# Is it time for wage increases?



## TheBigShort

In the context of general economic theory, wage increases are inflationary. Central banks around the world are trying to stoke inflation. Their primary tool is QE which is failing. It is only creating greater divides between rich and poor.
This is why property prices are rising in affluent areas of capital cities around the world, but elsewhere they are stagnant. This is why debt burdens are increasing not reducing as all money issued today is on the basis of a loan taken out rather than the value of productivity.
The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.
But it will also mean a massive transfer of capital to labour. Something that right wing free market worshipping monetarists cannot countenance right now.


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## Purple

TheBigShort said:


> In the context of general economic theory, wage increases are inflationary. Central banks around the world are trying to stoke inflation.


 Agreed.




TheBigShort said:


> Their primary tool is QE which is failing. It is only creating greater divides between rich and poor.


Way too simplistic.




TheBigShort said:


> This is why property prices are rising in affluent areas of capital cities around the world, but elsewhere they are stagnant.


 I don’t follow that argument.




TheBigShort said:


> This is why debt burdens are increasing not reducing as all money issued today is on the basis of a loan taken out rather than the value of productivity.


 Excellent point.




TheBigShort said:


> The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.


 Only if everyone does it. If most do it and others don’t then those that don’t will have an advantage as they’ll get the up-side of global inflation while increasing their competitiveness. As a small, very open and very expensive economy I think we should be the last to increase wages.




TheBigShort said:


> But it will also mean a massive transfer of capital to labour. Something that right wing free market worshipping monetarists cannot countenance right now.



Why do you think that? Anyone who is really in favour of free markets will be in favour of it.


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## PGF2016

TheBigShort said:


> The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.



Has the debt burden in Ireland reduced over the last 30 years as wages have increased? Or is personal debt at an all time high?


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## odyssey06

A better question would be why haven't wage increases already happened if there is that much pressure? Would it already have happened if labour supply was more constrained?

Right wing free market worshipping monetarists don't have a problem with wage increases. They have a problem with how they come about.
How do you propose to implement a 10% wage increase to all workers in the economy? How will you compel all private sector employers to comply with the increase? How do you guarantee that the wage increase won't simply result in thousands of jobs going to Poland, India or the UK?

How about a tax cut?


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## TheBigShort

PGF2016 said:


> Has the debt burden in Ireland reduced over the last 30 years as wages have increased? Or is personal debt at an all time high?



Personal debt is at an all time high. But it has nothing to do with wages. It has to do with the availability of credit. If a bank is prepared to lend to me 10 times my wage instead of 5 times my wage, then regardless of my wage, if I accept the offer of the larger amount it will increase my indebtedness.


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## dub_nerd

TheBigShort said:


> The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.



This sounds wrong on a number of counts. First of all inflation and savings pull in opposite directions. Savings in this country are already increasing at a rapid rate -- the problem is that it is being used to pay down debt (which counts as savings in the statistics), instead of being spent into the economy. It is difficult to increase people's propensity to spend when there is such an overhang of historical debt. 

Second, increasing inflation should not be an end in itself without increasing productivity. Otherwise you simply penalise those with savings and give to those with debts. If you merely wanted to increase spending then give to those with no discretionary income who are more likely to spend any additional income, for instance those on welfare. And if you really want to target spending specifically, only give it to those with no debt. But this is neither sensible, fair, nor likely politically doable. And it won't close the rich-poor divide.

Third, the government doesn't directly control wages in general. It could raise the minimum wage but if it wants to use it as a tool to control inflation then it better be prepared to reduce it again, which is historically not done nor politically acceptable. You have similar problems with raising public sector wages. And mandatory wage controls have rarely worked out well, as they interfere with efficiency and price signals. You will probably just increase unemployment.

If you really want to increase inflation, given our situation of considerably less than full employment, you need to increase the number of people getting paid, not the amount earned by people already in employment. The main tool under the government's control is infrastructure spending. Especially at a time of low borrowing costs it could make sense to open taps somewhat on productive public spending. On the other hand we are also at a time of unprecedented government borrowing levels. Any changes in bond yields has the potential for hugely negative impact on the economy.

Arguably, yields are so low _because_ governments are not spending on infrastructure and are trying to reduce debt. On the other hand, as the proverbial "small open economy" with no control of our interest rates, we might get away with something countercyclical while the big boys aren't looking, i.e. use their prudence to our advantage by borrowing hugely at low rates. However, that option is closed to us as the European Fiscal  Stability Treaty requires us to balance the books within stringent limits.

So apart from relatively small tweaking around the edges "we are where we are". It is the result of the credit splurges of the 2000s, the crooked practices of banks, and the general demographic decline of the West. If you are optimistic we just have to wait for debt to reduce and inflation to slowly increase. If you are pessimistic we are just waiting for the next economic calamity to befall us, and/or political events to overtake us as the disadvantaged decide they won't put up with it anymore.


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## Purple

Excellent post dub_nerd.


dub_nerd said:


> It is the result of the credit splurges of the 2000s, the crooked practices of banks, and the general demographic decline of the West.


 It's also the result of massive and unsustainable increases in wages of state employees (including pensions). Over the last 15 years that's cost more than the direct cost of the bank collapse.


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## TheBigShort

dub_nerd said:


> This sounds wrong on a number of counts. First of all inflation and savings pull in opposite directions. Savings in this country are already increasing at a rapid rate -- the problem is that it is being used to pay down debt (which counts as savings in the statistics), instead of being spent into the economy. It is difficult to increase people's propensity to spend when there is such an overhang of historical debt.



Correct about savings and inflation, my err, it should have read increased consumption, generating further employment.



dub_nerd said:


> Second, increasing inflation should not be an end in itself without increasing productivity.



I agree, and its my fault if a straightforward wage increase is interpreted as the answer by itself. But I would argue that wage increases and productivity increases are somewhat a chicken and egg scenario. You cant have wage increases without productivity increases, alternatively productivity increases can be generated through higher wages. It really depends on the business cycle and in my view wage increases are overdue. As such increasing wages will begin to generate increased productivity.



dub_nerd said:


> If you merely wanted to increase spending then give to those with no discretionary income who are more likely to spend any additional income



True to an extent, and there is another thread on welfare payments that argues for cutting welfare in order to push people into work. I would argue that increased wages for lower paid workers will also drive spending and increase participation in the workforce.



dub_nerd said:


> Third, the government doesn't directly control wages in general. It could raise the minimum wage but if it wants to use it as a tool to control inflation then it better be prepared to reduce it again, which is historically not done nor politically acceptable



Not politically acceptable but historically it was done under the last FF administration.



dub_nerd said:


> You have similar problems with raising public sector wages. And mandatory wage controls have rarely worked out well, as they interfere with efficiency and price signals. You will probably just increase unemployment.



I disagree somewhat. Prices tend to be fairly sticky also and even in the face of falling demand, prices can be pretty resilient.



dub_nerd said:


> If you really want to increase inflation, given our situation of considerably less than full employment, you need to increase the number of people getting paid, not the amount earned by people already in employment.



Again, my fault for not stating the intent here.
It has been argued elsewhere that there is a welfare dependency culture in this state. And it has been argued that welfare should be cut to 'push' people into working. I have argued that it would push people into poverty. I have argued that a solution, or as part of a solution to unemployment levels and moving people out of welfare traps is to increase wages.



dub_nerd said:


> The main tool under the government's control is infrastructure spending.



True, and this would generate the increased participation in the workforce and subsequently the demand for labour.



dub_nerd said:


> It is the result of the credit splurges of the 2000s, the crooked practices of banks, and the general demographic decline of the West.



Agreed.


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## Firefly

Great post dub_nerd and put better than I could. Just to add that just like the unintended consequences of increased homelessness due to the removal of bedsits, I think forcing an increase in wages would disproportionatly affect those on lower paid, temporary jobs. Take the example of the local shop who gets a window cleaner in once a fortnight. Given that his wage costs have just risen, perhaps he might get one of his staff to clean the windows instead. Perhaps the manufacturing plant down the road, weighing up whether to expand their operations here or move abroad would choose the latter. 




TheBigShort said:


> In the context of general economic theory, wage increases are inflationary. Central banks around the world are trying to stoke inflation.



I suppose the first question is do we need to raise inflation in Ireland? Perhaps you could provide evidence of this requirement?



TheBigShort said:


> The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.
> But it will also mean a massive transfer of capital to labour. Something that right wing free market worshipping monetarists cannot countenance right now.



Why is it fair, per se, to increase everyone's wages?


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## cremeegg

TheBigShort said:


> alternatively productivity increases can be generated through higher wages......... increasing wages will begin to generate increased productivity.



How does that happen ?


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## PGF2016

TheBigShort said:


> Personal debt is at an all time high. But it has nothing to do with wages.


So why state that higher wages reduce the debt burden? 

Higher wages should reduce the debt burden but in practice rarely does (and human behaviour is to blame for this).


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## PGF2016

TheBigShort said:


> I would argue that increased wages for lower paid workers will also drive spending and increase participation in the workforce.



How do you propose this should happen? Raising the minimum wage?


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## Firefly

TheBigShort said:


> Personal debt is at an all time high. But it has nothing to do with wages. It has to do with the availability of credit.



I'm not so sure about that - debt levels rose here due to availability of credit certainly, but this also happened at a time of wage increases. In fact, if wages have nothing to do with debt levels as you say, then would you foresee people borrowing more if they knew their wages were due to be cut?


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## Purple

TheBigShort said:


> You cant have wage increases without productivity increases,


 Tell that the Dublin Bus and LUAS employees (soon to be followed by all other CIE company employees).



TheBigShort said:


> alternatively productivity increases can be generated through higher wages.


 Can you explain that please?





TheBigShort said:


> It really depends on the business cycle and in my view wage increases are overdue. As such increasing wages will begin to generate increased productivity.


 Different businesses have different cycles. The business I’m in thrived through the last few years but we are down by 40% on turnover from 18 months ago (hence the 45% pay cut I took). That is the opposite of what is happening generally for businesses selling into the Irish market.






TheBigShort said:


> True to an extent, and there is another thread on welfare payments that argues for cutting welfare in order to push people into work. I would argue that increased wages for lower paid workers will also drive spending and increase participation in the workforce.


 That thread is about welfare traps.





TheBigShort said:


> Not politically acceptable but historically it was done under the last FF administration.


 Yep, an FF government which was willing to make hard decisions; a rare thing. They got hammered though so they’ll be back to populism in future.


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## TheBigShort

Firefly said:


> I suppose the first question is do we need to raise inflation in Ireland? Perhaps you could provide evidence of this requirement?



[broken link removed]

The CSO data above shows that country is languishing very close to a deflationary trap. If deflation is not desirable at this time, then some inflation is.



cremeegg said:


> How does that happen ?



Ever heard of overtime, bonuses, commission?
If you earn €30,000 pa to produce 30,000 cremeggs and then I ask you to change operations so that you now could produce 40,000 for the same money, you may or may not be agreeable to that. If I offer €5,000 extra in wages you may be more agreeable. As a consequence, wages rise followed by productivity increases.



PGF2016 said:


> So why state that higher wages reduce the debt burden?
> 
> Higher wages should reduce the debt burden but in practice rarely does (and human behaviour is to blame for this).



You can only get into debt if you borrow money. For sure, the more you earn the more confident you may be to borrow bigger sums. But thats why we are supposed to have financial regulation. So that borrowers and lenders dont get carried away with themselves.



PGF2016 said:


> How do you propose this should happen? Raising the minimum wage?



Raising the minimum wage would be a start. But I think the minimum wage in itself is inadequate. I do think there is a premium to be paid over and above the minimum wage for a worker who is reliable, punctual, good at their job, and who provides continuous service.



Firefly said:


> I'm not so sure about that - debt levels rose here due to availability of credit certainly, but this also happened at a time of wage increases. In fact, if wages have nothing to do with debt levels as you say, then would you foresee people borrowing more if they knew their wages were due to be cut?



Increasing wages for sure will give the earner confidence of taking on more debt, but it still should all be relative. If I earn €50000 I may think I can borrow €150,000 for a property. If I earn €150,000 I may think I can borrow €600,000. But its up to the bank (in their capacity as expert financiers) to tell me I would be out of my depth and at risk of negative equity.



Purple said:


> Tell that the Dublin Bus and LUAS employees (soon to be followed by all other CIE company employees).



You should go to the Transdev Ireland website where they openly boast about all the productivity increases they achieved with the workers, during the period of pay freezes and increased revenue streams.
Dublin Bus is back in profit, what is there to be told?



Purple said:


> Can you explain that please?



If im not mistaken, the offer of higher wages can act as a motivating force to produce more?



Purple said:


> Different businesses have different cycles. The business I’m in thrived through the last few years but we are down by 40% on turnover from 18 months ago (hence the 45% pay cut I took). That is the opposite of what is happening generally for businesses selling into the Irish market.



Yes, we can all point to micro elements of the economy that work conversely to overall trends.



Purple said:


> Yep, an FF government which was willing to make hard decisions; a rare thing. They got hammered though so they’ll be back to populism in future.



Targeting minimum wage workers for wage cuts could in no way be regarded as a 'hard' decision. Minimum wage workers were identified as an easy target.


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## Firefly

TheBigShort said:


> [broken link removed]
> The CSO data above shows that country is languishing very close to a deflationary trap.



No it doesn't. If you look at 2015 you will see negative figures for 10 months out of 12, but in 2012 there are negative figures in only 4 out of 8 months, so it could actually be just as easily argued we are seeing more inflation!!

In fact if you look at 2009 - 2011 when we can see prices were really falling, do you think that was the time to force wages to be increased when the economy was close to falling off a cliff and there was talk of the eurozone itself imploding?

In any case, these are just tables. Do you have a link that backs up your assertion that we need inflation in Ireland?


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## TheBigShort

Firefly said:


> No it doesn't. If you look at 2015 you will see negative figures for 10 months out of 12, but in 2012 there are negative figures in only 4 out of 8 months, so it could actually be just as easily argued we are seeing more inflation!!
> 
> In fact if you look at 2009 - 2011 when we can see prices were really falling, do you think that was the time to force wages to be increased when the economy was close to falling off a cliff and there was talk of the eurozone itself imploding?
> 
> In any case, these are just tables. Do you have a link that backs up your assertion that we need inflation in Ireland?



But its 2016 and what is to come that is of interest. The trend is clear that since 2015 inflation is barely getting off the ground.

Its not a question of whether I think we need inflation or not, its a question of whether the ECB thinks we do or not. Its mandate is to manage inflation at around 2-3% and it has embarked on a QE program to induce inflation into the eurozone economies.
This has not worked in Europe and is not working in Ireland. It is my view that rather than engage in this program of QE that a preferential approach would be to start increasing wages.


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## Firefly

I think you are contradicting yourself. First you say (_emphasis mine_)



TheBigShort said:


> *Personal debt* is at an all time high. But it *has nothing to do with wages*. It has to do with the availability of credit.



Then you go on to provide an example of where someone would borrow more money based on higher wage levels!



TheBigShort said:


> Increasing wages for sure will give the earner confidence of taking on more debt, but it still should all be relative. If I earn €50000 I may think I can borrow €150,000 for a property. If I earn €150,000 I may think I can borrow €600,000.


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## Firefly

TheBigShort said:


> Its not a question of whether I think we need inflation or not, its a question of whether the ECB thinks we do or not. Its mandate is to manage inflation at around 2-3% and it has embarked on a QE program to induce inflation into the eurozone economies.
> This has not worked in Europe and is not working in Ireland. It is my view that rather than engage in this program of QE that a preferential approach would be to start increasing wages.



Simple question...let's say inflation was running above target at say 5%. Would you be as eager to seek wage cuts to reduce inflation?


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## TheBigShort

Firefly said:


> I think you are contradicting yourself. First you say (_emphasis mine_)
> 
> 
> 
> Then you go on to provide an example of where someone would borrow more money based on higher wage levels!



Yes, I agree, the more a person earns, the more inclined he may be to borrow over and above what is financially sound. 
But that doesn't mean a bank should lend the money does it? The banks are the self-proclaimed expert financiers, the regulator is there to ensure a responsible approach to borrowing and lending.
Private debt got out of hand, not because of wages, but because of irresponsible banking and lack of regulation. When someone on minimum wage can borrow 10 times income for a mortgage, its not their wages that is leading to unsuitable debt, its wreckless borrowing and lending.


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## TheBigShort

Firefly said:


> Simple question...let's say inflation was running above target at say 5%. Would you be as eager to seek wage cuts to reduce inflation?



I wouldn't be in favour of wage cuts, but I would be in favour of moderate wage increases less than the inflation rate if it could be shown that inflation was in an upward trend and going higher.
This is not about a workers revolt to grab a bigger slice of the pie than what is due. This is about a monetary policy adopted by the ECB that uses our currency in an asset buying program to induce inflation to the eurozone economies. 
It hasnt worked in Japan or the US. It is a money printing scheme that directs a bigger share of our currency into the hands of bankers and financiers. Its time to try something different. That is, governments need to start spending. This will increase labour market participation and put a demand on labour and in turn increase wages - creating an inflationary effect.


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## Firefly

TheBigShort said:


> I wouldn't be in favour of wage cuts, but I would be in favour of moderate wage increases less than the inflation rate if it could be shown that inflation was in an upward trend and going higher.



Let me get this straight, you are saying that in the current environment with low / no inflation you would increase wages as a means to raise inflation but if inflation was higher than planned you would keep raising wages albeit at a lower rate than inflation? 




TheBigShort said:


> This is not about a workers revolt to grab a bigger slice of the pie than what is due.


Can you please explain what you mean by "what is due"?



TheBigShort said:


> This is about a monetary policy adopted by the ECB that uses our currency in an asset buying program to induce inflation to the eurozone economies.
> It hasnt worked in Japan or the US. It is a money printing scheme that directs a bigger share of our currency into the hands of bankers and financiers. Its time to try something different. That is, governments need to start spending. This will increase labour market participation and put a demand on labour and in turn increase wages - creating an inflationary effect.


I think there is an argument indeed for increased government spending but surely this would be better achieved by building infrastructure projects such as roads and schools thereby getting more people working than simply giving those already working just more money?


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## Firefly

TheBigShort said:


> Yes, I agree, the more a person earns, the more inclined he may be to borrow over and above what is financially sound.



But you said wages had nothing to do with debt, but now you are saying it does!



TheBigShort said:


> But that doesn't mean a bank should lend the money does it? The banks are the self-proclaimed expert , the regulator is there to ensure a responsible approach to borrowing and lending.Private debt got out of hand, not because of wages, but because of irresponsible banking and lack of regulation. When someone on minimum wage can borrow 10 times income for a mortgage, its not their wages that is leading to unsuitable debt, its wreckless borrowing and lending.



The banks are there to make a profit. Bank managers up and down the country lent like crazy to book a quick profit we all know that. As for the regulation you would need to look at what all the countless public servants in the Dept of Finance and Central Bank were doing for the 8 years between 2000 - 2008. I don't see any of them being held accountable either.


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## Firefly

TheBigShort said:


> I wouldn't be in favour of wage cuts, but I would be in favour of moderate wage increases less than the inflation rate if it could be shown that inflation was in an upward trend and going higher.



I'm sorry I have to quote this again! You are saying that in the current environment with low/no inflation you would raise wages to raise inflation but if inflation was shown to be in an upward trend and going higher, you would carry-on raising wages!!


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## TheBigShort

Firefly said:


> But you said wages had nothing to do with debt, but now you are saying it does!



No I am not. I am saying a person who earns more may be _inclined _to want to borrow more. But if a bank doesnt lend the money then that person cannot fall into debt, can they? It doesn't matter how much I earn if its 10k, 100k or 1m, if I apply for a loan of 0.50c and the bank says no, then I cannot fall into 0.50c debt with the bank. Alternatively if I earn 10k and apply for a 20m loan to buy a hotel in New York and the bank says yes, then im in debt to 20m. It both cases (as extreme as they are) my wage had nothing to do with the debt level but rather idiotic bankers.
In the real world, the banks in their capacity as expert financiers, should evaluate a persons ability to repay a loan based on their income. 
If incomes arent rising, private debt levels shouldn't increase.



Firefly said:


> all the countless public servants in the Dept of Finance and Central Bank were doing for the 8 years between 2000 - 2008. I don't see any of them being held accountable either.



True, I referenced that in my previous post.



Firefly said:


> I'm sorry I have to quote this again! You are saying that in the current environment with low/no inflation you would raise wages to raise inflation but if inflation was shown to be in an upward trend and going higher, you would carry-on raising wages!!



You have quoted a figure of 5% inflation without any reference to whether that is an increasing or decreasing rate of inflation. You have made no reference as to the cause of this inflation, wages? Oil? Insurance costs? Food? Or a combination of various factors.
If the cause is wages, then reducing the rate of wage increases will bring down the inflation rate. If the cause of inflation is other than wages then wage increases will need to stay apace with the inflation rate.
Regardless of all that, the situation today is that the ECB, using our currency, is trying to induce inflation through asset buying program. 
I would suggest trying something different, like inducing wage increases.


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## Firefly

TheBigShort said:


> No I am not. I am saying a person who earns more may be inclined to want to borrow more. But if a bank doesnt lend the money then that person cannot fall into debt, can they? It doesn't matter how much I earn if its 10k, 100k or 1m, if I apply for a loan of 0.50c and the bank says no, then I cannot fall into 0.50c debt with the bank. Alternatively if I earn 10k and apply for a 20m loan to buy a hotel in New York and the bank says yes, then im in debt to 20m. It both cases (as extreme as they are) my wage had nothing to do with the debt level but rather idiotic bankers.
> In the real world, the banks in their capacity as expert financiers, should evaluate a persons ability to repay a loan based on their income.



The Central Bank has put the brakes on mortgage lending. It is now a multiple of earnings. Most people in this country would like to buy a house and those on higher incomes tend to buy more expensive houses in desirable locations, so you cannot say that wages are not a factor in the level of debt people take on.



TheBigShort said:


> If incomes arent rising, private debt levels shouldn't increase.



I agree, if my income was going to fall why would I take on debt? But the opposite would also hold true, if incomes are rising people will upgrade their car, move to a better house etc.




Back to my first question:

I suppose the first question is do we need to raise inflation in Ireland? Perhaps you could provide evidence of this requirement?

You provided a table from the CSO but that doesn't back up the claim that we need more inflation in Ireland.

You also stated:



TheBigShort said:


> The quickest and fairest way to stoke inflation into developed economies is through increased wages.



Again, why is it fair, per se, to increase everyone's wages?




TheBigShort said:


> This is not about a workers revolt to grab a bigger slice of the pie than what is due.



Again, can you please explain what you mean by "what is due"?


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## TheBigShort

Firefly said:


> The Central Bank has put the brakes on mortgage lending. It is now a multiple of earnings. Most people in this country would like to buy a house and those on higher incomes tend to buy more expensive houses in desirable locations, so you cannot say that wages are not a factor in the level of debt people take on.
> 
> 
> 
> I agree, if my income was going to fall why would I take on debt? But the opposite would also hold true, if incomes are rising people will upgrade their car, move to a better house etc.
> 
> 
> 
> 
> Back to my first question:
> 
> I suppose the first question is do we need to raise inflation in Ireland? Perhaps you could provide evidence of this requirement?
> 
> You provided a table from the CSO but that doesn't back up the claim that we need more inflation in Ireland.
> 
> You also stated:
> 
> 
> 
> Again, why is it fair, per se, to increase everyone's wages?
> 
> 
> 
> 
> Again, can you please explain what you mean by "what is due"?



Im talking about levels of debt. If I earn €50k maybe the bank will lend me €150k. (3 x income). If I earn 200k maybe the bank will lend me 600k - again three times earnings. So in that regard wages come into it. But my _debt level _is 3 times income in both scenarios, the _debt level _stays the same.  But if the bank decides to lend me another 100k on top of all, regardless of whether I earn 50k or 200k then my level of debt will increase.

I already stated that it is not me that has decided we need inflation. The ECB, through its QE program has decided eurozone countries need inflation. My view is, that wage increases are a better method of inducing inflation than an asser buying program.

I never said it was fair to increase everybody's wages. I said the quickest and fairest way to stoke inflation is through wage increases. There is a difference. If government increases minimum wage to €10 an hour that represents a wage increase for workers on that wage, with most likely, subsequent knock ons for other low paid workers. It does not mean a worker on a high salary, say €150,000 will benefit from that increase, although it can't be ruled out.

"What is due", is a turn of phrase. Some workers believe they are due or entitled or deserve more money, some others would argue differently. One thing we know is that if you offer your services or skills through labour you are due something.

Can I ask you a question?

Assuming some inflation is the desired outcome for eurozone economies, do you think a QE asset buying program administered by the ECB is preferable to a capital spending program on infrastructure that may lead to job creation and in turn pressure on wages?


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## Purple

This is an absurd discussion.
I just don't know where to start but I don't know how anyone can think wage increases can be a good thing for the economy in a country which is a tiny percentage of a single market (and single currency), which exports so much of what it produces and imports so much of what it consumes. If we were a closed economy like North Korea or communist Russia it might make sense but for us it's crazy.


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## Firefly

TheBigShort said:


> Im talking about levels of debt. If I earn €50k maybe the bank will lend me €150k. (3 x income). If I earn 200k maybe the bank will lend me 600k - again three times earnings. So in that regard wages come into it. But my debt level is 3 times income in both scenarios, the debt level stays the same.



Yes, in your example, both borrow 3 times their income so the _ratio _stays the same. However, the second person borrows €450k more, so how do you stand over the statement below?



TheBigShort said:


> *Personal debt* is at an all time high. But it *has nothing to do with wages.*


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## Firefly

TheBigShort said:


> Can I ask you a question?
> 
> Assuming some inflation is the desired outcome for eurozone economies, do you think a QE asset buying program administered by the ECB is preferable to a capital spending program on infrastructure that may lead to job creation and in turn pressure on wages?



To be honest, I am not an economist and I therefore do not posses the knowledge or skills to offer an informed opinion. There are other things to take into account such as the national debts of the countries involved which could make the latter option difficult. Take Ireland, how can we borrow for investment purposes when are currently borrowing for _consumption_? In the same way, would I borrow for a new house if the only way I could pay for my weekly shop at Aldi was using a credit card and only making the minimum monthly payments? I think I would clear my credit card bill first, then build up savings and maybe then borrow to invest. 

The effectiveness of QE can be argued and again I am not informed on the matter. My gut though tells me it is wrong as it makes people who save worse off.


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## Purple

Firefly said:


> Yes, in your example, both borrow 3 times their income so the _ratio _stays the same. However, the second person borrows €450k more, so how do you stand over the statement below?


God bless your energy.


----------



## Firefly

TheBigShort said:


> You have quoted a figure of 5% inflation without any reference to whether that is an increasing or decreasing rate of inflation.


Let's say inflation is increasing and is currently runing at 5%



TheBigShort said:


> You have made no reference as to the cause of this inflation, wages? Oil? Insurance costs? Food? Or a combination of various factors.



Neither have you on why inflation is needed other than to reference the inflation targets of the EU. Have they even suggested raising wages?



TheBigShort said:


> If the cause is wages, then reducing the rate of wage increases will bring down the inflation rate.



With respect, that's not what I asked. I asked:
_Simple question...let's say inflation was running above target at say 5%. Would you be as eager to seek wage cuts to reduce inflation?_


----------



## TheBigShort

Purple said:


> This is an absurd discussion.
> I just don't know where to start but I don't know how anyone can think wage increases can be a good thing for the economy in a country which is a tiny percentage of a single market (and single currency), which exports so much of what it produces and imports so much of what it consumes. If we were a closed economy like North Korea or communist Russia it might make sense but for us it's crazy.



Good God, you think wage increases are bad thing? And you base that on the fact that we are a small open economy!
Wage increases should not be considered on the basis of whether our economy is opened or closed, it should be considered on the basis of whether an economy is growing or not. All the indicators are pointing to reasonable sustained growth for Ireland over the next few years, and in the context of a near decade of wage stagnation, the prospect of wage increases should firmly be on the cards.
The minimum wage was introduced in 2000 and co-incided with growth levels in this country never previously seen. The minimum wage increased in order was to attract workers from abroad into the economy. The period 2000-2008 saw net migration to the country. The period 2009-2011 saw net immigration, also saw an attempt to cut the minimum wage.
Wage growth is a good thing for an economy, for the people living there, and for productive businesses trying to attract workers into that economy.
Of course, it needs to be managed, and not get out of control, but to say wage growth is a bad thing for an economy is bizarre and completely devoid of any understanding of how an economy works.


----------



## Purple

TheBigShort said:


> Good God, you think wage increases are bad thing? And you base that on the fact that we are a small open economy!



Yes, that’s it in a nutshell; we are a small open economy which already has very high wages, very high tax rates and have slipped way down the list for competitiveness. Wage increases are the last thing we need.




TheBigShort said:


> Wage increases should not be considered on the basis of whether our economy is opened or closed, it should be considered on the basis of whether an economy is growing or not. All the indicators are pointing to reasonable sustained growth for Ireland over the next few years, and in the context of a near decade of wage stagnation, the prospect of wage increases should firmly be on the cards.


 Ok, so more pro-cyclical economic policies. Sure, that’s just what we need in a fast growing economy. Maybe a few tax breaks, more borrowing and unsustainable increases in public spending. Sure that’s never caused any problems in the past.




TheBigShort said:


> The minimum wage was introduced in 2000 and co-incided with growth levels in this country never previously seen. The minimum wage increased in order was to attract workers from abroad into the economy. The period 2000-2008 saw net migration to the country. The period 2009-2011 saw net immigration, also saw an attempt to cut the minimum wage.


 The colour of my stool changes at exactly the same times. Since no cause an effect, merely coincidence, is required I propose that my excretions were the cause of these changes in migratory patterns.




TheBigShort said:


> Wage growth is a good thing for an economy, for the people living there, and for productive businesses trying to attract workers into that economy.



No it’s not. Value is what’s attractive, not price.




TheBigShort said:


> O say wage growth is a bad thing for an economy is bizarre and completely devoid of any understanding of how an economy works.



Productivity increases are the only thing that creates wealth. This is not a command economy, that’s where you are making your mistake.


----------



## TheBigShort

Firefly said:


> Yes, in your example, both borrow 3 times their income so the _ratio _stays the same. However, the second person borrows €450k more, so how do you stand over the statement below?



I don't stand over it, not in numeric terms anyway. My point was debt as a percentage of income. In numeric amounts you would be correct in relating higher debt amounts with wages.



Firefly said:


> Take Ireland, how can we borrow for investment purposes when are currently borrowing for _consumption_?



Its a fair point, and due to fiscal treaties and deficit spending limits Ireland cannot do this. 
But the ECB has embarked on a money printing asset buying program, that in my understanding, it has no mandate to do either. 
Alternatively, when Mario Draghi, announces another €60bn program of asset buying he is basically buying financial assets in the form of government bonds (driving negative yields), issuing ECB bonds at 0% facilitating corporate share buy-backs (driving stock prices) and facilitating vulture 'investment' funds to buy large tranches of property in major capital cities ( driving property prices and rents).
None of this offers any real input into generating productivity in eurozone economies. The concept is to create a 'wealth effect' inducing consumers to borrow and spend on the back of perceived wealth creation. 
Alternatively, that €60bn program could be used to lend to governments cheaply to initiate capital spending programs. Creating real employment, real income, real wage increases, real debt burden reduction.


----------



## Purple

TheBigShort said:


> But the ECB has embarked on a money printing asset buying program, that in my understanding, it has no mandate to do either.
> Alternatively, when Mario Draghi, announces another €60bn program of asset buying he is basically buying financial assets in the form of government bonds (driving negative yields), issuing ECB bonds at 0% facilitating corporate share buy-backs (driving stock prices) and facilitating vulture 'investment' funds to buy large tranches of property in major capital cities ( driving property prices and rents).
> None of this offers any real input into generating productivity in eurozone economies. The concept is to create a 'wealth effect' inducing consumers to borrow and spend on the back of perceived wealth creation.
> Alternatively, that €60bn program could be used to lend to governments cheaply to initiate capital spending programs. Creating real employment, real income, real wage increases, real debt burden reduction.


Fair points but I'd rather see no borrowing at all.


----------



## TheBigShort

Firefly said:


> Neither have yoeon why inflation is needed other than to reference the inflation targets of the EU. Have they even suggested raising wages?



https://www.theguardian.com/busines...b013613fffb49a#block-57d16664e4b013613fffb49a

And this report from RTE about US Federal reserve thinking
http://m.rte.ie/news/business/2016/0907/814967-us-federal-reserve-be/


----------



## Purple

TheBigShort said:


> https://www.theguardian.com/busines...b013613fffb49a#block-57d16664e4b013613fffb49a
> 
> And this report from RTE about US Federal reserve thinking
> http://m.rte.ie/news/business/2016/0907/814967-us-federal-reserve-be/


Yea, in Germany and the USA. that has nothing to do with a tiny open economy; apples and oranges.


----------



## TheBigShort

Purple said:


> Yea, in Germany and the USA. that has nothing to do with a tiny open economy; apples and oranges.



Yeh, tiny open economies should not have wage growth. They are there to service the needs of the big consuming nations only. One day, with some luck, the Irish workforce can look forward to wages and conditions as good as China! 
You really do aspire to great things.


----------



## TheBigShort

Purple said:


> and have slipped way down the list for competitiveness



Source please.


----------



## Firefly

TheBigShort said:


> I don't stand over it, not in numeric terms anyway. _My point was debt as a percentage of income._ In numeric amounts you would be correct in relating higher debt amounts with wages.



You never said that. You said wages had nothing to do with debt.


----------



## Firefly

TheBigShort said:


> Its a fair point, and due to fiscal treaties and deficit spending limits Ireland cannot do this.



*And AMEN to that!* Can you imagine where we would be otherwise. Even with the caps we have Benchmarking 2.0 with the bus drivers!!


----------



## Purple

TheBigShort said:


> Yeh, tiny open economies should not have wage growth. They are there to service the needs of the big consuming nations only. One day, with some luck, the Irish workforce can look forward to wages and conditions as good as China!
> You really do aspire to great things.


What on earth are you talking about?
We are already one of the highest wage economies in the world.


----------



## Purple

TheBigShort said:


> Source please.


World economic forum ranks us at 13th for labour market efficiency.
While it's improving since the claw back of some of the massive pay increases during the boom it's still not as good as it was in the late 1990's.
If people want pay increases they need to be more efficient; add more value. 
Take the socialist cotton wool out of your ears and the pink tinted glasses off. 
I'd love it if everyone was better off but we should not enact policies based on ideology which, in the medium to long term, will hurt the people we are looking to help.


----------



## Deiseblue

Hasn't the question posed by the thread already been answered ?

IBEC has suggested that pay increases amongst large companies has averaged out at 2 % annually for the years 2014 & 2015 with increases for this year edging towards 3% .

The successful strike action by Luas employees , albeit a private sector company , has set the bar extremely high across the entire transport sector & I do believe that an increase in excess of the rejected Labour Court recommendation of 8.2% will be achieved by the current & putative industrial actions.

The ESB Unions have concluded a front loaded increase of 5.5% over 2 1/2 years with a lump sum of €2,750.

The FSU ( formerly IBOA ) has negotiated pay increases across the Banking Sector , 4.8 % in BOI over 2 years , 2.2 % over 1 year in AIB & between 1.75 % & 8% in Ulster Bank over 1 year plus a €600 bonus.

The " yellow pack " system across the nursing , consultants & teaching sectors is soon  to be a thing of the past & I'm sure the Unions will ensure that this continues across the entirety of the Public Sector & of course the gradual restoration of pay cuts is currently progressing

It appears also that the MNC's are being forced to offer substantially increased salaries to attract qualified staff in order to offset the cost of renting/purchasing houses , taxation issues etc.

The minimum wage seems set to increase , albeit marginally.

So , my conclusion is that yes it is time for wage increases , a view seemingly shared by Private & Public sector employers , employees and Unions.


----------



## Purple

Deiseblue said:


> Hasn't the question posed by the thread already been answered ?


The question is "Is it time for wage increases" not are wage increases happening.
The OP suggested that wage increases would be good for the economy and so we should have them. A reasonable question. 
That's different from Unions coercing pay rises by putting a gun to the head of the people of Ireland.
We've had quite enough of that from the various vested interest groups over the last couple of decades.


----------



## Firefly

Deiseblue said:


> Hasn't the question posed by the thread already been answered ?
> 
> So , my conclusion is that yes it is time for wage increases , a view seemingly shared by Private & Public sector employers , employees and Unions.



Hi Deise,

Wages are increasing in a lot of sectors and I will certainly be increasing my own rates soon. However, the question posed was "Is it time for wage increases" and I think this needs to be on a case by case basis. Any company losing money shouldn't even dream about raising wages for it's staff and ditto for public sector wages & pensions when we as a country are _still borrowing to pay for day to day consumption._

Firefly.


----------



## Protocol

Firefly said:


> Hi Deise,
> Any company losing money shouldn't even dream about raising wages for it's staff and ditto for public sector wages & pensions when we as a country are _still borrowing to pay for day to day consumption._
> 
> Firefly.



We are not.

The public deficit is below the public cap exp.

So borrowing can be said to be purely for cap purposes.


----------



## Protocol

Purple said:


> We are already one of the highest wage economies in the world.



Given productivity levels in Ireland, as a whole, wages are not high.

Here is 2015 labour cost data:


----------



## Protocol

Our labour costs are 10th in the EU.

Employers PRSI is below average.

Note that average wages are fairly similar to Germany's, yet our price level is 20% higher.


So Irish businesses charge 20% more than Germany, on average, yet pay similar wages.

Why?

I suggest the following:

too high property costs, rents are criminally high, some commercial needs need to fall 90%, yes, I repeat 90%

too high energy costs

too high medical / legal  / insurance costs



If the price level fell 10%, there would be less need for wage increases.


----------



## Deiseblue

Firefly , that really doesn't reflect however the reality of the situation for Public Sector employees.
The Government & Unions entered into an Agreement to avoid IR difficulties whereby the pay cuts suffered by employees would be gradually restored and that is currently happening , it also began to dawn on them that it was becoming increasingly difficult to recruit much needed nurses , doctors & consultants on the reduced wages for new entrants & so pragmatically they are scrapping this  two tiered system , the same is now going to apply across the teaching system - the ASTI remain outside the tent currently & the rest of the Public Sector will surely follow suit.
It does appear that the majority of private sector companies who are in a position to do so are increasing salaries , a statement backed up by IBEC research.
Given the above & the expected increase in the minimum wage it does appear that both private & public sectors ( this sector for more pragmatic reasons ) have concluded that it is time for wage increases.


----------



## Purple

One of the major reasons we find it hard to employ highly skilled people is because income taxes are so high.
Someone on €100k per year pays €12k more in income taxes than the same person in the UK. That's right folks, the person in the UK on the same salary takes home €230 a week more. That means the same person has to earn far more to take home the same wage in Ireland. So; same skills, same job, same productivity and same take home pay = much lower productivity per € paid because the state takes a larger slice of the gross income and so gross incomes have to be higher.


----------



## Firefly

Protocol said:


> We are not.
> 
> The public deficit is below the public cap exp.
> 
> So borrowing can be said to be purely for cap purposes.



Seeing is believing - watch that bad boy go!

http://www.financedublin.com/debtclock.php


----------



## TheBigShort

Firefly said:


> You never said that. You said wages had nothing to do with debt.



Thats true, I never said that. But that was my intention when talking about levels of debt. My fault for not making that clear.


----------



## TheBigShort

Firefly said:


> *And AMEN to that!* Can you imagine where we would be otherwise. Even with the caps we have Benchmarking 2.0 with the bus drivers!!



That is to miss the point. Fine if we impose those restrictions on our economic policy, but it isnt worth the effort if the ECB hits the printing presses and starts injecting new debt into selected areas of the economy that have no productive value. 
The point of the fiscal deficit limits is to ensure governments dont lose the run of themselves in managing the economy. Which sounds sensible, but instead, we allow the ECB to do 'whatever it takes' (Draghi) to inject stimulus into the economy. The ECBs answer is an asset, or more appropriately a liability, purchasing program that is only creating stock market, bond market, property market bubbles that have no intrinsic value and that only a small percentage of people benefit from.
On the other hand, the millions upon millions of ordinary working citizens across Europe are going to have to live with the consequences of this lunacy.
My view, would be to begin programs of capital infrastructure, creating real jobs, real income. This will return increases in wages to millions of Europeans and in turn, create an inflationary effect, which is the stated aim of the ECB.
Do you agree?


----------



## TheBigShort

Purple said:


> What on earth are you talking about?
> We are already one of the highest wage economies in the world.



This is where you get it all muddled up. On the one hand you state that we are one of the highest wage economies in the world and you point that we are 13th most competitive country (and improving) in the world. Yet you disagree with wages rising, you claim that to be a bad thing, even though, with one of the highest wage economies we are improving on competitiveness!
On the otherhand, in another thread, you identify high income earners (your friend in US) as the type of person we need to attract into the economy. So you would like a high wage economy, but on the otherhand, you think increasing wages are a bad thing.
So the only thing I can conclude is that you think it is desirable to pay top dollar for highly productive expertise (i have no issue there), but that the millions who work through manufacturing, production, distribution, servicing, etc this expertise into anything worthwhile, should keep their heads down and just be grateful to have a job and stop making sounds about pay increases - sounds like China to me.


