i see it the senior bondholders lent/invested the money with Anglo to make money only a guess but lets say 3% return, they are now loaning the money to the Irish government to pay themselves (the bondholders) back. but now they are getting 6.5% and all the security on there own money, nice deal, few rumors in there own money markets and the % keeps on increasing. On the good side they will keep lending or they lose there own money next time so carnt see us needing the IMF.


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## Sunny (2 Oct 2010)

bluemac said:


> How i see it the senior bondholders lent/invested the money with Anglo to make money only a guess but lets say 3% return, they are now loaning the money to the Irish government to pay themselves (the bondholders) back. but now they are getting 6.5% and all the security on there own money, nice deal, few rumors in there own money markets and the % keeps on increasing. On the good side they will keep lending or they lose there own money next time so carnt see us needing the IMF.



Yeah, show me the senior bondholders who made a 3% return on anglo before the crisis. Get real.


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## Sunny (2 Oct 2010)

sunrock said:


> The U.S. government left Lehman Bros go to the wall and billions of dollars are still invested in U.S. treasuries and bonds.
> Investors would still invest in irish government bonds if Anglo was left go. Investors would know their money was safe with the government and the interest on the bonds would be much lower.
> Lenihan is playing nice guy to the anglo creditors to the tune of 45 billion.......that is e 10,000 for every man woman and child in the country just to cover anglo alone.
> If it turns out that if the depositors in Anglo are protected, then the senior  bond holders must be protected too, then I say let them all take the hit.
> We will have to endure a generation of hardship for the vast majority of irish citizens and I just think that is too high a price to pay for something that the Irish government does not legally have to pay for.



Yes because you can compare Ireland and the US when it comes to risk. The default of Lehman almost brought down the global financial system never mind the American banking system.


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## serotoninsid (2 Oct 2010)

Sunny said:


> Yes because you can compare Ireland and the US when it comes to risk. The default of Lehman almost brought down the global financial system never mind the American banking system.


So are you saying that McWilliams argument is unworkable? Do you think he truly believes otherwise or is he just playing up to popular sentiment?

I don't suppose if these people were to be negotiated with, they would be encouraged to buy government bonds on the basis of the government agreeing to pay X cents in the € for their investment in Anglo? ie. they only get this if they DO takeup government bonds in 2011....or is it naive to think that this could work?

I have to say that as someone with no knowledge of such things, I find it very frustrating that these guys have so much clout that they simply can't lose!!


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## Sunny (2 Oct 2010)

serotoninsid said:


> So are you saying that McWilliams argument is unworkable? Do you think he truly believes otherwise or is he just playing up to popular sentiment?
> 
> I don't suppose if these people were to be negotiated with, they would be encouraged to buy government bonds on the basis of the government agreeing to pay X cents in the € for their investment in Anglo? ie. they only get this if they DO takeup government bonds in 2011....or is it naive to think that this could work?
> 
> I have to say that as someone with no knowledge of such things, I find it very frustrating that these guys have so much clout that they simply can't lose!!



Not saying it is unworkable. Just think it is nieve to believe that there won't be consequences for the other Irish banks and the Irish state. McWilliams is a good economist but unfortunately he has decided that a celebrity profile is more important to him than serious economic analysis. The only reason bondholders have so much clout is because this country is dependent on their money to run both the banking system and the public services. I would love it if we were in a position to stuff bondholders and save the taxpayer a couple of billion but we are not in a position to do that.


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## sunrock (2 Oct 2010)

The main argument for bailing out the banks seems to be that if the government don`t, then the money markets will not continue to finance our 20 billion euros a year current account deficit.I wouldn`t leave any sleep over this myself. This 20 billion is used to pay inflated salaries in our economy and results in us being a high cost place to do buisness. This deficit needs to be drastically reduced anyway, otherwise with interest payments etc we will be paying back as much as we are borrowing.
The problem is that the government only wants to take the path of least resistance.
Cutting that deficit means reducing wages and perks and pensions to what we can afford.That means we only spend what we take in in tax which will reduce our costs and make us more competitive. 
This idea of taking on the debt of the private bankrupt  banks  and all the problems associated with them is simply crazy stuff. All the huge expense is then thrown on the shoulders of the irish people and the thousands of  high paid jobs of the bureacracy and spin doctors to oversee this fiasco is only adding insult to injury.


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## serotoninsid (2 Oct 2010)

If we did burn them and we still needed finance, should the ECB not have some obligations in this regard?  After all, as well as our own institutions failing,they also failed to regulate the Irish Central Bank (one of its obligations).


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## Complainer (2 Oct 2010)

sunrock said:


> Cutting that deficit means reducing wages and perks and pensions to what we can afford.


Or else it means changing out tax model to bring in the income that we need to provide decent public services.


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## Chris (2 Oct 2010)

umop3p!sdn said:


> This doesn't mean that we'll never get lent money again.
> If senior bond holders think they will make money, then they'll lend money.
> 
> Who lends to other countries that have defaulted in the past?


Two of the biggest sovereign defaults in recent history were Russia and Argentina. At the time it was said by "economists" that they would never recover from such actions. But quite the opposite happened.
Also, the whole point of defaulting is to reduce your debts to a level that is manageable. The last thing a country should be looking for then is to take on more debt, but to do the exact opposite and balance budgets and pay off debts. The question of who will lend to a country that has defaulted is then irrelevant.




sunrock said:


> The U.S. government left Lehman Bros go to the wall and billions of dollars are still invested in U.S. treasuries and bonds.
> Investors would still invest in irish government bonds if Anglo was left go. Investors would know their money was safe with the government and the interest on the bonds would be much lower.
> Lenihan is playing nice guy to the anglo creditors to the tune of 45 billion.......that is e 10,000 for every man woman and child in the country just to cover anglo alone.
> If it turns out that if the depositors in Anglo are protected, then the senior  bond holders must be protected too, then I say let them all take the hit.
> We will have to endure a generation of hardship for the vast majority of irish citizens and I just think that is too high a price to pay for something that the Irish government does not legally have to pay for.


I agree with you. Bank failures would not mean no more banking and would have a very positive effect in Irish bond yields. At the same time though. I think that Ireland could completely ignore the bond yield if it balanced the budget and stopped borrowing money in the first place. 
Look at the amount of people that are in trouble with mortgages with sub-prime lenders. They would be better off if they hadn't borrowed, and they would also be able to completely ignore the fact that they can only get high interest loans.




sunrock said:


> The main argument for bailing out the banks seems to be that if the government don`t, then the money markets will not continue to finance our 20 billion euros a year current account deficit.I wouldn`t leave any sleep over this myself. This 20 billion is used to pay inflated salaries in our economy and results in us being a high cost place to do buisness. This deficit needs to be drastically reduced anyway, otherwise with interest payments etc we will be paying back as much as we are borrowing.
> The problem is that the government only wants to take the path of least resistance.
> Cutting that deficit means reducing wages and perks and pensions to what we can afford.That means we only spend what we take in in tax which will reduce our costs and make us more competitive.
> This idea of taking on the debt of the private bankrupt  banks  and all the problems associated with them is simply crazy stuff. All the huge expense is then thrown on the shoulders of the irish people and the thousands of  high paid jobs of the bureacracy and spin doctors to oversee this fiasco is only adding insult to injury.



You say it. I would actually welcome if the bond market yield went through the roof, as it would force the state to do the right thing. Wages of senior civil servants are outrageous, but this is not where you are going to get enough savings. I also believe that cutting wages for certain public employees (guards, nurses, teachers, i.e. front line staff) will have disastrous effects on the quality of service. What is needed is a reduction in the number of public sector employees, not reducing the wages they earn. There are so many nonsense government departments, that are not adding and never have added any benefit to the country. Start by getting rid of them altogether. Then introduce a constitutional change that forces government to balance the budget and restricts them from bailing out *any* industry or company.


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## Chris (2 Oct 2010)

Complainer said:


> Or else it means changing out tax model to bring in the income that we need to provide decent public services.



Increasing taxation always results in a negative effect on the private economy especially if it is levied on wealthy and/or large companies. The private economy is the only thing that can create a recovery. If you reduce the incentive of the productive economy you will reduce productivity.
And throwing more money at bad services, most of which are not needed or would be much better and cheaper to the public if they were private enterprises, is a vicious circle. All this does is incentivise providing poor services running over budget. There never is an end to the amount of money government services will waste.


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## Complainer (2 Oct 2010)

Chris said:


> Increasing taxation always results in a negative effect on the private economy especially if it is levied on wealthy and/or large companies. The private economy is the only thing that can create a recovery. If you reduce the incentive of the productive economy you will reduce productivity.


Negative effect for who, Chris? Possibly for those who can best afford the negative effect? As opposed to our current negative effects on those who can least afford it?

Come on, now - even your beloved Switzerland survives quite nicely with a modest wealth tax. We need to start bringing in more taxation to fund decent public services.