----------



## PGF2016

TheBigShort said:


> So the only thing I can conclude is that you think it is desirable to pay top dollar for highly productive expertise (i have no issue there), but that the millions who work through manufacturing, production, distribution, servicing, etc this expertise into anything worthwhile, should keep their heads down and just be grateful to have a job and stop making sounds about pay increases - sounds like China to me.



China is losing jobs to lower cost economies such as Vietnam. I would think those on this thread who favour not raising wages take this stance to avoid the same happening in Ireland.


----------



## Purple

TheBigShort said:


> This is where you get it all muddled up. On the one hand you state that we are one of the highest wage economies in the world and you point that we are 13th most competitive country (and improving) in the world. Yet you disagree with wages rising, you claim that to be a bad thing, even though, with one of the highest wage economies we are improving on competitiveness!
> 
> On the otherhand, in another thread, you identify high income earners (your friend in US) as the type of person we need to attract into the economy. So you would like a high wage economy, but on the otherhand, you think increasing wages are a bad thing.
> 
> So the only thing I can conclude is that you think it is desirable to pay top dollar for highly productive expertise (i have no issue there), but that the millions who work through manufacturing, production, distribution, servicing, etc this expertise into anything worthwhile, should keep their heads down and just be grateful to have a job and stop making sounds about pay increases - sounds like China to me.




I have no problem with pay increases which are market led. If a business can’t get the people they need at the wages they are offering then they will have to offer more.

If a business has more than enough applicants for the jobs they are offering at the wages they are currently paying then there should be no pay increases.


By the way, I’m a tradesman working in a manufacturing company. I spent years working on machines getting my hands dirty. I’m the sort of person Billy Bragg sings about. I, like the people I work with, have no time for Unions or socialism and see no reason for anything other than market forces to determine wages.


We fell down the competitiveness rankings as our pay increased faster than our productivity. We have gone back up to a large extent due to the fact that we have not had pay increases of any substantial value over the last few years. If we did as Dieseblue suggests and just give pay increases to everyone then we’d just lose more jobs. No offense intended; I am not comparing the two of you.

[broken link removed] is a good graph on just how crazy it got, driven by massive pay increases in construction and the public sector. Neither of these sectors create net wealth, i.e. bring money into the country, but increasing wages in those sectors creates wage pressures in the internationally traded goods and services sector. That in turns costs jobs in those areas and reduces our national wealth.


I do find your points about quantitative easing interesting though.


----------



## Purple

By the way TheBigShort, have you read [broken link removed]? (thanks Firefly)


----------



## Firefly

TheBigShort said:


> ..... we allow the ECB to do 'whatever it takes' (Draghi) to inject stimulus into the economy. The ECBs answer is an asset, or more appropriately a liability, purchasing program that is only creating stock market, bond market, property market bubbles that have no intrinsic value and that only a small percentage of people benefit from.
> On the other hand, the millions upon millions of ordinary working citizens across Europe are going to have to live with the consequences of this lunacy.



I agree with that - I'm not sold on printing money (or whatever they call it) as it hurts savers and rewards borrowers.



TheBigShort said:


> My view, would be to begin programs of capital infrastructure, creating real jobs, real income. This will return increases in wages to millions of Europeans and in turn, create an inflationary effect, which is the stated aim of the ECB.
> Do you agree?



I do agree. Bonds and interest rates are very low so now would be a good time, except for the fact that we currently owe 180bn and not only that, _we are continuing to borrow to consume_. If and when we see our national debt falling due to being able to run a current account surplus and start paying down our national debt, then I would be all for what you have outlined.

As bad as QE is it's not adding to our national debt!


----------



## TheBigShort

Purple said:


> I have no problem with pay increases which are market led. If a business can’t get the people they need at the wages they are offering then they will have to offer more.





Purple said:


> If a business has more than enough applicants for the jobs they are offering at the wages they are currently paying then there should be no pay increases.



Its too simplistic a method to determine overall income levels of an economy.
As a basic accounting exercise you are correct. But the topic is not about individual companies or even individual workers for that matter.
The topic is about economic policy in its broadest sense - my fault if the topic headline does not make this clear, but my OP sets the tone of ECB economic policy to stoke inflation into eurozone economies through QE.



Purple said:


> I, like the people I work with, have no time for Unions or socialism and see no reason for anything other than market forces to determine wages.



Allowing market forces to determine wages is fine if applied in a free market economy. But we dont live in a free market economy, there are too many interfering factors that corrupt the notion of a free market. Minimum wage legislation is an interference, bank bailouts are an interference, energy and transport regulators interfere, RRP interfere, VAT and other taxes, tariffs, and of course you have to deal with the vast range of human emotions ranging from aggression and violence to greed and corruption to passive submission.
There is also the matter of distinguishing between those who _create _the wealth and those who _control _the wealth.
All these things, and much more, are variable factors that interfere with the concept of a free market economy.
We are closer to finding life outside the solar system than we are to living in a free market economy.
I do laugh when I get labelled as a left-wing socialist searching for some socialist paradise, especially when it comes from right-wing free marketeers who believe they live in a free market economy.

As a side, I dont know if you are familiar with the Wells Fargo bank scandal in the US. If you have 17 mins to spare, it is worth checking out this clip from the Senate hearing between Senator Warren and the Wells Fargo CEO, John Stumpf. Its a brilliant example of how some people award themselves extravagant salaries and perks on the back of ordinary workers.

https://youtu.be/xJhkX74D10M



Purple said:


> We have gone back up to a large extent due to the fact that we have not had pay increases of any substantial value over the last few years. If we did as Dieseblue suggests and just give pay increases to everyone then we’d just lose more jobs.



The issue of pay increases correlates with a growing economy. The economy is growing, and we can point to certain sectors, be it Pharma, Food, IT etc as the generators of the growth. But without much thought, we can readily interpret that such growth in those sectors as being reliant in some form on the availability of a functioning transport sector. Be it the transport of goods and produce to ports for export and import, or the transport of workers from their homeplace to workplace.
So the argument against Luas drivers that "all they have to do is push a button", is mute. What is important is the capacity of those drivers to transport workers across the city - ( im not sure if you ever did check out the Transdev website boasting of its achievements in increased passenger numbers year in year out?) to their place of work, in order to accommodate those other industries in exploiting market opportunities for profit.





Purple said:


> [broken link removed] is a good graph on just how crazy it got, driven by massive pay increases in construction and the public sector. Neither of these sectors create net wealth



Again, we are back to basic accounting analogies and understanding the difference between market value and economic and social value.
If the Gardai costs €x bn to fund and is supported wholly out of taxation, then you are correct. But if we got rid of the Gardai, it is reasonable to assume that crime would increase to such a level that the insurance industry would collapse (if there is no law enforcement, why not rob a bank or three). And if there is no insurance, then individuals and businesses become fully liable for injury. This will lead to mass bankruptcies and mass unemployment.


----------



## TheBigShort

Purple said:


> By the way TheBigShort, have you read [broken link removed]? (thanks Firefly)



I have now, thanks. Is there any particular reason why you want to share this with me?


----------



## Firefly

TheBigShort said:


> But we dont live in a free market economy, there are too many interfering factors that corrupt the notion of a free market.
> Minimum wage legislation is an interference, bank bailouts are an interference, energy and transport regulators interfere, RRP interfere, VAT and other taxes, tariffs, and of course you have to deal with the vast range of human emotions ranging from aggression and violence to greed and corruption to passive submission.



I agree with you there and you could add Bertie (the socialist) to the mix and bench-marking!



TheBigShort said:


> The issue of pay increases correlates with a growing economy. The economy is growing, and we can point to certain sectors, be it Pharma, Food, IT etc as the generators of the growth. But without much thought, we can readily interpret that such growth in those sectors as being reliant in some form on the availability of a functioning transport sector. Be it the transport of goods and produce to ports for export and import, or the transport of workers from their homeplace to workplace.
> So the argument against Luas drivers that "all they have to do is push a button", is mute. What is important is the capacity of those drivers to transport workers across the city - ( im not sure if you ever did check out the Transdev website boasting of its achievements in increased passenger numbers year in year out?) to their place of work, in order to accommodate those other industries in exploiting market opportunities for profit.



I agree with you there, however, during the LUAS strike the company said it was inundated with CVs which would indicate a ready market. To think about how companies view the cost of labour, consider how you compare companies such as when you decide where to buy a TV or who to book a flight with. You pay based on the product / service and price.


----------



## TheBigShort

Firefly said:


> I agree with you there, however, during the LUAS strike the company said it was inundated with CVs which would indicate a ready market. To think about how companies view the cost of labour, consider how you compare companies such as when you decide where to buy a TV or who to book a flight with. You pay based on the product / service and price.



But that would appear to misunderstand the nature of the dispute, which is understandable given the vastly one-sided nature of the media coverage.
The notion that Transdev should have simply let the LUAS workers go on the basis of their failure to work, and then to hire even lower paid workers from the CV applications would have cost the state possibly hundreds of millions is lawsuits and legal settlements from other companies who lost out on the tender process by offering inferior pay and conditions.
Transdev only operate the Luas on the basis of a winning tender application that beat off competition from other private transport companies.
That application confirmed it would, amongst other terms and conditions, pay its workers on a set salary scale over a period of time. It also allowed for reviews of the payscales every five years, and this is where the dispute began to emerge.
In 2009, when a pay review was due, SIPTU and Transdev management agreed to a 0% pay rise in return for assurances that no redundancies were to be made. The reason for this mutual agreement was twofold. The company was projecting growth in passenger numbers and revenue streams each year for the next five years. But with the economic crash occuring in the backdrop it was up in the air if everything would fall flat on it's face. Hence the neutral position by both sides in 2009. However, both sides agreed to reserve the right to return to this agreement if 1) the company grew as planned regardless of the crash 2) if growth stalled and the company required to impose cost cutting measures.
In 2014, with the crisis receding, and Transdev having achieved its growth targets throughout the period, SIPTU sought as part of the agreement and 5yr pay review to look for pay rises that would have occured in ordinary circumstances. Transdev stalled, citing the continued existence of emergency legislation to cut workers pay. In reality, they just played SIPTU, knowing that as long as Labour Party were in government, SIPTUs hands were tied.
As soon as Labour lost office, within days SIPTU were balloting their members. The infamous 50% pay increase was a result of a claim dating back to 2009 and continuing to 2018 - a ten year pay claim. As representatives of the workers it is their responsibility to negotiate from the maximum position. In any normal circumstances where a company is growing, workers may expect to receive pay rises in the order of between  around 1 and 5% a year. SIPTU simply took the max position of 5% for ten years and hence the 50% pay rise claim. It was always a negotiating position and was stated publicly.


----------



## Firefly

TheBigShort said:


> But that would appear to misunderstand the nature of the dispute, which is understandable given the vastly one-sided nature of the media coverage.



Would you include RTE in that group because that's my primary source for Irish news?



TheBigShort said:


> The notion that Transdev should have simply let the LUAS workers go on the basis of their failure to work, and then to hire even lower paid workers from the CV applications would have cost the state possibly hundreds of millions is lawsuits and legal settlements from other companies who lost out on the tender process by offering inferior pay and conditions.



I never said anything about Transdev letting their workers go, I was merely showing that it was reported that a lot of people applied for jobs there during the strike, which indicates that a lot of people would happily work for the terms & conditions before the increases. If I implied otherwise I take it back. I was also just trying to show how companies "shop around" for labour in the same way as people "shop around" for companies when both make purchases. 




TheBigShort said:


> Transdev only operate the Luas on the basis of a winning tender application that beat off competition from other private transport companies.
> That application confirmed it would, amongst other terms and conditions, pay its workers on a set salary scale over a period of time. It also allowed for reviews of the payscales every five years, and this is where the dispute began to emerge.
> In 2009, when a pay review was due, SIPTU and Transdev management agreed to a 0% pay rise in return for assurances that no redundancies were to be made. The reason for this mutual agreement was twofold. The company was projecting growth in passenger numbers and revenue streams each year for the next five years. But with the economic crash occuring in the backdrop it was up in the air if everything would fall flat on it's face. Hence the neutral position by both sides in 2009. However, both sides agreed to reserve the right to return to this agreement if 1) the company grew as planned regardless of the crash 2) if growth stalled and the company required to impose cost cutting measures.
> In 2014, with the crisis receding, and Transdev having achieved its growth targets throughout the period, SIPTU sought as part of the agreement and 5yr pay review to look for pay rises that would have occured in ordinary circumstances. Transdev stalled, citing the continued existence of emergency legislation to cut workers pay. In reality, they just played SIPTU, knowing that as long as Labour Party were in government, SIPTUs hands were tied.
> As soon as Labour lost office, within days SIPTU were balloting their members. The infamous 50% pay increase was a result of a claim dating back to 2009 and continuing to 2018 - a ten year pay claim. As representatives of the workers it is their responsibility to negotiate from the maximum position. In any normal circumstances where a company is growing, workers may expect to receive pay rises in the order of between  around 1 and 5% a year. SIPTU simply took the max position of 5% for ten years and hence the 50% pay rise claim. It was always a negotiating position and was stated publicly.




Interesting insight there. Particularly the bit about "SIPTU, knowing that as long as Labour Party were in government, SIPTUs hands were tied." I thought Labour would be more pro unions?


----------



## TheBigShort

Firefly said:


> Would you include RTE in that group because that's my primary source for Irish news?



I wouldn't single out any media outlet as being biased on one side over the other. It is my perception from what I read and heard on TV, radio, papers etc.
As an example, the 50% pay claim was derided in many quaters, but I rarely heard any detailed analysis of how it was derived at.
A second example was providing ample air time to a well-known CEO, with a track record of not recognising trade unions, to demean the workers themselves and hurl personal insults at them, even though the dispute had nothing to do with him.  Furthermore, no questions asked over his enormous salary and wealth, and what he actually does himself to earn this money.



Firefly said:


> I never said anything about Transdev letting their workers go, I was merely showing that it was reported that a lot of people applied for jobs there during the strike, which indicates that a lot of people would happily work for the terms & conditions before the increases. If I implied otherwise I take it back. I was also just trying to show how companies "shop around" for labour in the same way as people "shop around" for companies when both make purchases.



Transdev were engaged in a recruitment program to enable their expansion of the tram line, hence the collection of CV's. Im sure their are plenty of people willing to work for _less _than the rates provided. But that misses the point. Transdev would still be obliged to enter into pay negotiations with workers with a view to improving their pay based on company performance.
Its nice that there are workers prepared to work for less, but I would guess there would be customers willing to pay less for fares too. But it doesn't work like that, prices are set, and so are wages.



Firefly said:


> Interesting insight there. Particularly the bit about "SIPTU, knowing that as long as Labour Party were in government, SIPTUs hands were tied." I thought Labour would be more pro unions?



A portion of SIPTU members subscriptions goes towards funding the Labour Party. If SIPTU had striked earlier then it could have put a strain between the FG/Lab coalition. 
I may have got my timelines wrong, but if you go to SIPTU website, you can see from Jan 2016 press releases and onwards, the sharp rise in actions relating to industrial disputes.


----------



## Gerry Canning

On thread there are 2 clear and opposing views.
Both have merit and both have flaws.

It appears that life expenses for workers , eg rents ,are increasing.
It appears that wages for workers have reduced since (fluffy) times.
It appears that (austerity ) type taxes have reduced real income.
It appears that unionised workforces are to the fore in requiring more .( if unionized workers achieve more the rest will get more)
It appears that most employers are making more profits.
It appears the economy is (mended) to a fair degree.



If things have/are improving then of course its time for real wage increases.
It is too trite to yowl about (the economy is still fragile) or ( we still have too much debt), ie, the Dim Capitalist model !
It is too trite to yowl about ( companies are now in good profit) = a pay increase.ie . The Dim Socialist model!

No harm being back to sectoral type negotiations,
Common sense will rule in most cases ,
1. If employers are leg-lifting = long strikes.
2. If workers/unions are leg-lifting = jobs gone.

 In spite of what passes for Newspapers/News , most employers/workers are sensible and most things get sorted before they make headline grabbing stuff.


----------



## PGF2016

Gerry Canning said:


> It appears the economy is (mended) to a fair degree.



The country is still running a deficit and has a large pension time bomb. Now is not the time for large scale wage increases.


----------



## Purple

I find it amusing that people accuse the Irish media of being right-wing.

It is a highly unionised sector and the main media outlet in the country, RTE, is almost totally unionised and the employees are effectively on semi-state/public sector contracts.

Note that employees are referred to as “workers” by just about every media outlet. That is a quintessentially socialist term.

Note that the pay increases being looked for by the protected sector are referred to as “pay restoration”, the term used by Unions to justify the increases they are looking for.


My gripe with the media in general, and RTE in particular, is the tabloidization of their news coverage. Every story on RTE, from the evening news and Clare Byrne Live is covered from a human interest point of view. There is a report with an ashen-faced mother/father/victim etc. and lots about how they feel. Once the emotions of the viewer have been stimulated there follows a panel discussion grounded firmly in the emotive specifics of such cases. The broader causes of the issue, the personal responsibility of the protagonists, the negative societal impact of the proposed solutions or the financial costs and their implications on other social programmes are never discussed.


Socialist or realist, I would like to see the standard of the discussion being raised from the tabloid and the emotive.


----------



## TheBigShort

I would agree with a great deal of that sentiment (Gerry Canning) but the topic has gone off track somewhat (im as much to blame for that, a poorly worded title if anything).
Regardless of whether the economy is growing or not, regardless of whether that should result in wages increaes or not, the real topic here is the ECB QE money printing program designed, apparently, to stoke inflation into eurozone economies.
My view is that this is lunacy and that ultimately wealth will be destroyed, companies will fail, wages will fall, and we will be back to another deep recession before too long.
Instead, I think governments could borrow from the ECB at 0%, to initiate capital spending programs. Resulting in real job creation, real wage growth, real inflation, real debt reduction.


----------



## Gerry Canning

PGF2016.

I understood the deficit is workable ie we can service everything ie we are ok ish ?

The Pension time bomb is on my reading, still solvable and indeed maybe a consequence of lower than need be wages in sectors.

No one said large scale increases and, I take  from your tone and  I agree that  we need to be careful about increases.

Over the years I have worked, there has never been a good time for wages to increase , but c,est la vie !


----------



## Purple

Gerry Canning said:


> On thread there are 2 clear and opposing views.
> 
> Both have merit and both have flaws.
> 
> 
> It appears that life expenses for workers , eg rents ,are increasing.
> 
> It appears that wages for workers have reduced since (fluffy) times.
> 
> It appears that (austerity ) type taxes have reduced real income.
> 
> It appears that unionised workforces are to the fore in requiring more .( if unionized workers achieve more the rest will get more)
> 
> It appears that most employers are making more profits.
> 
> It appears the economy is (mended) to a fair degree.



The economy is far from mended.

Many employers are still struggling under debts and in dire need to investment into businesses which haven’t seen a profit in nearly a decade.

If unionised employees get a pay rise the non-unionised employees will have to pay for it and so will probably end up with less.

We haven’t had any austerity in Ireland; we continue to borrow to live beyond our means.

If people have less money due to higher taxes then reduce taxes.






Gerry Canning said:


> If things have/are improving then of course its time for real wage increases.



Why? If my employer invents a good piece of technology (and I had nothing to do with it) and makes more money why should I get a pay rise?



Gerry Canning said:


> It is too trite to yowl about (the economy is still fragile) or ( we still have too much debt), ie, the Dim Capitalist model !


 It is utterly trite to ignore reality. We did that for a decade and a half and ended up bust.



Gerry Canning said:


> It is too trite to yowl about ( companies are now in good profit) = a pay increase.ie . The Dim Socialist model!


 That’s what you just said above; “If things have/are improving then of course its time for real wage increases”.




Gerry Canning said:


> No harm being back to sectoral type negotiations,
> 
> Common sense will rule in most cases ,
> 
> 1. If employers are leg-lifting = long strikes.
> 
> 2. If workers/unions are leg-lifting = jobs gone.



Pay etc should never be negotiated on a sector by sector basis. It should be on an employee by employee basis.

Nobody should get a pay increase due to someone else’s hard work.




Gerry Canning said:


> In spite of what passes for Newspapers/News , most employers/workers are sensible and most things get sorted before they make headline grabbing stuff.


 True.


----------



## Purple

TheBigShort said:


> I would agree with a great deal of that sentiment (Gerry Canning) but the topic has gone off track somewhat (im as much to blame for that, a poorly worded title if anything).
> Regardless of whether the economy is growing or not, regardless of whether that should result in wages increaes or not, the real topic here is the ECB QE money printing program designed, apparently, to stoke inflation into eurozone economies.
> My view is that this is lunacy and that ultimately wealth will be destroyed, companies will fail, wages will fall, and we will be back to another deep recession before too long.
> Instead, I think governments could borrow from the ECB at 0%, to initiate capital spending programs. Resulting in real job creation, real wage growth, real inflation, real debt reduction.


I'm with you on all of that; if the choice is QE or borrowing for capital expenditure then the latter is by far the best option.


----------



## Purple

TheBigShort said:


> I have now, thanks. Is there any particular reason why you want to share this with me?


Is speaks to the danger of what you are concerned about (QE) and the danger of the state controlling such a large part of the economy. Just because the state doesn't own a business it still effectively controls a large part of it when it takes two thirds of peoples marginal income in payroll and sales taxes and redistributes so must of the nations wealth. 
There is a reason we (Europe) are falling behind Asia so quickly and indeed slipping against the USA at the same time. We are closer to a command economy now than at any time in our history.


----------



## Purple

TheBigShort said:


> I would agree with a great deal of that sentiment (Gerry Canning) but the topic has gone off track somewhat (im as much to blame for that, a poorly worded title if anything).


Discussions like this go off topic no matter how you word them.
Reading your first post again the topic is quite clear.


----------



## Firefly

TheBigShort said:


> Instead, I think governments could borrow from the ECB at 0%, to initiate capital spending programs. Resulting in real job creation, real wage growth, real inflation, real debt reduction.



I would agree with you but I wouldn't do the latter until we are comfortably running a current account surplus and are paying down our national debt. Even at 0%, the money will still need to be repaid by our children / grandchildren. It's like all those buying cars on PCP at the moment - they're having a great time now but it won't be as funny for them down the road when the balloon payments need to be repaid.


----------



## PGF2016

Gerry Canning said:


> No one said large scale increases and, I take  from your tone and  I agree that  we need to be careful about increases.



Sorry, badly phrased. This captures what I meant:


Purple said:


> Pay etc should never be negotiated on a sector by sector basis. It should be on an employee by employee basis.


----------



## Firefly

TheBigShort said:


> Its nice that there are workers prepared to work for less, but I would guess there would be customers willing to pay less for fares too. _But it doesn't work like that, prices are set, and so are wages._



Prices change all the time! Granted in the case of LUAS I haven't seen them come down, but lots of other businesses raise and reduce their costs continually.


----------



## Gerry Canning

Purple,

As usual; agree mostly with you. (I know we could and should do things smarter)

If we require services ,we can,t really reduce taxes.

Decade and a half = bust.
Caused by weak management and greedy capitalism,
 I hope with current uplift we are not re-cycling into another bubble ?

Someone invents good technology , then he/she must largely benefit, but generally he/she benefitted by our paying for roads/education , so its fair that the rest , (in that case employees, whose taxes paid for infrastructure ) get something.

Pay to be done employee by employee.
Ideally = yes,
But gets caught poor reviewing .
Generally , give a set wage and promote incentivise better workers . (hard to do well).

Utopia in wages is far off !
Reckon things level off every decade.


----------



## Purple

Gerry Canning said:


> Decade and a half = bust.
> Caused by weak management and greedy capitalism,
> I hope with current uplift we are not re-cycling into another bubble ?


Financial collapse caused by utter incompetence by the people running our banks and the people running the Central Bank, Financial Regulator and the Department of Finance. Greed in only a problem when it trumps competence and rational behavior. Of course the greed and stupidity of the people who did the borrowing is just as big a factor. We are after all grown-up's and therefore responsible for our own decisions.

The rest of the collapse was caused by a narrowing of our tax base until only the top 20% of earners made any meaningful contribution through income tax, a massive increase in the size and pay rates of the state sector, a massive increase in the size of our welfare payments and a massive increase in the amount of money we wasted, sorry, spent, on Health (mainly in the form of pay increases). That bit had nothing to do with greedy capitalism and lots to do with the greed and selfishness of lots and lots of other people.

The latter is by far the biggest factor in our current woes and yet it is that which the be-whiskered brothers now wish to replicate.


----------



## TheBigShort

Firefly said:


> Prices change all the time! Granted in the case of LUAS I haven't seen them come down, but lots of other businesses raise and reduce their costs continually.



Yes of course, but I was thinking in the mind of prices in the round, the general cost of living. For sure we can all take advantage of two-for-one offer in the supermarket, but have you ever noticed that no matter how many offers there are, that your grocery bill stays within a certain range? Ditto your phone, internet, insurance, TV, etc. 
Notably it is (nearly) always at the behest of the business owner to dictate the price on offer. When was the last time you filled up a shopping trolley of €100 and offered to pay say, €90? 
On the otherhand, im getting my chimney sweeped soon and I have three quotes of €40, €50 and €80. But as I only get a chimney sweep once every few years, the price range is negligible in calculating the cost of living.
So, in conjunction with the main point of this topic, Ireland's inflation rate (CSO) is hovering around negative territory for sometime and the ECB is trying to stoke inflation through money printing. 
I would argue, a capital spending program that stoked employment and wage increases as the preferred method.


----------



## TheBigShort

Purple said:


> Of course the greed and stupidity of the people who did the borrowing is just as big a factor.



This is where I would differ. Whilst I accept everyone has a responsibility in how much they borrow, there can be no equalizing of the blame between borrower and lender. 
The reality is that most borrowers borrowed on the basis of need to finance a the cost of a purchase (that is, they didn't borrow €50,000 to buy a €25,000 car, they borrowed €25,000). Most borrowers only borrow money at irregular intervals (in the case of borrowings for a home, probably only once or twice in a lifetime). And in most cases, borrowers dont pretend to have expertise in financial matters, both locally and globally.

On the otherhand, a bank, will lend day in, day out, multiple times, throughout the year to thousands of borrowers. The bank will not be overly concerned about what the money is for, but more on the probability of it being repaid with interest. And the bank will deduce this probability on the basis of its financial 'expertise'. 
To me, its like going to a restaurant for a meal and getting food poison and then being told that I am equally to blame for the food poisoning.
Of course we are all human and mistakes can be made, but if the restaurant can show it took the required measures in sourcing food, in matters of food handling and hygiene, then it should be able to insure against such instances.
However, if short cuts are taken, if food is sourced that cannot be traced, if hygiene standards are poor, then the restaurant is wholly responsible for the poisoning. But either way, the customer should not have blame attributed to them.
This applies to the banks too. In the end, no-one can borrow too much and ridiculous amounts of money from a bank, without the agreement of the banks financial 'expertise'.


----------



## Firefly

TheBigShort said:


> The reality is that most borrowers borrowed on the basis of need to finance a the cost of a purchase (that is, they didn't borrow €50,000 to buy a €25,000 car, they borrowed €25,000). Most borrowers only borrow money at irregular intervals (in the case of borrowings for a home, probably only once or twice in a lifetime). And in most cases, borrowers dont pretend to have expertise in financial matters, both locally and globally.
> 
> On the otherhand, a bank, will lend day in, day out, multiple times, throughout the year to thousands of borrowers. The bank will not be overly concerned about what the money is for, but more on the probability of it being repaid with interest. And the bank will deduce this probability on the basis of its financial 'expertise'.



Put a mark on the wall, I agree with all of this! Just to add - people of course need to take personal responsibility and therefore not borrow too much - I remember being offered approx 120k more than I "needed" but didn't all of a sudden go out looking for a more expensive house. Likewise, the bank should be making sure it gets it's money back. Just like someone knocking on my door looking for a lend of 10e the onus is on me to determine if I will get the tenner back. 

The problem (and we're way off-point) is that we have all picked up the mess!


----------



## Firefly

TheBigShort said:


> Yes of course, but I was thinking in the mind of prices in the round, the general cost of living. For sure we can all take advantage of two-for-one offer in the supermarket, but have you ever noticed that no matter how many offers there are, that your grocery bill stays within a certain range? Ditto your phone, internet, insurance, TV, etc.
> Notably it is (nearly) always at the behest of the business owner to dictate the price on offer. When was the last time you filled up a shopping trolley of €100 and offered to pay say, €90?
> On the otherhand, im getting my chimney sweeped soon and I have three quotes of €40, €50 and €80. But as I only get a chimney sweep once every few years, the price range is negligible in calculating the cost of living.


You are correct to be fair, however those businesses you mentioned operate in a market with only a few competitors and they are also operating in the types of industries that have massive barriers to entry due to costs. As such they can enjoy high prices and we can only enjoy paying them. Looking at your quotes for the chimney sweepers you can see how things operate when there is more competition - assuming they have the same competence, you can save half the cost through shopping around. In the same way, companies shop around when hiring someone. 



TheBigShort said:


> I would argue, a capital spending program that stoked employment and wage increases as the preferred method.


I would too prefer to go down this route, more so for providing work than to increase wages mind, however we can't do this as we have borrowed too much and are still running a deficit. It's kinda like seeing all those cheap houses in 2011 but there was no credit available to buy them!


----------



## Gerard123

Purple said:


> Financial collapse caused by utter incompetence by the people running our banks and the people running the Central Bank, Financial Regulator and the Department of Finance. Greed in only a problem when it trumps competence and rational behavior. Of course the greed and stupidity of the people who did the borrowing is just as big a factor. We are after all grown-up's and therefore responsible for our own decisions.
> 
> The rest of the collapse was caused by a narrowing of our tax base until only the top 20% of earners made any meaningful contribution through income tax, a massive increase in the size and pay rates of the state sector, a massive increase in the size of our welfare payments and a massive increase in the amount of money we wasted, sorry, spent, on Health (mainly in the form of pay increases). That bit had nothing to do with greedy capitalism and lots to do with the greed and selfishness of lots and lots of other people.
> 
> The latter is by far the biggest factor in our current woes and yet it is that which the be-whiskered brothers now wish to replicate.



Fantastic, couldn't have said it better. 



TheBigShort said:


> Whilst I accept everyone has a responsibility in how much they borrow, there can be no equalizing of the blame between borrower and lender.
> The reality is that most borrowers borrowed on the basis of need to finance a the cost of a purchase (that is, they didn't borrow €50,000 to buy a €25,000 car, they borrowed €25,000). Most borrowers only borrow money at irregular intervals (in the case of borrowings for a home, probably only once or twice in a lifetime). And in most cases, borrowers don't pretend to have expertise in financial matters, both locally and globally.



Said borrowers who should have borrowed, and could only afford, 25 grand to buy a car, saw their neighbour with a fancier car costing 50 grand and borrowed 50 grand.  Banks fault for giving it but the borrowers fault for wanting and obtaining it.  In terms of apportioning the blame its impossible to generalise, as it depends on specific facts and circumstances of each borrower.  I would have no hesitation in saying that it is my view most borrowers are culpable to a good or great degree for their predicament, sad and all that their current circumstances are with hindsight. 



TheBigShort said:


> To me, its like going to a restaurant for a meal and getting food poison and then being told that I am equally to blame for the food poisoning.



I have seen analogies but this one takes the biscuit (or the entire restaurant meal!!).  To continue with it, what happens if the customer bought a tin of rat poison and left it in the restaurant kitchen or at the table, perhaps opened?  If the restaurants supervision or standards were not up to scratch and the tin was not observed or removed, is the restaurant fully responsible with no responsibility on the customers part?  Saying that the customer had no hand, act or part and that it is entirely someone else's fault?  Come on please. 



TheBigShort said:


> Of course we are all human and mistakes can be made



Agree with that!


----------



## Gerry Canning

Gerard 123,
In (fluffy) times Joe Soap was prodded into excessive debt , Joe was culpable , but the lender a Regulated Professional was in too many cases (as a Regulated Professional )guilty of gross miss-selling.
What other industry would be permitted to hood wink people the way banks did?
If a car dealer  sold you a patently ludicrous car  , should you on taking his advice be forced to pay all?


----------



## T McGibney

Gerry Canning said:


> Gerard 123,
> In (fluffy) times Joe Soap was prodded into excessive debt , Joe was culpable , but the lender a Regulated Professional was in too many cases (as a Regulated Professional )guilty of gross miss-selling.
> What other industry would be permitted to hood wink people the way banks did?
> If a car dealer  sold you a patently ludicrous car  , should you on taking his advice be forced to pay all?



This is revisionism of the highest order.

A customer of good standing with a decent but unspectacular business came in to me about 10/12 years ago and told he was shutting his business as he wanted to build a housing estate in a small rural village. He needed projections done to support an application for a hefty bank loan.

I told him I would be happy to oblige but when I pointed out that the projections would need to incorporate the financial risks that he would face as a newbie property developer, and provide for contingencies for these risks, he went off and I never saw him again. He presumably got his projections together elsewhere as he got his plans off the ground and built the estate only to lose everything as when the crash came he had most of his properties unsold. I heard later that ended up without a cent to his name.

I don't buy the theory that this man, and others like him, were duped by banks or anyone else. They took big gambles which stood to make them fortunes had they paid off, and lose them fortunes if they didn't. And in many cases they didn't mind disregarding the advice of their own professional advisors to get what they wanted either. So how can they now claim that they relied for advice on bank salesmen who were never in the professional advice business in the first instance?

And yes, if I walk into a car dealership and buy a fancy car having drawn down an unsustainable loan to pay for it, of course I have to pay for the car. And if I take away the car without having paid for  it, I can expect a call from the cops.


----------



## Gerard123

Gerry Canning said:


> Gerard 123,
> In (fluffy) times Joe Soap was prodded into excessive debt , Joe was culpable , but the lender a Regulated Professional was in too many cases (as a Regulated Professional )guilty of gross miss-selling.



Thank you.  Joe was culpable.  I agree.  I also agree that the Banks were guilty of lots of things. 



Gerry Canning said:


> If a car dealer sold you a patently ludicrous car , should you on taking his advice be forced to pay all?



Of course you should pay, that's a ridiculous question.  He's not giving you advice, he's selling you a car. Should the tax payer bail the car dealer out if the customer cannot pay?  If you didn't pay the car should/would be seized, and action taken to recover debt. 

I too can provide examples of people who dismissed any mention of risks or caution, disregarded advice, sought out someone else to rubber stamp their wishes.  No sympathy for them, greed and reckless!!  

While my sympathy for Banks is on the very low side, trust me I have taken one to the FSO and it is now with the CB, I do not accept many of the one sided and distorted views provided.  Its not simply good vs evil scenario.  Individuals had personal responsibility for their action, greed took over many, etc.


----------



## PMU

TheBigShort said:


> In the context of general economic theory, wage increases are inflationary. .


No. If the supply of good and services increases to match the increase in wages (i.e. money in circulation) there is no need for inflation to increase. 



TheBigShort said:


> Central banks around the world are trying to stoke inflation. .


No. Central banks typically have price stability targets, i.e. inflation at no more than 2%. This is is not the same as saying that banks are deliberately trying to increase prices.



TheBigShort said:


> Their primary tool is QE which is failing. .


On balance it's been a great success, or at least using QE to generate money to allow central banks to carry out asset purchases has been successful, and by and large has not caused inflation.



TheBigShort said:


> It is only creating greater divides between rich and poor.


No. If a business can now borrow or borrow more because of QE both employees, who stand to gain from increased economic opportunity, benefit, and also the unemployed, who stand to gain from greater job opportunities, benefit.


TheBigShort said:


> This is why property prices are rising in affluent areas of capital cities around the world, but elsewhere they are stagnant. .


I doubt this is correct. This happens only of banks fuel a property boom; but they are not doing this, or at least not in Ireland due to the Central Banks quantitative restrictions on mortgage lending.  The UK also has various restrictions in place.



TheBigShort said:


> This is why debt burdens are increasing not reducing as all money issued today is on the basis of a loan taken out rather than the value of productivity..


At least in IE, debt burdens are decreasing. We had a debate on this here: http://www.askaboutmoney.com/threads/how-much-do-irish-households-owe-in-total.200063/#post-1483336.



TheBigShort said:


> The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden..


Actually it's through printing money, where the economy is already running at capacity and cannot produce enough goods and services to soak up the increase in money supply. It's also a disaster, and you only have to look at the US Confederate States; Weimar Germany and Allende's Chile to see what inflation does. Simply put, it destroys societies.



TheBigShort said:


> But it will also mean a massive transfer of capital to labour. Something that right wing free market worshipping monetarists cannot countenance right now.


I don't think it's just “right wing free market worshipping monetarists”. It's most central banks. If a worker saves part of his or her wages, that becomes 'capital'. But CBs want people to spend to generate economic activity. That's why you've got low or negative interest rates. To encourage you to spend, and not build up capital.


----------



## TheBigShort

Gerard123 said:


> Banks fault for giving it but the borrowers fault for wanting and obtaining it.



What is wrong in wanting something, or anything, for that matter? 



Gerard123 said:


> To continue with it, what happens if the customer bought a tin of rat poison and left it in the restaurant kitchen or at the table, perhaps opened? If the restaurants supervision or standards were not up to scratch and the tin was not observed or removed, is the restaurant fully responsible with no responsibility on the customers part?



Aside from the bizarre circumstance of a customer bringing rat poison to a restaurant!?!? 
The answer would be no, of course the restaurant would not be responsible for a deliberate act of sabotage.

The restaurant would be responsible if it _knowingly _sourced food from an untraceable source, if it _knowingly _breached hygiene standards, if it _knowingly _sold food that was out of date.
In such circumstances the customer cannot be blamed. In similar circumstances, the banks, in their capacity as licensed financial traders, in their capacity as 'expert' financiers, the question of whether or not they _knowingly _issued loans that they _knew _were financially unsound and unsustainable needs to be asked.


----------



## TheBigShort

PMU said:


> No. If the supply of good and services increases to match the increase in wages (i.e. money in circulation) there is no need for inflation to increase.



True, but the money supply is being increased without a corresponding increase in wages or corresponding supply of goods and services. That is the problem.



PMU said:


> No. Central banks typically have price stability targets, i.e. inflation at no more than 2%. This is is not the same as saying that banks are deliberately trying to increase prices.



http://www.bloomberg.com/news/artic...redibility-at-stake-in-hitting-inflation-goal



PMU said:


> On balance it's been a great success, or at least using QE to generate money to allow central banks to carry out asset purchases has been successful, and by and large has not caused inflation.


https://www.ecb.europa.eu/mopo/implement/omt/html/index.en.html

"_The expanded asset purchase program....under which private and public sector securities are purchased to address the risks of too prolonged a period of low inflation"
_
Sounds like stoking inflation to me.




PMU said:


> No. If a business can now borrow or borrow more because of QE both employees, who stand to gain from increased economic opportunity, benefit, and also the unemployed, who stand to gain from greater job opportunities, benefit.



I agree, and if private sector businesses are borrowing that would explain the falling unemployment rate. But it needs to be sustained, and government spending can assist greatly in that. However, governments are restricted by fiscal compacts. Instead there is a high level of corporate borrowing to fuelling stock prices and driving down bond yields.



PMU said:


> doubt this is correct. This happens only of banks fuel a property boom; but they are not doing this, or at least not in Ireland due to the Central Banks quantitative restrictions on mortgage lending. The UK also has various restrictions in place.



http://www.irishtimes.com/business/...sparities-in-dublin-property-prices-1.2799666

House prices in more 'desirable' areas have been rising for the last 18 months at a pace that is completely out of kilter with more 'common' areas. 
There is something rotten again in the property market.



PMU said:


> Actually it's through printing money, where the economy is already running at capacity and cannot produce enough goods and services to soak up the increase in money supply. It's also a disaster, and you only have to look at the US Confederate States; Weimar Germany and Allende's Chile to see what inflation does. Simply put, it destroys societies.



I agree.



PMU said:


> don't think it's just “right wing free market worshipping monetarists”. It's most central banks. If a worker saves part of his or her wages, that becomes 'capital'. But CBs want people to spend to generate economic activity. That's why you've got low or negative interest rates. To encourage you to spend, and not build up capital.



The problem here is that despite the ECB money printing, or QE, larger and larger amounts of workers in Europe cannot even save money for it to be considered as capital. If you have no savings, you have no capital, if you have no capital, then you dont have a capitalist market economy.


----------



## TheBigShort

Gerard123 said:


> Individuals had personal responsibility for their action, greed took over many, etc.



Of course greed took over many. Nobody is suggesting that greed is not an inherent human trait.
But how does my greed make a bank hand over large sums of money in financially unsound and unsustainable transactions?
Are we to believe that now that banks are resorting to stricter lending practices that it is because there arent any greedy people anymore?

I cant believe that people are still so blind to the corrupt nature of the banking system.
I posted this yesterday, relating to an on going banking inquiry in the US for Wells Fargo.
If people want to see the true nature of banking in the developed world, the first 8 minutes of this clip will reveal so much.

https://youtu.be/xJhkX74D10M


----------



## TheBigShort

T McGibney said:


> I don't buy the theory that this man, and others like him, were duped by banks or anyone else. They took big gambles which stood to make them fortunes had they paid off, and lose them fortunes if they didn't.



Of course we can all point to individuals that lost the run of themselves and took huge gambles, but in general terms, how many of us tried to build housing estates? How many of us tried to redevelop top end sites like Ballsbridge by borrowing millions? Or tried to buy a bank like Anglo by borrowing billions?
At most I know a few friends who bought second properties, and in the main, they are still doing ok for themselves with the rental income.