Chris said:


> And throwing more money at bad services, most of which are not needed or would be much better and cheaper to the public if they were private enterprises, is a vicious circle. All this does is incentivise providing poor services running over budget. There never is an end to the amount of money government services will waste.


Maybe you could be more specific about which services are 'not needed'? I often find those who criticise public services the loudest are those who don't need public services, because they available of their private medical services (subsidised by the Govt) and private education (subsidised by the Govt) etc etc.

There is indeed waste within the Govt, like there is waste is almost all large organisations. And this waste does need to be addressed urgently. We are a long way off. There are many, many unmet needs in public services today. Here's one quick example - mental health services. If you need counselling, it is rarely available on the public health system. We need more public and better public services.


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## Firefly (4 Oct 2010)

Padraigb said:


> There seems to be no legal way to protect my savings and not the deposits of the senior bondholders.


 
Doesn't this mean that we have really bailed out the depositors then?


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## Complainer (4 Oct 2010)

Firefly said:


> Doesn't this mean that we have really bailed out the depositors then?


Just for the record, depositors were already covered up to €100k per person before the guarantee.


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## shnaek (4 Oct 2010)

Complainer said:


> Or else it means changing out tax model to bring in the income that we need to provide decent public services.



It has already been proven that throwing money at Irish 'services' does not result in better service, let alone 'decent' service. The health 'service' is a prime example. It's rubbish.


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## Complainer (4 Oct 2010)

shnaek said:


> It has already been proven that throwing money at Irish 'services' does not result in better service, let alone 'decent' service. The health 'service' is a prime example. It's rubbish.


I agree that throwing money at anything isn't a great approach. That doesn't mean that we walk away from the importance of providing good public services.


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## Chris (4 Oct 2010)

Complainer said:


> Negative effect for who, Chris? Possibly for those who can best afford the negative effect? As opposed to our current negative effects on those who can least afford it?


Negative effect on the economy as a whole and therefore on every member of society. When you increase taxation on large, wealthy companies or individuals four things happen:
1) They have less profits to reinvest to expand business operations
2) They have less incentive to increase their operations or investments
3) New competition is reluctant to enter due to less profit opportunity
3) And worst of all some will move somewhere else altogether

All these are detrimental consequences on the economy, whether you are a pensioner, a child, wealthy or poor. Actually, probably more so on the less well off as job opportunities deminish and they are less able to move.



Complainer said:


> Come on, now - even your beloved Switzerland survives quite nicely with a modest wealth tax. We need to start bringing in more taxation to fund decent public services.


Yes it does, but it is at most 1%, and dependent on where you live the maximum income tax you pay can be as low as 22% on income over CHF750k; and VAT is less than 8%. You can even negotiate a fixed amount of tax with the government. I read a few years ago that Michael Schumacher pays a fixed CHF750k in tax per annum to live in Switzerland. The reason Switzerland is doing so nicely is precisely because the overall tax burden is so low and individual contons are looking to reduce it even more. 
Take a look around the world and history and you'll see that the higher the tax burden a country has, the lower the overall wealth of the country is. And I hope no one tries to bring up the argument that Ireland is a low tax economy. Ireland has one of the highest VAT rates, road tax rates, excise duties on alcohol and cigarettes, and the list goes on. The one thing that is low here is corporation taxes, and it is because of this that Ireland was an attractive place for foreign investment 10 years ago.
We need to reduce taxation and more importantly reduce government services and expenditure.



Complainer said:


> Maybe you could be more specific about which services are 'not needed'? I often find those who criticise public services the loudest are those who don't need public services, because they available of their private medical services (subsidised by the Govt) and private education (subsidised by the Govt) etc etc.


I don't want to move to far away off topic, but here are some to start with that I have mentioned on other threads:
1) Communications, Energy
2) Community, Equaity and Gaeltacht Affairs
3) Enterprise, Trade and Innovation
4) Heritage and Local Government
5) Tourism, Culture and Sport
These are services that are not essential (to say the least) and given the state of public finances cannot be afforded. 

While I do have private health insurance it is because of gevernment failure. I will probably not be able to send my kids to private school, as I am not willing to make the sacrifices to increase my earnings to the necessary level.



Complainer said:


> There is indeed waste within the Govt, like there is waste is almost all large organisations. And this waste does need to be addressed urgently. We are a long way off. There are many, many unmet needs in public services today. Here's one quick example - mental health services. If you need counselling, it is rarely available on the public health system. We need more public and better public services.


The wastage in government far far exceeds that in large and small private organisations. It is not even on a comparable level! If a private organisation wastes too much it risks going out of business. When government departments waste too much the budget is increased and more money is taxed or borrowed to pay for it. The reason private enterprises provide vastly better services than public ones, is because a private company only makes profits if it attracts customers who are free to make a choice. The profit is a reward for providing the best product at the best price, i.e. the result of best serving the public. When it comes to government services you do not have a choice. And because wastage is not punished, but rewarded, more government services will only increase overall wastage.
You somewhat critisize or ridicule my repeatedly mentioning Switzerland (Quote "even your beloved Switzerland"). But can you explain to me why the Swiss health system, which is based solely on *private* insurance, does not only provide more services (including mental health), but is cheaper than the Irish system? 
What we need is less government monopolies and less taxation, and let freely competing companies try and attract customers through the best products they can provide.


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## Sunny (4 Oct 2010)

Chris said:


> You somewhat critisize or ridicule my repeatedly mentioning Switzerland (Quote "even your beloved Switzerland"). But can you explain to me why the Swiss health system, which is based solely on *private* insurance, does not only provide more services (including mental health), but is cheaper than the Irish system?
> What we need is less government monopolies and less taxation, and let freely competing companies try and attract customers through the best products they can provide.


 
There is a lot in the Swiss model to be admired but the average health insurance pemium for a Swiss adult is over €3000 a year. Not saying the idea of compulsory insurance isn't a bad idea but there are difficulties in implementing it.


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## Chris (4 Oct 2010)

Sunny said:


> There is a lot in the Swiss model to be admired but the average health insurance pemium for a Swiss adult is over €3000 a year. Not saying the idea of compulsory insurance isn't a bad idea but there are difficulties in implementing it.



Yes it is about €3000 per year. But the cost of the HSE is about €3500 per annum, per man woman and child. Add to that what is spent on private health insurance and you you get a better picture.


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## Sunny (4 Oct 2010)

Chris said:


> Yes it is about €3000 per year. But the cost of the HSE is about €3500 per annum, per man woman and child. Add to that what is spent on private health insurance and you you get a better picture.


 
The Swiss Government also subsidise health insurance costs so that the cost of premium doesn't go over 8% of income which is a good idea but not sure how it would work here. To be honest, it is very difficult to compare the two. Would need detailed economic analysis to get a better picture. I like the idea in theory though and to be fair to Labour and FG, it is a road they want to go down. I don't think mixing public and private works.


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## Towger (4 Oct 2010)

Sunny said:


> There is a lot in the Swiss model to be admired but the average health insurance pemium for a Swiss adult is over €3000 a year.


 
But in Ireland the average person on 35k pays 2,500 per year on PRSI and another 1000 on private insurance.


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## Sunny (4 Oct 2010)

Towger said:


> But in Ireland the average person on 35k pays 2,500 per year on PRSI and another 1000 on private insurance.


 
PRSI goes towards your State Pension as well as well as other social welfare entitlements, not just health. Also, you don't have to take out health insurance. You will still be treated by the public service.  In Switzerland, you do have take out insurance.


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## Firefly (4 Oct 2010)

Complainer said:


> Just for the record, depositors were already covered up to €100k per person before the guarantee.


 
Exactly. If the guarantee wasn't in place, the government could default on both the bond holders and depositors. Now, as it can't renage on deposits it cannot default on the bonds.


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## Chris (4 Oct 2010)

Sunny said:


> The Swiss Government also subsidise health insurance costs so that the cost of premium doesn't go over 8% of income which is a good idea but not sure how it would work here. To be honest, it is very difficult to compare the two. Would need detailed economic analysis to get a better picture. I like the idea in theory though and to be fair to Labour and FG, it is a road they want to go down. I don't think mixing public and private works.


It's the social security insurance that makes up the difference or pays the premium for unemployed. You are right in that you cannot compare the two systems, but you can see that the Swiss system is both cheaper and better.
For it to work here the government first has to balance the budget. Then it would take out the €14b euro of HSE budget and reuce the tax burden by that amount on the taxpayer. The taxpayer would then be in a position to buy private health insurance from competing companies. I'm not saying it would be something that can be done quickly or easily, but the Irish system is totally useless as it is.



Towger said:


> But in Ireland the average person on 35k pays 2,500 per year on PRSI and another 1000 on private insurance.


That is on your income only. The HSE's budget is not solely derived from income tax and PRSI. Your 21% VAT, and excise duties on fuel, alcohol, cigarettes, stamp duty, etc. also go towards it. Let's say the average person spends €25000 of the income, then in VAT alone about €5000 in tax is collected. Ultimately the average person in this countries pays €3500 per annum in one way or another for the grossly crap HSE, while the Swiss pay €3000. 