In real terms most people kept to within buying the house, replacing the car and perhaps holidays in more exotic locations. For sure, people over extended themselves in that regard also, but if you worked in Dublin for example, then it is only reasonable to try find somewhere to live in Dublin. If a bank tells you that it can offer you a mortgage of €x amount over what you thought you could afford, you could assume that they believe you are credit worthy. You could assume that they know more about finance than you do. You could assume that they know more about national and international economic trends than you do.
You could assume this on the basis that they deal with mortgage loans and repayments day in, day out while joe soap only does the deal once or twice in a lifetime.


----------



## Gerard123

TheBigShort said:


> In real terms most people kept to within buying the house, replacing the car and perhaps holidays in more exotic locations. For sure, people over extended themselves in that regard also, but if you worked in Dublin for example, then it is only reasonable to try find somewhere to live in Dublin. If a bank tells you that it can offer you a mortgage of €x amount over what you thought you could afford, you could assume that they believe you are credit worthy. You could assume that they know more about finance than you do.  You could assume that they know more about national and international economic trends than you do.
> You could assume this on the basis that they deal with mortgage loans and repayments day in, day out while joe soap only does the deal once or twice in a lifetime.



Agree with most of above.  People who did the above are not in trouble (some exceptions unfortunately if they lost their job for example).  Some people may have over extended themselves as you point out.

However, why would you think that if you know that you could afford to pay X, and the Bank tells you can pay X + more, that you believe the bank?  And to justify it by saying that they know more about finances than you. They may well know about finances, but really do they know about your finances better than you?  Delusional to then believe the bank and blame them for your woes, unless you really wanted the higher borrowing!!   (I might trust a second hand car dealer but I will still take a car for a test drive.)

Absolutely agree banks were reckless in lending the higher number, no doubt about that, but individuals have responsibility to, so its not black and white.  Its just a cop out to blame the banks all the time, and excuse reckless individual behaviours, when your own information tells you otherwise.


----------



## Purple

Gerard123 said:


> Agree with most of above.  People who did the above are not in trouble (some exceptions unfortunately if they lost their job for example).  Some people may have over extended themselves as you point out.
> 
> However, why would you think that if you know that you could afford to pay X, and the Bank tells you can pay X + more, that you believe the bank?  And to justify it by saying that they know more about finances than you. They may well know about finances, but really do they know about your finances better than you?  Delusional to then believe the bank and blame them for your woes, unless you really wanted the higher borrowing!!   (I might trust a second hand car dealer but I will still take a car for a test drive.)
> 
> Absolutely agree banks were reckless in lending the higher number, no doubt about that, but individuals have responsibility to, so its not black and white.  Its just a cop out to blame the banks all the time, and excuse reckless individual behaviours, when your own information tells you otherwise.


Gerard, on the surface of it adults should be responsible for their own actions. Without really digging down into things it is understandable to think that people making life changing financial decisions should do their homework and not we swayed by a bank employee pushing a larger loan than they actually need. What you are forgetting is that people aren’t actually ever responsibly for their own actions;


If they borrow too much that’s the fault of the lender.

If they run up a massive credit card bill that’s the fault of the credit card company.

If they drink too much that’s the fault of the pubs and drinks companies.

If they smoke it’s the fault of the tobacco companies.

If they are fat it is the fault of the fast food companies.

If they fall over a crack in the footpath that tens of thousands of other people can walk along without falling it’s the fault of the local council.

Etc. etc.


That’s where you are making your mistake; nothing is ever the fault of the “victim”, not as long as they are part of that 90% of the population which can be described as “vulnerable”. That group also contains the 50% of people who make up “the most vulnerable in society”.


----------



## TheBigShort

Gerard123 said:


> However, why would you think that if you know that you could afford to pay X, and the Bank tells you can pay X + more, that you believe the bank? And to justify it by saying that they know more about finances than you.





Gerard123 said:


> Absolutely agree banks were reckless in lending the higher number, no doubt about that, but individuals have responsibility to, so its not black and white



Im trying to look at things in the round, rather than individual cases. Im not denying some individuals over extended themselves, that much is clear. But an individual cannot countenance for the actions of thousands of others who are over extending themselves. On the other hand, a bank, with its employees of economists, accountants etc, carrying high salaries on the basis of their expertise in finance, on the basis of having the most up-to-date information available to them, on the basis that they are in the business of buying and selling money - must have known the wreckless nature of their actions on a national, if not, international scale. To equate Joe Public who bought the holiday apartment in Budapest only for it never to be built, with a bank is simply ludicrous. Week after week, the newspaper property, the bank forecasts all peddled the good times that would never end. Its not hard to see how some got caught up in the hysteria - typical of bubble mania as has been repeated throughout financial history.
Or to put it another for each individual that borrowed wrecklessly there was a bank on the other side of the equation. Chances are most people if financial trouble have one or two, maybe three non performing loans. The bank has tens of thousands of non-performing loans. Who is more wreckless? Really?


----------



## TheBigShort

Purple said:


> it is understandable to think that people making life changing financial decisions should do their homework



This, I assume applies to both sides of the equation? Both borrower and lender?



Purple said:


> and not we swayed by a bank employee pushing a larger loan than they actually need.



Its called Sales, an industry in itself, the power to persuade a customer to depart with more money than they initially intended.
Last time I bought a car I was persuaded to have in-built camera for reversing and parking cost €1,500!
Until my wife pointed out that I already know how to reverse park without a camera!



Purple said:


> If they borrow too much that’s the fault of the lender.



You see, this is where a proper discussion begins to fall down. With throwaway remarks best fit for a tabloid column.
People who did borrow too much _are _taking responsibility. They are losing their homes, they have lost jobs, and in tragic circumstances, some see no way out and commit suicide.
On the other hand those who _lent _too much...what responsibility have they faced up too?



Purple said:


> If they drink too much that’s the fault of the pubs and drinks companies.



Never, in my life, have I ever heard anyone blame the pub or drinks companies for a hangover! Other than in jest, it just doesn't happen.



Purple said:


> If they smoke it’s the fault of the tobacco companies.



See above



Purple said:


> they are fat it is the fault of the fast food companies.



Wrong again.



Purple said:


> That’s where you are making your mistake; nothing is ever the fault of the “victim”, not as long as they are part of that 90% of the population which can be described as “vulnerable”. That group also contains the 50% of people who make up “the most vulnerable in society”.



More make it up as you go along stuff.


----------



## Purple

The boards of all the banks have changed. Ironically they are not really the people to blame. That dubious honour falls to the senior managers who didn’t lose their jobs. You’ll get no argument from me that they should have been out the door but your contention that borrowers are not responsible for the loans took out because the bank “sold them” the loan is nonsense.


When you bought your car should you have been able to use it for years without paying for it because you were convinced to buy a reversing camera? That’s what’s happening with homes; people who haven’t paid their mortgage for years are still living in the homes they don’t own and many people think that’s fine; the state should either pay their mortgage for them or give them a house. It would be funny if it wasn’t so serious.


----------



## TheBigShort

Purple said:


> but your contention that borrowers are not responsible for the loans took out because the bank “sold them” the loan is nonsense.



When did I contend that people are not responsible for their own loans?



Purple said:


> When you bought your car should you have been able to use it for years without paying for it because you were convinced to buy a reversing camera? That’s what’s happening with homes; people who haven’t paid their mortgage for years are still living in the homes they don’t own and many people think that’s fine; the state should either pay their mortgage for them or give them a house. It would be funny if it wasn’t so serious.



People who haven't paid their mortgage for years is probably due to them not having an income to use to pay it, and you are the first person I heard that thinks that "many people think thats fine". I dont know who those people are that you are talking about but I know that a lot of people in this situation find themselves under severe strain and pressure, leading to mental illness, family breakdown and worse. Nothing fine about that at all.


----------



## T McGibney

TheBigShort said:


> Of course we can all point to individuals that lost the run of themselves and took huge gambles, but in general terms, how many of us tried to build housing estates?



More than you think. Over a decade a business contact told me in confidence that an AIB branch in a certain small country town had over a dozen property developer borrowers owing that bank branch more than €10m each. That was €120m-odd borrowed in one of the two banks in a town of a few thousand people.  He theorised that if this was being replicated nationwide (which indeed it was), there must be hundreds if not thousands of people who between them had borrowed billions, and he predicted a bank crash. He wasn't far wrong.  

The idea that massive borrowings were confined to a small golden circle is attractive, but has no basis in reality.


----------



## TheBigShort

T McGibney said:


> More than you think. Over a decade a business contact told me in confidence that an AIB branch in a certain small country town had over a dozen property developer borrowers owing that bank branch more than €10m each. That was €120m-odd borrowed in one of the two banks in a town of a few thousand people.




And who is the more wreckless here. The developer trying to make a profit, or the bank that _knowingly _lent all this money to all the property developers?
Would each property developer have knowledge of the size of each others loan?

Would the bank have knowledge of the size of each loan to each developer? Clearly they did as you have stated they did.


----------



## TheBigShort

T McGibney said:


> The idea that massive borrowings were confined to a small golden circle is attractive, but has no basis in reality.



I never suggested they were.
I suggested that the vast, vast majority of people borrowed for individual purchases, a home, a car, a holiday etc. Most tried to keep within sustainable levels, some over extended for sure. 
But banks have provisions for bad debt. Banks have estimates for bad loans following prudent lending practices. These were blown out of the water, wrecklessly.


----------



## Firefly

TheBigShort said:


> But banks have provisions for bad debt_._ Banks have estimates for bad loans following prudent lending practices. These were blown out of the water, wrecklessly.



I agree with this. Individuals must take personal responsibility for sure, but the main responsibility must lie with the lender, after all it's in their interest that they are repaid.  Granted a few people have lost their homes, but this seems to be after making no payments for a number of years and being brought to court. In the main, I think neither borrow nor lender really took the hit, but rather the burden was shared out over the general population.


----------



## T McGibney

TheBigShort said:


> I never suggested they were.
> I suggested that the vast, vast majority of people borrowed for individual purchases, a home, a car, a holiday etc. Most tried to keep within sustainable levels, some over extended for sure.
> But banks have provisions for bad debt. Banks have estimates for bad loans following prudent lending practices. These were blown out of the water, wrecklessly.


And the vast vast majority of such loans were and continue to be repaid. But the bad debts problems that sunk the banks were generally attributable to larger scale lending, by significant numbers of borrowers.


----------



## TheBigShort

T McGibney said:


> And the vast vast majority of such loans were and continue to be repaid. But the bad debts problems that sunk the banks were generally attributable to larger scale lending, by significant numbers of borrowers.



Yes, and if I borrow €50m from a bank for retail and residential development, where I have done my homework, the figures, the projections, am I really supposed to be able to factor in that the same bank has lent billions to another borrower to buy 30% shares in the same bank?
If my development falls on its face because my projections did not materialise and I go bankrupt, then its my own fault.
But if my development falls on its face due to the dodgy lending practicesof the bank,  that I have no knowledge of and that results in freezing the credit, am I still as culpable?

Anyway, we could argue around the houses on this, back on topic

*The case for wage led growth
*
_"The past decades have witnessed falling wage shares and a polarization of 
personal income distribution. Average wages and average labour com-
pensation have not kept up with productivity growth. Functional income 
distribution has shifted at the expense of labour. In many countries per-
sonal income distribution has also become more unequal. By many measures 
income inequality is worse than at any time in the twentieth century. At the 
same time economic growth processes have become imbalanced. Financial 
crises have become more frequent; household debts have risen sharply; inter-
national imbalances have increased, with some countries relying excessively 
on export growth. This paper argues that the polarization of income dis-
tribution and the decline in the wage share play an important role in the 
generation of imbalanced and unequal growth, and that a pro-labour wage 
policy will form an important part of a policy package that generates a stable 
growth regime. A wage-led growth strategy is thus advocated"
_
www.ilo.org › publication › wcms_168753

Sorry, above link opens to another doc. Not sure why, Google the title if interested.
_
_


----------



## Purple

TheBigShort said:


> Yes, and if I borrow €50m from a bank for retail and residential development, where I have done my homework, the figures, the projections, am I really supposed to be able to factor in that the same bank has lent billions to another borrower to buy 30% shares in the same bank?
> If my development falls on its face because my projections did not materialise and I go bankrupt, then its my own fault.
> But if my development falls on its face due to the dodgy lending practicesof the bank,  that I have no knowledge of and that results in freezing the credit, am I still as culpable?
> 
> Anyway, we could argue around the houses on this, back on topic
> 
> *The case for wage led growth
> *
> _"The past decades have witnessed falling wage shares and a polarization of
> personal income distribution. Average wages and average labour com-
> pensation have not kept up with productivity growth. Functional income
> distribution has shifted at the expense of labour. In many countries per-
> sonal income distribution has also become more unequal. By many measures
> income inequality is worse than at any time in the twentieth century. At the
> same time economic growth processes have become imbalanced. Financial
> crises have become more frequent; household debts have risen sharply; inter-
> national imbalances have increased, with some countries relying excessively
> on export growth. This paper argues that the polarization of income dis-
> tribution and the decline in the wage share play an important role in the
> generation of imbalanced and unequal growth, and that a pro-labour wage
> policy will form an important part of a policy package that generates a stable
> growth regime. A wage-led growth strategy is thus advocated"
> _
> www.ilo.org › publication › wcms_168753
> 
> Sorry, above link opens to another doc. Not sure why, Google the title if interested.


Probably true internationally but we live in a small high wage economy with very even after-tax income distribution. The latter is due to our very narrow tax base which relies so heavily on taxing the top 10% of earners.


----------



## TheBigShort

Purple said:


> Probably true internationally but we live in a small high wage economy with very even after-tax income distribution. The latter is due to our very narrow tax base which relies so heavily on taxing the top 10% of earners.



Thats somewhat of a contradiction. On the one hand you claim we are a high wage economy, but on the other hand, and despite all these apparent high wages, we are heavily reliant on the top 10% of earners.
This would imply that there is a lot of high earners who are being lightly taxed?
So if we are a high wage economy, how come we are so reliant on only the top 10% of earners?


----------



## Firefly

I was wondering why this topic came up and then it hit me last night (I can be slow like that)....maybe raising wages can be seen as a "justification" to help the ECB raise inflation. But isn't it a handy coincidence that many of the PS groups are lining up for more money???? "Sure, t'll be handy for inflation"


----------



## T McGibney

TheBigShort said:


> Yes, and if I borrow €50m from a bank for retail and residential development, where I have done my homework, the figures, the projections, am I really supposed to be able to factor in that the same bank has lent billions to another borrower to buy 30% shares in the same bank?




This is a non sequitur. The example I gave concerned AIB. Anglo never had branches in small country towns. But a lot of people knew in 2004-06 that local banks were handing out multi-million developer loans to all and sundry. A wise few did take this into account and escaped the bloodbath, but most didn't.


----------



## TheBigShort

Firefly said:


> I was wondering why this topic came up and then it hit me last night (I can be slow like that)....maybe raising wages can be seen as a "justification" to help the ECB raise inflation. But isn't it a handy coincidence that many of the PS groups are lining up for more money???? "Sure, t'll be handy for inflation"



The national minimum wage increased this year by 5.6% which applies to both private and public sector workers. Luas drivers are employed in the private sector, Tesco workers are fighting their own corner, contract cleaning companies have agreed new minimum rates for workers with trade unions, security workers are engaged also in negotiations. 
Its not just public sector workers that are pushing for increases. But having said that, in a growing economy, wages should start to rise.
As pointed out earlier, even in Germany, France, UK and the US there is a push to start increasing wages (admittedly there are moves by some to reduce wages or freeze them).
But its unlikely that the ECB or Federal Reserve would determine their policies based on Irish public sector workers demands. Those policies, QE, may now be giving way to improved labour conditions across Europe.

As a side, I think it was yourself that said you were going to increase your own (wage) rates this year? If it was you that said that, then I assume you are an employer? If you are an employer, why are you increasing wages this year?


----------



## TheBigShort

T McGibney said:


> But a lot of people knew in 2004-06 that local banks were handing out multi-million developer loans to_* all and sundry. *_A wise few did take this into account and escaped the bloodbath, but most didn't.



Sorry, but earlier it was "more than a dozen", implying between 13 and 23 people in a town of a few thousand, now its all and sundry. Anyway, the point stands, if I borrow €1 or €10m, I have no idea how much you or anybody else is borrowing. 
The bank, on the otherhand, would know.


----------



## Firefly

TheBigShort said:


> The national minimum wage increased this year by 5.6% which applies to both private and public sector workers. Luas drivers are employed in the private sector, Tesco workers are fighting their own corner, contract cleaning companies have agreed new minimum rates for workers with trade unions, security workers are engaged also in negotiations.



You'll find that all of those organisations you have mentioned are in the red. The government is still borrowing to consume so do you think it should raise wages in the public sector?



TheBigShort said:


> As a side, I think it was yourself that said you were going to increase your own (wage) rates this year? If it was you that said that, then I assume you are an employer? If you are an employer, why are you increasing wages this year?



I am not an employer, merely a humble IT contractor. It is certainly my intention to raise my rates in next year however this is on the basis of my role being in demand (lucky for me) and me attaining specific certifications and decent experience. However the company I am currently consulting for may very well not agree. I will then have to either stay where I am or look elsewhere. Wouldn't it be funny to see an IT contractor striking outside an office though?


----------



## T McGibney

TheBigShort said:


> Sorry, but earlier it was "more than a dozen", implying between 13 and 23 people in a town of a few thousand, now its all and sundry. Anyway, the point stands, if I borrow €1 or €10m, I have no idea how much you or anybody else is borrowing.
> The bank, on the otherhand, would know.



You're over-analysing. If a small town bank had advanced €10m+ loans to more than a dozen locals, it's not hard to generalise that they had also offered €1m+ loans to a lot more people.

In the fervid atmosphere of the time this effectively meant anyone who applied who, to use that dreadful phrase "ticked the boxes".

Again this isn't exactly breaking news at this stage as long processions of people have been in and out of the courts in the past 8/9 years trying to unwind the mess that has resulted.



TheBigShort said:


> Anyway, the point stands, if I borrow €1 or €10m, I have no idea how much you or anybody else is borrowing.



The dogs in the street knew back in 2004-06 that huge sums were being borrowed from even insignificant bank branches and that those branches were crying out for more takers for such loans.


----------



## Purple

TheBigShort said:


> Thats somewhat of a contradiction. On the one hand you claim we are a high wage economy, but on the other hand, and despite all these apparent high wages, we are heavily reliant on the top 10% of earners.
> This would imply that there is a lot of high earners who are being lightly taxed?
> So if we are a high wage economy, how come we are so reliant on only the top 10% of earners?


We are reliant in high wage earners because we under tax low and middle wage earners (by international and EU standards). Nothing is implied.


----------



## TheBigShort

Firefly said:


> You'll find that all of those organisations you have mentioned are in the red. The government is still borrowing to consume so do you think it should raise wages in the public sector?



Granted Tesco is in trouble, but workers are only trying to hold onto to what they have.
Luas is only in the red because of significant capital outlay to progess the Luas expansion. It has nothing to do with the profitability or viability of the company. Transdev Ireland is in a very healthy position.

Of course we shouldn't borrow to pay wages per se, but budget deficits are less than fiscal pact limits of 3% of GDP.
Ideally wage increases would be forthcoming in the private sector, followed by public sector. But unfortunately, despite your intentions to demand higher rates, the concept of organised labour in the private sector has been severely diminished. 
Nothing funny about being on strike.


----------



## TheBigShort

_Duplicate._


----------



## TheBigShort

_Duplicate._


----------



## TheBigShort

Purple said:


> We are reliant in high wage earners because we under tax low and middle wage earners (by international and EU standards). Nothing is implied.



Well I would beg to differ. You have stated that we are a high wage economy, and that we are heavily reliant on the top 10% of our high earners. That would imply that the other 90% of high earners do not contribute their fair share? That we under tax 90% of high earners.
Alternatively, what you really mean is that only 10% earn a high income, the other 90% earn mid to low incomes, implying a not so high wage economy after all.


----------



## TheBigShort

T McGibney said:


> If a small town bank had advanced €10m+ loans to more than a dozen locals, it's not hard to generalise that they had also offered €1m+ loans to a lot more people.



Correct, and my point is, of all the people who borrowed large sums, is it really feasible that any of them would have a true picture, assumptions and speculation aside, of the amount of borrowing going on around them?
Each of the borrowers are 50/50 responsible with the bank for their own individual loans.
The banks are 100% responsible for the full extent and scale of lending.


----------



## Purple

TheBigShort said:


> Well I would beg to differ. You have stated that we are a high wage economy, and that we are heavily reliant on the top 10% of our high earners. That would imply that the other 90% of high earners do not contribute their fair share? That we under tax 90% of high earners.
> Alternatively, what you really mean is that only 10% earn a high income, the other 90% earn mid to low incomes, implying a not so high wage economy after all.


No, I said top 10% of earners, not the top 10% of high earners.
I honestly think you are being deliberately obtuse here but I'll try to explain; A high wage economy is high relative to other economies. Wages in Ireland are generally high relative to the countries we compete with. The data on incomes and income distribution is, as you know, posted in another thread in this section.


----------



## TheBigShort

Purple said:


> No, I said top 10% of earners, not the top 10% of high earners.
> I honestly think you are being deliberately obtuse here but I'll try to explain; A high wage economy is high relative to other economies. Wages in Ireland are generally high relative to the countries we compete with. The data on incomes and income distribution is, as you know, posted in another thread in this section.



Honestly, im just trying to make sense of your position. 
You have stated we are high wage economy (logic would deduce that means relative to other economies).
You have stated that we are heavily tax reliant on the top 10% of earners in this high wage economy. This would imply that the other 90% of earners (who are also high earners relative to other economies, otherwise its not a high wage economy) do not contribute their fair share. 
But then you stated that we undertax low and middle income earners. Is it fair to deduce that you mean low and middle incomes _relative _to other economies? If you are being consistent then that would be correct. But then what applies from that is that we actually live in a low to mid income economy. And you think they should pay more tax.
Alternatively, our low and middle income earners (relative to other economies) make up only a tiny portion of our income earning population. This means the vast bulk, or majority of workers are high earners (relative to other economies), but that we are heavily reliant on only the top 10% of those high earners and that the rest of the high earners (relative to other economies) are undertaxed.
So, according to you, we are a high wage, low tax economy and you want a low wage, high tax economy.


----------



## Firefly

TheBigShort said:


> Of course we shouldn't borrow to pay wages per se, but budget deficits are less than fiscal pact limits of 3% of GDP.



Could you please answer the question I put to you:

The government is still borrowing to consume so do you think it should raise wages in the public sector?



TheBigShort said:


> Ideally wage increases would be forthcoming in the private sector, followed by public sector.



This sounds like benchmarking to me! We all know what happened the last time this was tried!

I disagree in any case. Previously posters here were asking why the public and private sectors were being treated separately and I agree. Regarding wage increases I think it should depend on whether the organisation in question has the ability to pay and also it should depend on the person in question - how the market would pay their rates elsewhere.




TheBigShort said:


> But unfortunately, despite your intentions to demand higher rates, the concept of organised labour in the private sector has been severely diminished.
> Nothing funny about being on strike.



I won't be demanding anything! I will be seeking a higher rate. I may or may not be successful, however I won't be striking for this.


----------



## Purple

TheBigShort said:


> Honestly, im just trying to make sense of your position.
> You have stated we are high wage economy (logic would deduce that means relative to other economies).
> You have stated that we are heavily tax reliant on the top 10% of earners in this high wage economy. This would imply that the other 90% of earners (who are also high earners relative to other economies, otherwise its not a high wage economy) do not contribute their fair share.
> But then you stated that we undertax low and middle income earners. Is it fair to deduce that you mean low and middle incomes _relative _to other economies? If you are being consistent then that would be correct. But then what applies from that is that we actually live in a low to mid income economy. And you think they should pay more tax.
> Alternatively, our low and middle income earners (relative to other economies) make up only a tiny portion of our income earning population. This means the vast bulk, or majority of workers are high earners (relative to other economies), but that we are heavily reliant on only the top 10% of those high earners and that the rest of the high earners (relative to other economies) are undertaxed.
> So, according to you, we are a high wage, low tax economy and you want a low wage, high tax economy.


OK, you are being obtuse.
We are a high wage economy relative to other economies.
The top 10% of earners in this economy are the top 10% relative to other people in this economy.
The other 90% of earners in this economy are the other 90% in this economy. They are the other 90% which, added to the 10% already discussed, make up the 100% of earners in this economy.


----------



## TheBigShort

Firefly said:


> The government is still borrowing to consume so do you think it should raise wages in the public sector?



No of course not, not in the flat terms that you have presented it here.
But the topic is not about public v private sector workers.
What the government should do, and other European governments, is borrow at near 0% for capital stimulus programs. This will create employment (public and private) create real wages increases (public and private), including advancing that increase you are looking for.
Instead what the EU has chosen to do is to limit the ability of governments to manage the growth of their own economies and instead hand it over to unelected bankers at the ECB. They have chosen to adopt an asset purchasing program which is doing nothing but create bubbles in property, stocks and bonds, and only a tiny portion of the population will benefit. 



Firefly said:


> This sounds like benchmarking to me! We all know what happened the last time this was tried!



The last benchmarking exercise was 2007 and awarded 0% increases.
Again, the topic is not about pitting public v private sector workers against each other. It is about increasing wages in the round for reasons mentioned above.


----------



## TheBigShort

Purple said:


> OK, you are being obtuse.
> We are a high wage economy relative to other economies.
> The top 10% of earners in this economy are the top 10% relative to other people in this economy.
> The other 90% of earners in this economy are the other 90% in this economy. They are the other 90% which, added to the 10% already discussed, make up the 100% of earners in this economy.



Are the 90% earners, relative to other economies, high earners or not?


----------



## Purple

TheBigShort said:


> Are the 90% earners, relative to other economies, high earners or not?


What's that got to do with anything?

Relative to the same jobs in other economies they are highly paid.


----------



## T McGibney

TheBigShort said:


> Correct, and my point is, of all the people who borrowed large sums, is it really feasible that any of them would have a true picture, assumptions and speculation aside, of the amount of borrowing going on around them?
> Each of the borrowers are 50/50 responsible with the bank for their own individual loans.


They all knew. It was their friends and buddies who were prompting them to go in to the bank ahead of every field or site auction. The country was awash with borrowed money.


TheBigShort said:


> The banks are 100% responsible for the full extent and scale of lending.


That is your view. Not all of us subscribe to it. I've given you reasons why I don't.


----------



## Firefly

TheBigShort said:


> No of course not, not in the flat terms that you have presented it here.



Thanks for clarifying that



TheBigShort said:


> What the government should do, and other European governments, is borrow at near 0% for capital stimulus programs. This will create employment (public and private) create real wages increases (public and private)



Similar question if I may: The government is still borrowing to consume so do you think it should borrow more money for capital programs?



TheBigShort said:


> The last benchmarking exercise was 2007 and awarded 0% increases.



I am referring to benchmarking during the 2000s and I'm guessing you know that! 




TheBigShort said:


> Again, the topic is not about pitting public v private sector workers against each other.



It's not my intention by any means. For what it's worth, Mrs. Firefly has now returned to the HSE, so any increases will be enjoyed at our house.


----------



## TheBigShort

Purple said:


> What's that got to do with anything?
> 
> Relative to the same jobs in other economies they are highly paid.





Purple said:


> We are reliant in high wage earners because we under tax low and middle wage earners (by international and EU standards).



So who are the undertaxed, low to mid income earners that you also refer to?
 Can I take it that these are also high earners relative to other economies, but are low and middle income earners relative to the high earners in this economy?
And you want to shift the tax burden more onto these low and middle income earners, and simultaneously to keep their wages down?


----------



## Purple

TheBigShort said:


> So who are the undertaxed, low to mid income earners that you also refer to?
> Can I take it that these are also high earners relative to other economies, but are low and middle income earners relative to the high earners in this economy?
> Yes and yes. And you want to shift the tax burden more onto these low and middle income earners, and simultaneously to keep their wages down?


I'd like the tax burden spread more evenly by European standards. Low to middle income earners are under-taxed in Ireland relative to our neighbours. This is one of the major factors contributing to our very narrow tax base. Unfortunately the water tax seems to be gone so the policy of a more even and balanced tax base has taken a blow. I'm not necessarily advocating big cuts to taxes for high earners, just a medium to long term re-balancing. What we had in the early 90's was much better.
I went onto the highest tax band as a 3rd year apprentice in 1993 (I did a lot of overtime) and paid tax on the first pound I earned as a first year apprentice. It didn't stop me from working. Everyone should pay some income tax, even if it's only 5% of their income.


----------



## TheBigShort

Firefly said:


> Similar question if I may: The government is still borrowing to consume so do you think it should borrow more money for capital programs?



Yes. The money is already being borrowed, not by governments, but by private interests. This is fueling property bubbles in London, Dublin and other selected areas, whereas property prices in Limerick and Sheffield stagnate. It is fueling bond markets as banks borrow government debt driving yield and interest rates to zero and less. It is fuelling stock market bubbles as corporations engage in share buy back schemes. None of this is productive. Governments need to take back control of our currency for the overall good of society. Instead control has been handed to unelected bankers in the ECB.



Firefly said:


> I am referring to benchmarking during the 2000s and I'm guessing you know that!


I did suspect that, but it was you that referenced "the last time". 
Funny how the 0% benchmarking ever gets little attention.


----------



## Purple

TheBigShort said:


> Yes. The money is already being borrowed, not by governments, but by private interests. This is fueling property bubbles in London, Dublin and other selected areas, whereas property prices in Limerick and Sheffield stagnate. It is fueling bond markets as banks borrow government debt driving yield and interest rates to zero and less. It is fuelling stock market bubbles as corporations engage in share buy back schemes. None of this is productive. Governments need to take back control of our currency for the overall good of society. Instead control has been handed to unelected bankers in the ECB.


I agree that there is far too much governmental and extra-governmental interference in the market.
We are getting closer and closer to a command economy.


----------



## TheBigShort

Purple said:


> I'd like the tax burden spread more evenly by European standards.



Perhaps we can agree that a fair taxation system is the goal here. 
What a fair tax system would look like is where we start to differ.



Purple said:


> Low to middle income earners are under-taxed in Ireland relative to our neighbours.



I would disagree. 



Purple said:


> Everyone should pay some income tax, even if it's only 5% of their income.



Thats fine, but its all relative to what the highest percentage rate of tax is applied. For instance if there is an effective 50% rate on the highest earners, will a 5% tax rate on the lowest earner provide a re-balancing? 
On the other hand, from another perspective, while a minimum wage worker may not contibute income tax by virtue of personal tax credits applied to the first €20,000 of their income, it is notable that the same personal tax credits are applicable to a high earner on the first €20,000 of their income also. In other words, any tax advantage for low earners over high earners is merely a perceived advantage.


----------



## Firefly

TheBigShort said:


> Funny how the 0% benchmarking ever gets little attention.



Would it have anything to do with it be widely reported at the time that salaries in the public sector were higher than those in the private sector?


----------



## Firefly

TheBigShort said:


> Yes.



Thanks for clarifying. I disagree. To me it's akin to a family paying for their groceries on the credit card and only meeting the interest repayments and then going to the credit union for a loan to put on a sun-room.  

In any case you have clarified that we should not borrow to raise wages but instead borrow to fund capital projects. The result of this would surely be more employment rather than increasing the wages of those already working?




TheBigShort said:


> The money is already being borrowed, not by governments, but by private interests. This is fueling property bubbles in London, Dublin and other selected areas, whereas property prices in Limerick and Sheffield stagnate. It is fueling bond markets as banks borrow government debt driving yield and interest rates to zero and less. It is fuelling stock market bubbles as corporations engage in share buy back schemes. None of this is productive. Governments need to take back control of our currency for the overall good of society. Instead control has been handed to unelected bankers in the ECB.


Yes, you've made that point before and it does have merit, but at least it does not involve government adding to their national debts.


----------



## TheBigShort

Firefly said:


> Would it have anything to do with it be widely reported at the time that salaries in the public sector were higher than those in the private sector?



Yes, so in this instance the benchmarking exercise was somewhat effective? In other words, benchmarking is not necessarily a bad thing, it can achieve good results. I would agree that benchmarking increases in 2000 was wrong, not because of the pay increases but because the pay increases for higher paid public servants were way out of kilter. The increases for lower paid public sector workers were more modest (I think 8% over 3yrs compared to 14% for higher paid salaries)



Firefly said:


> The result of this would surely be more employment rather than increasing the wages of those already working?



More employment yes, and higher wages too. As you said yourself, you will be seeking an increase for your services. The question for the contract provider will be whether its worth giving you that increase, or part of, or seeking another contractor at a cheaper rate. But then risking losing your talent and knowledge to a potential rival.



Firefly said:


> but at least it does not involve government adding to their national debts.



The currency is being debased. The only thing stopping it from losing value against peer currencies is that the US, UK, Japan and China are all at the same thing. And secondly the money is being centred and controlled in too narrow, effectively abstract sectors - bond, stock and property prices. 
When these markets burst, we will be back to 2008 again and worse.
No doubt, some will blame low paid workers and public sectors workers once more.


----------



## Sarenco

TheBigShort said:


> The currency is being debased.



Really?  We have basically had zero inflation in the Eurozone for some time now so how is the currency being debased? 

Also, Eurozone equities are actually in negative territory YTD.


----------



## TheBigShort

Sarenco said:


> Really? We have basically had zero inflation in the Eurozone for some time now so how is the currency being debased?
> 
> Also, Eurozone equities are actually in negative territory YTD.



A €60bn a month expansion of the money supply or €1.1trn QE asset purchasing program should help in that regard.

 The whole policy is bogus. It is supposed to create a 'wealth effect' inducing people to start spending more, increasing demand over supply, achieving the ECB target of 2% inflation, allowing interest rates to rise.

Instead, bond yields have gone into negative territory, indicating a recession. Stock markets have recovered to levels last seen during boom times pre- 2008*. Property prices are rising fast in capital cities but remain relatively stagnant elsewhere. Traditional economic indicators are being turned on their head.

*You are correct about European stocks in negative territory YTD. But Duetsche banks share price collapse, dragging prices down, is indicative of the woes ahead. In the US, a 0.25% rise in interest rates last Jan knocked 8% of market values. A growing economy should put interest rates on an upward trajectory but instead they are headed into negative territory. This is because all this apparent growth is based on more and more debt. Debt which is being used to create bubble markets instead of real productivity. 
Stock markets are facing into another heavy crash and with it property prices too.


----------



## TheBigShort

Firefly said:


> To me it's akin to a family paying for their groceries on the credit card and only meeting the interest repayments and then going to the credit union for a loan to put on a sun-room.



Kind of, if not managed right. But if managed right it could be akin to a family investing in their childrens education, carrying out necessary home repairs adding value, and buying a more fuel efficient car. 
But you are right, using it to pay off the interest on the credit card and building a sun room does sound wasteful. It all depends on how and what it is used for.


----------



## TheBigShort

T McGibney said:


> They all knew. It was their friends and buddies who were prompting them to go in to the bank ahead of every field or site auction. The country was awash with borrowed money.



Sitting on the upperdeck of a Dublin Bus, looking out at all the apartments being built, even I could tell that it was going to end badly.
But very few knew the extent of the crash to come in 2008. Anybody who did stick their heads out and predict a crash were derided publicly and told to go "commit suicide".
The only ones who could have know in anyway the _true _ extent of the borrowing, would have been the banks themselves.
But like I said, we could argue around the houses on this. 
In the meantime,another bank, the ECB, is engaged in the biggest gamble of all time.


----------



## Sarenco

TheBigShort said:


> The whole policy is bogus.



That may be so but you said our currency was being debased.  Can you stand up that claim?



TheBigShort said:


> Instead, bond yields have gone into negative territory, indicating a recession.



Really?  The Eurozone is not currently in recession and this is the first time in recorded financial history that negative yields on government debt are commonplace.  

Incidentally, I would have thought you would be cheering QE as it enables governments to maintain their public sectors and welfare programmes.



TheBigShort said:


> Property prices are rising fast in capital cities but remain relatively stagnant elsewhere.



Any basis at all for that claim?  It's certainly not reflected in the conventional CRE indices.



TheBigShort said:


> In the US, a 0.25% rise in interest rates last Jan knocked 8% of market values.



And yet the S&P is up YTD!  

It really is a killer when the facts don't back up your idealogical prejudices.



TheBigShort said:


> Stock markets are facing into another heavy crash and with it property prices too.



Have you thought about starting a global macro hedge fund?  

With such perfect foresight you should make a killing!


----------



## TheBigShort

Sarenco said:


> That may be so but you said our currency was being debased. Can you stand up that claim?



Yes, hitting the printing presses to prop up a currency debases its value. Even if it is dressed up as QE.



Sarenco said:


> Really? The Eurozone is not currently in recession and this is the first time in recorded financial history that negative yields on government debt are commonplace.



That is the point. If we are not in recession dont you think that yields on government debt should be rising and not falling?



Sarenco said:


> Incidentally, I would have thought you would be cheering QE as it enables governments to maintain their public sectors and welfare programmes.



Why would you think I would be cheerleading QE?



Sarenco said:


> Any basis at all for that claim? It's certainly not reflected in the conventional CRE indices.





Sarenco said:


> And yet the S&P is up YTD!



Yes, the S&P is up YTD, the Dow and Nasdaq are at record levels, US unemployment is at 4.9% according to official figures.
But if interest rates rise even 0.25%, stock markets start tumbling. 
Dont you think that is odd? With such good economic indicators that stock markets start tanking even at the hint of interest rates rising?
Dont you think it's odd bond yields are negative despite "not being in a recession"?

Unfortunately I cant afford to start up a hedge fund. Im one of those joe soap heads who got burnt in 2008. I had some "investments" in bank stock which tanked. Since then my savings have been depleted through pay cuts and stealth taxes. 
Fortunately my wife and I kept our jobs and we did ok in selling a property, but only by complete fluke.
Since 2008 I have been trying to understand what happened, how, why and who or what was responsible. Im no expert, but ive come to the realisation that in this game there are no experts, only self proclaiming experts.
The last time I heard anyone with the foresight to predict a crash, they were laughed out of town too, told to "commit suicide". 
But whether another crash occurs or not, the fact that you make light of my views and proclaim to know my 'ideological prejudices', tells me a lot about what you actually know, which by your comments above, is not an awful lot.


----------



## TheBigShort

Sarenco said:


> Any basis at all for that claim? It's certainly not reflected in the conventional CRE indices.



My err, house prices are increasing nationally, but still lag behind Dublin which is not to be unexpected.
But what is fuelling the price rises? The most recent census shows very modest population increases, if not decreases, in all but a few high density areas. Stricter lending conditions are supposedly in place. Central bank figures show lending to private households is flat and wages over the last number of years are almost flat also.
So the bounce in property prices, in Dublin +39% (CSO) since 2013 seems out of kilter with the rest of the economy.


----------



## TheBigShort

_Duplicate._


----------



## Sarenco

TheBigShort said:


> Yes, hitting the printing presses to prop up a currency debases its value.



How so?  If there's no inflation to speak of how is the currency being devalued?  



TheBigShort said:


> If we are not in recession dont you think that yields on government debt should be rising and not falling?



Eh, no.  



TheBigShort said:


> Why would you think I would be cheerleading QE?



Because...


Sarenco said:


> ...it enables governments to maintain their public sectors and welfare programmes.



Is that not what you're advocating?



TheBigShort said:


> But if interest rates rise even 0.25%, stock markets start tumbling.
> Dont you think that is odd?



No, it's entirely predictable.



TheBigShort said:


> Dont you think it's odd bond yields are negative despite "not being in a recession"?



But we're not in a recession!


----------



## Sarenco

TheBigShort said:


> But what is fuelling the price rises?



Limited supply - basic economics.


----------



## TheBigShort

Sarenco said:


> How so? If there's no inflation to speak of how is the currency being devalued?



I beg your pardon. Let me rephrase, hitting the printing presses to prop up a currency _will _lead to the debasement of the currency. I simply take the step of QE programs as a clear understanding that the currency _is _being debased.



Sarenco said:


> Eh, no



I do.



Sarenco said:


> Is that not what you're advocating?



Eh, no.



Sarenco said:


> No, it's entirely predictable



Really, you must have made your fortune by now so.
I can understand why stock markets fall under rising interest rates, but I cant gauge by how much they will fall by. My only view on this is that the last time the Federal reserve raised rates by 0.25% there was quite a substantial negative reaction. So if the Federal reserve or ECB has a target of some 2% inflation (and they are not even close to it) and in turn this is what will prompt interest rate hikes, then by my reckoning stock markets are going to sink. And the biggest reason being is that all these current stock market highs are built on new debt, not on capital gains from productivity increases.
Investment funds, pension funds etc will be obliterated, inflation will rocket and the currency debased.



Sarenco said:


> But we're not in a recession!



Correct, we are not in a recession. The economy is growing, unemployment is falling, stock markets are rising.
So why would anyone in their right mind buy government bonds with negative yields?



Sarenco said:


> Limited supply - basic economics



And thats to dismiss the factors that I have pointed out to you. If we are to accept that there are stricter lending conditions, a relatively stagnant population, flat wages and flat household lending then its hard to see how prices have increased by so much so soon.
For sure, the last decade will hold significant pent up demand and I accept that a property crash can 'overshoot' on the downside as much as the upside.
But it still doesn't explain that if wages and lending is flat, then the demand in itself cannot push up the price by so much.