Sunny said:


> PRSI goes towards your State Pension as well as well as other social welfare entitlements, not just health. Also, you don't have to take out health insurance. You will still be treated by the public service.  In Switzerland, you do have take out insurance.


Actually your PRSI goes towards the pension of current pensioners. It is not an insurance, and actually an insult for government to call it such. Your state pension will be paid for (or not) by those still working when you retire. As Purple highlited in another post, it's a ponzi scheme run by government: http://www.askaboutmoney.com/showthread.php?t=144414


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## Towger (4 Oct 2010)

Sunny said:


> PRSI goes towards your State Pension as well as well as other social welfare entitlements, not just health.


 
By the time I get to retire (don't forget 68 is the current future retiring age) so will the bulk of the grossly expanded number of public sector employees from the tiger years. There will be no pension reserve left and not enough workers in the country to fund the PS pensions, let alone provide a contributory Social Insurance pension at 33% of the average industrial wage to Private Sector employees, as promised by our current leaders.


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## Complainer (4 Oct 2010)

Chris said:


> Negative effect on the economy as a whole and therefore on every member of society. When you increase taxation on large, wealthy companies or individuals four things happen:
> 1) They have less profits to reinvest to expand business operations
> 2) They have less incentive to increase their operations or investments
> 3) New competition is reluctant to enter due to less profit opportunity
> ...


You seem to equate 'economy' with 'society'. What is good for the economy (going by your measures) is often not good for society. There is clear evidence that income inequality is not good for society, across a whole range of measures (See Equality Trust UK's website for evidence). There are people who are part of society, but who did not benefit from our booming Celtic Tiger economy, such as the people who live in Dolphin House and who's drinking water has the same eColi levels as raw sewage.



Chris said:


> I don't want to move to far away off topic, but here are some to start with that I have mentioned on other threads:
> 1) Communications, Energy
> 2) Community, Equaity and Gaeltacht Affairs
> 3) Enterprise, Trade and Innovation
> ...


I see, so no IDA/Enterprise Ireland (despite that fact that every developed economy in the world has resourced dedicated to attracting FDI. No Equality Tribunal to address discrimination by public and private service providers at a low cost. No Library service. No local authority sports/leisure centres which are offering amazing services to those who can't afford gym memberships. No Cliffs of Moher visitor centre or Boyne Valley interpretive centre, all of which serve to bring tourist spend into the country etc etc etc. 

The Irish people have firmly rejected the PD approach. More Irish people want to live in a country that provides decent public services to all, than want to live in a desolate, divided wasteland of the haves and the have-nots.


Chris said:


> The wastage in government far far exceeds that in large and small private organisations. It is not even on a comparable level! If a private organisation wastes too much it risks going out of business. When government departments waste too much the budget is increased and more money is taxed or borrowed to pay for it. The reason private enterprises provide vastly better services than public ones, is because a private company only makes profits if it attracts customers who are free to make a choice. The profit is a reward for providing the best product at the best price, i.e. the result of best serving the public. When it comes to government services you do not have a choice. And because wastage is not punished, but rewarded, more government services will only increase overall wastage.


So what's your source for the claim that public wastage exceeds private wastage? What's the source for your claim that private companies provide vastly better services than public ones?

This is great theory, but it just doesn't work in the real world. Have a look at the posts here on AAM, and you'll see customers have just as many problems with their hotel, or their accountant, or their car dealer as they do with their local authority or Govt dept.


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## shnaek (4 Oct 2010)

Complainer said:


> There is clear evidence that income inequality is not good for society, across a whole range of measures (See Equality Trust UK's website for evidence).


There is indeed, clear evidence in the likes of North Korea and Cuba, where income inequality is not tolerated. 
There is also clear evidence that countries that levy low tax (Switzerland, Hong Kong, Monaco) are very successful - much more successful than Cuba or North Korea. 
The equality agenda is driven by nothing other than begrudgery. Of course a civilised country needs to provide services which help to ensure equality of opportunity. A civilised society should ensure health, education, water etc standards. But a society that enforces wage equality is one destined to failure. Read all the studies one likes - history shows this to be true.


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## Complainer (4 Oct 2010)

shnaek said:


> There is indeed, clear evidence in the likes of North Korea and Cuba, where income inequality is not tolerated.
> There is also clear evidence that countries that levy low tax (Switzerland, Hong Kong, Monaco) are very successful - much more successful than Cuba or North Korea.
> The equality agenda is driven by nothing other than begrudgery. Of course a civilised country needs to provide services which help to ensure equality of opportunity. A civilised society should ensure health, education, water etc standards. But a society that enforces wage equality is one destined to failure. Read all the studies one likes - history shows this to be true.


You obviously haven't read the evidence, given your one dimensional view. I've certainly never proposed income equality. However, there is no doubt that wide income inequality is bad for everybody. The evidence is there, whether you like it or not.


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## shnaek (4 Oct 2010)

Complainer said:


> You obviously haven't read the evidence, given your one dimensional view. I've certainly never proposed income equality. However, there is no doubt that wide income inequality is bad for everybody. The evidence is there, whether you like it or not.



Where is it? I have pointed out solid evidence to the contrary. The reason that wide income inequality is labled as bad is because of begrudgery. The way to eliminate begrudgery is through education and upbringing. In a free democracy there are going to be those who do really well, and those who do badly. The only way to stop this is through a socialist system where everyone is equally miserable. And I say equally miserable, because there has never been a solicalist system where everyone is equally happy.


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## Complainer (4 Oct 2010)

shnaek said:


> Where is it? I have pointed out solid evidence to the contrary. The reason that wide income inequality is labled as bad is because of begrudgery. The way to eliminate begrudgery is through education and upbringing. In a free democracy there are going to be those who do really well, and those who do badly. The only way to stop this is through a socialist system where everyone is equally miserable. And I say equally miserable, because there has never been a solicalist system where everyone is equally happy.


I told you where it was in my earlier post, i.e. "There is clear evidence that income inequality is not good for society, across a whole range of measures (See Equality Trust UK's website for evidence)". So where is your 'solid evidence to the contrary'?

I don't think that many people in the Nordic countries, or in Japan have a miserable existance. Compared to us, they are on the pigs back.


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## shnaek (4 Oct 2010)

Complainer said:


> See Equality Trust UK's website for evidence.


Sending me to the Equality Trusts website for evidence that their agenda is the correct one is like sending me to a dairy farmer for evidence that drinking milk is good for me.



Complainer said:


> I don't think that many people in the Nordic countries, or in Japan have a miserable existance. Compared to us, they are on the pigs back.



Are you suggesting Nordic countries and Japan have income equality?

In Japan you move to the top rate of 40% income tax at €160k. In Finland it's top rate of 30%  is payable on incomes of €66k and over


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## Complainer (4 Oct 2010)

shnaek said:


> Sending me to the Equality Trusts website for evidence that their agenda is the correct one is like sending me to a dairy farmer for evidence that drinking milk is good for me.



There is none so blind as the one who does not want to see. The evidence (all published, peer-reviewed papers) is all there. Or better still - read the book - The Spirit Level: Why Equality is Better for Everyone 


shnaek said:


> Are you suggesting Nordic countries and Japan have income equality?
> 
> In Japan you move to the top rate of 40% income tax at €160k



I'm not going to take you through the evidence, post by post. Go read the evidence or the book. It's all there.


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## shnaek (4 Oct 2010)

Complainer said:


> There is none so blind as the one who does not want to see. The evidence (all published, peer-reviewed papers) is all there. Or better still - read the book - The Spirit Level: Why Equality is Better for Everyone
> 
> I'm not going to take you through the evidence, post by post. Go read the evidence or the book. It's all there.



The answers are not to be found solely in academia. One must also open ones eyes and take a look around.



Complainer said:


> Or better still - read the book - The Spirit Level: Why Equality is Better for Everyone



I haven't read the book, but I see from reviews on: 
http://en.wikipedia.org/wiki/The_Spirit_Level:_Why_More_Equal_Societies_Almost_Always_Do_Better
that opinion on the book is divided.


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## Complainer (4 Oct 2010)

shnaek said:


> The answers are not to be found solely in academia. One must also open ones eyes and take a look around.


Or to translate - I'm going to ignore the evidence that I don't like, and quote one or two irrelevant examples that disprove another completely different issue.


shnaek said:


> I haven't read the book, but I see from reviews on:
> http://en.wikipedia.org/wiki/The_Spirit_Level:_Why_More_Equal_Societies_Almost_Always_Do_Better
> that opinion on the book is divided.


Indeed, the findings have been so damning that some of the 'usual suspects' have got very animated about trying to nitpick and discredit them. All of the nitpicking has been answered by the authors.


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## orka (4 Oct 2010)

Complainer said:


> ...there is no doubt that wide income inequality is bad for everybody.