----------



## galway_blow_in

TheBigShort said:


> My err, house prices are increasing nationally, but still lag behind Dublin which is not to be unexpected.
> But what is fuelling the price rises? The most recent census shows very modest population increases, if not decreases, in all but a few high density areas. Stricter lending conditions are supposedly in place. Central bank figures show lending to private households is flat and wages over the last number of years are almost flat also.
> So the bounce in property prices, in Dublin +39% (CSO) since 2013 seems out of kilter with the rest of the economy.



dublins economy is much bigger than it was in 2006 , the economy outside dublin ( galway and cork aside ) is much smaller , there has been a disproportionate level of recovery in dublin since 2012 , its population has risen significantly and its where people migrate to for work , houses in dublin are cheaper than in galway relatively speaking and in my opinion a better buy than in cork too


----------



## Firefly

TheBigShort said:


> but ive come to the realisation that in this game there are no experts, only self proclaiming experts.



One of the top things I'm going to drum into my kids!


----------



## Firefly

TheBigShort said:


> Kind of, if not managed right. But if managed right it could be akin to a family investing in their childrens education, carrying out necessary home repairs adding value, and buying a more fuel efficient car.
> But you are right, using it to pay off the interest on the credit card and building a sun room does sound wasteful. It all depends on how and what it is used for.



Very fair points made there to be fair. However we have seen major cost over-runs by taxpayer funded projects in the past so any capital expenditure should be planned for correctly.


----------



## Purple

We tried borrowing our way out of recession in the 70's...

Given how bad the State sector is at running things and the massive and obscene levels of waste we have I don't understand why anyone thinks taking more money from the productive wealth generating section of the economy and giving it to the wasteful and profligate State to spend is a good idea.


----------



## T McGibney

TheBigShort said:


> Sitting on the upperdeck of a Dublin Bus, looking out at all the apartments being built, even I could tell that it was going to end badly.
> But very few knew the extent of the crash to come in 2008. Anybody who did stick their heads out and predict a crash were derided publicly and told to go "commit suicide".
> The only ones who could have know in anyway the _true _ extent of the borrowing, would have been the banks themselves.
> But like I said, we could argue around the houses on this.
> In the meantime,another bank, the ECB, is engaged in the biggest gamble of all time.


We all knew but pretended not to. Ditto the Germans, although their chickens took their time to roost.


----------



## Purple

T McGibney said:


> We all knew but pretended not to. Ditto the Germans, although their chickens took their time to roost.


I sold my rental apartment in September 2008 as I know the crash had started. My main source for that conclusion was this site.
I'm a tradesman and no expert so I find it hard to believe that all the people who are smarter than me who were working in the financial industry, on both sides of the fence, didn't see it coming.


----------



## TheBigShort

T McGibney said:


> We all knew but pretended not to. Ditto the Germans, although their chickens took their time to roost.



We did not know the true extent of the crash to come. I sold a property in March 2008. The market had frozen and despite this tge estate agent wanted me to pitch it at peak price. I dropped the price by €20,000 and managed to sell within a few weeks. If I had known the extent of the crash I most probably would have crapped myself and dropped the price more.
If the buyer of my property had known the extent of the crash to come most likely they would not have bought ( it fell by a further €125,000!!).
I was blessed, but not because I 'knew' anything more than anyone else.


----------



## Firefly

TheBigShort said:


> We did not know the true extent of the crash to come. I sold a property in March 2008. The market had frozen and despite this tge estate agent wanted me to pitch it at peak price. I dropped the price by €20,000 and managed to sell within a few weeks. If I had known the extent of the crash I most probably would have crapped myself and dropped the price more.
> If the buyer of my property had known the extent of the crash to come most likely they would not have bought ( it fell by a further €125,000!!).
> I was blessed, but not because I 'knew' anything more than anyone else.



We sold our house in Dublin in March 2008 too! I hope this doesn't turn out to be like the Munster / All Blacks match of '78 where at least 100,000 were at the match!


----------



## TheBigShort

Firefly said:


> We sold our house in Dublin in March 2008 too! I hope this doesn't turn out to be like the Munster / All Blacks match of '78 where at least 100,000 were at the match!



Ha! Good one.


----------



## TheBigShort

[broken link removed]

Article from David McWilliams yesterday concerning wages and profits.

"_One way to look at things is to view high wages as a sign of success. They can be taken as a sign that the economy is healthy and moving in the right direction. Low wages, on the other hand, signal all sorts of problems_


----------



## Firefly

TheBigShort said:


> [broken link removed]
> 
> Article from David McWilliams yesterday concerning wages and profits.
> 
> "_One way to look at things is to view high wages as a sign of success. They can be taken as a sign that the economy is healthy and moving in the right direction. Low wages, on the other hand, signal all sorts of problems_



Maybe he's reading this thread!


----------



## Sarenco

I don't think that anybody would argue that rising real incomes are not a good thing.

The reality, of course, is that while average household incomes have increased dramatically in many emerging economies, average household incomes have been flat (or have even fallen) in most developed economies over the last decade or so.  That's the impact of globalisation.

You can't simply magic a positive income trend out of thin air.  Without productivity gains, incomes cannot rise in a sustainable fashion.


----------



## TheBigShort

Sarenco said:


> You can't simply magic a positive income trend out of thin air. Without productivity gains, incomes cannot rise in a sustainable fashion.



Obviously.

So instead of the ECB pumping stock markets and property bubbles etc. How about government borrowing at 0% and pumping massive infrastructure in new technologies, medicine, transport, construction, agriculture, etc..etc..

Obviously easier said than done, but at least it offers the opportunity to strive for productivity gains instead of the short-termism of QE that will ultimately fail.


----------



## TheBigShort

Purple said:


> We tried borrowing our way out of recession in the 70's...



Time to get over that, time to move on and stop living in the past.


----------



## TheBigShort

Sarenco said:


> I don't think that anybody would argue that rising real incomes are not a good thing.



This poster would.



Purple said:


> I just don't know where to start but I don't know how anyone can think wage increases can be a good thing for the economy in a country which is a tiny percentage of a single market (and single currency), which exports so much of what it produces and imports so much of what it consumes. If we were a closed economy like North Korea or communist Russia it might make sense but for us it's crazy.


----------



## Sarenco

TheBigShort said:


> So instead of the ECB pumping stock markets and property bubbles etc. How about government borrowing at 0% and pumping massive infrastructure in new technologies, medicine, transport, construction, agriculture, etc..etc..



Ok, let's try some facts:-

*Impact of QE on stock prices*

Eurozone - on-going QE - EuroStoxx50 TR YTD: -8 04%.
US - FED tightening - S&P500 TR YTD: +6.98%.

Not much sign that the ECB is pumping stock prices based on those figures.

*Impact of QE on government borrowing costs
*
10-year German bond yields (30 June 2016): -0.13%
10-year French bond yield (30 June 2016): 0.18%
10-year Irish bond yields (30 June 2016): 0.52%

So, Eurozone governments can already borrow funds at close to (or in some cases below) 0% out to 10-years.

You have simultaneously argued that QE has been a failure in combating deflation while at the same time it will ultimately result in hyper-inflation, with dire consequence for retirement savings, etc.  How do you square these two conflicting positions?


----------



## Sarenco

TheBigShort said:


> This poster would.



I don't think Purple was arguing that rising real incomes was a bad thing in that post.

But there's not much point simply hiking wages if it results in jobs moving elsewhere as an enterprise becomes uncompetitive.  That would obviously result in a reduction in income.


----------



## TheBigShort

Sarenco said:


> *Impact of QE on stock prices*
> 
> Eurozone - on-going QE - EuroStoxx50 TR YTD: -8 04%.
> US - FED tightening - S&P500 TR YTD: +6.98%.
> 
> Not much sign that the ECB is pumping stock prices based on those figures.



Fair point. But my point is to highlight the _policy _of an asset purchasing program. From my armchair its not possible nor feasible to determine exactly which or what assets are being purchased.
However in the main, the ECB has been buying government bonds. It has also being buying corporate debt and it is also lending free/cheap money to banks. Similar to what the US did.
This program facilitates large banks, corporations, governments etc to access cheap funding. 
It is what they do with this funding that is the issue.
My view is that it is responsible for increases in property prices in the main. I have stated why I dont think prices should be increasing at the rate that they are - this is a property bubble.
This cheap funding is responsible for negative yields on bonds, costing savers or eating bank profits.
This cheap funding is broadly responsible for  the record increases in the stock markets (I should clarify, in the US. You are correct re Euro stocks). 
So why are US stocks being bought and not Euro stocks? Well, on going woes at Deutsche Bank, italian banks etc may have something to do with that.
The point is ultimately, all this cheap money, or too little of it, at too slow a rate, is finding its way into the productive economy, manufacturing, distribution, research and development, advancing new technologies etc. 



Sarenco said:


> You have simultaneously argued that QE has been a failure in combating deflation while at the same time it will ultimately result in hyper-inflation, with dire consequence for retirement savings, etc. How do you square these two conflicting positions?



No I have argued QE _will _be a failure in combating deflation as it _will _lead to excess inflation. I know I used the phrase rocketing-inflation but I would be reluctant to say hyper-inflation as that conjures up images of all sorts. But certainly double-digit inflation is not out of the question in medium term (1-5yrs) and from the point we are at now that will indicates further instability.


----------



## Sarenco

TheBigShort said:


> No I have argued QE _will _be a failure in combating deflation as it _will _lead to excess inflation.



Sorry but that makes absolutely no sense.  If we have above target inflation in the coming years as a result of QE then obviously the policy will have been successful in combatting deflation.  

Are you advocating a further loosening of monetary policy (leading to even cheaper borrowing rates for Government entities and corporates) or a tightening of policy?  You seem to be saying that you want to see both at the same time, which is obviously impossible.


----------



## TheBigShort

Sarenco said:


> Sorry but that makes absolutely no sense. If we have above target inflation in the coming years as a result of QE then obviously the policy will have been successful in combatting deflation.



Eh, yeh for sure. But inherent in this discussion is the concept that monetary policy, or any policy for that matter, is derived around the principle of providing a stable economic environment. 
Im sorry if you didn't pick up on that. So, in efforts to combat a deflationary environment, the ECB has adopted a 'whatever it takes' approach through QE. My view is that policy is/will ultimately debase the currency because it primarily involves chugging billions into non-productive areas of the economy to try create a wealth effect.
This will create more instability.



Sarenco said:


> Are you advocating a further loosening of monetary policy (leading to even cheaper borrowing rates for Government entities and corporates) or a tightening of policy? You seem to be saying that you want to see both at the same time, which is obviously impossible.



I would like to see new debt being used for capital expenditure programs in infrastructure not asset buying. This will in turn create employment, increase real incomes, and generate the inflationary effect that the ECB is seeking. 
Perhaps at this point, if my views are confusing you, you can explain why QE is a good or bad thing, and if bad, what alternative would you propose.


----------



## TheBigShort

http://on.mktw.net/2cVsMjd

Article from marketwatch.com suggesting increasing wages in the US economy to be a good thing.

"_If any single indicator can tell where the economy is headed it might be wages...stagnant wage growth has been one the hallmarks of the weakest economic recovery since WWII"_


----------



## Purple

TheBigShort said:


> This poster would.


I'm all in favour of real incomes increasing. That can be done by people becoming more productive and therefore being paid more, through reductions in payroll taxes, through reductions in utility charges (remember the average wage in the ESB is more than twice the average industrial wage and over half of the ESB's input costs are labour). Wage moderation in the State sector means lower taxes and increased real income for the productive wealth generating sector of the economy.


----------



## TheBigShort

[broken link removed]

David McWilliams writing recently. His conclusion is that we are not experiencing a property bubble. Still, interesting that he warns against it at this time.
Personally, I think we are in a bubble. Not 2007, but a sharp correction in Dublin will occur over next 12 months unless some momentum gathers for wage increases across all sectors.


----------



## Purple

TheBigShort said:


> [broken link removed]
> 
> David McWilliams writing recently. His conclusion is that we are not experiencing a property bubble. Still, interesting that he warns against it at this time.
> Personally, I think we are in a bubble. Not 2007, but a sharp correction in Dublin will occur over next 12 months unless some momentum gathers for wage increases across all sectors.


Wage increases which are not tied to productivity increases are one of the worst things that can happen in any economy as it will ultimately result in a flight of capital. This is especially ture in a small open economy.
A reduction in property prices would be a good thing. The best way to get one is to increase supply. The best way to increase supply is for the construction industry to become efficient and productive through adopting methods of construction which have been common in most of the rest of the developed world for decades. How on earth could anyone look for pay increases in such an unproductive sector? 
We have the the second highest spend on health in the OECD and the poorest outcomes. Do you want to reward the doctors and nurses and other people who work in the healthcare industry for collectively being so bad at their jobs?  
Farmers already get about 75% of their income from welfare payments. Should we ask the Germans to give them more welfare payments?
Who exactly has earned these pay increases you are talking about?


----------



## Firefly

TheBigShort said:


> Personally, I think we are in a bubble. Not 2007, but a sharp correction in Dublin will occur over next 12 months unless some momentum gathers for wage increases across all sectors.



Surely wage increases would push up house prices further?


----------



## Delboy

TheBigShort said:


> [broken link removed]
> 
> David McWilliams writing recently. His conclusion is that we are not experiencing a property bubble. Still, interesting that he warns against it at this time.
> Personally, I think we are in a bubble. Not 2007, but a* sharp correction in Dublin will occur over next 12 months unless some momentum gathers for wage increases across all sectors*.


I will gladly take a bet with you on no correction (i.e. downwards), sharp or not, in Dublin house prices in the next 12 months. Certainly not caused by wages rates here! No chance, pure pie in the sky.


----------



## Purple

Delboy said:


> I will gladly take a bet with you on no correction (i.e. downwards), sharp or not, in Dublin house prices in the next 12 months. Certainly not caused by wages rates here! No chance, pure pie in the sky.


Yea, but when it does happen (could be a decade from now) McWilliams will be shown to have called it first.


----------



## Delboy

TheBigShort said:


> Time to get over that, time to move on and stop living in the past.


"Those who cannot remember the past are condemned to repeat it" - George Santayana


----------



## Delboy

Purple said:


> Yea, but when it does happen (could be a decade from now) McWilliams will be shown to have called it first.


And TheBigShort!


----------



## Purple

Delboy said:


> And TheBigShort!


Shortie doesn't seem as bombastic as McWilliams.


----------



## TheBigShort

Delboy said:


> I will gladly take a bet with you on no correction (i.e. downwards), sharp or not, in Dublin house prices in the next 12 months. Certainly not caused by wages rates here! No chance, pure pie in the sky.



Ok, you are on. Come 06.10.2017, national house prices will have fallen from the previous 12 months. 
If they fall 6% on average or more (thats my definition of a sharp correction) what will you owe me?


----------



## TheBigShort

Delboy said:


> "Those who cannot remember the past are condemned to repeat it" - George Santayana



Profound.

Except, 'moving on' doesnt mean forgetting.


----------



## TheBigShort

Firefly said:


> Surely wage increases would push up house prices further?



Yes, thats why I said house prices will fall _unless _wages start to increase.


----------



## TheBigShort

Purple said:


> Yea, but when it does happen (could be a *decade* from now) McWilliams will be shown to have called it first.





Delboy said:


> And TheBigShort!





TheBigShort said:


> a sharp correction in Dublin will occur over *next 12 months*



Delboy, you should have got Rodney to the sums. He has a GSCE in maths!


----------



## Delboy

TheBigShort said:


> Delboy, you should have got Rodney to the sums. He has a GSCE in maths!


Don't pick certain lines from various posts and stick them together to present some sort of put down. Petty and misleading


----------



## Firefly

TheBigShort said:


> Yes, thats why I said house prices will fall _unless _wages start to increase.



I get you now. For a moment there I thought you were advocating higher wages in order to prevent prices falling.

Btw, are we breaking the guidelines regarding house prices?


----------



## TheBigShort

Delboy said:


> Don't pick certain lines from various posts and stick them together to present some sort of put down. Petty and misleading



Ah lighten up Delbot, just teasing you.


----------



## TheBigShort

Firefly said:


> I get you now. For a moment there I thought you were advocating higher wages in order to prevent prices falling.
> 
> Btw, are we breaking the guidelines regarding house prices?



Do you mean guidelines for mortgage lending? Not sure.
But when section 110 is closed, and if the ECB stops QE (funding vulture funds at 0%).
Add in uncertainty about Brexit (culminating in a weaker £) then I would expect a reversal in prices.
Pent up demand in first-time buyers wont be enough if the 20% deposit plus 3.5 LTV remain.
Only thing to keep it going will be wage increases (fuelled by fiscal stimulus).


----------



## Firefly

I caught an interesting segment on BBC news at 10 / Newsnight last night where they showed Theresa May announcing (somewhat) of a change in policy away from monetary policy (interest rates) to a fiscal policy (taxes and spending).  I think there are merits to both, but not being an expert or qualified in the area I really wouldn't know. I always however felt that relying on monetary policy is easier as you can increase / decrease interest rates quicker and the action is performed by the (independent) central bank. Fiscal policy is more difficult (when cuts need to be made) as it involves increasing taxes / cutting spending. I'm kinda old fashioned though and when I'm trying to balance the books at home I tend to look at what I am earning.


----------



## TheBigShort

Firefly said:


> think there are merits to both, but not being an expert or qualified in the area I really wouldn't know.



Like I said before, there are actually no experts in this game, just self-proclaimed experts.



Firefly said:


> I always however felt that relying on monetary policy is easier as you can increase / decrease interest rates quicker and the action is performed by the (independent) central bank. Fiscal policy is more difficult (when cuts need to be made) as it involves increasing taxes / cutting spending



Correct, monetary policy provides more/less liquidity to the economy than fiscal policy can. But fiscal policy can be more targeted. 
If the ECB lends to banks who in turn lend to large corporations, there is no gaurantee what the corporation will do with this new debt. Ideally, it would invest in research and product development, but if it simply buys out competitors or buys it own shares then productivity increases will be minimal. 
On the other hand if government sanctions the construction of an underground rail system (assuming costed and required) then that new debt will boost employment, wages etc.. The problem with this is if the rail system turns out to be a great white elephant, then we will be worse off.
But the money supply is being increased through QE and Europe is still stagnating, this money is not creating the desired wealth effect.


----------



## TheBigShort

Purple said:


> Wage increases which are not tied to productivity increases are one of the worst things that can happen in any economy as it will ultimately result in a flight of capital. This is especially ture in a small open economy.
> A reduction in property prices would be a good thing. The best way to get one is to increase supply. The best way to increase supply is for the construction industry to become efficient and productive through adopting methods of construction which have been common in most of the rest of the developed world for decades. How on earth could anyone look for pay increases in such an unproductive sector?
> We have the the second highest spend on health in the OECD and the poorest outcomes. Do you want to reward the doctors and nurses and other people who work in the healthcare industry for collectively being so bad at their jobs?
> Farmers already get about 75% of their income from welfare payments. Should we ask the Germans to give them more welfare payments?
> Who exactly has earned these pay increases you are talking about?



Purple, to my neglect I overlooked this post of yours and am only coming to it now. You raise some fair points, but there are also some counters to those points also.

"_Wage increases which are not tied to productivity increases are one of the worst things that can happen in any economy...", _

Theoretically at least, I would agree.
But alternatively, productivity increases which are not tied to an increase in capital investment are effectively a reduction in the value of labour.
And that is what has been happening over the last decade - do more for less.
But now, its the pay rise _first _that can often induce the productivity increase.

_A reduction in property prices would be a good thing. The best way to get one is to increase supply. _

I totally agree. This will involve a capital investment in a labour intensive industry, pushing demand on wages.
Your stuff about our construction industry being inefficient however, is, unfortunately babble. We were building 90,000 units at the peak! We had the people, the money and the means - we just didn't have the demand, nor the foresight. I tend to look at banks in that regard. But the construction industry did as was required.

Healthcare. I can only speak from my own experience, and say the health care in this country is excellent.
That is not to say the administration of the whole system is a complete mess.
My health insurance company, upon renewal, asks me which hospital I would like cover in!?! The Mater, Blackrock, or the Beacon.
Does it matter?
I dont care,  just treat the ailment, thats all I want.

As for farming, if you think Germans wouldnt be inclined to pay more then you might be surprised!
The reason for farmer subsidies is nothing to do with Irish farmer dependency, but rather German agricultural policy.
After WWII , when the Allies had destroyed Nazi Industry, the country was impoverished. It was through an effective agricultural program, not industrial program,  that the German economy began to rise again.
Since then, at the very heart of German political philosophy is the recognition that without food, and preferably an abundance of it, humankind will not progress, unite and live in peace.
Food, unlike ipads, rubiks cubes, steam engines, sandals, hospitals, power-steering, xbox, condoms, mid-week breaks to Madrid, the internet etc...is actually really important. So important, that without it, everything else is basically redundant.
It was the Germans that established the EU farmer subsidy program. The basic premise was this - as long as people didnt starve, they could progress. By paying a guaranteed amount of income to farmers, should ensure an abundance of available food.


----------



## dub_nerd

TheBigShort said:


> Your stuff about our construction industry being inefficient however, is, unfortunately babble. We were building 90,000 units at the peak! We had the people, the money and the means - we just didn't have the demand, nor the foresight. I tend to look at banks in that regard. But the construction industry did as was required.



This piece of your comment stuck out like a sore thumb. It is only true if you call the ability to fling up vast numbers of shoddy dwellings that nobody wants "efficient".

A tremendous amount of boom time building was in the wrong places, of the wrong type, of extremely dubious quality, not suitable for family living, and without surrounding amenities or infrastructure. Even given that a lot of the blame can be pinned on planners, lenders, and government policy, there is still plenty of blame left over for the construction industry.

Specifically regarding the efficiency question, it seems to me that dwellings are still being constructed using pretty much the same methods as fifty years ago. There may be some newer materials but the basic planning, design and modularity is mostly unchanged. I've always been amazed that our drab little cookie cutter housing estates without an ounce of individuality seem for some reason to be more expensive to build than much more tailored houses that you see in suburban parts of the Netherlands, Belgium and Germany (to take a few examples). And it certainly isn't because we build them to a higher spec, quite the reverse.

I expect that new technology will overtake us in spite of ourselves in the next decade. Robotically constructed high rises and 3D-printed houses are almost certainly on the horizon in that sort of timeframe. And that's according to industry insiders, not sci-fi authors. If we can sort issues like planning policy and land hoarding in a similar period, there may be some hope.


----------



## TheBigShort

dub_nerd said:


> It is only true if you call the ability to fling up vast numbers of shoddy dwellings that nobody wants "efficient".



That was my point. You cant blame the actual architects, engineers, trade workers, labourers etc. They were simply acting to demand and fulfilled their end of the bargain.

The developers, planners, financiers, failed at their end.


----------



## dub_nerd

TheBigShort said:


> You cant blame the actual architects, engineers, trade workers, labourers etc. They were simply acting to demand and fulfilled their end of the bargain.



You can certainly blame them for shoddy work and low standards. But there's a lot of blame to go around and a lot of it is shared across disparate groups.


----------



## TheBigShort

dub_nerd said:


> You can certainly blame them for shoddy work and low standards. But there's a lot of blame to go around and a lot of it is shared across disparate groups.



True to an extent of course, Priory Hall et al. But by and large, building standards were kept high. As demand went beserk, standards would invariably fall.
The point I am trying to make is that we have all the people (then and now) we need to build stuff, or reasonable acess to them, high skilled or no, through the EU.
In decades gone by, like the eighties we trained people to build, but as there was nothing to build they went to America.


----------



## dub_nerd

Ok, let's agree that if people are led by the nose and forced to do the right thing we have a chance of putting up some decent dwellings. I still fancy they will be replaced by robots sooner rather than later, so maybe we won't have to worry about it.


----------



## Purple

TheBigShort said:


> Purple, to my neglect I overlooked this post of yours and am only coming to it now. You raise some fair points, but there are also some counters to those points also.
> 
> 
> "_Wage increases which are not tied to productivity increases are one of the worst things that can happen in any economy...",_
> 
> 
> Theoretically at least, I would agree.
> 
> But alternatively, productivity increases which are not tied to an increase in capital investment are effectively a reduction in the value of labour.
> 
> And that is what has been happening over the last decade - do more for less.
> 
> But now, its the pay rise _first _that can often induce the productivity increase.



I take your point on the reduction in value of labour but I see that as a result in the inclusion of a couple of billion of people in developing (and now developed) countries in the international economy. We are a little poorer in terms of labour value but they are vastly better off than they were. A good thing, I’m sure you will agree.

I see no reason why an increase in wages will lead to an increase in productivity. You have not suggested how one would follow the other or any thread of cause and effect.




TheBigShort said:


> _A reduction in property prices would be a good thing. The best way to get one is to increase supply._
> 
> 
> I totally agree. This will involve a capital investment in a labour intensive industry, pushing demand on wages.
> 
> Your stuff about our construction industry being inefficient however, is, unfortunately babble. We were building 90,000 units at the peak! We had the people, the money and the means - we just didn't have the demand, nor the foresight. I tend to look at banks in that regard. But the construction industry did as was required.


 Housed can and should be pre-fabricated in factories and assembled on site. It’s much cheaper and gives a much better quality product. It also removes much of the costly labour and vastly speeds up the whole process. That’s how it’s done, to varying degrees, in most other countries. There is no need for any bricklayers, carpenters, plasterers etc during initial construction or during the first fix stage.

We built lots of shoddy properties during a credit and tax break fuelled boom. That is irrelevant in a discussion about efficiency in the sector.





TheBigShort said:


> Healthcare. I can only speak from my own experience, and say the health care in this country is excellent.
> 
> That is not to say the administration of the whole system is a complete mess.
> 
> My health insurance company, upon renewal, asks me which hospital I would like cover in!?! The Mater, Blackrock, or the Beacon.
> 
> Does it matter?
> 
> I dont care,  just treat the ailment, thats all I want.


 Personal anecdotal experiences are not a relevant response. That’s what RTE does. We shouldn’t lower ourselves to their level where everything is a human interest story and emotion trumps evidence and reason.




TheBigShort said:


> As for farming, if you think Germans wouldnt be inclined to pay more then you might be surprised!
> 
> The reason for farmer subsidies is nothing to do with Irish farmer dependency, but rather German agricultural policy.
> 
> After WWII , when the Allies had destroyed Nazi Industry, the country was impoverished. It was through an effective agricultural program, not industrial program,  that the German economy began to rise again.
> 
> Since then, at the very heart of German political philosophy is the recognition that without food, and preferably an abundance of it, humankind will not progress, unite and live in peace.
> 
> Food, unlike ipads, rubiks cubes, steam engines, sandals, hospitals, power-steering, xbox, condoms, mid-week breaks to Madrid, the internet etc...is actually really important. So important, that without it, everything else is basically redundant.
> 
> It was the Germans that established the EU farmer subsidy program. The basic premise was this - as long as people didnt starve, they could progress. By paying a guaranteed amount of income to farmers, should ensure an abundance of available food.



I’m well aware of the history of the EU and the CAP. I’m also aware of the tens of millions of people it condemns to poverty and the people it, and our other protectionist policies, kills l across the developing world.  

There’s no way that a 75% subsidy is required to make sure Europe can feed itself. In fact we are less productive in land use than other developed countries and regions with similar climatic and arable land stat’s because of our subsidies which result in small and inefficient farms. We have good environmental outcomes only because we outsource those problems to developing regions of the world; we import vast amounts of what we consume from countries with very bad environmental records because we are unwilling to produce it ourselves. In short we cause death and poverty along with environmental destruction but we do it to darker skinned people elsewhere so that’s ok. Then we pat ourselves on the back.


----------



## Protocol

Is it time for profit decreases?

*40% net profit margins............*

http://www.askaboutmoney.com/threads/selling-my-business.200754/


----------



## Purple

Protocol said:


> Is it time for profit decreases?
> 
> *40% net profit margins............*
> 
> http://www.askaboutmoney.com/threads/selling-my-business.200754/


Are you suggesting people should be punished for being good at running their business?
If my neighbour writes an App which is very popular and makes 75% profits, say an extra €200,000 a year, is it not enough that the State will take over half of it in direct taxes and a quarter of what's left in sales taxes?
Someone posted recently that Irish personal taxation is based on jealousy and charity. It's hard to disagree.


----------



## Protocol

Well what should happen is competition should drive down prices and profits.

Doesn't seem to happen in some sectors in Irl, though.

Example:

Sudocrem 400g = 10.59 euro Tesco Irl

UK = 5.50 GBP Asda, 5.80 GBP Tesco, or approx 6.50-7.00 euro


----------



## Purple

Protocol said:


> Well what should happen is competition should drive down prices and profits.
> 
> Doesn't seem to happen in some sectors in Irl, though.
> 
> Example:
> 
> Sudocrem 400g = 10.59 euro Tesco Irl
> 
> UK = 5.50 GBP Asda, 5.80 GBP Tesco, or approx 6.50-7.00 euro



The reason prices are higher in Ireland is generally because wages are higher. In the case of supermarkets a longer supply chain and economies of scale come into it. In  general terms the cost of living is a result of the cost of labour. If we are no more productive than the British (and we aren't) that means higher ages = higher costs. That's why things are cheaper in Spain; lower wages = lower costs.
The protected sectors and the so-called professions are exceptions. That's particularly the case with the medical industry since it has the double whammy of being mostly state funded and having barriers to entry through both the incompetence of the State and their own restrictive practices.
There is still over supply in the legal industry but demand is catching up fast.


----------



## TheBigShort

The thoughts of a self-made billionaire

http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014


----------



## Purple

TheBigShort said:


> The thoughts of a self-made billionaire
> 
> http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014


What on Earth have billionaires in America got to do with this discussion? The utter extremes make bad examples, at either end of the spectrum.


----------



## Firefly

TheBigShort said:


> The thoughts of a self-made billionaire
> 
> http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014



I think he's right but a major issue is _identifying _the super rich. Apart from the famous ones (which a lot of people like & admire), a lot of them are practically unknown, live in safe places and have easy access to flights and travel and the ability to move their wealth pretty easily.


----------



## Purple

Firefly said:


> I think he's right but a major issue is _identifying _the super rich. Apart from the famous ones (which a lot of people like & admire), a lot of them are practically unknown, live in safe places and have easy access to flights and travel and the ability to move their wealth pretty easily.


Drop a large rock in Lake Geneva and you'll wet a good few of them. You'll also splash the billionaire wife of that Nobel Peace Prize winner from Palestine.


----------



## Firefly

Purple said:


> Drop a large rock in Lake Geneva and you'll wet a good few of them. You'll also splash the billionaire wife of that Nobel Peace Prize winner from Palestine.



But I like Lake Geneva!


----------



## TheBigShort

Firefly said:


> I think he's right but a major issue is _identifying _the super rich. Apart from the famous ones (which a lot of people like & admire), a lot of them are practically unknown, live in safe places and have easy access to flights and travel and the ability to move their wealth pretty easily.



If they are unknown, how do you know they live in safe places? Where are these safe places? Are they unknown safe places too? How do they have easy access to flights without anyone knowing who they really are?


----------



## TheBigShort

Purple said:


> Drop a large rock in Lake Geneva and you'll wet a good few of them. You'll also splash the billionaire wife of that Nobel Peace Prize winner from Palestine.



Or alternatively you could comment on the views offered in the article instead of side-stepping. I like this bit,

"_The model for us rich guys here should be Henry Ford, who realized that all his autoworkers in Michigan weren’t only cheap labor to be exploited; they were consumers, too. Ford figured that if he[broken link removed]their wages, to a then-exorbitant $5 a day, they’d be able to afford his Model Ts.

What a great idea. My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. Any yours too."
_
I tend to agree with the sentiment here. Increasing wages can drive consumption and in turn increase productivity.


----------



## TheBigShort

Interesting article from Ken Early in the Irish Times commenting on the decline in Sky Sports viewers. Despite this, prices have increased and not declined. He also comments on the effect of wage stagnation. 

http://www.irishtimes.com/sport/soc...-watch-nothing-and-yet-miss-nothing-1.2832070

Perhaps its time that wages started to increase? Perhaps wages could be used as a tool to reduce debt, instill confidence, increase consumption, increase productivity?


----------



## Firefly

TheBigShort said:


> If they are unknown, how do you know they live in safe places? Where are these safe places? Are they unknown safe places too? How do they have easy access to flights without anyone knowing who they really are?



That's my point - we don't know who they are or where they are. Usually as people do better for themselves they tend to live in nicer areas that are safer, but you're right, at any point in time people from the 0.1% could be just strolling down Grafton St without a care in the world. So, short of rounding them up à la Pol Pot I'm not sure there's anything much that can be done. In older times the rich and powerful built big houses with tall walls. If enough people got together they could just surround the house and climb the walls. It's a bit different today. Have you seen the height of those mountains in Switzerland?


----------



## TheBigShort

Firefly said:


> That's my point - we don't know who they are or where they are. Usually as people do better for themselves they tend to live in nicer areas that are safer, but you're right, at any point in time people from the 0.1% could be just strolling down Grafton St without a care in the world. So, short of rounding them up à la Pol Pot I'm not sure there's anything much that can be done. In older times the rich and powerful built big houses with tall walls. If enough people got together they could just surround the house and climb the walls. It's a bit different today. Have you seen the height of those mountains in Switzerland?



What are you talking about???
A self-made billionaire, of no particular expertise, is able to deduce that the gap between rich and poor is growing at an alarming rate. He is able to deduce that the 'middle class' are in danger of losing their quality of life (this is echoed on this very site, expect posters are targeting low earners instead of the very wealthy) and as such this acts as a major threat to his own wealth, and billionaires like him. He is smart enough to realise that it is in his own interest that the middle class be preserved, and is advocating increasing the income of middle class earners. He uses Henry Fords initiatives in raising wages to help spur demand and in turn increase productivity.

What Pol Pot, Swiss mountains and Geneva Lake have to do with any of this is beyond me!


----------



## Firefly

TheBigShort said:


> What are you talking about???



I'm taking about the difficulty in identifying the majority of the super rich and where they are even if someone wanted to.




TheBigShort said:


> A self-made billionaire, of no particular expertise, is able to deduce that the gap between rich and poor is growing at an alarming rate. He is able to deduce that the 'middle class' are in danger of losing their quality of life (this is echoed on this very site, expect posters are targeting low earners instead of the very wealthy) and as such this acts as a major threat to his own wealth, and billionaires like him. He is smart enough to realise that it is in his own interest that the middle class be preserved, and is advocating increasing the income of middle class earners. He uses Henry Fords initiatives in raising wages to help spur demand and in turn increase productivity.



I agree with this. Henry Ford did the right thing for Henry Ford. For others this might not be the right thing to do. The question I have is how is this implemented?



TheBigShort said:


> What Pol Pot, Swiss mountains and Geneva Lake have to do with any of this is beyond me!



Pol Pot is a reference to what can when people are forced to live in an extreme left world. The Swiss Mountains is a reference to how difficult it would be to even locate the super rich who presumably have homes in Switzerland and other places. Lake Geneva was obviously tongue in cheek.


----------



## PGF2016

TheBigShort said:


> Increasing wages can drive consumption and in turn increase productivity.



The wages should be increased in lower wage economies, not Ireland. Increase the wages in Asia and let them consume more and let us compete on ability and productivity, not wages.


----------



## TheBigShort

Firefly said:


> I'm taking about the difficulty in identifying the majority of the super rich and where they are even if someone wanted to.



Why, do super rich people start to disappear or something? Dont they have tax numbers, bank accounts , use credit cards, buy big expensive stuff, like yachts and private planes? 



Firefly said:


> Pol Pot is a reference to what can when people are forced to live in an extreme left world.



Who mentioned anything about forcing anyone to live in an extreme left world? 



Firefly said:


> The Swiss Mountains is a reference to how difficult it would be to even locate the super rich who presumably have homes in Switzerland



Well, if they have homes in Switzerland, im guessing...erm... Switzerland is a good place to go find them if you need too!
What do you think happens to people when they go to Switzerland???


----------



## Firefly

TheBigShort said:


> Why, do super rich people start to disappear or something? Dont they have tax numbers, bank accounts , use credit cards, buy big expensive stuff, like yachts and private planes?



My point is that that it's not as easy as it was in times past by just pointing to a big set of gates to identify someone who is wealthy. Wealth can be hidden offshore and set up in complex structures.


----------



## Delboy

Bertie Ahern was on the Pat Kenny show earlier. He defended benchmarking back when he was in power and hinted that we may need to bring it back given the current unrest. Because the public servants are clearly unhappy and the private sector are being paid more


----------



## TheBigShort

Firefly said:


> My point is that that it's not as easy as it was in times past by just pointing to a big set of gates to identify someone who is wealthy. Wealth can be hidden offshore and set up in complex structures.



But that is to miss the point entirely. We know the wealthiest are hoarding wealth off-shore in complex tax avoidance schemes etc. 
Its the level of that hoarding that is now coming to the fore in the form of the middle class struggling to keep apace with the cost of living. It is being felt in the US, UK, Ireland, across Europe etc. 
It doesnt matter how much you have stashed away, if things keep going the way they are, it'll be worth nothing if, as the author of the article states "the pitchforks are coming". 
Thats obviously a metaphor for social unrest, but in real terms, a collapse of the euro for instance could cause extreme social unrest through rising inflation. A lot of wealthy people could see their wealth wiped out. Some will no doubt gain from it, but if you were a billionaire would you be prepared to take your chances? Not knowing in what form social unrest will take place? Who will be in charge? Whether or not it would be your assets seized or not.
Alternatively, if incomes were to start to rise, any potential social unrest could be thwarted.


----------



## Firefly

Delboy said:


> Bertie Ahern was on the Pat Kenny show earlier. He defended benchmarking back when he was in power and hinted that we may need to bring it back given the current unrest. Because the public servants are clearly unhappy and the private sector are being paid more



You know, the last time I wasn't happy with my income I just changed jobs.


----------



## Firefly

TheBigShort said:


> But that is to miss the point entirely. We know the wealthiest are hoarding wealth off-shore in complex tax avoidance schemes etc.
> Its the level of that hoarding that is now coming to the fore in the form of the middle class struggling to keep apace with the cost of living. It is being felt in the US, UK, Ireland, across Europe etc.
> It doesnt matter how much you have stashed away, if things keep going the way they are, it'll be worth nothing if, as the author of the article states "the pitchforks are coming".
> Thats obviously a metaphor for social unrest, but in real terms, a collapse of the euro for instance could cause extreme social unrest through rising inflation. A lot of wealthy people could see their wealth wiped out. Some will no doubt gain from it, but if you were a billionaire would you be prepared to take your chances? Not knowing in what form social unrest will take place? Who will be in charge? Whether or not it would be your assets seized or not.
> Alternatively, if incomes were to start to rise, any potential social unrest could be thwarted.



I agree entirely, but how do you go about making these billionaires to pay higher wages?


----------



## Delboy

Firefly said:


> You know, the last time I wasn't happy with my income I just changed jobs.


Ah you see, you don't have the 'vocation' spirit!


----------



## Protocol

Delboy said:


> Bertie Ahern was on the Pat Kenny show earlier. He defended benchmarking back when he was in power and hinted that we may need to bring it back given the current unrest. Because the public servants are clearly unhappy and the private sector are being paid more



25 years old recently qualified accountants start on 45-48k.

Gardai start on 23k.

That gap is not defendable.


----------



## PGF2016

Protocol said:


> 25 years old recently qualified accountants start on 45-48k.
> 
> Gardai start on 23k.
> 
> That gap is not defendable.



Did the Gardai recruits join the force expecting to start on 45k? Maybe they should read this: 



Firefly said:


> You know, the last time I wasn't happy with my income I just changed jobs.


----------



## Firefly

Delboy said:


> Ah you see, you don't have the 'vocation' spirit!



I do (sadly), but I just believe in sharing the love!!


----------



## Purple

TheBigShort said:


> Or alternatively you could comment on the views offered in the article instead of side-stepping. I like this bit,
> 
> "_The model for us rich guys here should be Henry Ford, who realized that all his autoworkers in Michigan weren’t only cheap labor to be exploited; they were consumers, too. Ford figured that if he[broken link removed]their wages, to a then-exorbitant $5 a day, they’d be able to afford his Model Ts.
> 
> What a great idea. My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. Any yours too."
> _
> I tend to agree with the sentiment here. Increasing wages can drive consumption and in turn increase productivity.


Henry Ford was a horrible man who treated his employees like children and had employment and pay structures which were deeply invasive in their personal lives. He hired private detectives to make sure they were "clean living" and sacked those who were left wing and/or politically active on the left.
The $5 an hour so they could buy Ford cars was also total Bull. This is why he paid more.


----------



## Purple

TheBigShort said:


> What do you think happens to people when they go to Switzerland???


Very rich people negotiate what income tax they will pay in a particular year with the Canton and they then live there. That way the Canton gets X million guaranteed revenue and the very rich person gets to pay bugger all tax as a percentage of their income. They  do pay VAT and Property tax and local taxes etc. as Switzerland has a much broader tax base than us.


----------



## TheBigShort

Purple said:


> Henry Ford was a horrible man who treated his employees like children and had employment and pay structures which were deeply invasive in their personal lives. He hired private detectives to make sure they were "clean living" and sacked those who were left wing and/or politically active on the left.
> The $5 an hour so they could buy Ford cars was also total Bull. This is why he paid more.



Not really interested in what type of man he was tbh. Im more interested in the effect of the wage increase. 
Certainly I would go with your article as to the real reasoning why he increased wages, but nevertheless, the wage increase also increased productivity.