It’s a bit of a stretch to say there’s no doubt.  The ‘evidence’ has not been universally accepted as correct by any stretch of the imagination.  A group of academics writing a paper does not make their conclusion ‘beyond doubt’.  

And ‘bad for everybody’?  I've read through the 'evidence' on the Equality Trust website and, to me, it looks like the conclusions (such as can be drawn from a series of regression charts) are that some selected ‘bad things’ are more prevalent than average in some selected countries with income inequality as defined by the authors.  I don’t see on the website where they have taken the step from ‘bad on average’ to ‘bad for everyone’.  

A lot of what they say seems obvious – poor people are more likely to have lower education levels, be teenage mothers, do drugs, go to prison etc. – but where is the impact on ‘everyone’?  For the ‘haves’ in society, what is the impact of an unequal society giving rise to more teenage mothers?  There’s obviously a cost in terms of paying social welfare etc – but does that outweigh the cost of creating a more equal society which would prevent some of the teenage births?  I don’t see that analysis, research or discussion in the trust’s research.  

More glaringly obvious is the ‘social mobility’ category – the ‘shock’ conclusion is that there isn’t much social mobility (rich to poor and vice versa) in unequal societies – what is the benefit to the ‘haves’ of social mobility if it means there’s a greater chance their children will migrate to being poor?  How is this inequality ‘bad for everybody’ when it is so obviously good for those who already ‘have’?  

I’m obviously devils-advocating here and I don’t really like injustice or unfairness in any shape or form but I don’t think this research can be held up as proof beyond doubt that inequality is bad for everyone.




Complainer said:


> the findings have been so damning that some of the 'usual suspects' have got very animated about trying to nitpick and discredit them. All of the nitpicking has been answered by the authors.


It wasn’t all nitpicking by the usual suspects – there were critics from left and right, from academia and from social care practitioners.  Just because the authors replied to the criticism, doesn’t make the last word correct does it?  In fact, from my quick reading this afternoon, it looks like one of their main critics has answered back again – does that make his last word correct?  

What is beyond doubt is that there is ongoing practical and academic debate over this research and many have severe misgivings about the approach and the conclusions so I don’t think you can hang your hat on it and say – read this – it is gospel.


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## Complainer (4 Oct 2010)

orka said:


> And ‘bad for everybody’?  I've read through the 'evidence' on the Equality Trust website and, to me, it looks like the conclusions (such as can be drawn from a series of regression charts) are that some selected ‘bad things’ are more prevalent than average in some selected countries with income inequality as defined by the authors.  I don’t see on the website where they have taken the step from ‘bad on average’ to ‘bad for everyone’.  [/FONT][/COLOR]
> 
> A lot of what they say seems obvious – poor people are more likely to have lower education levels, be teenage mothers, do drugs, go to prison etc. – but where is the impact on ‘everyone’?  For the ‘haves’ in society, what is the impact of an unequal society giving rise to more teenage mothers?  There’s obviously a cost in terms of paying social welfare etc – but does that outweigh the cost of creating a more equal society which would prevent some of the teenage births?  I don’t see that analysis, research or discussion in the trust’s research.



You've missed the whole point of the book. The whole point is that yes - income inequality is bad for everybody. On all the measures they studies, the impacts on things like mental health, obesity, life expectancy were all worse for all groups (regardless of income) in those countries with high income inequality.


orka said:


> More glaringly obvious is the ‘social mobility’ category – the ‘shock’ conclusion is that there isn’t much social mobility (rich to poor and vice versa) in unequal societies – what is the benefit to the ‘haves’ of social mobility if it means there’s a greater chance their children will migrate to being poor?  How is this inequality ‘bad for everybody’ when it is so obviously good for those who already ‘have’?  [/FONT]


Again, you've missed the point. It is not 'good' for those who 'have'. It may be good for their wealth, but it is not good for the mental health, their obesity, their addiction rates etc etc. 

This is indeed the shock conclusion. The lack of social mobility higlights the myth of the 'American dream', that anyone can work their way up the ladder. They can't. I read an interesting quote from the Chicago projects in a book by Jon Jeter this morning, something along the lines 'The Dow Jones Index can go up 500 points or go down 500 points - Niggas still be poor'. (His terminology, not mine).


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## orka (4 Oct 2010)

Complainer said:


> You've missed the whole point of the book.


Not overly surprising as I haven't read the book - just the website. And the website presents a bunch of regression charts showing that, on average, the selected indicators are worse in selected countries with income inequality as defined by the authors - it shows no evidence that this affects 'everyone'. 


Complainer said:


> Again, you've missed the point. It is not 'good' for those who 'have'. It may be good for their wealth, but it is not good for the mental health, their obesity, their addiction rates etc etc.


You have missed MY point - yes, things may be worse ON AVERAGE for mental health, obesity, addiction rates etc. - but how does that extend to EVERYBODY? (e.g. how does it affect a well-off, slim, mentally sound, unaddicted, educated, physically healthy person from a family with similar genes who will most likely end up similarly?)



Complainer said:


> This is indeed the shock conclusion. The lack of social mobility higlights the myth of the 'American dream', that anyone can work their way up the ladder.


Social mobility works both ways - so, again, what is the benefit to the 'haves' of trying to change the social system of their country so that there's a greater chance their children will end up poor - and more prone to obesity, teenage pregnancy, lower education etc?

The more I read about the research, the more flawed and less convincing I find it.


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## Complainer (4 Oct 2010)

orka said:


> Not overly surprising as I haven't read the book - just the website. And the website presents a bunch of regression charts showing that, on average, the selected indicators are worse in selected countries with income inequality as defined by the authors - it shows no evidence that this affects 'everyone'.
> You have missed MY point - yes, things may be worse ON AVERAGE for mental health, obesity, addiction rates etc. - but how does that extend to EVERYBODY? (e.g. how does it affect a well-off, slim, mentally sound, unaddicted, educated, physically healthy person from a family with similar genes who will most likely end up similarly?)
> 
> Social mobility works both ways - so, again, what is the benefit to the 'haves' of trying to change the social system of their country so that there's a greater chance their children will end up poor - and more prone to obesity, teenage pregnancy, lower education etc?
> ...



You really haven't read anything significant about it. Go read the book. Seriously.


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## orka (4 Oct 2010)

Complainer said:


> You really haven't read anything significant about it. Go read the book. Seriously.


I have a long plane journey coming up so I might (along with its apparant companion piece, The Spirit Level Deception) as I do find studies like this interesting but it's not a great recommendation if they can't synthesise the information well for their website.


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## shnaek (5 Oct 2010)

Complainer said:


> Or to translate - I'm going to ignore the evidence that I don't like, and quote one or two irrelevant examples that disprove another completely different issue.



One book is not "Evidence". If it were I would simply write a book about how I was amazing, throw in some graphs and charts and manipulated statistics, and then go around quoting that book as evidence to my amazingness. 

And I'm sure some people of our acquaintance - Fingers and Fitzy - would go and write a book about how innocent and mis-understood they are. And then hold that up as 'Evidence'. It's in the book, m'lud!


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## csirl (5 Oct 2010)

> You've missed the whole point of the book. The whole point is that yes - income inequality is bad for everybody. On all the measures they studies, the impacts on things like mental health, obesity, life expectancy were all worse for all groups (regardless of income) in those countries with high income inequality.


 
So how do you explain the fact that free western style democracies such as USA, Ireland, UK etc. where there is income inequality, consistantly outscore countries such as North Korea, Cuba, Mynamar etc. where there isnt income inequality in all these categories? We even had, what was in effect, a contolled experiment running in Europe on this issue for a number of decades - i.e. the Iron Curtain. Surely this conclusively proved beyond any doubt that income equality is BAD for any country?

Remember, that the most equal society is the one with equal opportunities, not equal income.


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## shnaek (5 Oct 2010)

csirl said:


> Remember, that the most equal society is the one with equal opportunities, not equal income.


And this is also the society with the most Freedom.


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## Chris (5 Oct 2010)

Complainer said:


> You seem to equate 'economy' with 'society'. What is good for the economy (going by your measures) is often not good for society. There is clear evidence that income inequality is not good for society, across a whole range of measures (See Equality Trust UK's website for evidence).


No, I'm not equating the two, but without a functioning economy of private enterprise, society as we know cannot exist. Equality of income has nothing to do with economic activity. If the economy as a whole grows then the wealth of *everyone* increases which has a very positive social effect. How do you think that even someone on a low wage can afford to run a car, or get on planes to go on foreign holidays, or have modern computer and other electronic equipment at home? Did all this happen because somehow over the past 50, or 100, or 200 years income inequality has been decreased? No it hasn't. All these advantages of market economy based capitalism were made available because the economy as a whole grew; as whealthy companies and individuals became wealthier, so did the poor. You would have to rewrite history to claim otherwise.


Complainer said:


> There are people who are part of society, but who did not benefit from our booming Celtic Tiger economy, such as the people who live in Dolphin House and who's drinking water has the same eColi levels as raw sewage.