----------



## TheBigShort

Purple said:


> Very rich people negotiate what income tax they will pay in a particular year with the Canton and they then live there. That way the Canton gets X million guaranteed revenue and the very rich person gets to pay bugger all tax as a percentage of their income. They  do pay VAT and Property tax and local taxes etc. as Switzerland has a much broader tax base than us.



Oh, thats ok then, we know where they are so. I got the impression from Firefly that they somehow managed to disappear themselves!


----------



## Firefly

TheBigShort said:


> Oh, thats ok then, we know where they are so. I got the impression from Firefly that they somehow managed to disappear themselves!



I'm not saying that and you know I'm not. I'm saying these people are so rich that they could have houses in dozens of places across the globe and could be at any one of them at any time. Not very helpful if someone is gathering pitchforks, unless it was a worldwide manhunt.


----------



## TheBigShort

Firefly said:


> I'm not saying that and you know I'm not. I'm saying these people are so rich that they could have houses in dozens of places across the globe and could be at any one of them at any time. Not very helpful if someone is gathering pitchforks, unless it was a worldwide manhunt.



Pitchforks was a metaphor. In reality, the election of a facist government and subsequent seizing of assets is more likely what was in mind.


----------



## Purple

TheBigShort said:


> Pitchforks was a metaphor. In reality, the election of a facist government and subsequent seizing of assets is more likely what was in mind.


With the Shinners gaining support that's more likely to happen. I always hear the faint echo of jackboots when I hear them talking.


----------



## Purple

TheBigShort said:


> Not really interested in what type of man he was tbh. Im more interested in the effect of the wage increase.
> Certainly I would go with your article as to the real reasoning why he increased wages, but nevertheless, the wage increase also increased productivity.


Yes, he knew that he needed to increase wages in  order to increase productivity because he was running a production line and wages were a small proportion of his input costs. He also wasn't competing with an international market. That's a world away from the notion that increasing wages will automatically lead to an increase in productivity. Henry Ford couldn't retain the required number of people to run his business; he wasn't paying the market rate because he was the only person in the market and the work was harder that the old way of doing things. He found the market rate and retained the required number of employees. 

I am a great believer in paying the market rate.


----------



## TheBigShort

Purple said:


> Yes, he knew that he needed to increase wages in order to increase productivity



Yes, so we can agree that in the right circumstances wage increases can induce productivity increases?



Purple said:


> I am a great believer in paying the market rate.



Me too, that applies to the chiefs too.
So what is the market rate? Obviously it will vary from job to job, location, experience etc.
But from a macro level, western economies are stagnating. Growth across Europe, US is lame at best. Oversupply and weak demand. That is why I argue for fiscal stimulus, that is why I argue for economic policies that will increase peoples incomes and stimulate demand.
Instead, monetary policy is trying to stimulate a "wealth effect" through further credit expansion. This is only beneficial for those who accumulate assets. The wealth effect is trickle up economics.
There are bubbles in property, in stocks, in bonds, and...seeing as McIlroy was brought up earlier, bubbles in sport, particularly the Premier League.


----------



## TheBigShort

Purple said:


> With the Shinners gaining support that's more likely to happen. I always hear the faint echo of jackboots when I hear them talking.



Well you have to ask yourself, why are they gaining support? Its too lame to say that their supporters are economic illiterates, when its the economic policies of the established parties that is surely pushing people toward them.


----------



## Purple

TheBigShort said:


> Yes, so we can agree that in the right circumstances wage increases can induce productivity increases?


 No, wages increased may be required in order to achieve or sustain an increase in productivity but in isolation they are not the cause. 





TheBigShort said:


> Me too, that applies to the chiefs too.


Not if the market is distorted through a small group of self serving people. It only works when the market is free (capitalism). Otherwise we get inflated packages awarded by a small group to each other. 


TheBigShort said:


> So what is the market rate? Obviously it will vary from job to job, location, experience etc.
> But from a macro level, western economies are stagnating. Growth across Europe, US is lame at best. Oversupply and weak demand. That is why I argue for fiscal stimulus, that is why I argue for economic policies that will increase peoples incomes and stimulate demand.
> Instead, monetary policy is trying to stimulate a "wealth effect" through further credit expansion. This is only beneficial for those who accumulate assets. The wealth effect is trickle up economics.
> There are bubbles in property, in stocks, in bonds, and...seeing as McIlroy was brought up earlier, bubbles in sport, particularly the Premier League.


 Europe and the US are stagnating because Asia is more efficient and productive relative to labour costs. We need to compete with them, not make ourselves less competitive. That's fairness and equality on a global level.


----------



## Purple

TheBigShort said:


> Well you have to ask yourself, why are they gaining support? Its too lame to say that their supporters are economic illiterates, when its the economic policies of the established parties that is surely pushing people toward them.


Failed protectionist and socialist policies which overheated the economy have been misrepresented as capitalist by a left wing media. A capitalist system would have burned the bond holders, allowed the banks to fail and seen massive pay cuts and cuts in numbers all across the state sector. 

The Shinners are an anti-reality party, just like all socialist parties. People don't like reality and so support parties like SF.


----------



## Firefly

TheBigShort said:


> Pitchforks was a metaphor. In reality, the election of a facist government and subsequent seizing of assets is more likely what was in mind.



Interesting article here on how the wealthy in China are moving their few bob.
http://www.bloomberg.com/news/features/2015-11-02/china-s-money-exodus

And since the majority of wealth is still concentrated in the USA, it would probably mean a Donald Trump win next month and him writing a 21st century Mein Kampf & growing a mustache for the wealthy there to get worries


----------



## TheBigShort

Firefly said:


> Interesting article here on how the wealthy in China are moving their few bob.
> http://www.bloomberg.com/news/features/2015-11-02/china-s-money-exodus
> 
> And since the majority of wealth is still concentrated in the USA, it would probably mean a Donald Trump win next month and him writing a 21st century Mein Kampf & growing a mustache for the wealthy there to get worries


 
I'd be more concerned about China's 'underground' banking system! Ive heard about this before, also their official holding of Gold is apparently underestimated. 
I would have thought such factors, if accurate, would be a recipe for financial instability?


----------



## Purple

TheBigShort said:


> I'd be more concerned about China's 'underground' banking system! Ive heard about this before, also their official holding of Gold is apparently underestimated.
> I would have thought such factors, if accurate, would be a recipe for financial instability?


Their holding of American Bonds (debt) is of far more concern.


----------



## TheBigShort

Purple said:


> Their holding of American Bonds (debt) is of far more concern.



That too!


----------



## TheBigShort

Purple said:


> Failed protectionist and socialist policies which overheated the economy have been misrepresented as capitalist by a left wing media.



Hard to take that between McCreevey and Harney at the helm for the guts of the 'Celtic Tiger' that they could be accused of protectionism or socialism.
If you are refering to benchmarking I, then while it may have contributed in part to overheating, it was hardly responsible for the scale of the collapse.
A property and lending bubble seems to have passed your radar.




Purple said:


> A capitalist system would have burned the bond holders, allowed the banks to fail and seen massive pay cuts and cuts in numbers all across the state sector.



And therein lies the very reason why a free market capitalist system is wholly inadequate - its a recipe for chaos, inequality, and ultimately conflict. 
And this is not to suggest that I supported the bank bailout, I didnt. Thats because if they ever get back to anywhere close to normal banking they will be sold off to private investors to gorge on the profits, proclaiming their new found wealth on talent, expertise and general BS.



Purple said:


> People don't like reality



Inane generalizations dont really cut it.


----------



## Purple

TheBigShort said:


> Hard to take that between McCreevey and Harney at the helm for the guts of the 'Celtic Tiger' that they could be accused of protectionism or socialism.
> If you are refering to benchmarking I, then while it may have contributed in part to overheating, it was hardly responsible for the scale of the collapse.


Bertie was the only Socialist in the Dail. Harney was the leader of a small minority party but still managed to moderate expenditure and vcut top rates of tax. It was only when socialist Bertie was in power with the socialist Labour Party that things really went nuts. 


TheBigShort said:


> A property and lending bubble seems to have passed your radar.


 No, vested interest groups ( an anathema to capitalism) including "Congress" and the Construction Industry Federation agitated to maintain and boost pro-cyclical economic policies while the country was awash with cheap money.  






TheBigShort said:


> Inane generalizations dont really cut it.


 I know but it hasn't stopped you so far


----------



## Protocol

Some interesting CSO info on average earnings:

2015 average earnings = 36,519, very stable during 2008-2015

Average annual earnings were €45,075 for full-time employees in 2015 while part-time employees earned €16,332 on average in the year.


----------



## MrEarl

Very simple situation here really...

The TDs are getting their pay restored, while many other categories of employees are not.... talk about "do as we say and not as we do" 

The TDs are relatively well paid, they should have been one of the last groups to get their pay restored, if they seriously wanted all other groups of state employees to be patient.


----------



## Protocol

MrEarl said:


> Very simple situation here really...
> 
> The TDs are getting their pay restored, while many other categories of employees are not.... talk about "do as we say and not as we do"
> 
> The TDs are relatively well paid, they should have been one of the last groups to get their pay restored, if they seriously wanted all other groups of state employees to be patient.



Note that the TDs are getting some of their former pay cut reversed, as part of the LRA.

Nothing special, nothing extra.

The same that any other PS on over 65k would get.


----------



## MrEarl

Protocol said:


> Note that the TDs are getting some of their former pay cut reversed....



TBF, I did say "restored" on each occassion, I didn't not suggest it was a "pay rise"


----------



## Protocol

MrEarl said:


> The TDs are getting their pay restored, *while many other categories of employees are not..*.. talk about "do as we say and not as we do"
> 
> The TDs are relatively well paid, they should have been one of the last groups to get their pay restored, if they seriously wanted all other groups of state employees to be patient.



All PS are getting some of their paycuts restored.


----------



## MrEarl

Protocol said:


> All PS are getting *some* of their paycuts restored.



What does "some" mean ? ... is it by the same percentage and at the same time as the TDs ?


----------



## Protocol

Main elements of Lansdowne Road agreement:


Most public service staff to receive €2,000 in increased earnings in three phases between January 2016 and September 2017. This to come about through a combination of flat-rate adjustments to the public service pension levy and a partial reversal of pay cuts introduced in 2010;
The €1,000 pay hike scheduled for 2017 will only apply to those earning less than €65,000;
Public servants earning above €100,000 a year will have cuts imposed under the 2013 Haddington Road agreement restored over three phases, beginning in 2017;
Most retired public service staff will receive about €1,680 more in their pensions over the next three years as part of a parallel pension restoration initiative.
Under various cuts and emergency measures put in place over recent years, the gross public service pay bill fell from €17.2 billion in 2008 to €14.2 billion in 2013. This was achieved by means of financial emergency legislation and the introduction of a pension levy. The numbers employed in the public service were also reduced by 32,000.


----------



## Protocol

PRD cut by 1,000 for most staff in 2016 and 2017
Gross pay up by 1,000 for many staff in 2017

For those people over 65k, incl. TDs, who took an extra paycut in the HRA, that paycut is being restored over phases.


----------



## TheBigShort

More so for the bit on wages,

https://www.rt.com/usa/366351-big-victories-for-weed-wages/

As for the weed, take it or leave it.


----------



## TheBigShort

An article of interest to this topic.

http://evonomics.com/the-rise-of-finance-and-the-fall-of-american-business/


----------



## TheBigShort

Some more thoughts

https://www.weforum.org/agenda/2016...al&utm_source=twitter.com&utm_campaign=buffer


----------



## TheBigShort

The return of fiscal spending, inducing an inflationary effect through wage pressure.


https://www.ft.com/content/b5b78c76-a769-11e6-8898-79a99e2a4de6


----------



## Firefly

It's a great coincidence that we are discussing this topic when the unions are surrounding the trough!


----------



## TheBigShort

Firefly said:


> It's a great coincidence that we are discussing this topic when the unions are surrounding the trough!



Unions are doing what they are supposed to do. Look for better terms for their members in a growing economy. Otherwise what is the point of growing an economy? Who should benefit from a growing economy?


----------



## TheBigShort

Wages are on the rise folks, not just here but across the EU and US, be sure you get your fair share. Public Sector workers are heavily unionized, private sector workers in unions will fare better. Non-unionized workers will fall behind.


----------



## Leo

TheBigShort said:


> Wages are on the rise folks, not just here but across the EU and US, be sure you get your fair share. Public Sector workers are heavily unionized, private sector workers in unions will fare better. Non-unionized workers will fall behind.



Most of the top paying jobs are in non-unionised houses, most of the IT industry here in non-unionised...


----------



## Firefly

Leo said:


> Most of the top paying jobs are in non-unionised houses, _most of the IT industry here in non-unionised_...



True that and at the mercy of the market for our rates!


----------



## TheBigShort

Leo said:


> Most of the top paying jobs are in non-unionised houses, most of the IT industry here in non-unionised...



Not doubting it. And they are not the people im talking about. Im talking about low-paid, middle income earners. Wage pressure is beginning to manifest itself for these workers.


----------



## Purple

TheBigShort said:


> Not doubting it. And they are not the people im talking about. Im talking about low-paid, middle income earners. Wage pressure is beginning to manifest itself for these workers.


How can someone be low paid and middle income at the same time?


----------



## Firefly

Purple said:


> How can someone be low paid and middle income at the same time?



Middle incomes are too low. Increasing wages will fix everything, have you not being paying attention?


----------



## Firefly

TheBigShort said:


> Unions are doing what they are supposed to do. Look for better terms for their members in a growing economy. Otherwise what is the point of growing an economy? Who should benefit from a growing economy?



Do you think wages for public servants should increase when we as a nation are borrowing to consume?


----------



## TheBigShort

Firefly said:


> Do you think wages for public servants should increase when we as a nation are borrowing to consume?



You are honed in on a narrow perspective. Looking over your shoulder at your neighbour wondering how much it is costing you.
The topic is about a global trend to increase the return on labour (admittedly, the title does not lend itself to that view).
But to answer your question, yes. I also think private sector workers need to see increases in their incomes, predominantly from the bottom up. For instance, a 25% increase in the minimum wage would spark demands for higher wages up the food chain. This will set about generating real domestic demand, increase savings, reduce debt etc.
Of course it cannot occur in a vacuum, international considerations need to be factored. But even a fleeting knowledge of national and global affairs would surely pick up the ascent of unlikely political outcomes. The cause of which is mistakenly construed by some commentators from the rise of extremism, racism, etc.
 It is not, it is simple, as it always is - 'its the economy, stupid' (not you personally). When wages cannot pay the bills, rent, childcare etc, then there is a big problem. Add to that the extreme levels of wealth, overvalued labour at top-end earnings, that is prevalent in this economic model and tensions will start to rise. Scapegoats will be made of Gardai who cannot afford to live in Dublin, teachers who have seen their savings depleted, LUAS drivers whose employers tried to renege on previous agreements, etc, etc.


----------



## TheBigShort

Purple said:


> How can someone be low paid and middle income at the same time?



Low paid _and _middle incomes, typo on my part.


----------



## TheBigShort

Firefly said:


> Middle incomes are too low. Increasing wages will fix everything, have you not being paying attention?



Nowhere have I said that increasing wages "would fix everything".
Try pay attention.


----------



## Firefly

TheBigShort said:


> But to answer your question, yes.



I've asked you the same, straight forward question 3 times and have gotten 3 different answers - the answer above plus these two:



TheBigShort said:


> Of course we shouldn't borrow to pay wages per se, but budget deficits are less than fiscal pact limits of 3% of GDP.





TheBigShort said:


> No of course not, not in the flat terms that you have presented it here.



In any case, you're as good as your last race I guess, so I am taking it that you are happy that we borrow extra money to pay for increases in wages for our public servants. I think this is a crazy thing to do but if we are intent on borrowing I can think of far more deserving things to spend the money on such as taking homeless people off the street.

In any case, I thank our lucky stars that we can only use constrained fiscal tools - we can't borrow any more and we can't print our own currency. Any money given to pay increases will have to come from somewhere else. This should make any such increases a lot more difficult.


----------



## TheBigShort

Firefly said:


> I've asked you the same, straight forward question 3 times and have gotten 3 different answers - the answer above plus these two:




And of course if you take each answer out of context then of course you can manipulate it to suit your agenda.
As stated in my last answer, wage increases should not occur in a vaccum. Or to put it another way, we shouldn't borrow to increase wages per se, or to put it another way, we shouldn't borrow to increase wages in the flat terms that you have presented here.
I assume, that as you keep asking the same question, then you don't understand the point.
We have a growing economy, interest rates are at zero, if the people working and contributing to this growing economy cannot afford a mortgage, rent, health insurance, childcare etc, then what is the point of growing an economy? Who should benefit from a growing economy?


----------



## TheBigShort

Firefly said:


> if we are intent on borrowing I can think of far more deserving things to spend the money on such as taking homeless people off the street.



How would borrowing take homeless people off the street?


----------



## jjm

Wages Increasing already for the top tax payers Public /Private sector will bring in more than enough to pay public servants ,I don't see any sign of a slow down in either  group


----------



## Purple

TheBigShort said:


> You are honed in on a narrow perspective. Looking over your shoulder at your neighbour wondering how much it is costing you.
> The topic is about a global trend to increase the return on labour (admittedly, the title does not lend itself to that view).
> But to answer your question, yes. I also think private sector workers need to see increases in their incomes, predominantly from the bottom up. For instance, a 25% increase in the minimum wage would spark demands for higher wages up the food chain. This will set about generating real domestic demand, increase savings, reduce debt etc.
> Of course it cannot occur in a vacuum, international considerations need to be factored. But even a fleeting knowledge of national and global affairs would surely pick up the ascent of unlikely political outcomes. The cause of which is mistakenly construed by some commentators from the rise of extremism, racism, etc.
> It is not, it is simple, as it always is - 'its the economy, stupid' (not you personally). When wages cannot pay the bills, rent, childcare etc, then there is a big problem. Add to that the extreme levels of wealth, overvalued labour at top-end earnings, that is prevalent in this economic model and tensions will start to rise. Scapegoats will be made of Gardai who cannot afford to live in Dublin, teachers who have seen their savings depleted, LUAS drivers whose employers tried to renege on previous agreements, etc, etc.


I find it genuinely frightening that anyone in a position of power in this country could think like you. It is so utterly out of kilter with reality and it would destroy our economy in a matter of months.

WE do not, as a nation, create wealth by selling things to each other. To a great extent, greater than almost anywhere else, what we make we export and what we consume we import. Therefore we generate wealth by exporting goods and services. If we increase wages by anything like the amounts you would like the Irish owned small and medium sized businesses which trade internationally will be wiped out within months. You just don’t get it; we have to be competitive on an international stage. That’s the bottom line, that’s the only line.


----------



## Purple

jjm2016 said:


> Wages Increasing already for the top tax payers Public /Private sector will bring in more than enough to pay public servants ,I don't see any sign of a slow down in either  group


No it won't.


----------



## jjm

Purple  because the people in power who You support will increase tax on this group so they will be taxed more.


----------



## TheBigShort

Purple said:


> If we increase wages by anything like the amounts you would like the Irish owned small and medium sized businesses which trade internationally will be wiped out within months.



I didn't say by what amount I would like wages to increase. If you are referring to the figure of 25% mentioned earlier, that was simply illustrative, as an example of how a wage increase can generate domestic demand, increase savings, reduce debt. I could have used a €0.10 rise in the minimum wage but such an amount I believe would be negligible.
But even if minimum wage increased by 25%, that does not necessarily equate to a 25% increase for all income brackets.



Purple said:


> we have to be competitive on an international stage.



And so does everyone else who exports. And far from not getting it, you are clearly blind to what is occurring economically and politically in international terms. We have a fragmented Irish parliament, Brexit, Trump as president elect, Le Pen on the rise in France, Merkel getting a kicking in Germany, Bulgaria building blockades, Italy in political disarray, Spain split, Venezuela, Argentina bankrupt, Greece on its knees and you would appear to support the same economic policy that has facilitated unfettered corporate profits, primarily through credit expansion and on the backs of wage restraint, or moderate wage increases for 20-30yrs.
That system is broken. You cannot expect people to continuously borrow to generate growth. You cannot expect people to continuously borrow on top of debt. For large sectors of the population their incomes no longer cover the cost of living. Not just in Ireland, but across Europe and the US aswell.
Either governments start defaulting (causing chaos) or there is a significant transfer of wealth from capital to labour.
This topic is not about Ireland in a vaccum, I have posted numerous articles from international sources all advocating similar points - wage increases. 
You and Firefly continuously try to limit it to the cost of a public servant v private sector worker in Ireland or some basic accounting.
You wholly fail to pick up on the general theme that the current economic model is broken. It has had its day. It is finished. It no longer works. Keep carrying on with the same model and the euro will crash, expect (more) conflict. Not because people have suddenly become racist or facist or misogynist, but because the economy is a debt trap.


----------



## PGF2016

TheBigShort said:


> For large sectors of the population their incomes no longer cover the cost of living. Not just in Ireland, but across Europe and the US aswell.



I find it very hard to understand the constant barrage of news saying that people can't cover the cost of living in Ireland. I've had the misfortune of having to go to a number of shopping centers around Dublin at the weekend recently. It's impossible to get parking. They're packed full of people. Someone has money. A Hyundai SUV is the highest selling car in Ireland this year. 

Maybe if the people stopped buying crap they don't need and can't afford there wouldn't be the massive debt that pervades Ireland / US etc.


----------



## TheBigShort

PGF2016 said:


> I find it very hard to understand the constant barrage of news saying that people can't cover the cost of living in Ireland.



That would imply that you are not affected. I said large sectors of the population, that does not equate to everyone.



PGF2016 said:


> Someone has money. A Hyundai SUV is the highest selling car in Ireland this year.



No-one is denying that there is not money out there, the opposite in fact. There is plenty of money, but it has concentrated itself in the hands of too few. Thats why you get other threads on this site like "What is the squeezed middle?" and "Cut the dole to cut higher taxes". Lots of people, working people, are barely keeping their heads above water.



PGF2016 said:


> Maybe if the people stopped buying crap they don't need and can't afford there wouldn't be the massive debt that pervades Ireland / US



Unfortunately the system of growth known as the Celtic Tiger was built around people buying lots of crap on cheap credit expansion. That in turn created a boom resulting in a debt overhang. The Central Banks would like it to start all over again. Cheap borrowing for crap we dont need and as you point out, it is working to an extent in this country. But it is very limited in my opinion as there is still too much debt overhang from the last credit expansion. I would argue that in the next few years we will begin to see wage growth across Europe and US, inducing inflation, raising interest rates. It will be driven primarily by fiscal policy and most likely make the fiscal pact and Lisbon treaty redundant.


----------



## PGF2016

TheBigShort said:


> That would imply that you are not affected. I said large sectors of the population, that does not equate to everyone.



There's a reason I'm not affected. My cost of living does not include two cars, Ipads, ridiculously priced alcohol, frequent eating out, cigarettes, gambling etc.

My point was that I struggle to see how it's "large sectors of the population " when all I see is new cars and packed shopping centers.



TheBigShort said:


> No-one is denying that there is not money out there.... it has concentrated itself in the hands of too few.



I don't see that at all. We're a very rich country. Or we could be. We just piss all our money away and are blind as to how good we have it. Or could have it.

That's my opinion as unpopular as it may be...


----------



## TheBigShort

PGF2016 said:


> My cost of living does not include two cars, Ipads, ridiculously priced alcohol, frequent eating out, cigarettes, gambling etc.



Which are all discretionary spending (aside two car families where both are at work and no reasonable public transport). I would suggest that it is not this spending that is of cause for concern, in fact such spending is good (aside the health effects of tobacco and alcohol) as they are industries in themselves creating employment.
I would suggest it is working people burdened with large mortgage, rent, childcare, increasing insurances combined with income tax, usc, prsi, tv license, nct, car service, phone bill, property tax, pay cuts or pay freeze that is hurting. 
Notwithstanding all that, employment has improved and fuel prices fallen, offering some relief, but it wont take much (interest rate hike for example) to reverse that progress.



PGF2016 said:


> We're a very rich country.



Totally agree.



PGF2016 said:


> We just piss all our money away and are blind as to how good we have it. Or could have it.



Disagree.


----------



## Firefly

TheBigShort said:


> And of course if you take each answer out of context then of course you can manipulate it to suit your agenda.
> As stated in my last answer, wage increases should not occur in a vaccum. Or to put it another way, we shouldn't borrow to increase wages per se, or to put it another way, we shouldn't borrow to increase wages in the flat terms that you have presented here.
> I assume, that as you keep asking the same question, then you don't understand the point.
> We have a growing economy, interest rates are at zero, if the people working and contributing to this growing economy cannot afford a mortgage, rent, health insurance, childcare etc, then what is the point of growing an economy? Who should benefit from a growing economy?



OK, if my question was presented in flat terms (I disagree btw), I am assuming your last sentence above is providing more context. So, with that in place, do you think we should borrow more money in order to raise wages in the public sector?


----------



## Purple

TheBigShort said:


> I would argue that in the next few years we will begin to see wage growth across Europe and US, inducing inflation, raising interest rates.


 If that happens we will see even more economic hardship while Asia (with more people than Europe and the USA combined) grows even more.
If it happens across the entire globe then Ireland can follow suit but we certainly should not lead the charge for obvious economic reasons.


----------



## Purple

TheBigShort said:


> I would suggest that it is not this spending that is of cause for concern, in fact such spending is good (aside the health effects of tobacco and alcohol) as they are industries in themselves creating employment.


 No, it's bad. None of the products are made in Ireland so buying imported goods is a transfer of wealth out of the country. Increasing wages through borrowing in order to fund spending on imported goods is economic madness.


----------



## Purple

TheBigShort said:


> I would suggest it is working people burdened with large mortgage, rent, childcare, increasing insurances combined with income tax, usc, prsi, tv license, nct, car service, phone bill, property tax, pay cuts or pay freeze that is hurting.


 So instead of fixing any of that you think we should pay everyone more. Is that the case?
We have historically low interest rates and in real terms oil has never been cheaper. That's the reason the economy is growing so fast. US interest rates will go up over the next 12-18 months. Oil prices will go up over the next 6-12 months. We have lost 15-20% of our competitiveness with our biggest trading partner and they are about to leave the EU... and you want to saddle the country with another billion Euro of borrowing or tax increases in order to pay 300,000 state employees who already enjoy a 5-10% pay advantage over their private sector counterparts (not including their gold plated pensions), even more?

Stop trying to dress self interest up as some broader social concern.


----------



## jjm

It is the people in power With the support of the people who have raised public sector wages .I don't think the are planning to borrow .I have already said where it in going to come from,


----------



## Purple

jjm2016 said:


> It is the people in power With the support of the people who have raised public sector wages .I don't think the are planning to borrow .I have already said where it in going to come from,


The Public Sector Unions (the people with power)have bullied the Government into paying more to an already over paid sector. 
The money is going to come from borrowing or taxing people in the Private Sector even more. 
Where do you think it is going to come from?


----------



## jjm

(Where do you think it is going to come from Purple said)
The over paid private sector who are putting there own jobs and the jobs of the lower paid at risk,


----------



## TheBigShort

TheBigShort said:


> Who should benefit from a growing economy?



No answer to this question.



TheBigShort said:


> How would borrowing take homeless people off the street?



No answer to this question.



Firefly said:


> So, with that in place, do you think we should borrow more money in order to raise wages in the public sector?



Wanted, a fourth answer to this question. Stop trying to limit the discussion to your public sector worker neighbour/friend/spouse. The topic is about wages in the round, for all workers. The topic is about the bankrupt nature of our, and developed economies and how to resolve it. As stated, I have posted a number of articles from various sources all pointing to rising incomes (particularly for low and middle income earners) as a method to returning stability. You deliberately choose to ignore these points and persist with repetitive questions about public sector pay in a vacuum. 

Perhaps you could answer some questions first, as a matter of courtesy, before expecting your repeated question to be answered again and again?


----------



## Purple

jjm2016 said:


> (Where do you think it is going to come from Purple said)
> The over paid private sector who are putting there own jobs and the jobs of the lower paid at risk,


Even though all the economic evidence points to the Public Sector enjoying a like for like premium of around 10%, excluding their gold plated pensions, over the private sector? A small dose of reality would do you no harm.


----------



## Purple

TheBigShort said:


> Wanted, a fourth answer to this question. Stop trying to limit the discussion to your public sector worker neighbour/friend/spouse. The topic is about wages in the round, for all workers. The topic is about the bankrupt nature of our, and developed economies and how to resolve it. As stated, I have posted a number of articles from various sources all pointing to rising incomes (particularly for low and middle income earners) as a method to returning stability. You deliberately choose to ignore these points and persist with repetitive questions about public sector pay in a vacuum.
> 
> Perhaps you could answer some questions first, as a matter of courtesy, before expecting your repeated question to be answered again and again?


Only the Public Sector can bully pay rises without any economic justification. In the Private Sector pay rises have to be earned and have to be based on economic reality. Therefore your discussion, by its very nature, is limited to the Public Sector. If a corner shop or Dry Cleaners or Cafe or small manufacturing business is hardly making enough money to fund existing levels of pay they can hardly give pay rises. If the Public Sector bully in State into giving them the €1 billion in pay increases they are looking for, and that's €1 billion every year, it will mean more income transfer from the Private Sector so less net income for those same people in the Cafes and shops.


----------



## Firefly

TheBigShort said:


> Wanted, a fourth answer to this question. Stop trying to limit the discussion to your public sector worker neighbour/friend/spouse. The topic is about wages in the round, for all workers.



Again you are dodging the specific question I have asked. The largest employer in the state, by a country mile, is the State. I would have thought that for wages to increase for everyone we should at least determine how this can be achieved for the largest employer in the state. In order for wages to increase for public sector workers the state would have to borrow more money. My question to you is do you think the state should borrow more money in order to increase wages in the public seector? By all means, when you have answered this, I would be more than happy to try and tease out how we can raise wages for everyone else.




TheBigShort said:


> The topic is about the bankrupt nature of our, and developed economies and how to resolve it. As stated, I have posted a number of articles from various sources all pointing to rising incomes (particularly for low and middle income earners) as a method to returning stability. You deliberately choose to ignore these points and persist with repetitive questions about public sector pay in a vacuum.



I am not ignoring these points, but as stated, I would like you to answer the question above before moving on to raising wages for everyone else. You see it's very easy to throw out statements like, it would be good to raise wages, but in order to be taken seriously, you will have to provide something as to how you think this can be achieved.



TheBigShort said:


> Perhaps you could answer some questions first, as a matter of courtesy, before expecting your repeated question to be answered again and again?



I am happy to answer any questions you have. I may not have all the answers but I will certainly try. Given, that you are still dodging my question above though, I really think it's you first on this.


----------



## TheBigShort

TheBigShort said:


> In the context of general economic theory, wage increases are inflationary. Central banks around the world are trying to stoke inflation. Their primary tool is QE which is failing. It is only creating greater divides between rich and poor.
> This is why property prices are rising in affluent areas of capital cities around the world, but elsewhere they are stagnant. This is why debt burdens are increasing not reducing as all money issued today is on the basis of a loan taken out rather than the value of productivity.
> The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.
> But it will also mean a massive transfer of capital to labour. Something that right wing free market worshipping monetarists cannot countenance right now.



Here is the OP again. Nowhere does it say borrow to pay public sector pay increases. That is a line being peddled by others to avoid the issue.
The theme of the topic is how do economies induce an inflationary effect (assuming it desirable , assuming it is policy) into economies.
To date CB's globally have undertaken monetary expansion through QE. I would argue that a fiscal expansion would be more effective. This would increase employment, increase incomes, increase savings for ALL workers, inducing an inflationary effect, reducing debt.
The Irish government should not do this in a vacuum. But neither should it wait for it to happen (as happen it will). Interest rates are 0%, fuel is cheap, so the option of borrowing, to invest in capital infrastructure projects should commence.



Purple said:


> So instead of fixing any of that you think we should pay everyone more. Is that the case?



No, pls read pages 1-15 again, to get a grasp of the topic.



Firefly said:


> all means, when you have answered this, I would be more than happy to try and tease out how we can raise wages for everyone else.



Please tell me, why should we grow an economy and who should benefit from a growing economy?
How would borrowing remove homeless people from the streets? Do you expect private sector workers to pay deposits on housing? Or are you talking about state agencies implementing a housing development plan? Or other?



Firefly said:


> I am not ignoring these points,



You are.



Firefly said:


> I would like you to answer the question above before moving on to raising wages for everyone else.



I would like you to answer questions too, but ypu choose not to.
Why are you discussing increased wages for public sector workers first, then pay increases for everyone else later? Who mentioned that? That is not what this is about.
If you want to discuss micro elements of it, here is one option. The government borrows €2m for a capital spending on an IT project that will be used by a good department to provide on-line services to the public. The project will be tendered to the private market giving a boost to local indigenous IT companies that employ IT contractors. The successful company offers markets rates of pay to prospective candidates. If demand exceeds supply, wages will rise.
The successful candidates (assured of two years work) spend their wages in the local cafe and dry cleaners. The cafe owner, hires extra staff to meet demand, and the staff take a weekend break in Killarney. 
All money into the private sector, barely a public servant to be seen or to benefit.


----------



## jjm

Have a small dose of reality ,Who wanted to cut the safety net for people in the private sector who lost there jobs. Who wanted to do away with the USC giving a pay increase to public servents on D stamp,Who has being shouting about having a system like they have in the HSE in there work place.Who has being talking down to the very people who pay There wages.Who has being talking down there fellow tradesmem. I better stop .


----------



## Purple

TheBigShort said:


> The Irish government should not do this in a vacuum. But neither should it wait for it to happen (as happen it will). Interest rates are 0%, fuel is cheap, so the option of borrowing, to invest in capital infrastructure projects should commence.


 Ok, so as wages increase globally we should keep pace with them and/or we should borrow for capital investment only, not to increase wages in the public sector. Yes, I see no problem with that.



TheBigShort said:


> Here is the OP again. Nowhere does it say borrow to pay public sector pay increases. That is a line being peddled by others to avoid the issue.


 If we increase public sector wages the only ways to fund it is to borrow, increase taxes or reduce services.



TheBigShort said:


> If you want to discuss micro elements of it, here is one option. The government borrows €2m for a capital spending on an IT project that will be used by a good department to provide on-line services to the public. The project will be tendered to the private market giving a boost to local indigenous IT companies that employ IT contractors. The successful company offers markets rates of pay to prospective candidates. If demand exceeds supply, wages will rise.


 That is a positive only if it reduced costs in the delivery of those services by the state. If a business invests in capital or IT infrastructure it will look for a return on that investment. The return to the State has to be a reduction in costs.


----------



## Firefly

TheBigShort said:


> Here is the OP again. Nowhere does it say borrow to pay public sector pay increases. That is a line being peddled by others to avoid the issue.
> Why are you discussing increased wages for public sector workers first, then pay increases for everyone else later? Who mentioned that?



You have proposed that wages should increase. I am asking _how_. I think it's logical to start with the largest employer in the state....if we can increase wages there your proposal has a chance.I promise to answer each and all the questions you have asked once you answer my question. Do you think the government should increase borrowings to raise wages in the public sector?


----------



## Purple

jjm2016 said:


> Have a small dose of reality ,Who wanted to cut the safety net for people in the private sector who lost there jobs.


 No, I want there to be a time limit on that safety, after which it reduces to a minimal level.




jjm2016 said:


> Who wanted to do away with the USC giving a pay increase to public servents on D stamp,


 Yes, emergency taxes should be removed before pay increases are given.




jjm2016 said:


> Who has being shouting about having a system like they have in the HSE in there work place.


 I don’t understand this point.




jjm2016 said:


> Who has being talking down to the very people who pay There wages.


 I don’t understand this point. Am I talking down the people who pay my wages?




jjm2016 said:


> Who has being talking down there fellow tradesmem. I better stop .



I don’t understand this point either. Are you referring to by posts about the low standards and skills of Irish trained Construction Sector Tradespeople? If so then yes, I think they have shamefully low standards and are, for the most part, not fit for purpose.


----------



## TheBigShort

Firefly said:


> You have proposed that wages should increase. I am asking _how_.



Fiscal stimulus. Interest rates are 0%. Unlikely to go lower.



Firefly said:


> I think it's logical to start with the largest employer in the state....i



I dont.



Firefly said:


> promise to answer each and all the questions you have asked once you answer my question.





TheBigShort said:


> wage increases should not occur in a vaccum. Or to put it another way, we shouldn't borrow to increase wages per se, or to put it another way, we shouldn't borrow to increase wages in the flat terms that you have presented here.



That is, no we shouldn't borrow €500 simply to give someone a pay rise. We should borrow to generate fiscal stimulus, like an IT program or develop a homeless strategy. Both will put money in workers pockets, fuelling demand, in turn, employment, in turn increased wages.
Instead we have QE to repair the balance sheets of bankrupt banks, in turn to offer lending to consumers for profit, at considerably higher rates than 0%. Inducing more debt overhang. A system that is broken.


----------



## TheBigShort

Purple said:


> None of the products are made in Ireland



You say one thing, these people say another



who are we to believe?


----------



## Purple

BS, can you clarify if that Fiscal


TheBigShort said:


> You say one thing, these people say another
> 
> 
> 
> who are we to believe?


Is that the best you can do?
You are either being utterly disingenuous by ignoring the fact that cars, TV's, iPads, Phones, really just about every consumer good we buy is imported or you are suggesting that the state borrow billions in order to allow us to drink more.


----------



## TheBigShort

Purple said:


> we should borrow for capital investment only, not to increase wages in the public sector. Yes, I see no problem with that.



That is the point from the get go. As demand is fuelled, employment, wages will rise (without identifying any particular sector, but in general terms).



Purple said:


> If we increase public sector wages the only ways to fund it is to borrow, increase taxes or reduce services.



Why do you keep resorting to public sector wages only?



Purple said:


> That is a positive only if it reduced costs in the delivery of those services by the state. If a business invests in capital or IT infrastructure it will look for a return on that investment. The return to the State has to be a reduction in costs.



Agreed. And a simple saving could be, that as a particular service is now on-line, this will reduce demand on fuel costs for people travelling, in turn reducing carbon emissions, in turn contributing to the State meeting its carbon quota without penalty.


----------



## Purple

TheBigShort said:


> That is, no we shouldn't borrow €500 simply to give someone a pay rise. We should borrow to generate fiscal stimulus, like an IT program or develop a homeless strategy. Both will put money in workers pockets, fuelling demand, in turn, employment, in turn increased wages.
> Instead we have QE to repair the balance sheets of bankrupt banks, in turn to offer lending to consumers for profit, at considerably higher rates than 0%. Inducing more debt overhang. A system that is broken.


Ok, we should borrow more money in order to pay state employees to provide more or better services. That's just borrowing to run the country. We already do that in spades.


----------



## Purple

TheBigShort said:


> That is the point from the get go. As demand is fuelled, employment, wages will rise (without identifying any particular sector, but in general terms).


 But that's not the same as funding homeless services and you want to borrow to do that.



TheBigShort said:


> Why do you keep resorting to public sector wages only?


 Because they will not increase as a result of a fiscal stimulus. They increase when the Unions put a gun to the head of the people of Ireland.



TheBigShort said:


> Agreed. And a simple saving could be, that as a particular service is now on-line, this will reduce demand on fuel costs for people travelling, in turn reducing carbon emissions, in turn contributing to the State meeting its carbon quota without penalty.


 No, the saving would be a reduction in headcount in the State agency or Department which delivers the service. If you are suggesting that then we are in agreement.


----------



## TheBigShort

Purple said:


> BS, can you clarify if that Fiscal
> 
> Is that the best you can do?
> You are either being utterly disingenuous by ignoring the fact that cars, TV's, iPads, Phones, really just about every consumer good we buy is imported or you are suggesting that the state borrow billions in order to allow us to drink more.



Ah, give it a break, do we have to go through each and every product manufactured abroad and at home? 

We manufacture alot of the technology that is assembled abroad into everyday use products that we consume. Think Apple, Intel, Pharma, etc.


----------



## jjm

Looking at the above posters  who said the voted For Fine Gael you  can see they have not got the will power to hold the Government feet to the fire,We never had a left wing government in power in this country on its own, Fine Gael supporters on hear need to hold there party feet to the fire,Fine Gael leaders and supporters in the past stood for something the had red line issues which never were for sale.Now all I see Hear and read are Inward looking half baked Fine Gael Supporters who don't know what they want or stand for.


----------



## TheBigShort

Purple said:


> But that's not the same as funding homeless services and you want to borrow to do that.



No I don't. The suggestion to borrow to remove homeless people from the streets was made by Firefly. Despite repeated attempts to ask him how this would work, he refuses to answer.



Purple said:


> Because they will not increase as a result of a fiscal stimulus. They increase when the Unions put a gun to the head of the people of Ireland.



Dont be so daft. In a growing economy, all sectors should benefit, "a rising tide..." and all that. We have a growing economy. Who should benefit? 



Purple said:


> No, the saving would be a reduction in headcount in the State agency or Department which delivers the service. If you are suggesting that then we are in agreement.



It could be that too, absolutely. Alternatively, the service could be out-sourced and licensed to the private sector altogether? Reducing jobs in the Public Sector, increasing them in the Private sector?


----------



## Firefly

TheBigShort said:


> That is, no we shouldn't borrow €500 simply to give someone a pay rise.



I agree and thanks for answering this.

I know it's off-topic, but across the public sector wages increases are being sought at the moment. It has nothing to do with a fiscal stimulus, just a plain demand for higher wages. This would require more borrowings, so I am glad you also think we "shouldn't borrow....simply to give someone a pay rise".