Looking at the last totally artificial boom to make an argument that the less well off did not gain anything is completely ignoring the bigger picture. The improvements to the lives of the poor in society over the last 200 years, are undeniable. And this was made possible through the end to serfdom and the advent of capitalism. But even in the boom years, uneducated and unskilled people got well paying jobs in construction and factories. You can hardly dispute this. At the peak of the boom foreign nationals took jobs that 100000 unemployed Irish were not willing to take. If these are the ones you feel were left behind then I have zero sympathy for them.
Also, maybe you could remind us whether it is a private enterprise or the government that is in charge of the water supply to Dolphin House?



Complainer said:


> I see, so no IDA/Enterprise Ireland (despite that fact that every developed economy in the world has resourced dedicated to attracting FDI. No Equality Tribunal to address discrimination by public and private service providers at a low cost. No Library service. No local authority sports/leisure centres which are offering amazing services to those who can't afford gym memberships. No Cliffs of Moher visitor centre or Boyne Valley interpretive centre, all of which serve to bring tourist spend into the country etc etc etc.


The IDA did not attract jobs, no matter how much they claim they did. What attracted foreign investment is the low tax rate and comparably low wages 10-15 years ago. Private enterprises do not go to IDA junkets and listen to politicians rant about how great they are and say "Hey, this sounds like a great place". Every company looking to invest will look at tax rates, wages, employment level and education level and make a comparative analysis to other possible locations. They then make a decision based on cost benefit, and I think it is wrong to claim that the IDA makes any significant impact on this, especially considering their budget. Either the cost structure is preferable or it is not; no amount of sales pitching will make a difference.
The equality of humans is written into the constitution. There is no need to create a completely seperate department, with all the ministers costs, and the duplicate senior civil servants and all that goes with it. Any legal issues should be handled by the department of justice. And creating an "equality" department does not mean that it actually does anything to improve equality in any way.
There is no reason for library services to not exist, as this could and even should fall under education, again reducing the duplicate jobs and ministerial positions.
Sports facilities should fall under health and tourist attractions would still be tourist attractions without the department of tourism. Even a visitor center at the Cliffs of Moher would exist if it had been allowed for private enterprises to set up there.
The biggest wastage at government level is in the mid to high level administration, where everything is duplicated ad nauseam. Half the employees of the HSE are non-frontline managerial and admin staff. I believe that it is the same across all government departments. Consolidate departments and admin side of things and you would quite easily reduce numbers by 50%. That's 25% of the public wage bill in savings.


Complainer said:


> The Irish people have firmly rejected the PD approach. More Irish people want to live in a country that provides decent public services to all, than want to live in a desolate, divided wasteland of the haves and the have-nots.


The PDs were no more free market capitalists than the Labour party is. They had their own interventionist agenda that favoured their lobbyists. Conservatism and socialism are two sides of the same coin called interventionism, with the only difference being those that gain. And yes, people want decent public services, starting with health, education and law enforcement. And until these are decent (or even mediocre) the majority of other services should be scrapped or consolidated.


Complainer said:


> So what's your source for the claim that public wastage exceeds private wastage? What's the source for your claim that private companies provide vastly better services than public ones?


Because if a private enterprise wastes too much it is under threat of going out of business. Because private enterprises have to constantly improve their products to remain competitive. Because private enterprises will scrap products that cause losses.
Because government services have no incentive to not waste resources. Because government services are rewarded for providing bad service with increased budgets. Because people do not have a choice when it comes to public services and therefore can only compare to public services in other countries, which is not the case in the private economy.
And as for my proof for private services being better than public, ask anybody in this country if they would rather go to a private hospital or a public one. Maybe some small business owners here can say whether they prefer dealing with the SME Association or the IDA or other government quangos. Or how about sending a parcel with UPS or AnPost, which do people have more faith in when it comes to getting things delivered on time and in the first place. Why do you think people are leaving the ESB and moving to Airtricity; hardly because their service is worse.
As for other services  provided by government, these are mainly government monopolies where people do not have a choice and therefore are prohibited from providing any kind of feedback on the service. 



Complainer said:


> This is great theory, but it just doesn't work in the real world. Have a look at the posts here on AAM, and you'll see customers have just as many problems with their hotel, or their accountant, or their car dealer as they do with their local authority or Govt dept.


It is not just some great theory. The western world came out of serfdom and widespread poverty over 200 years ago. There was little government services or intervention or taxation, and this resulted in the biggest and longest economic boom in human history. That theory is free market capitalsim where only successful enterprises survive and hard work is rewarded.
I also have encountered terrible services and products, and they have resulted in me not using the specific company again. There is a specific Irish airline that I will never fly with again, but millions of people disagree with me and the company is doing very well. 
Private companies can only exist if they succeed in retaining customers, i.e. serving their customers interests in the best way compared to competitors. Unless they do this (or are subsidised by government) they will not make profits. This is the case for any size company, and I'm sure there are a few small and medium size company directors here that can confirm this. 
The main point is, that if you have a problem with a hotel, you can choose to not go there again and use another hotel. When you have a problem with a government service you do not have a choice. Each cent you spend or don't spend with private comapnies is a vote, it is a continuous daily plebicite by the consumer; it does not get more democratic than that! 


Complainer said:


> I don't think that many people in the Nordic countries, or in Japan have a miserable existance. Compared to us, they are on the pigs back.


You are assuming that these countries actually have somewhat more equal income. They are often cited by socialists as proof that the welfare state can work. But what is totally ignored is the fact that their private economies are among the freest in the world and their higher tax bands kick in at a much higher rate. This means that they are more capitalist and have *less* income redistribution than most other countries.



Complainer said:


> There is none so blind as the one who does not want to see. The evidence (all published, peer-reviewed papers) is all there.


And you can confirm that they have been reviewed by peers of opposing views? These are the ones you want to look at, anything else is preaching to the choir.
Goethe: "In the newspapers and enyclopedias, in schools and universities, everywhere error rides high and basks in the consciousness of having the majority on its side."



Complainer said:


> I'm not going to take you through the evidence, post by post. Go read the evidence or the book. It's all there.


You don't need to go through every point, but you rate the website and the book so high that you should ba able to provide some logical explanation as to why income inequality is apparently such a problem.



Complainer said:


> Or to translate - I'm going to ignore the evidence that I don't like, and quote one or two irrelevant examples that disprove another completely different issue.


I think you are exposing what you are doing yourself in this statement. You are not acknowledging the facts that previous posters have provided with very relevant examples of countries that have the highest levels of wealth (economically or socially), while at the same time having the lowest levels of income redistribution. These are countries that do very littleif anything to actively reduce the gap between rich and poor. And by doing so, their economies thrive, which makes the poor wealthier.
It should be even more damning on the majority of the western world, that their actions to redistribute income is having the exact opposite effect as what the inactions of a few countries is having.



Complainer said:


> You really haven't read anything significant about it. Go read the book. Seriously.


I know this wasn't directed at me, but how about this. I'll read this book if you read Socialsim by von Mises.



Complainer said:


> You obviously haven't read the evidence, given your one dimensional view. I've certainly never proposed income equality. However, there is no doubt that wide income inequality is bad for everybody. The evidence is there, whether you like it or not.



No, there is only an interpretation of evidence. But let's say that social consequences of income inequality actually were bad for everyone. I imagine that the solution would be to redistribute income from wealthy to poor members of society through taxation. This would suggest that socialism should have resulted in wonderful places to live in East Germany, Russia, Romania, and today Cuba and North Korea. But this simply is not the case. Quite the opposite happens: when you tax the rich to "improve" the lives of the poor, the lives of everyone trend towards misery. There is no historic proof to the contrary.
Income redistribution is not the solution to improving the wealth of society. Poor African countries would not benefit by redistributing their income; people would still be poor. The western world did not improve economically and socially by redistributing income. It did so through private ownership rights and by becoming ever more productive and making more efficient use of resources. And this process improved the lives of everyone!


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## Chris (5 Oct 2010)

csirl said:


> So how do you explain the fact that free western style democracies such as USA, Ireland, UK etc. where there is income inequality, consistantly outscore countries such as North Korea, Cuba, Mynamar etc. where there isnt income inequality in all these categories? We even had, what was in effect, a contolled experiment running in Europe on this issue for a number of decades - i.e. the Iron Curtain. Surely this conclusively proved beyond any doubt that income equality is BAD for any country?
> 
> Remember, that the most equal society is the one with equal opportunities, not equal income.



Very important point, which I forgot to mention. And more specifically than the iron curtain as a controlled social experiment was the division of Germany. You had people of the same country, language, religion, race, education, etc. seperated by force into two opposing economic regimes, i.e. socialism and free market capitalism. West Germany immediately recovered, while East Germany is still trying to recover 20 years after the end of socialism.

Hayek put it very well when he said that the most equal society would be one where all laws had to be applied equally to everyone. Where not the loudest or wealthiest or most aggressive or violent are the source of economic decisions. That is true liberty and freedom for everyone.


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## Complainer (5 Oct 2010)

orka said:


> I have a long plane journey coming up so I might (along with its apparant companion piece, The Spirit Level Deception) as I do find studies like this interesting but it's not a great recommendation if they can't synthesise the information well for their website.


I have to confess that it wouldn't be my choice for a long plane journey, but everyone to their own. It really seem to be nitpicking to criticise them because you didn't spend enough time on their website. There is a lot of good information there, but you'll have to invest the time there.



csirl said:


> So how do you explain the fact that free western style democracies such as USA, Ireland, UK etc. where there is income inequality, consistantly outscore countries such as North Korea, Cuba, Mynamar etc. where there isnt income inequality in all these categories? We even had, what was in effect, a contolled experiment running in Europe on this issue for a number of decades - i.e. the Iron Curtain. Surely this conclusively proved beyond any doubt that income equality is BAD for any country?


Where did you get your information on income inequality in Cuba, North Korea and Myanmar? 

The Iron Curtain had nothing to do with income equality. It had everything to do with one small group exploiting the majority. It also suppressed just about every basic human freedom, so it is not really a good model for anything.



csirl said:


> Remember, that the most equal society is the one with equal opportunities, not equal income.



Your claim is fiction. See 

Researchers at the London School of Economics have used this method to compare social mobility in eight countries. Using their data, we have shown that, at least among these few countries, the more equal countries have higher social mobility (see graph). It looks as if the American Dream is far more likely to remain a dream for Americans than it is for people living in Scandinavian countries. Greater inequalities of outcome seem to make it easier for rich parents to pass on their advantages. While income differences have widened in Britain and the USA, social mobility has slowed​



Chris said:


> No, I'm not equating the two, but without a functioning economy of private enterprise, society as we know cannot exist. Equality of income has nothing to do with economic activity. If the economy as a whole grows then the wealth of *everyone* increases which has a very positive social effect. How do you think that even someone on a low wage can afford to run a car, or get on planes to go on foreign holidays, or have modern computer and other electronic equipment at home? Did all this happen because somehow over the past 50, or 100, or 200 years income inequality has been decreased? No it hasn't. All these advantages of market economy based capitalism were made available because the economy as a whole grew; as whealthy companies and individuals became wealthier, so did the poor. You would have to rewrite history to claim otherwise.
> 
> Looking at the last totally artificial boom to make an argument that the less well off did not gain anything is completely ignoring the bigger picture. The improvements to the lives of the poor in society over the last 200 years, are undeniable. And this was made possible through the end to serfdom and the advent of capitalism. But even in the boom years, uneducated and unskilled people got well paying jobs in construction and factories. You can hardly dispute this.


How do you conclude that growing economies help everyone? There is no basis for this. The old 'rising tide lifting all boats' story is great for those who have boats. If you don't have a boat, you drown.

You seem to be very quick to attribute a whole range of social developments to capitalism. Is it possible that your view is just a tad one-sided and has no basis in fact? Could possibly some of these benefits be attributable to the benefits of socialism, such as the health improvements in the UK arising from the NHS, and the economic developments in Ireland arising from the public education system? Could possibly some of these benefits be attributable to gains in terms and conditions hard won by trade unions for their members? Could possibly some of these improvements be attributable to improvements in science and technology, just some of which might have come from public universities? You don't have to rewrite history to show where benefits have come from. 




Chris said:


> Also, maybe you could remind us whether it is a private enterprise or the government that is in charge of the water supply to Dolphin House?


And I guess management companies that run private developments never give rise to complaints - No? I guess that forum here on AAM covering these complaints are just people making things up?



Chris said:


> The IDA did not attract jobs, no matter how much they claim they did. What attracted foreign investment is the low tax rate and comparably low wages 10-15 years ago. Private enterprises do not go to IDA junkets and listen to politicians rant about how great they are and say "Hey, this sounds like a great place". Every company looking to invest will look at tax rates, wages, employment level and education level and make a comparative analysis to other possible locations. They then make a decision based on cost benefit, and I think it is wrong to claim that the IDA makes any significant impact on this, especially considering their budget. Either the cost structure is preferable or it is not; no amount of sales pitching will make a difference.


So is it only in the public sector that 'sales pitching' doesn't work? It's strange how it is fairly well established in the private sector that 'sales pitching' works, and it is worthwhile investing in good salespeople and sales processes. But you are absolutely certain that there is no value in Ireland having similar resources pitching Ireland and providing considerable resources to startups (including buildings), especially as the competing economies will certain have their IDAs hammering down the doors of the FDI candidates?



Chris said:


> The equality of humans is written into the constitution. There is no need to create a completely seperate department, with all the ministers costs, and the duplicate senior civil servants and all that goes with it. Any legal issues should be handled by the department of justice. And creating an "equality" department does not mean that it actually does anything to improve equality in any way.
> There is no reason for library services to not exist, as this could and even should fall under education, again reducing the duplicate jobs and ministerial positions.
> Sports facilities should fall under health and tourist attractions would still be tourist attractions without the department of tourism. Even a visitor center at the Cliffs of Moher would exist if it had been allowed for private enterprises to set up there.
> The biggest wastage at government level is in the mid to high level administration, where everything is duplicated ad nauseam. Half the employees of the HSE are non-frontline managerial and admin staff. I believe that it is the same across all government departments. Consolidate departments and admin side of things and you would quite easily reduce numbers by 50%. That's 25% of the public wage bill in savings.


The constitutional provisions on equality are very narrow, i.e. ‘held equal before the law’. It doesn’t say anything about equality in the pub, or in the workplace, or at the bank. And of course, it doesn’t say anything about social equality. People die waiting for healthcare in Ireland, unless of course they have VHI or equivalent. 

But regardless, your claim is ‘not needing a separate department’ is simplistic. First of all, equality doesn’t have a separate department. It has 1/3rd of a department, mixed in with Community & Gaeltacht Affairs. We actually agree on something (surprise surprise). I do agree that creating an Equality Department does not actually do anything to improve equality.  Either the Government has a focus on equality or it doesn’t. The last time equality had any serious focus from Government was when Mervyn Taylor was Minister for Equality and Law Reform in  the 90s. 

But the real over-simplification is about the reducing numbers by 50% and saving 25% of the public wage bill. Please pick any department and have a look at their org chart – tell me where the 50% reduction will come from? You won’t save 50% of any department by moving it around. There may be some economies of scale, but it is certainly nothing near the 50% saving that you expect. There is no benefit to be achieved by moving libraries from environment/local authorities into education. All you will achieve is considerable disruption and uncertainty, as Charlie McCreevy achieved with is €4 billion spend on decentralisation. Many public bodies organisations are already using shared services structures to reduce admin costs. No large organisation has a single HR dept, or a single IT dept. Have a look at IBM or AIB or Johnson & Johnson and you’ll find a myriad of IT groups and HR groups and consultants and special projects etc etc. Large organisations are complex beasts – public and private. 



Chris said:


> The PDs were no more free market capitalists than the Labour party is. They had their own interventionist agenda that favoured their lobbyists. Conservatism and socialism are two sides of the same coin called interventionism, with the only difference being those that gain. And yes, people want decent public services, starting with health, education and law enforcement. And until these are decent (or even mediocre) the majority of other services should be scrapped or consolidated.


This is nonsense. You present no rationale for scrapping services.  You have no clear business case for consolidating services. You can’t scrap library services, or environmental protection, or health and safety regulation, or financial regulation because health services aren’t perfect, 



Chris said:


> Because if a private enterprise wastes too much it is under threat of going out of business. Because private enterprises have to constantly improve their products to remain competitive. Because private enterprises will scrap products that cause losses.
> Because government services have no incentive to not waste resources. Because government services are rewarded for providing bad service with increased budgets. Because people do not have a choice when it comes to public services and therefore can only compare to public services in other countries, which is not the case in the private economy.
> And as for my proof for private services being better than public, ask anybody in this country if they would rather go to a private hospital or a public one. Maybe some small business owners here can say whether they prefer dealing with the SME Association or the IDA or other government quangos. Or how about sending a parcel with UPS or AnPost, which do people have more faith in when it comes to getting things delivered on time and in the first place. Why do you think people are leaving the ESB and moving to Airtricity; hardly because their service is worse.
> As for other services  provided by government, these are mainly government monopolies where people do not have a choice and therefore are prohibited from providing any kind of feedback on the service.


Again, more over-simplistic nonsense. When I ask my GP for referrals (across a whole range of medical issues), he always recommends public over private where possible. The quality of medical services is far better. The food might not be quite as nice, but is that a good reason for selecting a healthcare provider.  And I spoke to one multi-national that has just switched back from private courier to An Post recently on a large distribution contract, for reasons of cost and quality. Perhaps you could explain how quality of service is often pretty crap in restaurants, in hotels, with builders, with solicitors etc etc, often with established businesses that have survived for years and will continue to survive. Your theoretical perfect market just doesn’t exist in the real world. Crap service providers continue to exist for a whole range of reasons in the private sector.