TheBigShort said:


> We should borrow to generate fiscal stimulus, like an IT program or develop a homeless strategy. Both will put money in workers pockets, fuelling demand, in turn, employment, in turn increased wages.



I would agree with this but on a case-by-case basis. I wouldn't just borrow because rates are zero. It would depend on the project and the return to the economy / society in general. As someone who works in IT, I would argue that borrowing money for an IT project, for example, would be down the list. I think transport infrastructure, schools, social housing would be better candidates.

I will answer the questions you have asked me shortly, but again thanks for answering my question and I am glad we are in agreement that borrowing to simply give someone a pay rise is a bad idea.


----------



## Firefly

TheBigShort said:


> Please tell me, why should we grow an economy and who should benefit from a growing economy?



The first question is a very interesting one. I think fundamentally, it comes from our desire as humans to improve ourselves. This, together with competition (both with others and with ourselves), drives the desire for growth. This is true for kids wanting to be on the starting team, to teens wanting to get the highest grades, to adults trying to provide the best for themselves and their families. Nothing new there, but just some context.

Specifically, growing an economy provides employment and reduces unemployment. Extra taxes can be raised to fund public serices and the mood of the people is generally "good".

The second question is difficult to answer and I say that not wanting to avoid the question, but rather, again, it depends. Like most things in live, the amount of money people get paid is never going to be fair, for everyone. There are those who happen to be at the right place at the right time and who get lucky. I would recommend Malcolm Gladwell's book Outliers - it's a great read on this topic.

For most people though, we get paid what the market can bear. For employees this generally comes down to individual skills (the level and market demand for same) and the profitability / solvency of their employer. For those in the private sector, this comes down to the profitability of their employer, for those in the public sector, it comes down to the current level of spending, raising taxes or borrowing. At some stage for either, there are limits to what can be paid before either goes down the swanney.

For a growing economy, we should expect to see wages (in the main) increasing. The breakdown of how much of the extra money goes to workers and how much goes to the owners is always going to be difficult to assess. Again, the market helps here - those with the best skills (experience, marketability) will tend to be rewarded more. It is up to the owner to decide on how much to allocate to wages. If they don't spend enough their people will leave (unless they can't get something better somewhere else, which is the case for a lot of people but they won't admit it!).

Just because an economy is growing should not mean that all wages should rise however, and certainly not by the same amount. If there were to happen we sould have equality of outcome and we certaily don't want this unless we want to live in a communist / solcialist utopia.




TheBigShort said:


> How would borrowing remove homeless people from the streets?


The government could borrow to build or buy houses for the homeless.

I'm sorry to bring public sector wage rises into this again, but it is for illustrative purposes as this wage demand is obviously current. According to Colm McCarthy, if the increases given to the Gardai recently were replicated across the public sector, it would require 1bn or more in spending. Let's instead say this money went into housing for the homeless. According to Daft, the average price of a house in Dublin is 314,311. 1bn buys 3,182 houses per year. According to the Peter McVerry Trust, there are 6,709 homeless people in Ireland. This figure includes 2,426 children, so it's probably 4,283 adults & families. This means that instead of increasing wages in the public sector, we could eradicate homelessness in 2 years, plus the State would own the houses outright. You might argue that that level of purchasing would increase prices, but if you offered any builder 315k for a development of 6,000 houses I'm sure you'd get them built.

http://www.independent.ie/opinion/c...l-lead-to-fresh-fiscal-disaster-35191635.html
http://www.thejournal.ie/house-prices-rising-across-the-country-2-2860216-Jul2016/
https://www.pmvtrust.ie/news-media/facts-and-figures/

_Edit: Can you please remove your 3rd sentence in post #299 ?_




TheBigShort said:


> Do you expect private sector workers to pay deposits on housing? Or are you talking about state agencies implementing a housing development plan? Or other?



I'm genuinely not sure where this question comes from or what it means. If you wish to expand further, I will gladly reply.


----------



## Purple

TheBigShort said:


> Dont be so daft. In a growing economy, all sectors should benefit, "a rising tide..." and all that. We have a growing economy. Who should benefit?


If a rising tide raises all boats then how come, in your view, wealth is being concentrated amongst the rich?
As to who should benefit; those who who earn it.





TheBigShort said:


> It could be that too, absolutely. Alternatively, the service could be out-sourced and licensed to the private sector altogether? Reducing jobs in the Public Sector, increasing them in the Private sector?


 The State has a terrible record in interacting with the Private Sector. It generally gets screwed. If it gets better at it then yes, it should outsource as much as possible and minimise their pension liability.


----------



## TheBigShort

Firefly said:


> I know it's off topic.



Yes it is.




Firefly said:


> I wouldn't just borrow because rates are zero. It would depend on the project and the return to the economy / society in general.



My bad, you see inherent in the topic of creating a fiscal stimulus was the assumption that stuff needs to get done. That there are opportunities out there to improve the productivity and delivery of goods and services (in all sectors). That could be costed IT programmes, roads, education and research and development, health care, the list is endless.
All of which costs money. Money is cheap. But money is beholden to monetary policy through QE. QE is stuffing bank balance sheets. Banks are starting to lend again, but lending could be for anything from top range motor car, to ipads. All of the crap that people borrow too much for and run up debt.
Instead targetting essential services, upgrading infrastructure will offer the opportunity for real productivity increases, improving living standards, benefiting the population at large through higher incomes, etc.


----------



## jjm

firefly What about Maslow Hierarchy of needs.The First manager of the US company I work for was into maslow Hierarchy of needs,To this day you can see the results. Managers came and went  some tried to change the culture ,I do a lot of voluntary work Which brings me into contact with a lot of people public/private service.They one thing I come across is a lot of unhappy people in jobs .Because where they work there are so many levels of pay people all doing there best .Lots of people retired early because of system.


----------



## Firefly

TheBigShort said:


> Yes it is.



Which is why I called it out. Have you anything else from that paragraph you would like to discuss? Do you see how we can eradicate homelessness in 2 years for the same cost as something which is being demanded by a subset of workers? If you had a choice, would you increases wages in the public sector or eradicate homelessness? I would chose the latter.





TheBigShort said:


> Money is cheap.



You've mentioned this before and there is no doubting that money is cheap, currently. From Colm McCarthy's article again...

_"In normal circumstances a heavily indebted country would face much higher interest costs on reborrowing, as it must do every year as old debts mature and fall due for repayment, and on fresh borrowing. But the European Central Bank (ECB) has been buying government bonds at a spanking pace, keeping interest rates artificially low.

Cheap borrowing costs have flattered the Irish Budget numbers for each of the past four years. This will end, possibly as early as 2017, when things get back to normal - the declared aim of the ECB's policy."_

What do you think is going to happen when the NTMA tries to raise money on the markets post QE?

We have a perfect storm brewing....Brexit, lower corporation taxes in the US and the end of QE. Any one of these could seriously affect things here. All three? Disaster. Now is not the time to increases wages, but to act prudently and put something aside.






TheBigShort said:


> Banks are starting to lend again, but lending could be for anything from top range motor car, to ipads. All of the crap that people borrow too much for and run up debt.



I agree 100%. People are buying like it's 2006 and even worse on credit.


----------



## Firefly

jjm2016 said:


> firefly What about Maslow Hierarchy of needs.The First manager of the US company I work for was into maslow Hierarchy of needs,To this day you can see the results. Managers came and went  some tried to change the culture ,I do a lot of voluntary work Which brings me into contact with a lot of people public/private service.They one thing I come across is a lot of unhappy people in jobs .Because where they work there are so many levels of pay people all doing there best .Lots of people retired early because of system.



Hi jjm2016,

Maslow's Hierarchy of Needs is an interesting one alright. Of course, it would be wrong to say that just paying people more money would make them happier. The companies who top The Great Places to work come to mind. You'll find a lot of those companies pay average wages but their staff are happier as a result of being provided challenging & interesting work and promoting cross-learning & development in the organisation. Team nights out also help! As a result, not only is staff retention higher but the company can attract better staff more easily.

Firefly.


----------



## TheBigShort

Firefly said:


> but across the public sector wages increases are being sought at the moment.



And private sector

http://www.rte.ie/news/2016/1115/831926-private-sector-unions-pay/



Firefly said:


> There are those who happen to be at the right place at the right time and who get lucky.



I haven't read Outliers but have heard about the concept. But your comment is hardly conducive for establishing a stable economic environment.



Firefly said:


> Like most things in live, the amount of money people get paid is never going to be fair.



Agreed.



Firefly said:


> For most people though, we get paid what the market can bear



What is paid as a whole is limited to what the market can bear. But as you have pointed out it is rarely fair.



Firefly said:


> For a growing economy, we should expect to see wages (in the main) increasing.



Agreed.



Firefly said:


> The breakdown of how much of the extra money goes to workers and how much goes to the owners is always going to be difficult to assess.



Certainly those in control of extra money would like you to think so. That is why, as you have pointed out, it is never fair.



Firefly said:


> Again, the market helps here - those with the best skills (experience, marketability) will tend to be rewarded more.



Generally, but as you have pointed out, its rarely fair.



Firefly said:


> It is up to the owner to decide on how much to allocate to wages.



No it is not. Wages allocated should be by agreement between employer and employee. If one side has total control then the unfairness will exacerbate.



Firefly said:


> Just because an economy is growing should not mean that all wages should rise however,



Actually, in a growing economy, everyone should see a benefit. Not equal in nature, but if a person works and the economy grows, this should ultimately result in higher incomes in general terms, if not equal terms.



Firefly said:


> and certainly not by the same amount.



Monetary or % amounts?



Firefly said:


> The government could borrow to build or buy houses for the homeless.



This is fiscal stimulus. Targeted at house building. Some of the families you mention are probably builders, plumbers, electricians, maybe architects and surveyors, maybe administrators, machine operators, lorry drivers, deli workers, shop assistants, landscape gardeners, designers, mechanics etc, etc all of whom would benefit from going back to work. Fiscal stimulus could provide that, increasing wages, reducing unemployment, reducing welfare benefits, eliminating the costs associated to the State. Increasing productivity, reducing debt burdens.




Purple said:


> If a rising tide raises all boats then how come, in your view, wealth is being concentrated amongst the rich?
> As to who should benefit; those who who earn it.



"A rising tide..." _should _raise all boats. It rarely does. Some people end up with more boats than they need, others never get a boat in the first place. 



Firefly said:


> What do you think is going to happen when the NTMA tries to raise money on the markets post QE?



Interest rates will rise, inflation will rise, the cost of borrowing will rise. Better to borrow and invest now at 0% than wait.



Firefly said:


> Now is not the time to increases wages, but to act prudently and put something aside.



Now is exactly the time to increase wages, generating demand, reducing unemployment, reducing welfare benefits, increasing tax revenues, generating budget surpluses. That way there will be something to put aside. 
If the State is still borrowing today just to keep things ticking over, how do you put something aside?
 If people are borrowing on credit to buy, its because they have no savings.


----------



## Firefly

TheBigShort said:


> Certainly those in control of extra money would like you to think so. That is why, as you have pointed out, it is never fair.
> Generally, but as you have pointed out, its rarely fair.
> Actually, in a growing economy, everyone should see a benefit. Not equal in nature, but if a person works and the economy grows, this should ultimately result in higher incomes in general terms, if not equal terms.



Apologies, a typo on my behalf. I have updated my post to read "Like most things in live, the amount of money people get paid is never going to be fair, for everyone." This leads into the following point I was making about people being in the right place at the right time and the Outliers book


----------



## Firefly

TheBigShort said:


> And private sector
> 
> http://www.rte.ie/news/2016/1115/831926-private-sector-unions-pay/



The cynic in me says that this is being put out there by the unions to legitimise their claims for wage increases in the public sector. No sooner had the LUAS drivers obtained an increase, we had Benchamrking 2.0 in full swing.

In any case I don't agree with wage claims by unions in the private sector either. It should be down to the company and the individual employee how much wages should be paid. It's no one else's business. I worked in the recent past with someone who has the same title as me. He was the most exceptional IT professional I've ever worked with. He constantly has companies chasing him he is so good. He left his last job to go contracting "to make a few bob". His last salary? 120,000. He was worth every penny. He is starting a cloud consultancy and I've no doubt he will be a millionaire by the time he is 40. Should he be subject to collective bargaining and get the same increase as everyone else?




TheBigShort said:


> I haven't read Outliers but have heard about the concept. But your comment is hardly conducive for establishing a stable economic environment.



I agree - and it's why centralised planning rarely works.





TheBigShort said:


> No it is not. Wages allocated should be by agreement between employer and employee. If one side has total control then the unfairness will exacerbate.



In an ideal world I agree with you and in all cases it's true at the beginning of the employment contract. However, the company ultimately decides on any wage increases. If the employee is paid enough based on what they can demand elsewhere or if the company cannot afford increases, none will be given.



TheBigShort said:


> Actually, in a growing economy, everyone should see a benefit. Not equal in nature, but if a person works and the economy grows, this should ultimately result in higher incomes in general terms, if not equal terms.



I agree with you there, but again blanket increases are bad - it's back to equality of outcome nonesense. Those who deserve more should get more. And before you ask, those who deserve more are those who build marketable skills & get things done.



TheBigShort said:


> Monetary or % amounts?



I'm not sure what you are referring to here



TheBigShort said:


> This is fiscal stimulus. Targeted at house building. Some of the families you mention are probably builders, plumbers, electricians, maybe architects and surveyors, maybe administrators, machine operators, lorry drivers, deli workers, shop assistants, landscape gardeners, designers, mechanics etc, etc all of whom would benefit from going back to work. Fiscal stimulus could provide that, increasing wages, reducing unemployment, reducing welfare benefits, eliminating the costs associated to the State. Increasing productivity, reducing debt burdens.



I agree it is fiscal stimulus. I am not against this, but I would prefer that we would be running a surplus and paying down existing debt rather than taking on additional debt. The example I gave was showing how for the same money, rather than increasing wages in the public sector we could eradicate homelessness. I've asked you which you would prefer we did but I haven't seen your answer yet..


----------



## Firefly

TheBigShort said:


> Interest rates will rise, inflation will rise, the cost of borrowing will rise. Better to borrow and invest now at 0% than wait.
> 
> Now is exactly the time to increase wages, generating demand, reducing unemployment, reducing welfare benefits, increasing tax revenues, generating budget surpluses.



The government does not pay down its debt, it merely rolls it over to new debt when it falls due. As you have said yourself, rates cannot get lower, so when we need to re-finance this debt it will be at a higher rate than what it is currently. Just like all those suckers buying cars on PCP, they are ultimately going to be paying higher rates down the road and eventually paying off the original loan for something they consumed years ago.



TheBigShort said:


> If the State is still borrowing today just to keep things ticking over, how do you put something aside?



Cut costs and / or grow income. Same for anyone.



TheBigShort said:


> If people are borrowing on credit to buy, its because they have no savings.


And unless absolutely necessary they shouldn't borrow. Same for the government.


----------



## TheBigShort

Firefly said:


> The cynic in me says that this is being put out there by the unions to legitimise their claims for wage increases in the public sector.



Or to reap some reward for contributing to a growing economy? If not, who should benefit from a growing economy?



Firefly said:


> No sooner had the LUAS drivers obtained an increase, we had Benchamrking 2.0 in full swing.



Ive already given you the background of the LUAS drivers claim. When it came to arbitration, 18% was agreed upon. Transdev still ploughing ahead with lucrative expansion plans.



Firefly said:


> In any case I don't agree with wage claims by unions in the private sector either.



Of course you dont, but thankfully every worker has the right to decide who represents them.



Firefly said:


> It should be down to the company and the individual employee how much wages should be paid. It's no one else's business.



If the employee wants a trade union to represent their rights thats none of your business.



Firefly said:


> He was the most exceptional IT professional I've ever worked with. He constantly has companies chasing him he is so good. He left his last job to go contracting "to make a few bob". His last salary? 120,000. He was worth every penny. He is starting a cloud consultancy and I've no doubt he will be a millionaire by the time he is 40. Should he be subject to collective bargaining and get the same increase as everyone else?



If he chooses to subjected to collective bargaining then yes. If he chooses not to then no.



Firefly said:


> However, the company ultimately decides on any wage increases. If the employee is paid enough based on what they can demand elsewhere or if the company cannot afford increases, none will be given.



Or if they are being exploited they can strike for better conditions. See Luas as an example.



Firefly said:


> I agree with you there, but again blanket increases are bad - it's back to equality of outcome nonesense.



I really thought we had moved on.



Firefly said:


> Those who deserve more should get more.



Yes of course.



Firefly said:


> And before you ask, those who deserve more are those who build marketable skills & get things done.



But that is every single worker to greater or lesser degrees!




Firefly said:


> I agree it is fiscal stimulus. I am not against this,



Hoorayy!!



Firefly said:


> but I would prefer that we would be running a surplus and paying down existing debt rather



Which would you prefer, pay down debt or leave the homeless without a home?




Firefly said:


> The example I gave was showing how for the same money, rather than increasing wages in the public sector we could eradicate homelessness.



Yes, what is your point here? You are making a policy decision to eradicate homeless instead of public sector pay increases. So what? Either way it is a fiscal stimulus which is what I have been arguing for.



Firefly said:


> I've asked you which you would prefer we did but I haven't seen your answer yet..



I would prefer to eradicate homelessness. Did you think I would say otherwise?




Firefly said:


> The government does not pay down its debt, it merely rolls it over to new debt when it falls due.



In monetary terms yes, as a % of GDP it can be paid down.



Firefly said:


> so when we need to re-finance this debt it will be at a higher rate than what it is currently.



True, but because of increased employment, budget surpluses we will be better prepared.



Firefly said:


> Just like all those suckers buying cars on PCP, they are ultimately going to be paying higher rates down the road and eventually paying off the original loan for something they consumed years ago.



Yes, if we apply the same bankrupt monetary policy of growing the economy through credit expansion and on the back of wage restraint. It is a policy that has run its course.
On the other hand if workers are rewarded appropriately for their efforts in growing the economy in the first place through higher wages, less debt will be taken on. Or at least a lower % of income will be subsumed by debt.



Firefly said:


> And unless absolutely necessary they shouldn't borrow. Same for the government.



True. I would say borrowing to resolve increasing numbers of homelessness is necessary, wouldn't you? Or should we just leave them as they are and hope for the best, that we are in the right place at the right time?


----------



## TheBigShort

https://www.theguardian.com/busines...oliberalism-robert-skidelsky?CMP=share_btn_tw

Somebody else supporting a policy of fiscal stimulus, increasing borrowing and agreeing that QE credit expansion is finished.

"_Trump has also promised an $800bn-$1tn programme of infrastructure investment, to be financed by bonds, as well as a massive corporation tax cut, both aimed *at creating 25m new jobs and boosting growth. *This, together with a pledge to maintain welfare entitlements, amounts to a modern form of Keynesian fiscal policy (though of course not identified as such). Its merit is its head-on challenge to the neoliberal obsession with deficits and debt reduction, and to reliance on quantitative easing as the sole – and now exhausted – demand-management tool." 
_
Would such a policy increase wages?


----------



## TheBigShort

Back in Ireland;

[broken link removed]

More private sector workers demanding better terms and conditions through higher wages. Well done.


----------



## Purple

TheBigShort said:


> What is paid as a whole is limited to what the market can bear. But as you have pointed out it is rarely fair.


 That's not the case with the Public Sector. They just bully the Government into giving them more of other people's money.



TheBigShort said:


> Actually, in a growing economy, everyone should see a benefit. Not equal in nature, but if a person works and the economy grows, this should ultimately result in higher incomes in general terms, if not equal terms.


 Not true; if the economy just gets bigger, i.e. more people working in it, then there is no particular reason there should be pay increases.



Firefly said:


> The cynic in me says that this is being put out there by the unions to legitimise their claims for wage increases in the public sector. No sooner had the LUAS drivers obtained an increase, we had Benchamrking 2.0 in full swing.


 Agreed. Very few people in the Private Sector are in Unions as the Unions managed to close down the businesses they got their claws into.



TheBigShort said:


> Or to reap some reward for contributing to a growing economy? If not, who should benefit from a growing economy?


 The additional people working in it.



TheBigShort said:


> Or if they are being exploited they can strike for better conditions. See Luas as an example.


 Do you really think the LUAS drivers, the best paid tram drivers in Europe before the strike.



TheBigShort said:


> Which would you prefer, pay down debt or leave the homeless without a home?


What would you prefer; wage increases in the Public Sector or give the homeless a home?


----------



## Firefly

TheBigShort said:


> Ive already given you the background of the LUAS drivers claim. When it came to arbitration, 18% was agreed upon. Transdev still ploughing ahead with lucrative expansion plans.



I've no problem with that. Transdev obviously have the funds to pay for increases in wages and as you have said are "ploughing ahead with lucrative expansion plans." More power to them. My point was that this kicked off Benchmarking 2.0 where workers in another organisation (which is borrowing to consume) are demanding higher wages. You have said that we shouldn't borrow to just raise wages, so how should these wage demands be met?



TheBigShort said:


> Of course you dont, but thankfully every worker has the right to decide who represents them.



I agree.




TheBigShort said:


> If the employee wants a trade union to represent their rights thats none of your business.



It becomes my business if I have to pay for their wage increases through higher taxes or more borrowings, or if the school my child goes to closes down.



TheBigShort said:


> If he chooses to subjected to collective bargaining then yes. If he chooses not to then no.


I agree, but my point was that an organisation that gives everyone the same increase in pay would never attract him




TheBigShort said:


> I really thought we had moved on.



I don't understand what you mean. I was referring to the nonesense that is equality of outcome.




TheBigShort said:


> But that is every single worker to greater or lesser degrees!


There are workers out there who have never advanced themselves and are crap at their job, always sick etc. I don't think they should get a penny of an increase in wages. If they don't like their pay levels, find another job. Giving them higher pay means that someone else is subsidising them





TheBigShort said:


> Which would you prefer, pay down debt or leave the homeless without a home?



Offered a choice between the 2 I would happily eradicate homelessness. I think it's a national disgrace that we, one of the richest countries in the world, have homeless children in our country. But rather than borrowing more money to fix it I would reduce current spending instead. I would reverse the measures introduced in the budget for example and put the money into eradicating homelessness.







TheBigShort said:


> Yes, what is your point here? You are making a policy decision to eradicate homeless instead of public sector pay increases. So what? Either way it is a fiscal stimulus which is what I have been arguing for.
> 
> I would prefer to eradicate homelessness. Did you think I would say otherwise?



My point is that (1) you have said that we shouldn't borrow just to give someone a pay rise and (2) you prefer to eradicate homelessness rather than increasing pay in the public sector. So why argue further for pay increases....why not instead put your efforts into promoting the eradication of homelessness, as you have said yourself, you would rather fix this first?







TheBigShort said:


> On the other hand if workers are rewarded appropriately for their efforts in growing the economy in the first place through higher wages, less debt will be taken on. Or at least a lower % of income will be subsumed by debt.



I agree. Let the market decide what's fair!







TheBigShort said:


> True. I would say borrowing to resolve increasing numbers of homelessness is necessary, wouldn't you? Or should we just leave them as they are and hope for the best, that we are in the right place at the right time?



As mentioned, I think fixing homelessness should be a national priority. I think this should be funded from existing taxes though rather than defaulting to increased borrowings.


----------



## riddles

If there is a free for all in terms of cash to fund everything - then why aren't private sector workers given a tax concession to compare with PS worker increases.
Why is Noonan still dipping into self funded private sector pensions?
Alas, I don't hold out much hope for us in the medium term - we have at the worst possible time a very high cost base with all the essentials spiraling out of control.
We have pension commitments which are not currently being funded.  A shrinking appetite for bonds will make funding our 182 billion national debt almost impossible.
But I guess we are as a nation predisposed to blunder from one disaster to another. 
Our leaders are the highest paid in world relative to their individual responsibilities.


----------



## jjm

post 313 To be fair The protest is about the fact we don't have allowances for people who have children in this country back in the eighties when we were a lot poorer than now. we had better tax allowances for people who had children,If you look at the Private sector union pay demands  Mr Douglas who is General Secretary of  Mandate says we will engage with those who Genuinely can not afford Increases,.The people who work in these company s have children too you know.I suspect this post will bring our the closet Far right who don't realize they are on the far right in there thinking.I am all for giving the people who are rearing the next generation a break.I don't mind paying more tax to help out.


----------



## Firefly

TheBigShort said:


> https://www.theguardian.com/busines...oliberalism-robert-skidelsky?CMP=share_btn_tw
> 
> Somebody else supporting a policy of fiscal stimulus, increasing borrowing and agreeing that QE credit expansion is finished.
> 
> "_Trump has also promised an $800bn-$1tn programme of infrastructure investment, to be financed by bonds, as well as a massive corporation tax cut, both aimed *at creating 25m new jobs and boosting growth. *This, together with a pledge to maintain welfare entitlements, amounts to a modern form of Keynesian fiscal policy (though of course not identified as such). Its merit is its head-on challenge to the neoliberal obsession with deficits and debt reduction, and to reliance on quantitative easing as the sole – and now exhausted – demand-management tool."
> _
> Would such a policy increase wages?




Interesting you are referencing the policies of a clear winner of capitalism. In any case, as per above, Trump seeks to finance this with new bonds. Given that he has previously said he would default on bonds if the going got tough, he might have a job! Also, he is looking to reduce corporate tax. Interesting that, as most of the Left argue for higher corporation taxes.


----------



## Firefly

riddles said:


> If there is a free for all in terms of cash to fund everything - then why aren't private sector workers given a tax concession to compare with PS worker increases.
> Why is Noonan still dipping into self funded private sector pensions?
> Alas, I don't hold out much hope for us in the medium term - we have at the worst possible time a very high cost base with all the essentials spiraling out of control.
> We have pension commitments which are not currently being funded.  A shrinking appetite for bonds will make funding our 182 billion national debt almost impossible.
> But I guess we are as a nation predisposed to blunder from one disaster to another.
> Our leaders are the highest paid in world relative to their individual responsibilities.



Excellent post.


----------



## Firefly

TheBigShort said:


> Back in Ireland;
> 
> [broken link removed]
> 
> More private sector workers demanding better terms and conditions through higher wages. Well done.



Forgive me if I am wrong, but are these not mainly creche workers working for private companies? If so why are they protesting at the government? Should the government interfere with every private sector worker not happy with their lot? Surely, if the workers are unhappy they should be focusing their efforts on their employers?


----------



## jjm

riddles I would agree .The problem is posters on hear do not realize it is both a public and private sector problem.It is spiraling out of control because people think they are under paid when in fact they are already over paid for the job they do in Ireland.


----------



## Firefly

jjm2016 said:


> riddles I would agree .The problem is posters on hear do not realize it is both a public and private sector problem.It is spiraling out of control because people think they are worth more than they really are in Ireland.



Couldn't have said it better myself!


----------



## TheBigShort

Firefly said:


> Wages are increasing in a lot of sectors and I will certainly be increasing my own rates soon.



Tut! Tut! But obviously you are worth it. Others are not.



TheBigShort said:


> I would prefer to eradicate homelessness.



Wouldnt we all.



Purple said:


> Not true; if the economy just gets bigger, i.e. more people working in it,



Yes, that is a benefit. But no pay increases?



Purple said:


> The additional people working in it.



Who will spend, creating demand. Fiscal stimulus can contribute hugely here.



Purple said:


> Do you really think the LUAS drivers, the best paid tram drivers in Europe before the strike.



I think agreements reneged on, on the pretence that there is no scope for negotiating pay rises, when clearly there was, is exploitation.
Whether they are the best paid or not is mute. Perhaps they live in one of the most expensive cities, relative to income? Perhaps they provide the best tram service in Europe? I mean, whatever the market dictates, isnt that right?



Purple said:


> What would you prefer; wage increases in the Public Sector or give the homeless a home?



Ive already answered that.



Firefly said:


> Transdev obviously have the funds to pay for increases in wages and as you have said are "ploughing ahead with lucrative expansion plans."



Thats not what they said before the strike. They delayed , and threw obstacles and hid behind political circumstances.



Firefly said:


> Benchmarking 2.0



Benchmarking 2.0 in 2008 delivered 0%. Dont let an inconvenient truth stop you however. Again, you divert the topic onto public sector pay. Your own sought after wage increase does not factor into the cost of living in this country does it not? If you get a pay rise, will others in your sector not seek the same? Or are you looking at rises awarded to colleagues and playing a bit of catch up?



Firefly said:


> You have said that we shouldn't borrow to just raise wages, so how should these wage demands be met?



Fiscal stimulus. I've already told you this, why do you keep repeating it? If you were in charge you would eradicate homelessness. I have told you the amount of trades and workers that could benefit, not a public sector worker in sight. This topic is not about current pay disputes of any particular sector. It is about formulating economic policy that will bring people back to work, increase state revenues, reduce the cost of welfare benefits, increase incomes and provide economic stability in the years ahead.
What we currently have, is the same bankrupt monetary policy that is based on credit expansion upon wage restraint. It cannot continue, it is a busted flush. You have said so yourself referring to the 'suckers' who borrow too much.



Firefly said:


> It becomes my business if I have to pay for their wage increases through higher taxes or more borrowings,



And your pay rise becomes my business if my cost of living increases. Or are you excluded from the economy as a whole, do you not count in the overall scheme of things?



Firefly said:


> I agree, but my point was that an organisation that gives everyone the same increase in pay would never attract him



Bully for him.



Firefly said:


> I don't understand what you mean. I was referring to the nonesense that is equality of outcome.



I was referring to your incessant compulsion to talk about public sector pay only, and ignore private sector pay increases.




Firefly said:


> There are workers out there who have never advanced themselves and are crap at their job, always sick etc



So for that, the rest of the workforce should freeze, cut pay?
If you are sick, you are sick. Either you lose your job and rely on disability allowance or you dont progress far in your job and remain on low pay. What proportion of the population are we talking about here? What levels of pay or disability allowances are we talking about, that could prevent the progress of the rest of the workforce?



Firefly said:


> If they don't like their pay levels, find another job.



Yes, and then other workers can fill their vacancies for less income. Because they wil only be too glad to work for less, a bit like what is actually happening - new recruits to teaching and the Gardai are just so grateful to have a job that pays less than their colleagues.



Firefly said:


> Giving them higher pay means that someone else is subsidising them



Only if you believe that what they do for a living is being overvalued. Take the (near) Garda strike for example. Had the Gardai gone on strike and someone shunted into the back of your car that morning, you would obviously file an insurance claim. But without a Garda report, the insurance claim may not get through if the other party in the accident denied what occured. Think of all the court cases thrown out because Garda witness didnt turn to court. Think of large entertainment and sport events that would have to be cancelled because of no garda presence. Think of security cash vans that couldn't deliver to atms because without garda emergency response are not insured.
Think of serious crimes not being investigated properly, the list goes on.
But the point is, the cost to the economy and society at large is far greater, in the absence of law enforcement, than the cost of a days wage to gardai.



Firefly said:


> But rather than borrowing more money to fix it I would reduce current spending instead. I would reverse the measures introduced in the budget for example and put the money into eradicating homelessness.



If you want to that that is fine. You are simply re-directing spending, not reducing it. Instead of money pumped into the economy via public sector wages, you would pump money into the private sector through a house building program, private sector wages. Its fiscal stimulus either way, what ive been arguing for.



Firefly said:


> My point is that (1) you have said that we shouldn't borrow just to give someone a pay rise and (2) you prefer to eradicate homelessness rather than increasing pay in the public sector. So why argue further for pay increases....why not instead put your efforts into promoting the eradication of homelessness, as you have said yourself, you would rather fix this first?



To eradicate homelessness, as you have pointed out, will require people to be paid. Its still government spending. It creates demand and in turn this will lead to wage increases across the economy. Its not rocket science.
Instead what we have is QE, bank balance sheets being stuffed with money printing. So banks will lend again, so we can buy ipads and SUV's or go on the rip, or speculate on property prices etc



Firefly said:


> Interesting you are referencing the policies of a clear winner of capitalism.



The guy is twerp, out of his depth, and if that is your idea of a 'winner', thats your view.
But at least he has the foresight to see fiscal stimulus, infrastructure spending and borrowing is preferable to what we have now.



Firefly said:


> In any case, as per above, Trump seeks to finance this with new bonds.



Yes, government borrowing. Money is cheap.
I find it interesting that you dont seem to take issue with private banks borrowing at 0% so they can lend us the money to be 'suckers', but you take issue with government borrowing even if it may eradicate homelessness.



Firefly said:


> Also, he is looking to reduce corporate tax. Interesting that, as most of the Left argue for higher corporation taxes



Like I said, he is a twerp. Nowhere have I argued for reduced corporate tax.


----------



## Firefly

Wow.. this is becoming an epic effort for both of us I imagine!



TheBigShort said:


> Tut! Tut! But obviously you are worth it. Others are not.




Never said I was worth it. As an IT contractor I am 100% at the mercy of the market. An influx of workers with my skills, a sudden change in technology, key employers going wallup, or me making a serious error would see my rates tumble, if not result in me being unemployed. Based on the skills & experience I have and the state of the market, I will be seeking a rise next year, because I believe the market will bear it. I could be completely wrong but I won't make a song & dance about it and you won't see me picketing my current employer!




TheBigShort said:


> Benchmarking 2.0 in 2008 delivered 0%. Dont let an inconvenient truth stop you however.



I had lost count of the number of Benchmarking exercises we've been through so thanks for clarifying! It must be Benchmarking 3.0 now is it?




TheBigShort said:


> Again, you divert the topic onto public sector pay.



It's not my intention. You are seeking wage increases and I am asking how this can be achieved for the largest employer in the state. I am happy to ask you how you think wages can be increased for everyone in the private sector too!



TheBigShort said:


> Your own sought after wage increase does not factor into the cost of living in this country does it not?



I don't believe so. It is based on what I can earn in an open market. As noted above, I could easily find my rates at zero and the cost of living would not play a part.



TheBigShort said:


> If you get a pay rise, will others in your sector not seek the same?



How would they know? I don't discuss my rates / earnings with anyone except my employer


TheBigShort said:


> Or are you looking at rises awarded to colleagues and playing a bit of catch up?


I'm not aware of what (edit: most of) my colleagues are earning and am doing nicely thanks. I do believe I can earn more next year though, but I could be wrong.



TheBigShort said:


> Thats not what they said before the strike. They delayed , and threw obstacles and hid behind political circumstances.


I agree they played hard-ball and I if I was dealing with a union I would too!



TheBigShort said:


> Fiscal stimulus. I've already told you this, why do you keep repeating it? If you were in charge you would eradicate homelessness. I have told you the amount of trades and workers that could benefit, not a public sector worker in sight. This topic is not about current pay disputes of any particular sector. It is about formulating economic policy that will bring people back to work, increase state revenues, reduce the cost of welfare benefits, increase incomes and provide economic stability in the years ahead.



It's debatable if eradicating homelessness would "increase state revenues, reduce the cost of welfare benefits", but I think it should still be done and we both agree on that.



TheBigShort said:


> And your pay rise becomes my business if my cost of living increases. Or are you excluded from the economy as a whole, do you not count in the overall scheme of things?



That's a fair point, except in my case a large proportion of the work I do is for organisations based outside the country.



TheBigShort said:


> I was referring to your incessant compulsion to talk about public sector pay only, and ignore private sector pay increases.



The reason I am asking about how public sector pay can be increased is because it's the largest cohort of workers in the country. It's like someone contemplating doing their first triathlon and not being able to swim...doesn't matter how fast they are on the bike does it?

In any case I am happy to discuss how you think wages across the public sector can be increased also.



TheBigShort said:


> So for that, the rest of the workforce should freeze, cut pay?
> If you are sick, you are sick. Either you lose your job and rely on disability allowance or you dont progress far in your job and remain on low pay. What proportion of the population are we talking about here? What levels of pay or disability allowances are we talking about, that could prevent the progress of the rest of the workforce?



My bad, when I said sick I meant "sick". You know, the people who take sickies.



TheBigShort said:


> Yes, and then other workers can fill their vacancies for less income. Because they wil only be too glad to work for less, a bit like what is actually happening - new recruits to teaching and the Gardai are just so grateful to have a job that pays less than their colleagues.


I find it highly amusing that the teachers and Gardai are protesting against the government, when it was their unions shafted them by agreeing to the terms!



TheBigShort said:


> Only if you believe that what they do for a living is being overvalued. Take the (near) Garda strike for example. Had the Gardai gone on strike and someone shunted into the back of your car that morning, you would obviously file an insurance claim. But without a Garda report, the insurance claim may not get through if the other party in the accident denied what occured. Think of all the court cases thrown out because Garda witness didnt turn to court. Think of large entertainment and sport events that would have to be cancelled because of no garda presence. Think of security cash vans that couldn't deliver to atms because without garda emergency response are not insured.
> Think of serious crimes not being investigated properly, the list goes on.
> But the point is, the cost to the economy and society at large is far greater, in the absence of law enforcement, than the cost of a days wage to gardai.


I agree with all that and it's why the government gave them the extra money.



TheBigShort said:


> If you want to that that is fine. You are simply re-directing spending, not reducing it. Instead of money pumped into the economy via public sector wages, you would pump money into the private sector through a house building program, private sector wages. Its fiscal stimulus either way, what ive been arguing for.



Exactly.




TheBigShort said:


> To eradicate homelessness, as you have pointed out, will require people to be paid. Its still government spending. It creates demand and in turn this will lead to wage increases across the economy. Its not rocket science.



Not necessarily, if we re-direct spending the money pumped into the economy stays the same, just that a different group (the homeless) benefit.



TheBigShort said:


> Instead what we have is QE, bank balance sheets being stuffed with money printing. So banks will lend again, so we can buy ipads and SUV's or go on the rip, or speculate on property prices etc



You've made this point upteen times and I agree with it.




TheBigShort said:


> The guy is twerp, out of his depth, and if that is your idea of a 'winner', thats your view.



I was been sarcastic. The guy's a complete muppet and that's an insult to muppets everywhere.



TheBigShort said:


> But at least he has the foresight to see fiscal stimulus, infrastructure spending and borrowing is preferable to what we have now.



If he can get the finance and if it makes sense to do so.




TheBigShort said:


> Yes, government borrowing. Money is cheap.



As already pointed out - when the government needs to re-finance this debt the interest rates are likely to he higher.



TheBigShort said:


> I find it interesting that you dont seem to take issue with private banks borrowing at 0% so they can lend us the money to be 'suckers', but you take issue with government borrowing even if it may eradicate homelessness.



I have a massive problem with banks lending at 0%. It's madness and people are buying all sorts of crap they don't need.




TheBigShort said:


> Like I said, he is a twerp. Nowhere have I argued for reduced corporate tax.



But he is arguing for a reduction in corporate tax to help fund his stimulus package. Cutting corporate tax seems to go against the grain for most socialists I have come into contact with. Do you think he should cut corporation tax?


----------



## TheBigShort

Firefly said:


> Never said I was worth it. As an IT contractor I am 100% at the mercy of the market.



Shouldn't you look for a pay cut so? You know, keep yourself competitive and all?



Firefly said:


> It's not my intention.



You are making a good stab at it though!




Firefly said:


> I don't believe so. It is based on what I can earn in an open market.



Where is this open market? Can I see the prices? Can you?



Firefly said:


> How would they know? I don't discuss my rates / earnings with anyone except my employer



Oh, its actually a closed market, based on confidentiality agreements and secrecy. Who does that suit I wonder? Especially when it comes to unfairness.
That is one of the benefits of a trade union, they can take exploitative employers to task. Better than having individual workers making a nuisance by picketing.



Firefly said:


> I'm not aware of what my colleagues are earning and am doing nicely thanks. I do believe I can earn more next year though, but I could be wrong.



How do you know? You must access to information that tells you can earn more. But simultaneously, you keep your earnings secret.



Firefly said:


> It's debatable if eradicating homelessness would "increase state revenues, reduce the cost of welfare benefits", but I think it should still be done and we both agree on that.



Everything is debatable. But if you are going to build homes, this costs money, in planning, design, construction, public works,  etc. Sounds like increased employment, sounds like reduced dole queues, sounds like increased revenues, VAT etc



Firefly said:


> The reason I am asking about how public sector pay can be increased is because it's the largest cohort of workers in the country.



Even though you dont intend to keep reverting back to discussing public sector pay?



Firefly said:


> My bad, when I said sick I meant "sick". You know, the people who take sickies.



Yeh, I know a colleague currently recovering from breast cancer operation, with severve difficulties. She is now on half pay, not much higher than welfare rates. All these sick days add to the total sick leave in the public sector. 
A friend of mine, in the private sector on the other hand broke his leg in numerous places, out of work for ten weeks on welfare benefits, no pay. But at least it doesn't count as sick days in the private sector!



Firefly said:


> I find it highly amusing that the teachers and Gardai are protesting against the government, when it was their unions shafted them by agreeing to the terms!



So now the unions are doing the state a service?



Firefly said:


> In any case I am happy to discuss how you think wages across the public sector can be increased also.



Honestly! You are not a bot are you?



Firefly said:


> Not necessarily, if we re-direct spending the money pumped into the economy stays the same, just that a different group (the homeless) benefit.



Who will build these homes? Will they get paid? Will they pay taxes? Is VAT applicable in all of this activity? Will there be profits for construction companies? Will they pay taxes.



Firefly said:


> You've made this point upteen times and I agree with it.



Great, so you are against QE. You are also in favour of fiscal stimulus. 