I have lots more to say, but life’s too short, and I have a life too!


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## Firefly (6 Oct 2010)

Complainer said:


> The Iron Curtain had nothing to do with income equality. It had everything to do with one small group exploiting the majority. It also suppressed just about every basic human freedom, so it is not really a good model for anything.


 
Income Equality IMO is a nice idea but goes against human nature. There are those who strive to better their position through education, what they eat and family values and there are those who don't

After the Iron Curtain came down the Russans privatised state assets via Voucher privitisation - everyone got the same number of shares. Some chose to sell, others to accumulate. Those that accumulated took a risk and it paid off, those that sold lost out. Human nature.


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## Firefly (6 Oct 2010)

Complainer said:


> How do you conclude that growing economies help everyone? There is no basis for this. The old 'rising tide lifting all boats' story is great for those who have boats. If you don't have a boat, you drown.


 
I think this is pretty obvious, but perhaps you are thinking about something else....a growing economy brings in more tax receipts for the government to spend on services that benefit everybody - old age pensions, the public schools that you mention, roads, increases in gardai numbers etc


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## shnaek (6 Oct 2010)

Complainer said:


> How do you conclude that growing economies help everyone? There is no basis for this. The old 'rising tide lifting all boats' story is great for those who have boats. If you don't have a boat, you drown.


Very easy to prove this by just looking around. The poor in countries in Europe are a hell of a lot richer than the poor in the middle east, India, North Korea, Africa etc.


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## orka (6 Oct 2010)

Complainer said:


> It really seem to be nitpicking to criticise them because you didn't spend enough time on their website. There is a lot of good information there, but you'll have to invest the time there.


I have actually read pretty much everything on their website - starting after you yakked on about it in a previous thread a few months ago - if you're saying that's all there is and the book doesn't have anything extra, there doesn't seem much point in reading it as the website 'evidence' just isn't compelling. It's good information to the already converted but it just doesn't stack up for an independent reader looking for a complete and rigorous analysis with no agenda.

_


csirl said:



			Remember, that the most equal society is the one with equal opportunities, not equal income.
		
Click to expand...

_


Complainer said:


> Your claim is fiction. ...





Complainer said:


> Researchers at the London School of Economics have used this method to compare social mobility in eight countries. Using their data, we have shown that, at least among these few countries, the more equal countries have higher social mobility (see graph).


You say csirl’s claim is fiction but then you give absolutely nothing to back this up. First of all, the social mobility section of ET’s website is asserting that societies with more equal income have higher social mobility – nothing to do with equal opportunities being a worse/better indicator of equality than income equality. 

Second, this section typifies the approach of the ET website and book. Their work is basically an analysis and use of other people’s work and research – they analysed 150+ papers and corresponding data and gave their interpretation – and subtly (or not...) used the respectability of some of their sources. So here, ‘researchers at LSE used this method’ (LOOK – it’s the LSE – therefore what we say must be as respectable as the LSE) – but the LSE method was in respect of the social mobility definitions and analysis – not the equality part.

The LSE was looking at all causes of social mobility and not just a single focus on outcome vs income equality. ET then took the social mobility data and compared it with their own definition of equality (and used the LSE name to give their result some credibility). In fact the LSE paper which there’s a link to on the ET website says 





> Also intergenerational mobility has declined in Britain at a time of rising income inequality. The strength of the relationship between educational attainment and family income, especially for access to higher education, is at the heart of Britain’s low mobility culture. If improving intergenerational mobility is viewed as desirable, this clearly suggests that from early ages, including prior to school entry, Britain needs to adopt a strategy to equalize opportunities. This should apply at all stages of the education process, and include support during the early years, for both parents and children; policies to improve the performance of deprived children in schools; and steps to promote participation at the post-compulsory level. Such policies have the potential to enhance intergenerational mobility by ensuring greater equality of educational opportunity


This is a more complete analysis which acknowledges that there are many factors affecting social mobility – income is an apparent one but when you analyse deeper, you see that income affects opportunity and it is actually opportunity which affects social mobility and not income. So I think csirl’s statement is far from fiction and much closer to reality than the ET’s simplistic income equality stance. There is not a single mention of education or opportunity on the ET’s ‘in detail’ description of their social mobility analysis.


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## Complainer (6 Oct 2010)

Firefly said:


> After the Iron Curtain came down the Russans privatised state assets via Voucher privitisation - everyone got the same number of shares. Some chose to sell, others to accumulate. Those that accumulated took a risk and it paid off, those that sold lost out. Human nature.


It is human nature to feed your family today, rather than holding out for some hope of 'jam tomorrow'. Those who sold did not have the luxury of holding out for future benefits. They needed food. The result of the Russian privatisation is the concentration of wealth among a tiny number of oligarchs. These are now the same people threatening to sue the Irish Govt if the State doesn't cover the costs of their investments in Irish Nationwide. Nice people.



Firefly said:


> Income Equality IMO is a nice idea but goes against human nature. There are those who strive to better their position through education, what they eat and family values and there are those who don't


No-one is proposing income equality. The evidence shows that societies with less income inequality do better across a whole range of measures - teenage births, obesity, life expectancy, inprisonment rates, mental health, social mobility etc. The proposal is for *less income inequality*. That is not the same as a proposal for income equality.


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## Firefly (6 Oct 2010)

Complainer said:


> It is human nature to feed your family today, rather than holding out for some hope of 'jam tomorrow'. Those who sold did not have the luxury of holding out for future benefits. They needed food. The result of the Russian privatisation is the concentration of wealth among a tiny number of oligarchs. These are now the same people threatening to sue the Irish Govt if the State doesn't cover the costs of their investments in Irish Nationwide. Nice people.


 
Those same people who needed to sell their shares for food needed food before they received their shares and also after they sold their shares. In this respect could they have not held on to them? 



Complainer said:


> No-one is proposing income equality. The evidence shows that societies with less income inequality do better across a whole range of measures - teenage births, obesity, life expectancy, inprisonment rates, mental health, social mobility etc. The proposal is for *less income inequality*. That is not the same as a proposal for income equality.


 
Thanks for the clarification.


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## Complainer (6 Oct 2010)

Firefly said:


> Those same people who needed to sell their shares for food needed food before they received their shares and also after they sold their shares. In this respect could they have not held on to them?


Would you hold onto any shares if your family was going hungry?


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## Complainer (6 Oct 2010)

orka said:


> I have actually read pretty much everything on their website - starting after you yakked on about it in a previous thread a few months ago - if you're saying that's all there is and the book doesn't have anything extra, there doesn't seem much point in reading it as the website 'evidence' just isn't compelling. It's good information to the already converted but it just doesn't stack up for an independent reader looking for a complete and rigorous analysis with no agenda.
> 
> 
> You say csirl’s claim is fiction but then you give absolutely nothing to back this up. First of all, the social mobility section of ET’s website is asserting that societies with more equal income have higher social mobility – nothing to do with equal opportunities being a worse/better indicator of equality than income equality.
> ...


You really haven't read the website well at all. You are mixing up income with income equality. You are using your own definition for social mobility. You are nitpicking with claims that you don't understand why a society with less teenage births, less obesity, lower imprisonment rates, more social mobility, less mental illness and lower murder rates would be better for everyone?

Come on, get off the stage and get real.


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## Firefly (6 Oct 2010)

Complainer said:


> Would you hold onto any shares if your family was going hungry?


 
If I knew that I'd be hungry soon after selling then I wouldn't.


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## Purple (6 Oct 2010)

Complainer said:


> You are nitpicking with claims that you don't understand why a society with less teenage births, less obesity, lower imprisonment rates, more social mobility, less mental illness and lower murder rates would be better for everyone?


 Nobody is saying that lower income disparity is desirable, they are suggesting that the best way to achieve it is through allowing the economy to function freely. 

Here’s a question for other posters, I’m on Complainers ignore list so he won’t see it (what’s that you say, you didn’t know there was an ignore list?) but anyway, here’s the question; Of the people you know that grew up poor and then did well as adults how many of them did so on the back of handouts and how many did so on the back of working hard (in school and/or afterwards)?


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## shnaek (6 Oct 2010)

Purple said:


> Of the people you know that grew up poor and then did well as adults how many of them did so on the back of handouts and how many did so on the back of working hard (in school and/or afterwards)?


That's a very good question. My father came from a family of 13 living in a 2 room house going to school without shoes. He and all his siblings have done well, all on the back of working hard. There really was no other choice back then.
Cousins of mine who grew up in working class areas are all doing well now, through hard work also. But their parents are really great people, so that helped too. 
Some friends of mine here in Cork haven't had things easy growing up, and though the have been on the dole from time to time they have always been applying for work and all of them are working presently and doing pretty well also. 
That's my tuppence worth. 