Firefly said:


> If he can get the finance and if it makes sense to do so



Can we take it as a given that we all believe our opinions and policy preferences make sense to at least those who proffer them?



Firefly said:


> As already pointed out - when the government needs to re-finance this debt the interest rates are likely to he higher.



As will the banks who are borrowing from ECB at 0%



Firefly said:


> I have a massive problem with banks lending at 0%. It's madness and people are buying all sorts of crap they don't need.



Its the ECB that is lending to banks at 0%. The banks are lending to consumers for higher rates and profits. Eventually these profits will trickle down to us all, ha!ha!hah!
This is economic policy as adopted by European governments.



Firefly said:


> But he is arguing for a reduction in corporate tax to help fund his stimulus package



So you said. I said he is a twerp. I said I dont believe that is a good idea.


----------



## Firefly

TheBigShort said:


> Shouldn't you look for a pay cut so? You know, keep yourself competitive and all?



No, I believe I am competitive at my current rate and will still be competitive at the higher rate.




TheBigShort said:


> You are making a good stab at it though!
> Even though you dont intend to keep reverting back to discussing public sector pay?



If you can tell me how increasing wages in the public sector can be achieved, (you have already stated we shouldn't borrow to just give pay rises), I will happily move on.




TheBigShort said:


> Where is this open market? Can I see the prices? Can you?



It's as open a market as it can be I believe. I get contacted by various agencies and discuss rates different employers are offering. I make my judgements on this.



TheBigShort said:


> Oh, its actually a closed market, based on confidentiality agreements and secrecy.



No, I just don't share my earnings with anyone and don't expect anyone else to share theirs with me. I find most people are the same actually. Does that make it a closed market?



TheBigShort said:


> Who does that suit I wonder? Especially when it comes to unfairness.


If I am not happy with my job I look for something else.




TheBigShort said:


> That is one of the benefits of a trade union, they can take exploitative employers to task. Better than having individual workers making a nuisance by picketing.



I'm not against unions per se, and there are no doubt cases where it's easier for an employer to agree a wage rate for a large number of staff rather than treating each case seperately. I think it works against staff who deliver more though.



TheBigShort said:


> How do you know? You must access to information that tells you can earn more. But simultaneously, you keep your earnings secret.



As above - discussions with agencies and also intuition & gut feeling. As I mentioned, I could just as easily be earing nothing next year though.



TheBigShort said:


> Everything is debatable. But if you are going to build homes, this costs money, in planning, design, construction, public works,  etc. Sounds like increased employment, sounds like reduced dole queues, sounds like increased revenues, VAT etc



In agree, but on the other side of the balance is increased fixed liabilities in the form of higher debts.



TheBigShort said:


> Yeh, I know a colleague currently recovering from breast cancer operation, with severve difficulties. She is now on half pay, not much higher than welfare rates. All these sick days add to the total sick leave in the public sector.
> A friend of mine, in the private sector on the other hand broke his leg in numerous places, out of work for ten weeks on welfare benefits, no pay. But at least it doesn't count as sick days in the private sector!



These are not the people I am talking about and you know it. I am referring people pulling sickies.



TheBigShort said:


> So now the unions are doing the state a service?



Where did I say that? My point is that the workers should be marching to their unions demanding why they agreed to the terms!




TheBigShort said:


> Honestly! You are not a bot are you?



Typo - I meant private sector.



TheBigShort said:


> Who will build these homes? Will they get paid? Will they pay taxes? Is VAT applicable in all of this activity? Will there be profits for construction companies? Will they pay taxes.



Whoever builds them the cheapest. If the State can do it for cheaper then it should. But I take your point, whoever builds the houses will also benefit.




TheBigShort said:


> Great, so you are against QE. You are also in favour of fiscal stimulus.



I am against QE. I am in favour of fiscal stimulus if it makes sense. IE if we are running a surplus and paying down our debts.




TheBigShort said:


> Can we take it as a given that we all believe our opinions and policy preferences make sense to at least those who proffer them?



I honestly don't understand your point, if you can re-phrase I will offer an opinion.



TheBigShort said:


> As will the banks who are borrowing from ECB at 0%



Agreed



TheBigShort said:


> Its the ECB that is lending to banks at 0%. The banks are lending to consumers for higher rates and profits. Eventually these profits will trickle down to us all, ha!ha!hah!



Yip, lending at 0% by the ECB to banks enticing people to borrow for crap they don't need is a recipe for disaster. Car companies (with their own banks) are also lending at 0% too by the way.




TheBigShort said:


> So you said. I said he is a twerp. I said I dont believe that is a good idea.



Well, he has put forward an idea you think is good. If you do not think it is a good idea for him to reduce corporation tax, do you think he should just borrow for it all?


----------



## Purple

TheBigShort said:


> Oh, its actually a closed market, based on confidentiality agreements and secrecy. Who does that suit I wonder? Especially when it comes to unfairness.


 No, it's an open market; everyone negotiates their own pay levels with perspective employers. If one employer is paying less than everyone else they don't get the right employees. If everyone was on the same pay levels or engaged in collective bargaining it would not be an open market. 




TheBigShort said:


> That is one of the benefits of a trade union, they can take exploitative employers to task. Better than having individual workers making a nuisance by picketing.


 That's a terribly negative view of the world. Who takes the exploitative unions to task as they take more and more from the poor and vulnerable and give it to middle income employees in the protected sector? Shame on them. 



TheBigShort said:


> A friend of mine, in the private sector on the other hand broke his leg in numerous places, out of work for ten weeks on welfare benefits, no pay. But at least it doesn't count as sick days in the private sector!


 He should have got serious illness insurance. It amazes me that people are so unable to make provision for themselves.


----------



## Purple

Firefly said:


> No, I believe I am competitive at my current rate and will still be competitive at the higher rate.


 And if you are not you won't get the work and so will have to reduce your rates; an open market.


----------



## Firefly

Purple said:


> And if you are not you won't get the work and so will have to reduce your rates; an open market.



Absolutely. It will be a short conversation. I actually intend to stay where I am whatever the outcome. It's a good, long running contract with very decent work.


----------



## Firefly

Purple said:


> He should have got serious illness insurance. It amazes me that people are so unable to make provision for themselves.



It's bananas. I was only taking to someone earlier today (a fellow, evil IT contractor), who has a wife and 2 kids but doesn't have life assurance.


----------



## jjm

firefly You are almost 100% sure of getting your pay rise. The people who directly Hire you may want a pay rise and by giving you a pay rise will be able to have pay rise also  . They may not be able to afford  to give a pay rise lower down  to everyone . This is the main reason the top 20% pay more tax in this country .So you see this is how it works in both the public and private sectors. only some get it in the private sector those closest to the top do better than people further down the line.I


----------



## TheBigShort

Firefly said:


> Where did I say that? My point is that the workers should be marching to their unions demanding why they agreed to the terms!



They do, the last ADC I was at got pretty heated. The union leadership prevailed however.



Firefly said:


> No, I believe I am competitive at my current rate and will still be competitive at the higher rate



Good, and I do hope you get that pay rise. It will be good for our economy if this manifests into pay rises for the population at large.



Firefly said:


> If you can tell me how increasing wages in the public sector can be achieved, (you have already stated we shouldn't borrow to just give pay rises), I will happily move on.



Through increased productivity. If the state borrows, say for...I dunno...eh, say a house building program. This will create employment in the construction sector. It will also create economic activity in legal and other professional activities including planning divisions of county councils, Office of public works etc. This will create employment, relieve the homeless crisis. It may also act as a buffer to increasing property prices, facilitating first-time buyers to enter the market, inducing more economic activity in the areas I have already mentioned. Not only that, other entrepreneurs may try take advantage of this new confidence by investing in ancillary enterprises like a restaurant, or supermarket. This will create more demand. And in doing so, as the economy grows, this activity will require public services, like a park, or a hospital or a garda station. And no different to yourself, most public servants are good at their jobs. And when the economy is growing, they look to see their own standard of living is maintained and or improved.
Thats how wage increases in the public service can be achieved.

But to ask you a question, you dont agree with increased government borrowing and you dont agree with QE. 
Would this not simply bring about a economic meltdown? What would you do to stimulate economic activity?


----------



## TheBigShort

[QUOTE="Purple, post: 1493900, member: 

He should have got serious illness insurance. It amazes me that people are so unable to make provision for themselves.[/QUOTE]

Unfortunately, as a qualified mechanic, he is relatively low paid €14ph. With rent and childcare etc there is not much left over. He is a good lad, 27, would love to buy his own home but it is out of reach.


----------



## Firefly

jjm2016 said:


> firefly You are almost 100% sure of getting your pay rise. The people who directly Hire you may want a pay rise and by giving you a pay rise will be able to have pay rise also  . They may not be able to afford  to give a pay rise lower down of to everyone . This is the main reason the top 20% pay more tax in this country .So you see this is how it works in both the public and private sectors.



Sorry, I don't follow. If someone lower down or higher up than me gets a pay rise it should be reflective of the same criteria as it is for me - what the market can bear. A promising junior grade worker who has constantly delivered for the client and is increasing his/her marketable skills should get more than a clock-watcher who does the minimum and doesn't improve his skillset. In addition, it also comes down to the ability of the organisation to pay. If the organisation is already borrowing to keep the lights on then it is going to have a hard time increasing pay rates for anyone, let alone its top performers.


----------



## TheBigShort

Firefly said:


> Absolutely. It will be a short conversation. I actually intend to stay where I am whatever the outcome. It's a good, long running contract with very decent work.



If it is a contract then you should be able to sue if breached. If your contract expires and is not renewed it is either no work available or you are not as competitive as you think you are.


----------



## TheBigShort

Purple said:


> And if you are not you won't get the work and so will have to reduce your rates; an open market.



But he is competitive, he said so. So much so that he is seeking a pay rise.


----------



## jjm

firefly you know better than that you sound like some people who got a big fat pay rise.your  reply is straight out of the public service union BOOK


----------



## Firefly

TheBigShort said:


> They do, the last ADC I was at got pretty heated. The union leadership prevailed however.



Good for them. Hadn't noticed it on the news though.



TheBigShort said:


> Good, and I do hope you get that pay rise. It will be good for our economy if this manifests into pay rises for the population at large.



Thanks. I'm a saver rather than a spender though, so it might take some time.




TheBigShort said:


> Through increased productivity. If the state borrows, say for...I dunno...eh, say a house building program. This will create employment in the construction sector. It will also create economic activity in legal and other professional activities including planning divisions of county councils, Office of public works etc. This will create employment, relieve the homeless crisis. It may also act as a buffer to increasing property prices, facilitating first-time buyers to enter the market, inducing more economic activity in the areas I have already mentioned. Not only that, other entrepreneurs may try take advantage of this new confidence by investing in ancillary enterprises like a restaurant, or supermarket. This will create more demand. And in doing so, as the economy grows, this activity will require public services, like a park, or a hospital or a garda station. And no different to yourself, most public servants are good at their jobs. And when the economy is growing, they look to see their own standard of living is maintained and or improved.
> Thats how wage increases in the public service can be achieved.



"planning divisions of county councils, Office of public works"
"public services, like a park, or a hospital or a garda station."

Why would they need higher wages? Certainly I could see a demand for more workers, but why more pay? (which is what this thread is about).




TheBigShort said:


> But to ask you a question, you dont agree with increased government borrowing and you dont agree with QE.
> Would this not simply bring about a economic meltdown? What would you do to stimulate economic activity?



I don't think so to be honest. We have the fastest growing economy in Europe (despsite all the dire warnings over austerity measures). Stable government finances are a key bedrock to the welfare of the economy of the state. I would prefer to run a small budget surplus and keep chipping away at the national debt. Ever talk so someone just after they have cleared their mortgage?

I would also make it as easy as possible for indigenous industry to grow.


----------



## Firefly

TheBigShort said:


> If it is a contract then you should be able to sue if breached.


It will be when the contract is up for renewal we'll having "the chat". And they're a great company and always pay on time.



TheBigShort said:


> If your contract expires and is not renewed it is either no work available or you are not as competitive as you think you are.



Yip, I agree 100%. Market based economics at its finest.


----------



## Firefly

jjm2016 said:


> firefly you know better than that you sound like some people who got a big fat pay rise.your  reply is straight out of the public service union BOOK



I can't see where you are getting that from to be honest. I will be seeking a pay rise based on what I think the market will bear. I may well be incorrect, but unlike public service unions, I won't be picketing outside the door.


----------



## Firefly

TheBigShort said:


> But he is competitive, he said so. So much so that he is seeking a pay rise.



I _believe _I am competitive. This time next year I could be obsolete, although I try to keep abreast of where things are going. Anyway, why are we focusing on me?


----------



## jjm

Firefly just make sure you get enough .


----------



## Firefly

jjm2016 said:


> Firefly just make sure you get enough .



I'll do my best thanks! It won't be anything extravagant anyway. Things are dandy and if push comes to shove I don't want to be one of those who stands out in an accountant's spreadsheet!


----------



## jjm

NO you will not The Accountant will get a bit more than you


----------



## Firefly

jjm2016 said:


> NO you will not The Accountant will get a bit more than you



I'd believe it! Bloody accountants!!


----------



## TheBigShort

Firefly said:


> Good for them. Hadn't noticed it on the news though.



It wasnt on it. Does it matter?



Firefly said:


> Thanks. I'm a saver rather than a spender though, so it might take some time.



Good, we need savers as well as spenders. When consumers save, government spends. When consumers spend, government can save.



Firefly said:


> Why would they need higher wages?



Why do you need a higher wage?



Firefly said:


> I would also make it as easy as possible for indigenous industry to grow.



By cutting government spending?


----------



## TheBigShort

Firefly said:


> I _believe _I am competitive. This time next year I could be obsolete, although I try to keep abreast of where things are going. Anyway, why are we focusing on me?



It is not my intention. But you believe that public sector workers shouldn't get a pay rise if government has to borrow. But you are prepared to seek a pay rise for yourself. There is a considerable chance that your employer may have borrowed to invest in your employment. The last time there was excess private borrowing the economy collapsed.
I don't believe in borrowing for the sake of pay rises, but if borrowing can provide stimulus to the economy as a whole, public sector workers should also benefit from that.
The economy is growing. But it is disjointed growth at the whim of private speculators. This has its benefits where investment is made on sound footing, but it is also open to speculative gambles on property, stocks etc that benefit few.
Fiscal stimulus, at this time, can target broader swathes of population, including public sector workers. Of course it needs to be managed, but ideally, at this time it is the way to progress the economy.


----------



## Firefly

TheBigShort said:


> It wasnt on it. Does it matter?



I would have liked to have seen more balanced coverage from RTE. For all I thought, it was just the government's fault newly qualified staff were being paid less. 



TheBigShort said:


> Good, we need savers as well as spenders. When consumers save, government spends. When consumers spend, government can save.



Fair point, however I save a large portion of my income in a bank in the UK. 




TheBigShort said:


> Why do you need a higher wage?



I don't need a higher wage. I believe I can obtain a higher wage based on the reasons already given. 



TheBigShort said:


> By cutting government spending?



Not necessarily. This kind of thing looks good: http://www.citizensinformation.ie/e...loyment/setting_up_a_business_in_ireland.html


----------



## Firefly

TheBigShort said:


> It is not my intention. But you believe that public sector workers shouldn't get a pay rise if government has to borrow. But you are prepared to seek a pay rise for yourself. There is a considerable chance that your employer may have borrowed to invest in your employment.



Nope. Long hours studying and building up IT environments in my own time. I also have the relevant certifications for my role and I paid for all learning material and the courses myself. Granted there have been plenty opportunity to learn "on the job" but that holds true for everyone - no one knows everything. I'm not portraying myself as a martyr to the cause by the way, just trying to taking personal responsibility for my income.



TheBigShort said:


> The last time there was excess private borrowing the economy collapsed.



I would add public borrowing to that. It's why the IMF flew into town.



TheBigShort said:


> I don't believe in borrowing for the sake of pay rises, but if borrowing can provide stimulus to the economy as a whole, public sector workers should also benefit from that.


They do, they get paid. If more help is needed, certainly hire more workers, but why pay them more? You still haven't really answered my question - how do you think wages in the public sector can be increased?

Regarding the house building program, and need for public sector workers in "planning divisions of county councils, Office of public works", I think it's fair to say that things have been relatively handy for them for the last number of years! We know how little building activity has been going on. If they were able to manage the largest building period in our history upto 2008, I'm sure the'd manage 6,000 houses!





TheBigShort said:


> The economy is growing. But it is disjointed growth at the whim of private speculators. This has its benefits where investment is made on sound footing, but it is also open to speculative gambles on property, stocks etc that benefit few.
> Fiscal stimulus, at this time, can target broader swathes of population, including public sector workers. Of course it needs to be managed, but ideally, at this time it is the way to progress the economy.



I agree with all of that, but as already pointed out, I don't agree we should borrow money for any stimulus package whilst we are still borrowing to consume.


----------



## TheBigShort

Firefly said:


> Nope. Long hours studying and building up IT environments in my own time. I also have the relevant certifications for my role and I paid for all learning material and the courses myself.



I was talking about the setting up of a business, like a factory for instance. I borrow a million and then out of that I hire you to look after IT requirements. If the business crashes I go bankrupt and leave a tab for others to pick up. You can claim state redundancy. If the business works I keep lions share, do whatever to avoid paying taxes and keep your pay rise to a minimum.



Firefly said:


> I would add public borrowing to that. It's why the IMF flew into town.



That is the point. Too much private sector lending, too much public sector spending. Disaster.
One or other. The EU, through the ECB has chosen to restrain government spending (fiscal pact) but have unlimited money printing for whoever wants to or can borrow.
I would prefer if governments tore up fiscal pact, stop QE, and target infrastructure spending.




Firefly said:


> They do, they get paid. If more help is needed, certainly hire more workers, but why pay them more?



When did I say you have to pay them more? This is ridiculous. I never said it, what I said was a fiscal stimulus will generate economic activity in a more targeted way than QE will ever do. Increasing public spending, ill let the government of the day decide what form it should take. It could be house building, it could be hiring more public servants, it could public-private partnership, it could nuclear testing, it could be water infrastructure, it could be anything, it could your pay rise!
Whatever it is it is better than QE. That is the point. It will induce economic activity at ALL income levels, in turn increasing wages.
It has nothing to do with your obsession to constantly divert this topic to current pay disputes.
It is about economic policy of fiscal spending over QE.




Firefly said:


> You still haven't really answered my question - how do you think wages in the public sector can be increased?



I have, numerous times. No more.



Firefly said:


> I agree with all of that, but as already pointed out, I don't agree we should borrow money for any stimulus package whilst we are still borrowing to consume



And you dont agree with QE either. So banks, governments, corporations will shortly go bankrupt.


----------



## jjm

Hi firefly Help TheBigShort  glitch in the system  you wont get paid. Good enough for you and you wanted to cut the dole


----------



## Firefly

TheBigShort said:


> When did I say you have to pay them more? This is ridiculous. I never said it, what I said was a fiscal stimulus will generate economic activity in a more targeted way than QE will ever do.



You were asked repeatedly how wages in the public sector could be increased.  You have pointed towards a stimulus package as a solution, but in your own words you are saying the above. So you still have not answered the question. More public servants, maybe, more employment maybe, but this thread concerns raising wages and you have not shown how wages for the largest cohort in the public sector will be achieved.

I'm with with on fiscal spending being better than QE by the way, but not when we are borrowing to consume.


----------



## TheBigShort

http://www.rte.ie/news/business/2016/1116/832163-ireland-prime-location-for-big-data-investment/

Here is an example of how government borrowing can be used to exploit potential within the economy.
Two of the top five issues for international entities were legal framework and data-related conditions and regulations. 
If Ireland is seen as a favourite location then clearly we are doing some things right. But with some foresight perhaps we could spend money in the areas where we are not doing so well, or could do better? God forbid if that requires a public servant getting a higher wage.


----------



## jim

to answer the OP's question - yes it is. economy is growing, public sector and others are getting an increase, wages have stagnated for a few yrs.

so, yep - its time.


----------



## Firefly

TheBigShort said:


> I was talking about the setting up of a business, like a factory for instance. I borrow a million and then out of that I hire you to look after IT requirements. If the business crashes I go bankrupt and leave a tab for others to pick up. You can claim state redundancy. If the business works I keep lions share, do whatever to avoid paying taxes and keep your pay rise to a minimum.



That's how it works in a lot of cases yes. On the flip side, employees should build marketable skills so as not to be dependent on one employer and if that employer does not increase wages to a level the employee feels appropriate, the employee is free to look elsewhere. 



TheBigShort said:


> That is the point. Too much private sector lending, too much public sector spending. Disaster.
> One or other. The EU, through the ECB has chosen to restrain government spending (fiscal pact) but have unlimited money printing for whoever wants to or can borrow.
> I would prefer if governments tore up fiscal pact, stop QE, and target infrastructure spending.



I agree - we are saying the same thing, except I don't believe we should borrow whilst still borrowing to consume. 






TheBigShort said:


> And you dont agree with QE either. So banks, governments, corporations will shortly go bankrupt.



How? How will the government go bankrupt? If it wasn't for the budget just gone we would have balanced the books this year.


----------



## Firefly

TheBigShort said:


> http://www.rte.ie/news/business/2016/1116/832163-ireland-prime-location-for-big-data-investment/
> 
> Here is an example of how government borrowing can be used to exploit potential within the economy.
> Two of the top five issues for international entities were legal framework and data-related conditions and regulations.
> If Ireland is seen as a favourite location then clearly we are doing some things right. But with some foresight perhaps we could spend money in the areas where we are not doing so well, or could do better?



Why are you fixated on borrowing? Where in the article does it mention the need for the government to borrow for this? Why not divert spending from somewhere else?



TheBigShort said:


> God forbid if that requires a public servant getting a higher wage.




I have no issue with public servants getting a higher wage as long as we do not have to borrow just to raise wages. You agreed with me remember?


----------



## jjm

the people in power will raise tax on all the high earners they will not have to borrow to pay a higher wage to public servants .Just take some tax from the people who are lucky enough to work in jobs that can afford to pay an increase in the private sector.As firefly says no problem once they don't borrow.


----------



## TheBigShort

Firefly said:


> Why are you fixated on borrowing? Where in the article does it mention the need for the government to borrow for this? Why not divert spending from somewhere else?



Where will you cut spending? Reduce garda pay/numbers? Reduce teacher pay/numbers, cut health services? Are you not conscience of current pay disputes.

If we had money in the kitty to spend on infrastructure investment then well and good. But as you have pointed out, we are running a deficit. So in order to invest in essential services, vital infrastructure etc we need to borrow.
We can do it two ways. We can increase government borrowing for targeted infrastructure spending, or we can await the trickle down borrowing of QE to arrive one day and hope we are in the right place at the right time.
I would favour turning off QE and for increaed government spending.
You appear to favour turning off QE _and _reducing government spending, and expect somehow, the economy will grow!
If you can point me any commentator, any economist, any business person that supports that view, then hands up, you win this discussion.


----------



## Firefly

You still have not shown how wages for those in the public sector can be increased!



TheBigShort said:


> Where will you cut spending? Reduce garda pay/numbers? Reduce teacher pay/numbers, cut health services? Are you not conscience of current pay disputes.



I would rather we left things alone. If the budget measures in Oct were reversed we would have balanced the books for the first time in year and next year we could have put ourselves on the path to reducing our debt. You are the one advocating stimulus package for the fastest growing economy in Europe. I am saying rather than borrowing for it (which seems to be the silver bullet for everything the left proposes) I am saying re-direct the money being spent elsewhere.




TheBigShort said:


> If we had money in the kitty to spend on infrastructure investment then well and good. But as you have pointed out, we are running a deficit. So in order to invest in essential services, vital infrastructure etc we need to borrow.



And I am saying we shouldn't borrow for this. The exception being homelessness, I have no problem with anyone or the government borrowing in a real emergency situation.





TheBigShort said:


> You appear to favour turning off QE and reducing government spending, and expect somehow, the economy will grow!
> If you can point me any commentator, any economist, any business person that supports that view, then hands up, you win this discussion.



No need for a commentator economist or any business person...Government spending has been drastically cut since 2008 and not only has the economy grown but we are the fastest growing economy in Europe!


----------



## TheBigShort

Firefly said:


> You still have not shown how wages for those in the public sector can be increased!



I have, but if you are not happy with it then so what? The topic is not about increasing public sector wages. It is about increasing wages across the economy to provide for stable, properous economic environment that will provide quality services and private investment.




Firefly said:


> I would rather we left things alone. If the budget measures in Oct were reversed we would have balanced the books for the first time in year and next year we could have put ourselves on the path to reducing our debt. You are the one advocating stimulus package for the fastest growing economy in Europe. I am saying rather than borrowing for it (which seems to be the silver bullet for everything the left proposes) I am saying re-direct the money being spent elsewhere.



And because of all those left-wing governments we have had to date that we have ended up where we are?

And im asking you where would you re-direct the money? What will that do? It is robbing peter to pay paul. So cut healthcare funding to build houses? Or close schools to build a motorway?



Firefly said:


> And I am saying we shouldn't borrow for this. The exception being homelessness, I have no problem with anyone or the government borrowing in a real emergency situation.



But you cant simply run an economy on the basis that borrowing is ok if its an emergency, but not ok otherwise. Thats what every tinpot basket case in Africa does.



Firefly said:


> No need for a commentator economist or any business person...Government spending has been drastically cut since 2008 and not only has the economy grown but we are the fastest growing economy in Europe!



Yes, the fastest growing economy in Europe. Propelled by a policy of providing 0% loans from the ECB to banks and governments through QE. Only, governments are restricted to 3% deficits under the fiscal pact so cant borrow accordingly for essential services and infrastructure development to increase the capacity of the economy to increase productivity.
Banks on the other hand are back in lending mode. PTSB offered me €0.10c everytime I used their current account debit card. Sounds like a loyalty card offer from a supermarket. This is the type of nonsense we are being offered with.
SUV sales are on the increase and if I want to replace my smartphone to an iphone 7 (because it has wireless earphones, why wouldn't I?) I can borrow away. But if I am struggling with childcare payments, then perhaps I shouldn't have had children (this was actually said to me once). Certainly the government should not interfere in the free-market and provide additional supports to workers in that sector. That would cost the taxpayer! Cant have that . No, we need to stimulate the economy through increased borrowing for cash-strapped citizens by buying stuff they dont need and worse, its on credit.


----------



## jjm

both TheBigShort and firefly agree they hope to get a Pay increase. If all goes to plan and we don't want to borrow the next question is how are we going to pay TheBigShort pay increase .Will the pay increases in the private sector wages  generate enough in tax to  provide the services  require along with TheBigShorts Pay increases.   Do we cut back on the services we already have .Do we do away with some of the tax breaks if so which one.If we cut back on services which services.  Do we increase  taxes on all taxpayers or some taxpayers only.I say taxing Foreign direst investment is out If we had  taxed them  higher before now wages would be lower in both the public and private sectors .In other words the have prices in there tax advantage in the wages they pay. CAN WE AGREE ON WHO PAYS MORE TAXES.TheBigShot is getting His/Her pay Increase already Agreed and like firefly may get a little  bit more no harm in asking.Wages are on the way up for employers who can afford to pay more according to firefly .The only question who Gets there snouts in the trough first.


----------



## Firefly

TheBigShort said:


> I have, but if you are not happy with it then so what?


You haven't. You have argued that a spending program will increase activity in the economy and that many in the private sector will benefit. I agree with this, many will. And possibly the number of public sector workers may increase, but you haven't shown how anyone in the public sector can expect higher wages.




TheBigShort said:


> The topic is not about increasing public sector wages. It is about increasing wages across the economy to provide for stable, properous economic environment that will provide quality services and private investment.



You are the one who is asking who should benefit from a growing economy, yet you are not able to show how public sector workers can expect their wages to increase as a result of a stimulus package!



TheBigShort said:


> And because of all those left-wing governments we have had to date that we have ended up where we are?



I would say the biggest mistake was not following a counter-cyclical pattern of government spending. During the boom was the time when the government should have been spending way less money. We are hell-bent on pro-cyclcical spending - spend when the economy is doing well (Sure we can afford it) and spend when the economy is in the doldrums (to stimulate demand).




TheBigShort said:


> And im asking you where would you re-direct the money? What will that do? It is robbing peter to pay paul. So cut healthcare funding to build houses? Or close schools to build a motorway?



We are (thank goodness) limited by the amount money we can borrow. We can no longer print our own money. So, if we can't borrow and we can't print, that leaves either raising taxes or cutting spending. Where do you think the money should be found since you're the one advocating this stimulus package?



TheBigShort said:


> But you cant simply run an economy on the basis that borrowing is ok if its an emergency, but not ok otherwise. Thats what every tinpot basket case in Africa does.



You're the one saying the system is broke and we need something new. I am saying, let's try and live within our means for a while. We almost achieved it this year if it wasn't for the budget.



TheBigShort said:


> Yes, the fastest growing economy in Europe. Propelled by a policy of providing 0% loans from the ECB to banks and governments through QE.



The 0% deal is available to all countries in the EU. Why are we the fastest growing economy in Europe?



TheBigShort said:


> Banks on the other hand are back in lending mode. PTSB offered me €0.10c everytime I used their current account debit card. Sounds like a loyalty card offer from a supermarket. This is the type of nonsense we are being offered with.
> SUV sales are on the increase and if I want to replace my smartphone to an iphone 7 (because it has wireless earphones, why wouldn't I?) I can borrow away.



We've been there and I agree with you - it's madness!



TheBigShort said:


> But if I am struggling with childcare payments, then perhaps I shouldn't have had children (this was actually said to me once).



That must have been a difficult thing to hear and I am sorry for you. It is insensitive in the extreme. Having said that, children are expensive and I know after we had our second we decided to call it quits on a number of factors, and unfortunately cost was a factor, albeit a small one.



TheBigShort said:


> Certainly the government should not interfere in the free-market and provide additional supports to workers in that sector. That would cost the taxpayer!



I would be very slow to argue that the government should get involved in private business. Where do you draw the line? Should the government help out the Spar in Dundalk as the shoppers are currently going to Newry?



TheBigShort said:


> No, we need to stimulate the economy through increased borrowing for cash-strapped citizens by buying stuff they don't need and worse, its on credit.



Again, I agree. Crazy stuff.


----------



## Firefly

jjm2016 said:


> both TheBigShort and firefly agree they hope to get a Pay increase. If all goes to plan and we don't want to borrow the next question is how are we going to pay TheBigShort pay increase .Will the pay increases in the private sector wages  generate enough in tax to  provide the services  require along with TheBigShorts Pay increases.   Do we cut back on the services we already have .Do we do away with some of the tax breaks if so which one.If we cut back on services which services.  Do we increase  taxes on all taxpayers or some taxpayers only.I say taxing Foreign direst investment is out If we had  taxed them  higher before now wages would be lower in both the public and private sectors .In other words the have prices in there tax advantage in the wages they pay. CAN WE AGREE ON WHO PAYS MORE TAXES.TheBigShot is getting His/Her pay Increase already Agreed and like firefly may get a little  bit more no harm in asking.Wages are on the way up for employers who can afford to pay more according to firefly .The only question who Gets there snouts in the trough first.



Great post. And that's the problem I have with so many on the Left. Their intentions are admirable and are great at the "Why" but unfortunately fall down on the "How", unless it involves borrowing!


----------



## jjm

But are they really on the left I suspect not.It was the center that let it out of control The real left are a small part of the problem .It is the center parties who have and still are falling over one another to be reckless. At one stage today you sounded like one of the bearded brethren  I thought your shadow would come after you. The people in power need to  provide a better health service . better supports for young family where  parents have to go out to work . I have no problem paying more tax provided we get the service .There is a lot we could do if the people in power kept the usc and stopped playing games.


----------



## TheBigShort

Firefly said:


> You haven't. You have argued that a spending program will increase activity in the economy and that many in the private sector will benefit.



Only because you identified a situation where you agreed borrowing would be required. And in turn, I showed how such a stimulus could benefit private sector workers, even to the point that their wages would increase. I showed you this with regard to IT workers also.
So its not rocket science. If the government identified that we needed more nurses and doctors, the a fiscal stimulus could be used to the point that nurses and doctors wages started to increase in order to attract more of them into the system. Ditto, for any area of the public service.
Another way to increase wages in the public sector is to reduce the numbers and expect same output from fewer workers, increasing productivity, contributing to growth in the economy. This will surely create an upward pressure on wages.
But im not here to advocate wage increases for one sector or another. I am advocating adopting an economic policy or model, that is spurred by fiscal stimulus _instead _of QE.



Firefly said:


> I would say the biggest mistake



By a left-wing government? Yes? Or no?



Firefly said:


> We



As in the Irish people who elected left-wing governments?



Firefly said:


> We are hell-bent on pro-cyclcical spending



Left-wing governments, again?



Firefly said:


> We are (thank goodness) limited by the amount money we can borrow.



I dont advocate wreckless spending and borrowing, that is what QE is effectively. The debasement of our currency by unelected central bankers in the control of investment bankers.



Firefly said:


> We can no longer print our own money.



Yes, we have ceded a great deal of sovereignty to unelected central bankers.



Firefly said:


> So, if we can't borrow and we can't print, that leaves either raising taxes or cutting spending.



A combination of taxes and cuts has been the austere policy for 6-7yrs. The economy is growing again, but growth is driven by a policy of cheap credit expansion that is based on asset purchasing program, stuffing bankrupt banks with free money to boost balance sheets. It is a debasement of our currency and we will pay a heavy price for this if incomes dont start to rise.



Firefly said:


> Where do you think the money should be found since you're the one advocating this stimulus package?



Instead of restricting governments to 3% fiscal pact and allowing banks to load up with practically unlimited free to lend in the manner that they see best.
An undemocratic centralized corporate controlled economy.





Firefly said:


> The 0% deal is available to all countries in the EU. Why are we the fastest growing economy in Europe?



Im not disputing that the economy is growing. Im disputing the manner in which it is growing. It is being propped up on unsound economic money printing policy designed to create, in Draghis words, "a wealth effect", so that we can start our borrowing spree again.



Firefly said:


> We've been there and I agree with you - it's madness!



And we are going there again if we are not careful.



Firefly said:


> That must have been a difficult thing to hear and I am sorry for you. It is insensitive in the extreme. Having said that, children are expensive and I know after we had our second we decided to call it quits on a number of factors, and unfortunately cost was a factor, albeit a small one.



It was a stupid comment from some air-head. I laughed. Reproduction is a human condition, not a financial stress test. By that reasoning large swathes of Africa would be extinct now. It was actually poor starving Irish families that reproduced greater numbers during the Famine more so than more affluent families.



Firefly said:


> I would be very slow to argue that the government should get involved in private business. Where do you draw the line? Should the government help out the Spar in Dundalk as the shoppers are currently going to Newry?



You distinguish between essential services and discretionary services for a start. If the government wants two parents to go to work, childcare structures need to be in place. High costs dettering both parents from entering the workforce represents a market failure.




Firefly said:


> Again, I agree. Crazy stuff.


----------



## TheBigShort

Bill Gross, head of Janus Capital Investment



Criticizing Trumps policy to cut corporate tax because it will favour capital at the expense of labour.

"_Corporations are fighting structural headwinds, demographic ageing, technological displacement of jobs...*overleveraged balance sheets*. They focus on the bottom line instead of public welfare. Government must step in, not by reducing taxes which will only increase profits at the expense of labour. But by being the employer of last resort in hopefully a productive way"
_
What on earth could he mean by being the employer of last resort?
My guess is he is advocating fiscal stimulus (hopefully in a productive way) that will result in a transfer of wealth from capital to labour.


----------



## jjm

I am expecting Trump lower tax rate to hurt Ireland where a company have a plant in the USA making the same parts as in Ireland .They may pull some back to the USA then we will have some Fun.They did not see Trump winning how come they are so smart all of a sudden


----------



## Firefly

TheBigShort said:


> Only because you identified a situation where you agreed borrowing would be required. And in turn, I showed how such a stimulus could benefit private sector workers, even to the point that their wages would increase. I showed you this with regard to IT workers also.
> So its not rocket science.





TheBigShort said:


> If the government identified that we needed more nurses and doctors, the a fiscal stimulus could be used to the point that nurses and doctors wages started to increase in order to attract more of them into the system. Ditto, for any area of the public service.





TheBigShort said:


> Instead of restricting governments to 3% fiscal pact and allowing banks to load up with practically unlimited free to lend in the manner that they see best.



Firstly, thanks for answering the question. Up until now it wasn't clear..either you weren't answering the question, or I have been unable to decipher what you were providing. I think I have it now. If I am correct, you are basically saying that (1) you are in favour of wages increasing and (2) you are advocating increased government borrowing for a stimulus package in order to achieve these wage increases.

I would disagree with this as I think we are heading into an extremely dangerous time over the next 2-3 years. There is a Perfect Storm brewing. The nearest cloud is Brexit and the untold damage it will do. Next up is the ending of QE by the ECB. Once this ends, the State will need to borrow from the market. Our current 0% rates could easily jump back to 6%, meaning that any bonds expiring after next year will cost much more to finance. If we reversed the budget in Oct we would have balanced our books. Next year we would have had a surplus. When QE ends the markets would view us much better and the cost of this re-financing would be much lower.
Next up is Mr. Trump and his proposals to reduce corp tax in the US. This will at best halt in-ward investment into Ireland and at worst result in a flight of operations back to the US. Lastly, we have the rise of the far-right nutjobs in Europe. This will lead to further protectionism and all the nasty stuff that goes with it. Apologies if I am sounding dramatic on this, but I believe now is the time to buckle down and put on the rain gear rather than booking that foreign holiday.

As well as the above, I think the economy is improving and growing faster than anywhere in Europe. Yes, interest rates that are too low are helping, but the rest of Europe has the same "deal" from the ECB, why are we growing faster?




TheBigShort said:


> Another way to increase wages in the public sector is to reduce the numbers and expect same output from fewer workers, increasing productivity, contributing to growth in the economy. This will surely create an upward pressure on wages.



We constantly hear how public sector workers are over-burdened, so I don't think reducing numbers further would be sustainable.



TheBigShort said:


> By a left-wing government? Yes? Or no?
> As in the Irish people who elected left-wing governments?
> Left-wing governments, again?



This could be argued till the cows come home. You have the leader of the party that was in power all through this declaring himself a socialist. We had increases in public sector numbers & pay, increases in the OAP and the dole. That's all left wing politics. On the other hand you have the PDs with their pro-market policies and tax breaks for builders & developers. So I wouldn't see a left-wing government per se, but rather a government with both Left and Right policies.




TheBigShort said:


> I dont advocate wreckless spending and borrowing, that is what QE is effectively.



The government gets exceptionally bad value from the money it spends in some areas. Fiscal stimulus could produce equally bad results. Check out the Ballybrophy train thread for instance where each passenger could be chauffeur driven for less than the price of the train fare we subsidise.

http://www.askaboutmoney.com/threads/train-cost-tax-payer-€550-per-journey.201303/#post-1493908



TheBigShort said:


> It was a stupid comment from some air-head. I laughed. Reproduction is a human condition, not a financial stress test. By that reasoning large swathes of Africa would be extinct now. It was actually poor starving Irish families that reproduced greater numbers during the Famine more so than more affluent families.



That's true, however in large parts of Africa having a large family is a status symbol. It was as you said a stupid argument, however the number of kids does affect our pocket.



TheBigShort said:


> You distinguish between essential services and discretionary services for a start. If the government wants two parents to go to work, childcare structures need to be in place. High costs dettering both parents from entering the workforce represents a market failure.



That's a fair point and I knew it when I posted it. However, I think the agenda is not for government support, but to be brought under goverment provision, i.e. for those workers to become public servants.


----------



## jjm

firefly theBigShort pick a country Lets say Germany seeing they helped bail us out . Benchmark Ireland to  services to Germany services or any other country for that matter . Do we want and are we prepared to pay to have them. Are we prepared to unwind Everything stopping us from achieving our goals.Lets say pensions  public/private. child care .health service. Dole.Housing.


----------



## TheBigShort

Firefly said:


> I think I have it now



Great, we can on?



Firefly said:


> I would disagree with this as I think we are heading into an extremely dangerous time over the next 2-3 years.



Ive been in the workforce for 25yrs and outside 5 or 6 of those years dangerous headwinds in one form or another has always been the mantra. During recession, wages should be subdued to build recovery. During economic expansion wages should be restraint to aid recovery and growth. Always the same, restrain wages but allow unlimited profits.



Firefly said:


> The nearest cloud is Brexit



I have my views on why I believe Brexit wont happen here, certainly not as Farage, Johnson have painted it anyway

http://www.askaboutmoney.com/threads/good-time-to-buy-sterling.199676/

But assuming I am wrong, it is still not a cause to impede fiscal stimulus that will generate wage increases. Brexit is the by-product of the same wage restraint/credit expansion policy experienced here, across Europe and the US. 
In other words, we are looking at a global transfer of wealth from capital to labour in the developed world. That is why I post commentary and articles from US investors and billionaires. They are effectively saying the same thing. Economies need more wages and less capital reward.
That is why we have a fragmented Irish parliament, a divided US, Brexit, Le Pen, etc
That is why this site has topics such as the squeezed middle, cut the dole etc.
How we go about transferring wealth to the worjing population at large is another matter.
We can do QE, which is ok as a way to stop meltdown, but no good for sustainable development (think property, stock market , credit expansion bubbles).



Firefly said:


> Our current 0% rates could easily jump back to 6%, meaning that any bonds expiring after next year will cost much more to finance



They will jump back to 6% and higher if we turn off QE and curb government spending.