As for the ignore list - The Irish government have their own version of that too!


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## csirl (6 Oct 2010)

Purple said:


> Of the people you know that grew up poor and then did well as adults how many of them did so on the back of handouts and how many did so on the back of working hard (in school and/or afterwards)?


 
Know quite a few people who fall into the above category. In my experience, the majority used the education system to get themselves out of poverty. Others, mainly those who are less academic, essentially worked their way up from the bottom by being reliable and good at their jobs.


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## csirl (6 Oct 2010)

I know a family who are an interesting example of what Purple is talking about. 4 siblings, grew up together in an average house with parents in average jobs. For some unexplained reason, these siblings took different paths in life.

2 of them are wealthy and respectable, 2 of them are long term unemployed living in council housing. One of the wealthy ones used the education system to get into a particular profession and has done well as a result. The other wealthy one worked hard in his youth for various businesses, rose to a management level and eventually started his own business in the same industry and was successful. 

One of the two poor ones essentially fell in with the wrong crowd as a teenager, didnt finish school etc. Did get offered an apprenticeship through a family connection, but wouldnt take up the offer. The other got a good leaving cert and got a scholarship to go to college, but couldnt be bothered going - prefered to laze about at home. 

Family gatherings of this family are very interesting. The children of the two who did well are all privately educated, well groomed etc. The children of the other two are tracksuit wearing dole scroungers - the wealthy family members say that some of them have a tendancy to rob stuff when they visit. Meeting both groups, you would never guess that it only took 1 generation to put such a gulf in status between the two groups.


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## PaddyW (6 Oct 2010)

I grew up in a three bed house. 2 parents and 7 children (I always find it funny when people need 4 bed houses for 2 parents and 2 kids). Anyways, we were never well off, but today most of us work full time. I've never been on the dole, working since I left school. Same for my brother and sister here in Dublin. Both own their own houses now and I ended up buying the family home. All done through hard work.


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## serotoninsid (6 Oct 2010)

Thread has ran away with itself has it not?


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## shnaek (6 Oct 2010)

serotoninsid said:


> Thread has ran away with itself has it not?



True! Can't even remember what it started out as


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## Chris (6 Oct 2010)

Complainer said:


> The Iron Curtain had nothing to do with income equality. It had everything to do with one small group exploiting the majority. It also suppressed just about every basic human freedom, so it is not really a good model for anything.


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?



Complainer said:


> Your claim is fiction. See
> 
> Researchers at the London School of Economics have used this method to compare social mobility in eight countries. Using their data, we have shown that, at least among these few countries, the more equal countries have higher social mobility (see graph). It looks as if the American Dream is far more likely to remain a dream for Americans than it is for people living in Scandinavian countries. Greater inequalities of outcome seem to make it easier for rich parents to pass on their advantages. While income differences have widened in Britain and the USA, social mobility has slowed​


I have to agree that the "American Dream" no longer exists in the USA, but that is because of the inequality of opportunity and income redistribution. America is not the post card ideal of free market capitalism, no matter how much they claim they are. 
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.



Complainer said:


> How do you conclude that growing economies help everyone? There is no basis for this. The old 'rising tide lifting all boats' story is great for those who have boats. If you don't have a boat, you drown.


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.



Complainer said:


> You seem to be very quick to attribute a whole range of social developments to capitalism. Is it possible that your view is just a tad one-sided and has no basis in fact? Could possibly some of these benefits be attributable to the benefits of socialism, such as the health improvements in the UK arising from the NHS, and the economic developments in Ireland arising from the public education system? Could possibly some of these benefits be attributable to gains in terms and conditions hard won by trade unions for their members? Could possibly some of these improvements be attributable to improvements in science and technology, just some of which might have come from public universities? You don't have to rewrite history to show where benefits have come from.


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. 
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.
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.
Indeed some public universities have come up with good inventions, but the some of the greatest inventions and discoveries have come out of the private sector. And when it comes to science, there is at least a relatively open and competitive market.
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. I already suggested you read "Socialism" by von Mises to give you a better understanding of what you are actually favouring.



Complainer said:


> And I guess management companies that run private developments never give rise to complaints - No? I guess that forum here on AAM covering these complaints are just people making things up?


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.



Complainer said:


> So is it only in the public sector that 'sales pitching' doesn't work? It's strange how it is fairly well established in the private sector that 'sales pitching' works, and it is worthwhile investing in good salespeople and sales processes. But you are absolutely certain that there is no value in Ireland having similar resources pitching Ireland and providing considerable resources to startups (including buildings), especially as the competing economies will certain have their IDAs hammering down the doors of the FDI candidates?


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.



Complainer said:


> The constitutional provisions on equality are very narrow, i.e. ‘held equal before the law’. It doesn’t say anything about equality in the pub, or in the workplace, or at the bank. And of course, it doesn’t say anything about social equality. People die waiting for healthcare in Ireland, unless of course they have VHI or equivalent.
> 
> But regardless, your claim is ‘not needing a separate department’ is simplistic. First of all, equality doesn’t have a separate department. It has 1/3rd of a department, mixed in with Community & Gaeltacht Affairs. We actually agree on something (surprise surprise). I do agree that creating an Equality Department does not actually do anything to improve equality.  Either the Government has a focus on equality or it doesn’t. The last time equality had any serious focus from Government was when Mervyn Taylor was Minister for Equality and Law Reform in  the 90s.


The justice department is more capable of applying and enforcing laws, whether they are enshrined in the constitution or otherwise. And it should be an indication of a very poor constitution when human equality is not included.
You can also be certain that each one of the 1/3 department comes with its very own senior civil servants and "managers".




Complainer said:


> But the real over-simplification is about the reducing numbers by 50% and saving 25% of the public wage bill. Please pick any department and have a look at their org chart – tell me where the 50% reduction will come from? You won’t save 50% of any department by moving it around. There may be some economies of scale, but it is certainly nothing near the 50% saving that you expect. There is no benefit to be achieved by moving libraries from environment/local authorities into education. All you will achieve is considerable disruption and uncertainty, as Charlie McCreevy achieved with is €4 billion spend on decentralisation. Many public bodies organisations are already using shared services structures to reduce admin costs. No large organisation has a single HR dept, or a single IT dept. Have a look at IBM or AIB or Johnson & Johnson and you’ll find a myriad of IT groups and HR groups and consultants and special projects etc etc. Large organisations are complex beasts – public and private.


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.



Complainer said:


> This is nonsense. You present no rationale for scrapping services.  You have no clear business case for consolidating services. You can’t scrap library services, or environmental protection, or health and safety regulation, or financial regulation because health services aren’t perfect,


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.
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.



Complainer said:


> Again, more over-simplistic nonsense. When I ask my GP for referrals (across a whole range of medical issues), he always recommends public over private where possible. The quality of medical services is far better. The food might not be quite as nice, but is that a good reason for selecting a healthcare provider.  And I spoke to one multi-national that has just switched back from private courier to An Post recently on a large distribution contract, for reasons of cost and quality. Perhaps you could explain how quality of service is often pretty crap in restaurants, in hotels, with builders, with solicitors etc etc, often with established businesses that have survived for years and will continue to survive. Your theoretical perfect market just doesn’t exist in the real world. Crap service providers continue to exist for a whole range of reasons in the private sector.


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? 
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.
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.



Complainer said:


> You really haven't read the website well at all. You are mixing up income with income equality. You are using your own definition for social mobility. You are nitpicking with claims that you don't understand why a society with less teenage births, less obesity, lower imprisonment rates, more social mobility, less mental illness and lower murder rates would be better for everyone?
> 
> Come on, get off the stage and get real.


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.


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## Complainer (9 Oct 2010)

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. 



Chris said:


> 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.


Chris said:


> 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.


Chris said:


> 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?


Chris said:


> 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.


Chris said:


> 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?


Chris said:


> 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.


Chris said:


> Indeed some public universities have come up with good inventions


Did that hurt?


Chris said:


> 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. 


Chris said:


> 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.


Chris said:


> 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? 


Chris said:


> 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.


Chris said:


> 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. 


Chris said:


> 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?


Chris said:


> 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.


Chris said:


> 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.


Chris said:


> 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.


Chris said:


> 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.


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## Chris (10 Oct 2010)

Complainer said:


> 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?



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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
> ...


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.



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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. 



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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



Complainer said:


> 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.


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## Complainer (11 Oct 2010)

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.


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## shnaek (11 Oct 2010)

Complainer said:


> 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.



Complainer said:


> 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.


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## Chris (11 Oct 2010)

Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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.




Complainer said:


> 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.


Complainer said:


> 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.



Complainer said:


> 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.


Complainer said:


> 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. 



Complainer said:


> 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.



Complainer said:


> 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.



Complainer said:


> 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.


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## Firefly (11 Oct 2010)

Chris said:


> 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?


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## Chris (12 Oct 2010)

Firefly said:


> 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.


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## shnaek (12 Oct 2010)

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.


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