Firefly said:


> If we reversed the budget in Oct we would have balanced our books.



Our deficit is 1 to 2%. Our growth is 4% +. This is living within our means. If you borrow €2,000 + €100 interest and the value of what you produce increases by €3,000 then you are growing the economy.



Firefly said:


> Next up is Mr. Trump and his proposals to reduce corp tax in the US.



All remains to be seen. I am sceptical about this (or the dreaded consequences if it does occur)but assuming I am wrong, then trump will be a one-term president, and the US (and everywhere) will be in worse state than now. No rain jacket will protect us from the economic calamity.



Firefly said:


> This will at best halt in-ward investment into Ireland and at worst result in a flight of operations back to the US



Im sceptical about this, it may slow somewhat, but with TTIP in the bin for now, I dont expect much interference in FDI as a consequence of Trump policy.



Firefly said:


> Lastly, we have the rise of the far-right nutjobs in Europe.



A consequence of a wage restraint/ credit expansion policy.



Firefly said:


> I believe now is the time to buckle down and put on the rain gear rather than booking that foreign holiday.



If consumers dont spend, if governments dont spend, then corporations have no markets.



Firefly said:


> We constantly hear how public sector workers are over-burdened, so I don't think reducing numbers further would be sustainable.



Im not advocating it, just used to show how wages could rise in public sector as you requested. But lets not try go there.



Firefly said:


> We had increases in public sector numbers & pay



And reductions in numbers and pay cuts.



Firefly said:


> The government gets exceptionally bad value from the money it spends in some areas



Yes, but the private sector can also provide very bad value too. Take a look at the landscape and the empty apartment blocks etc. Aside from the financial disaster, it bordered on an environmental calamity.
There is no doubt when the private sector does something good, it is generally better at it than the public sector. The problem is, the private sector cannot provide essential services without profit. Take law & order for example. If it were privatised, the biggest growth industry would probably be prisons.
In all, as stated earlier, we live in one of the richest countries in the world. It is relatively safe and politically stable. 
For sure, train lines with empty carriages are a problem, but so are empty houses.


----------



## Firefly

TheBigShort said:


> Great, we can on?


Yip!



TheBigShort said:


> Ive been in the workforce for 25yrs and outside 5 or 6 of those years dangerous headwinds in one form or another has always been the mantra. During recession, wages should be subdued to build recovery. During economic expansion wages should be restraint to aid recovery and growth. Always the same, restrain wages but allow unlimited profits.



You might have heard these things, but they weren't acted upon. We had a boom until 2008 where the largesse of everything including wage increases needed to be reversed.



TheBigShort said:


> I have my views on why I believe Brexit wont happen here, certainly not as Farage, Johnson have painted it anyway



I have my doubts too to be honest. But if it does come to pass I expect a lot of volatilty..we may gain in some areas (financial sector job relocating here maybe)  but there could be major problems in other areas (Think of all the energy we import from the UK for example).



TheBigShort said:


> How we go about transferring wealth to the worjing population at large is another matter.



This is the crux of what I would like to know. The "How" bit. Lets say for argument's sake we embark on a fiscal stimulus package to build 6,000 homes for the homeless. Using the average house price of 315k, this would come in at 1.9bn. Let's say we build them near Dublin, Cork, Limerick and Galway. The unemployed electricians & block layers in those areas will see a direct benefit. They'll go from unemployment to being paid. What about the part-time deli worker in the Spar in Donegal town? How will he/she see an increase? We've already spent 1.9bn....Do we keep going? And once those houses are built, what then? Those electricians & block layers will be back looking for work. It's fine to say borrow for things, but this will have to be repaid down the line. 



TheBigShort said:


> They will jump back to 6% and higher if we turn off QE and curb government spending.



Perhaps, perhaps not, but if I was buying a government bonds and had a choice between a country balancing their books and a country running a deficit, I would be looking for a higher return from the latter.



TheBigShort said:


> Our deficit is 1 to 2%. Our growth is 4% +. This is living within our means. If you borrow €2,000 + €100 interest and the value of what you produce increases by €3,000 then you are growing the economy.


Basing our borrowing on our growth levels is not correct in my opinion. It works well until growth falls and we need to cut costs and go through all the pain we have done recently again. Borrowing should not be a target!



TheBigShort said:


> All remains to be seen. I am sceptical about this (or the dreaded consequences if it does occur)but assuming I am wrong, then trump will be a one-term president, and the US (and everywhere) will be in worse state than now. No rain jacket will protect us from the economic calamity.


I agree, except for the last bit. Of course if really bad things happen we will be affected, but doing so from a stable place would be better. See what happened to Greece when they ran into trouble? They had nothing in reserve and massive debts. I blame Charlie McCreevey for many things, but if we didn't have the pension reserve fund we would have been in serious trouble. Time to build this up again..




TheBigShort said:


> If consumers dont spend, if governments dont spend, then corporations have no markets.



Consumers are spending. The government spends a huge amount of money - billions. I'm not looking for a reduction is spending at all, just not an increase.




TheBigShort said:


> Yes, but the private sector can also provide very bad value too. Take a look at the landscape and the empty apartment blocks etc. Aside from the financial disaster, it bordered on an environmental calamity.


I agree and a lot of those companies are gone now.




TheBigShort said:


> There is no doubt when the private sector does something good, it is generally better at it than the public sector. The problem is, the private sector cannot provide essential services without profit. Take law & order for example. If it were privatised, the biggest growth industry would probably be prisons.



I agree 100%. If there is ever even the slighest sign that the police would be privatised, I'll be scrambling on a plane somewhere.[/QUOTE][/QUOTE]


----------



## TheBigShort

TheBigShort said:


> In other words, we are looking at a global transfer of wealth from capital to labour in the developed world.



http://m.independent.ie/business/irish/eu-power-grab-sees-creation-of-budget-ministry-35221841.html


----------



## Firefly

TheBigShort said:


> http://m.independent.ie/business/irish/eu-power-grab-sees-creation-of-budget-ministry-35221841.html



_Ireland is not one of the countries being asked to spend more, however.

Instead, the Government was told that spending increases and tax cuts fuelled by "volatile" tax revenues risk breaching EU budget rules this year and next._

Looks like we're spending enough already!

If we didn't have so many give-aways in the budget just gone and not as many demands for wage increases (not for any stimulus package, just plain and simple demands for higher wages (which you have agreed we should not borrow for)).


----------



## TheBigShort

Here is the opening post. The context was set in a global sense.  The concept of fiscal stimulus is taking hold across the developed world. 
It is time for wages to rise.




TheBigShort said:


> In the context of general economic theory, wage increases are inflationary. Central banks around the world are trying to stoke inflation. Their primary tool is QE which is failing. It is only creating greater divides between rich and poor.
> This is why property prices are rising in affluent areas of capital cities around the world, but elsewhere they are stagnant. This is why debt burdens are increasing not reducing as all money issued today is on the basis of a loan taken out rather than the value of productivity.
> The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.
> But it will also mean a massive transfer of capital to labour. Something that right wing free market worshipping monetarists cannot countenance right now.



_Ireland is not one of the countries being asked to spend more, however._

True, not yet anyway.


----------



## Firefly

TheBigShort said:


> It is time for wages to rise.



Not here it seems, sure haven't we the highest wages in Europe already! Maybe you're right, maybe higher wages are better and that's why we have the fastest growing economy in Europe!!


----------



## Firefly

Looks like wage increases are also being sought in Hungary.

_Hungary will cut its corporate income tax to the lowest in the European Union, reducing the levy by more than half in some cases, as prime minister Viktor Orban turns to budget steps to boost growth ahead of parliamentary elections.

“Lowering the corporate tax will boost growth, enable companies to cover the costs of much-needed wage raises and will also help investments,” said Peter Virovacz, an economist at ING Bank in Budapest. 

Mr Orban is making use of his increased fiscal wiggle room after he narrowed the budget gap to the smallest in 20 years in 2015._

http://www.irishtimes.com/business/...ate-below-ireland-s-to-lowest-in-eu-1.2872354

It's interesting that Hungary is lowering taxes to achieve the result whereas the idea being suggested here is to borrow...


----------



## Firefly

TheBigShort said:


> It is time for wages to rise.



But not here it seems!


----------



## TheBigShort

Firefly said:


> It's interesting that Hungary is lowering taxes to achieve the result whereas the idea being suggested here is to borrow



Yes, it goes back the 'how' it should be achieved. No doubt reducing corporate tax can induce an pressure on wages, but the benefit will predominantly felt in higher capital returns. This would defeat the purpose.
I would more agree with this sentiment from Bill Gross.

_"Corporations are fighting structural headwinds, demographic ageing, technological displacement of jobs...*overleveraged balance sheets*. They focus on the bottom line instead of public welfare. Government must step in, not by reducing taxes which will only increase profits at the expense of labour. But by being the employer of last resort in hopefully a productive way"_

Would you?


----------



## Firefly

TheBigShort said:


> Yes, it goes back the 'how' it should be achieved. No doubt reducing corporate tax can induce an pressure on wages, but the benefit will predominantly felt in higher capital returns. This would defeat the purpose.
> I would more agree with this sentiment from Bill Gross.
> 
> "Corporations are fighting structural headwinds, demographic ageing, technological displacement of jobs...overleveraged balance sheets. They focus on the bottom line instead of public welfare. Government must step in, not by reducing taxes which will only increase profits at the expense of labour. But by being the employer of last resort in hopefully a productive way"
> 
> Would you?



Seeing as you're so keen on infrastructure spending, it's interesting that you didn't mention his quote below in the same interview:

_"his policies of greater defense and infrastructure spending combined with lower corporate taxes to invigorate the private sector continue to favor capital versus labor, markets versus wages, and is a continuation of the status quo."_


As you have mentioned, this topic is about raising wages in the global context. In Ireland, after a particularly difficult number of years, we have arrived at the current state with already high levels of wages:


An unemployment rate below 10% and falling all the time
A competitive tax rate that both the EU wants to change and The Donald wants to emulate
The envy of the world regarding foreign direct investment - largely as a result of our tax rate
Almost balancing our books

Looks like we are pretty much there and perhaps this is why EU has not told us to spend more. Since 2008 we have been spending far more that we were taking in in taxes. Doesn't this represent the stimulus package you are after? Have we not completed it already?


----------



## TheBigShort

Firefly said:


> his policies of greater defense and infrastructure spending _combined_ with lower corporate taxes to invigorate the private sector continue to favor capital versus labor, markets versus wages, and is a continuation of the status quo."



I read that as 1) military defence spending as not being productive - in other words, the US will dispose of old military stock, typically by dropping it on some unfortunate country that is not on the same page.
2) 'combined with' being the critical part of the comment. As stated, reducing corporate taxes will increase wages to a point but the greatest benefit of the infrastructure spending will end up rewarding capital far in excess of labour. That is why he says "Governments must step in, *not *by reducing taxes which will only increase profits at the expense of labour."
The point being, infrastructure spending is good, but if you reduce taxes, the overwhelming benefit will go to profits instead of labour.
The sentiment in the article is to redress the imbalance between capital and labour, in favour of labour.
The sentiment of fiscal stimulus is taking hold in the developed world, would you agree? 
Perhaps not yet in Ireland, but we usually follow at some point.
The concept of fiscal stimulus in the articles I have listed is to reward labour over capital. Would you agree?


----------



## Firefly

TheBigShort said:


> I read that as 1) military defence spending as not being productive - in other words, the US will dispose of old military stock, typically by dropping it on some unfortunate country that is not on the same page.
> 2) 'combined with' being the critical part of the comment.



I read it differently. I read it that "military and infrastructure spending" as it stands, i.e. each one being separate. The comments are in reference to Trump who wants to beef up the military, engage on massive infrastructure spending and reduce corporation taxes. These 3 items are being referred to by Bill Gross.



TheBigShort said:


> The sentiment of fiscal stimulus is taking hold in the developed world, would you agree?


I agree it's taking hold.



TheBigShort said:


> Perhaps not yet in Ireland, but we usually follow at some point.



As per above, we have had fiscal stimulus in Ireland since 2008, probably one of the highest in any developed world ever. So much so that the EU has told us not to do any more. We're not following, we're leading!



TheBigShort said:


> The concept of fiscal stimulus in the articles I have listed is to reward labour over capital. Would you agree?


I do agree.


----------



## TheBigShort

Firefly said:


> I read it differently. I read it that "military and infrastructure spending" as it stands, i.e. each one being separate. The comments are in reference to Trump who wants to beef up the military, engage on massive infrastructure spending and reduce corporation taxes. These 3 items are being referred to by Bill Gross.



Yes, but then he clearly states that governments should step in, *not *to reduce taxes.
Doing so will result in any benefits of infrastructure spending predominantly to _c_apital over labour.


----------



## TheBigShort

Firefly said:


> I do agree.



Thank you.


----------



## Firefly

TheBigShort said:


> Thank you.



Not at all. I think some companies, such as Apple, have obscene amounts of money tied up in their balance sheets. I would love them to pay their workers more, especially in places like China where some workers in sub-contractors like in Foxconn would rather jump off buildings than carry on working. However, if you force all companies to pay more in wages, then so many companies would close and / or lay off workers, that the few who would benefit would be outnumbered by those who would lose out. There may be a conception that most or all businesses are making lots of money at the expense of their employees. It's not true at all. Many small businesses are barely breaking even, all you have to do is look at the empty windows in towns up and down the country. Forcing wage increases would lead to further closures and / or job losses.

I think perhaps a better way for employees to share the wealth of their employers would be to either own part of the company or receive a share of the profits...the better the company does, the better the employee does. It takes the pressure off wages and provides incentives to workers to deliver more. Employees have a stake in the business too and can object to things like excessive executive pay more easily. Again, impossible to enforce, but I know one company that shares a % of its profits to staff and it works very well - they have low staff turnover. The wages are so so but on a regular basis there's something extra in the pay packet.

I admit this is not available to most in the public sector as the purpose is not for the government to make a profit per se. However, if the government can run a surplus then maybe bonuses could be paid or something. I don't have any more ideas here though.

On a genuine note, I've re-read some of my posts and I hope I don't come across as anti-public sector, because I promise you I'm not. My wife works in the HSE and I have family members who are also employees of the State. I just don't want to increase our national debt any further because I genuinely think it's going to break us if we're not careful and I feel so bad for my kids who will probably have to emigrate. I'm not for a second blaming public sector workers for the state or level of our national debt by the way, but just when we are nearly breaking even, the unions are lining up again. We have a national debt of 180bn and a pension crisis that will make the bank bailout look like spare change. If I stand back and look at it coldly, I can't see how we will pull through it. Maybe that's why I started that Good News Thread!!


----------



## Firefly

Oh dear, both Purple and TheBigShort have liked the same post. I must be wrong somewhere!!!


----------



## Purple

TheBigShort said:


> Unfortunately, as a qualified mechanic, he is relatively low paid €14ph. With rent and childcare etc there is not much left over. He is a good lad, 27, would love to buy his own home but it is out of reach.



He must be a rubbish mechanic if he’s only getting €14 per hour and not getting any overtime or nixers.




TheBigShort said:


> I was talking about the setting up of a business, like a factory for instance. I borrow a million and then out of that I hire you to look after IT requirements. If the business crashes I go bankrupt and leave a tab for others to pick up. You can claim state redundancy. If the business works I keep lions share, do whatever to avoid paying taxes and keep your pay rise to a minimum.


 The vast majority of businesses like that make small profits and spend the vast majority of their income on wages.




TheBigShort said:


> By a left-wing government? Yes? Or no?


 It was very left wing.




TheBigShort said:


> Left-wing governments, again?


Again, it was very left wing.




TheBigShort said:


> A combination of taxes and cuts has been the austere policy for 6-7yrs


 We have continued to borrow money to fund day to day expenses. That’s hardly austerity.




TheBigShort said:


> Im not disputing that the economy is growing. Im disputing the manner in which it is growing. It is being propped up on unsound economic money printing policy designed to create, in Draghis words, "a wealth effect", so that we can start our borrowing spree again.


 Agreed.




TheBigShort said:


> What on earth could he mean by being the employer of last resort?
> 
> My guess is he is advocating fiscal stimulus (hopefully in a productive way) that will result in a transfer of wealth from capital to labour.


 The State being the employer of last resort, i.e. employing people for the sake of it. We did it here in the 70’s.




Firefly said:


> We constantly hear how public sector workers are over-burdened, so I don't think reducing numbers further would be sustainable.


 They are but much of it is to do with inefficient processes.




jjm2016 said:


> firefly theBigShort pick a country Lets say Germany seeing they helped bail us out . Benchmark Ireland to  services to Germany services or any other country for that matter . Do we want and are we prepared to pay to have them. Are we prepared to unwind Everything stopping us from achieving our goals.Lets say pensions  public/private. child care .health service. Dole.Housing.


 Take Sweden or New Zealand. Both are much better run. Both have better public services. Both have much fairer income tax systems and a generally broader tax base.




TheBigShort said:


> Yes, it goes back the 'how' it should be achieved. No doubt reducing corporate tax can induce an pressure on wages, but the benefit will predominantly felt in higher capital returns. This would defeat the purpose.
> 
> I would more agree with this sentiment from Bill Gross.


 I agree that there has been a general move from a return on labour to a return on capital. It’s happened since the 80’s and early 90’s, mainly since the opening up of South East Asia and a huge increase on capital due to their very low wage costs. On a global level, as per your original post, this has resulted in massive wage increases, just not in the part of the globe where wages were already high.


So, in answer to your first post yes; it is time for wages to increase and there have been increasing well ahead of inflation for the vast majority of those in the labour force (or “workers” as you like to call them) in the world. Just not for those who are already very highly paid. Everyone in Ireland, even those who have no job, are very highly paid in the global context.


----------



## TheBigShort

Purple said:


> He must be a rubbish mechanic if he’s only getting €14 per hour and not getting any overtime or nixers.



That is a really dumb ignorant comment I have to say. You dont know anything about the man.
You don't know for instance that he lives in small provincial town from a farming background where he also works on the family farm. You don't know that he is a committed footballer, hurler and cyclist (his accident was a nasty fall in mountain bike event) and gives his time to volunteer in his community in various ways.
He is committed to his family and his community. If that means foregoing 'the market rate' for his skills so be it. Life is not just about the climb up the greasy pole to higher incomes and serious illness cover, is it?


----------



## Purple

TheBigShort said:


> That is a really dumb ignorant comment I have to say. You dont know anything about the man.
> You don't know for instance that he lives in small provincial town from a farming background where he also works on the family farm. You don't know that he is a committed footballer, hurler and cyclist (his accident was a nasty fall in mountain bike event) and gives his time to volunteer in his community in various ways.
> He is committed to his family and his community. If that means foregoing 'the market rate' for his skills so be it. Life is not just about the climb up the greasy pole to higher incomes and serious illness cover, is it?


That's a bit harsh!
If someone makes choices which limit their ability to earn a higher income that's their own business. They may well enjoy a better quality of life and be happier. Money is not the be all and end all and it certainly doesn't bring happiness but at the same time you can't complain about a low income or the limitations that brings (for example not being able to afford income protection insurance) if you choose to do things which limit your income.


----------



## TheBigShort

Purple said:


> That's a bit harsh!
> If someone makes choices which limit their ability to earn a higher income that's their own business.



Doesn't mean they are rubbish at their job though, does it?


----------



## Purple

TheBigShort said:


> Doesn't mean they are rubbish at their job though, does it?


Still a bit harsh though.


----------



## TheBigShort

Purple said:


> Still a bit harsh though.



Yes, assuming somebody is rubbish at their job based solely on their income level is indeed very harsh.


----------



## Firefly

TheBigShort said:


> You don't know for instance that he lives in small provincial town from a farming background where he also works on the family farm. You don't know that he is a committed footballer, hurler and cyclist (his accident was a nasty fall in mountain bike event) and gives his time to volunteer in his community in various ways.
> He is committed to his family and his community. If that means foregoing 'the market rate' for his skills so be it. Life is not just about the climb up the greasy pole to higher incomes and serious illness cover, is it?




People are free to choose how to spend their time and I'm glad we live in such a society. The mechanic in question is obviously committed to his community and that's great. Plenty other people are too though who also have a higher income. 14 euro an hour for a mechanic is quite low I would have thought. Given his farming background and rural location, perhaps he could specialise in farming equipment or something. He may well choose to work the same hours as he currently does but his rate could be higher.


----------



## PGF2016

TheBigShort said:


> Unfortunately, as a qualified mechanic, he is relatively low paid €14ph. With rent and childcare etc there is not much left over. He is a good lad, 27, would love to buy his own home but it is out of reach.





TheBigShort said:


> You don't know for instance that he lives in small provincial town from a farming background where he also works on the family farm. You don't know that he is a committed footballer, hurler and cyclist (his accident was a nasty fall in mountain bike event) and gives his time to volunteer in his community in various ways.
> He is committed to his family and his community. If that means foregoing 'the market rate' for his skills so be it. Life is not just about the climb up the greasy pole to higher incomes and serious illness cover, is it?


This will probably be considered harsh also...

Childcare costs and a home is out of reach? Maybe he should have prioritized a house before having the child if that's what he wanted.

No insurance, a child to pay for and he's out mountain biking and breaks his leg? Maybe he should stick to something a little less dangerous given his precarious financial situation.


----------



## Purple

TheBigShort said:


> Yes, assuming somebody is rubbish at their job based solely on their income level is indeed very harsh.


Giving a small part of the story and then attacking someone who draws conclusions based on that portion which you gave is indeed very harsh. If you are posting a hard luck story then give all the facts before you get all precious about it.
In normal circumstances if a mechanic is only earning €28'000 a year then he or she isn't much of a mechanic. If there are other reasons why they are on such a low income then include those reasons when bringing it up.


----------



## Purple

Firefly said:


> People are free to choose how to spend their time and I'm glad we live in such a society. The mechanic in question is obviously committed to his community and that's great. Plenty other people are too though who also have a higher income. 14 euro an hour for a mechanic is quite low I would have thought. Given his farming background and rural location, perhaps he could specialise in farming equipment or something. He may well choose to work the same hours as he currently does but his rate could be higher.


That must be a really dumb ignorant comment too.


----------



## Purple

PGF2016 said:


> This will probably be considered harsh also...
> 
> Childcare costs and a home is out of reach? Maybe he should have prioritized a house before having the child if that's what he wanted.
> 
> No insurance, a child to pay for and he's out mountain biking and breaks his leg? Maybe he should stick to something a little less dangerous given his precarious financial situation.


It's not just a bit harsh, it's a really dumb ignorant comment.


----------



## TheBigShort

Purple said:


> Giving a small part of the story and then attacking someone who draws conclusions based on that portion which you gave is indeed very harsh



Thats exactly what you did. You took a small element of a story and automatically attacked the persons ability and skills based solely on their income level. Its not a first, you are consistent in attacking people on low incomes, that they should upskill, or they get the 'market rate' they deserve.
Funnily, when talking about your own 45% pay cut, it has nothing to do with you being rubbish at your job, or is it?


----------



## TheBigShort

Purple said:


> Giving a small part of the story and then attacking someone who draws conclusions based on that portion which you gave is indeed very harsh. If you are posting a hard luck story then give all the facts before you get all precious about it.
> In normal circumstances if a mechanic is only earning €28'000 a year then he or she isn't much of a mechanic. If there are other reasons why they are on such a low income then include those reasons when bringing it up.



I assumed a €14ph rate. Could be a bit more or a bit less. He is 27yrs old, lives in a provincal town (Athlone to be precise), how much do you think a qualified mechanic, working for a brand franchise should command?


----------



## Purple

TheBigShort said:


> Thats exactly what you did. You took a small element of a story and automatically attacked the persons ability and skills based solely on their income level.


 I took all of the information you had given and drew a conclusion. You then moved the goalposts. 


TheBigShort said:


> Its not a first, you are consistent in attacking people on low incomes, that they should upskill, or they get the 'market rate' they deserve.


 That's not attacking them, it's just suggesting they do what other people do who want to earn more. 



TheBigShort said:


> Funnily, when talking about your own 45% pay cut, it has nothing to do with you being rubbish at your job, or is it?


 Yes, if I was better at my job it may not have happened. That's the real world for you. I can't go on strike and picket reality.


----------



## Firefly

PGF2016 said:


> Maybe he should have prioritized a house before having the child if that's what he wanted.



I think this is harsh to be fair. Different if he had 8 kids maybe, but people have kids either planned or unplanned all the time.


----------



## Purple

TheBigShort said:


> I assumed a €14ph rate. Could be a bit more or a bit less. He is 27yrs old, lives in a provincal town (Athlone to be precise), how much do you think a qualified mechanic, working for a brand franchise should command?


Many mechanics service and work on cars in the evening and/or weekends. 
My friend is an electrician. He makes more doing nixers than he gets from his day job. Yes, he pays tax on his nixers. A mechanic should be in the same bracket. If he chooses not to then that's fine but don't play the poor mouth.


----------



## TheBigShort

Purple said:


> I took all of the information you had given and drew a conclusion



Yes, a dumb and ignorant conclusion.



Purple said:


> That's not attacking them, it's just suggesting they do what other people do who want to earn more.



Ignorance to fore again. Dont you think most people already know that? Its the failure to give due regard to people's personal circumstances, background, education, lifestyle, family wealth (if any), and your fawning to 'the market', that is dumb.



Purple said:


> I can't go on strike and picket reality.



You could, if you really wanted to, if you believed you were being screwed, you absolutely could.
But obviously that is not the case, your market value has crashed.


----------



## PGF2016

Firefly said:


> I think this is harsh to be fair. Different if he had 8 kids maybe, but people have kids either planned or unplanned all the time.


Yeah, I agree one unplanned event can happen... but to then to injure yourself doing a dangerous activity when you have responsibilities is a bit much.


----------



## TheBigShort

Purple said:


> Many mechanics service and work on cars in the evening and/or weekends.
> My friend is an electrician. He makes more doing nixers than he gets from his day job. Yes, he pays tax on his nixers. A mechanic should be in the same bracket. If he chooses not to then that's fine but don't play the poor mouth.



Yes, because mechanics lives have one sole purpose - to work evenings and weekends, on top of 9-6pm Mon-Fri.
Unfortunately, farming, and healthy living (such as his personal relationship with someone of the opposite sex) keep interfering.
In any case, who is putting on the poor mouth? His circumstances arose in this instance with regard to 'sickies' being taken. As his employer wasn't paying him, I assume his absence from work is not calculated as a sick days? Unlike public service, where pay is afforded by the employer and as such, sick days in the public service will always be calculated as a higher amount.


----------



## TheBigShort

PGF2016 said:


> Yeah, I agree one unplanned event can happen... but to then to injure yourself doing a dangerous activity when you have responsibilities is a bit much.



Im sorry, but he could have injured himself playing hurling or football. Or even at work. Should we stop all activities in which people could get hurt? 
To be honest, I dont know if he had serious illness cover or not. I just assumed, given his circumstances that he had not.
The point was made about 'sickies'. I was just pointing out that as his employer was not paying him for his absence, then his employer could not calculate his absence as a cost lost.


----------



## Purple

TheBigShort said:


> Yes, because mechanics lives have one sole purpose - to work evenings and weekends, on top of 9-6pm Mon-Fri.


 I disagree. People should have a work-life balance so that they can strive to be happy but each to their own.



TheBigShort said:


> Unfortunately, farming, and healthy living (such as his personal relationship with someone of the opposite sex) keep interfering.


 So he is a farmer as well as a mechanic. There’s his additional income.




TheBigShort said:


> In any case, who is putting on the poor mouth? His circumstances arose in this instance with regard to 'sickies' being taken. As his employer wasn't paying him, I assume his absence from work is not calculated as a sick days? Unlike public service, where pay is afforded by the employer and as such, sick days in the public service will always be calculated as a higher amount.



He wasn’t, you were.


----------



## Purple

Purple said:


> I agree that there has been a general move from a return on labour to a return on capital. It’s happened since the 80’s and early 90’s, mainly since the opening up of South East Asia and a huge increase on capital due to their very low wage costs. On a global level, as per your original post, this has resulted in massive wage increases, just not in the part of the globe where wages were already high.
> 
> 
> So, in answer to your first post yes; it is time for wages to increase and there have been increasing well ahead of inflation for the vast majority of those in the labour force (or “workers” as you like to call them) in the world. Just not for those who are already very highly paid. Everyone in Ireland, even those who have no job, are very highly paid in the global context.



BS, any chance you can reply to this and leave the poor farmer mechanic to his low income and adventure sports?


----------



## PGF2016

TheBigShort said:


> Im sorry, but he could have injured himself playing hurling or football. Or even at work. Should we stop all activities in which people could get hurt?


Was it Rio Ferdinand that hurt his knee reaching for the TV remote? All activities can't be stopped. Something as dangerous as mountain biking is a bit much. Where is the line drawn? I don't know. 

Also, if he injured himself at work I assume he'd be covered. 

The main point in my comments is that we shouldn't be setting ourselves up for financial failure.


----------



## Firefly

TheBigShort said:


> His circumstances arose in this instance with regard to 'sickies' being taken.



He injured himself in a biking accident and just like the other examples you gave earlier, these are not "sickies". We all know what "sickies" are...people not bothering to come to work and feigning sickness.


----------



## TheBigShort

Purple said:


> So he is a farmer as well as a mechanic. There’s his additional income.



A small family farm, he helps his father out. He may inherit it one day, or partof, but  I don't know if he receives any income from it.



Purple said:


> He wasn’t, you were.



Where did I put on the poor mouth? Simply presenting a set of circumstances and realities is not putting on the poor mouth.


----------



## Purple

TheBigShort said:


> Yes, a dumb and ignorant conclusion.


 That's a bit harsh.



TheBigShort said:


> Ignorance to fore again. Dont you think most people already know that? Its the failure to give due regard to people's personal circumstances, background, education, lifestyle, family wealth (if any), and your fawning to 'the market', that is dumb.


People's personal circumstances have no bearing on what people should be paid.



TheBigShort said:


> You could, if you really wanted to, if you believed you were being screwed, you absolutely could.


 What, picket reality? Do you also agree with tilting at windmills?


TheBigShort said:


> But obviously that is not the case, your market value has crashed.


 Yep. As the market collapsed so did my value.


----------



## Firefly

Purple said:


> Yep. As the market collapsed so did my value.



I've noticed it for some time, you're not the man you were


----------



## Purple

Firefly said:


> I've noticed it for some time, you're not the man you were


You better believe it!


----------



## TheBigShort

Firefly said:


> He injured himself in a biking accident and just like the other examples you gave earlier, these are not "sickies". We all know what "sickies" are...people not bothering to come to work and feigning sickness.



Fair enough. But the point im making is that as public servants receive pay while out sick (genuine or not) and as such total sick days per employee will be far greater than private sector where employers may not pay for such absences (genuine or not).
I recall listening to a Newstalk item, Chris Donoghue with three guests discussing a newspaper headline about sick leave in the public service. Outraged they were. Until a listener text a question if any of the panel ever took a 'sickie'. All of a sudden, the tone of the discussion changed from serious indignation, to high humour as each panelist coyed away from giving a straight no answer. 
'Sickies' are a disgrace in the public sector, but nudge-nudge, wink-wink, in the private sector.


----------



## PGF2016

TheBigShort said:


> Fair enough. But the point im making is that as public servants receive pay while out sick (genuine or not) and as such total sick days per employee will be far greater than private sector where employers may not pay for such absences (genuine or not).
> I recall listening to a Newstalk item, Chris Donoghue with three guests discussing a newspaper headline about sick leave in the public service. Outraged they were. Until a listener text a question if any of the panel ever took a 'sickie'. All of a sudden, the tone of the discussion changed from serious indignation, to high humour as each panelist coyed away from giving a straight no answer.
> 'Sickies' are a disgrace in the public sector, but nudge-nudge, wink-wink, in the private sector.



Yes but the public sector sick day rate is twice the private sector (No source. Feel free to Google). It's not an issue in any private sector company I've worked in. It's ridiculous in the public sector.


----------



## TheBigShort

Purple said:


> People's personal circumstances have no bearing on what people should be paid.



How much should a qualified mechanic (with roughly seven yrs exp and excellent work ethos) command per hour in a provincial town like Athlone, working for an internationally established branded franchise?




Purple said:


> Yep. As the market collapsed so did my value.



Yes, I figured that. Nothing to do with you being rubbish at your job afterall. Im sure you are good at it.


----------



## Purple

TheBigShort said:


> How much should a qualified mechanic (with roughly seven yrs exp and excellent work ethos) command per hour in a provincial town like Athlone, working for an internationally established branded franchise?


 He has skills which allow him to earn more if he chooses to. That's the point I'm making. If he chooses to work on his family farm, be involved in the community, spend more time with his kids etc that's fine, he may well have a better and happier life doing do
so, but he has the option of making more money and chooses not to do so.





TheBigShort said:


> Yes, I figured that. Nothing to do with you being rubbish at your job afterall. Im sure you are good at it.


 Thanks. My skills and ability are worth what the market decides they are worth. I have the choice of trying something different or trying to help improve the trading position of my company. They are my choices. That's reality and there's no point in pretending otherwise. I can't hold a gun to the head of my fellow citizens and demand they pay me more.


----------



## Purple

Purple said:


> I agree that there has been a general move from a return on labour to a return on capital. It’s happened since the 80’s and early 90’s, mainly since the opening up of South East Asia and a huge increase on capital due to their very low wage costs. On a global level, as per your original post, this has resulted in massive wage increases, just not in the part of the globe where wages were already high.
> 
> 
> So, in answer to your first post yes; it is time for wages to increase and there have been increasing well ahead of inflation for the vast majority of those in the labour force (or “workers” as you like to call them) in the world. Just not for those who are already very highly paid. Everyone in Ireland, even those who have no job, are very highly paid in the global context.


BS, any chance you can reply to this?


----------



## TheBigShort

Purple said:


> He has skills which allow him to earn more if he chooses to.



Not in Athlone, where his family ties are, which are very important factors in most peoples lives.



Purple said:


> but he has the option of making more money





Purple said:


> or trying to help improve the trading position of my company



And if he chooses, like you, to help improve the trading position of his company, what then? How much can he expect to command in a hourly rate?


----------



## Purple

TheBigShort said:


> And if he chooses, like you, to help improve the trading position of his company, what then?


Then he has to stick with it.


----------



## TheBigShort

Purple said:


> Then he has to stick with it.



Obviously, but I sense we are far removed now from the notion that a mechanic must be rubbish at their job just because of a €14ph rate? 
In fact, if we are to accept that he is good at his job (same as you), but that €14ph is low income for a mechanic, then perhaps it is time for a rise in his wages.


----------



## TheBigShort

Purple said:


> I agree that there has been a general move from a return on labour to a return on capital. It’s happened since the 80’s and early 90’s, mainly since the opening up of South East Asia and a huge increase on capital due to their very low wage costs. On a global level, as per your original post, this has resulted in massive wage increases, just not in the part of the globe where wages were already high.
> 
> 
> So, in answer to your first post yes; it is time for wages to increase and there have been increasing well ahead of inflation for the vast majority of those in the labour force (or “workers” as you like to call them) in the world. Just not for those who are already very highly paid. Everyone in Ireland, even those who have no job, are very highly paid in the global context



I agree that incomes have risen globally, which is a good thing, but relative to capital gains, it has been diminutive.
I read a stat recently that if you earn $28,000 pa or equivalent, that you are in the top 1% of income earners globally. I don't know how accurate that stat is, but I would hazard a guess it is not too far off the mark.
The problem arising, which is the thrust of this topic, is the cost of living in the top 1% of wealthiest economies - $28,000 or equivalent does not cut it. That does not mean people cannot feed themselves, but it may mean, hard-working people, like mechanics in Athlone, may not be able to afford a home of their own, or sustain a future for their families based on normal expectations of living in a wealthy economy. This will bring resentment, fatigue, disillusionment, political unrest etc. All of this is clearly evident, to me anyway, in developed economies of US and Europe.
The best way, in my opinion, to quell unrest is make living affordable again for such workers. Not by cutting taxes, but increasing wages.
Increasing incomes will also bring thousands of workers into the tax net, contributing their share, and reducing the (perceived) % burden of tax on high income earners, as has been propagated on this site.


----------



## Purple

TheBigShort said:


> In fact, if we are to accept that he is good at his job (same as you), but that €14ph is low income for a mechanic, then perhaps it is time for a rise in his wages.


 If that's the market rate then that's what it's worth.


----------



## Firefly

TheBigShort said:


> As his employer wasn't paying him, I assume his absence from work is not calculated as a sick days? Unlike public service, where pay is afforded by the employer and as such, sick days in the public service will always be calculated as a higher amount.





TheBigShort said:


> Fair enough. But the point im making is that as public servants receive pay while out sick (genuine or not) and as such total sick days per employee will be far greater than private sector where employers may not pay for such absences (genuine or not).



You seem to take issue when people compare the private sector to the public sector, but you seem happy to do so yourself when it suits. Nobody is comparing levels of sick-leave between the sectors, so why bring it up? In fact nobody is even discussing levels of sick leave at all. The topic of "pulling a sickie" was raised by me. "To take a day off from work feigning illhealth" https://en.wiktionary.org/wiki/pull_a_sickie#English 

In any case, any of the companies I have worked for had pretty much the same policy..sick leave is paid for upto a point (usually 6 months upon medical certification).  If someone is out for more than 2 days they are required to produce a medical cert. If it becomes a regular occurence they may be asked to be assessed by the company doctor and if it's deemed they are taking the proverbial, HR may get involved. 




TheBigShort said:


> 'Sickies' are a disgrace in the public sector, but nudge-nudge, wink-wink, in the private sector.



Sickies are a disgrace regardless of the sector. Anywhere I've worked it's never been treated as wink-wink, certainly not by management.



TheBigShort said:


> As his employer wasn't paying him, I assume his absence from work is not calculated as a sick days?



I am self-employed. If I am out of work for any reason I'm not paid. However if I pull a sickie, it's still a sickie. It's unplanned and could be letting someone or a project down.


----------



## Purple

TheBigShort said:


> I read a stat recently that if you earn $28,000 pa or equivalent, that you are in the top 1% of income earners globally. I don't know how accurate that stat is, but I would hazard a guess it is not too far off the mark.
> The problem arising, which is the thrust of this topic, is the cost of living in the top 1% of wealthiest economies - $28,000 or equivalent does not cut it. That does not mean people cannot feed themselves, but it may mean, hard-working people, like mechanics in Athlone, may not be able to afford a home of their own, or sustain a future for their families based on normal expectations of living in a wealthy economy. This will bring resentment, fatigue, disillusionment, political unrest etc. All of this is clearly evident, to me anyway, in developed economies of US and Europe.


$28,000 sounds about right to me. Should that income be increased before the income of people on $500 a year?


TheBigShort said:


> The best way, in my opinion, to quell unrest is make living affordable again for such workers. Not by cutting taxes, but increasing wages.


 What if increasing wages just increases the cost of living? The only way to increase real wealth is to increase productivity. Even if we find a way of reversing the trend from capital retaining value to labour retaining value (badly phrased but I hope you know what I mean) we still face the prospect of increases in income being eaten up by increases in living costs.
I want to see everyone better off. I just don't think increasing pay levels for everyone as the solution. That's particularly the case for those of us at the top of the global income graph.


----------



## PGF2016

TheBigShort said:


> $28,000 or equivalent does not cut it. That does not mean people cannot feed themselves, but it may mean, hard-working people, like mechanics in Athlone, may not be able to afford a home of their own



28k and can't afford a home? Add in a partner earning 20k and the couple could borrow ~150k. There are plenty of houses around Athlone for less than that. Please tell me how a person on those wages can't afford a home. 



TheBigShort said:


> or sustain a future for their families based on normal expectations of living in a wealthy economy


Expectations of living in a wealthy economy? Expect nothing. Work hard and earn enough to sustain the standard of living you desire.


----------



## Firefly

PGF2016 said:


> Expectations of living in a wealthy economy? Expect nothing. Work hard and earn enough to sustain the standard of living you desire.



There are enough of us here who think like that, so bugger off and start your own thread


----------



## Leo

PGF2016 said:


> Something as dangerous as mountain biking is a bit much. Where is the line drawn? I don't know.



Mountain biking isn't all that dangerous. Injuries that affect ability to work even temporarily are very rare.


----------



## TheBigShort

PGF2016 said:


> 28k and can't afford a home? Add in a partner earning 20k and the couple could borrow ~150k. There are plenty of houses around Athlone for less than that. Please tell me how a person on those wages can't afford a home.



I think she earns roughly the same as him. 
For sure there are plenty of properties for sale for which they could afford. But there is the consideration of their income being used up in rent and childcare. I believe there are moves afoot so that a history of rental payments will now be considered for approval for mortgages, a good thing I think, do you? 
There is also the consideration of finding a suitable property, or desired property. Its not a snooty thing, I think it is reasonable to find a home that is worth the asking price dont you? Its not like buying a bottle of milk. Most people will only carry out this transaction once or twice in a lifetime, so best to make sure you will be happy there long-term.
The way you put it is that there is a 2 bed apt for €99,000, buy that! Any consideration allowed for a bigger family one day? The condition of the property relative to the price? The location, local amenities, neighbours, taste, management fees, property tax, refurbishing and repairs?


----------



## PGF2016

TheBigShort said:


> I think she earns roughly the same as him.
> For sure there are plenty of properties for sale for which they could afford. But there is the consideration of their income being used up in rent and childcare. I believe there are moves afoot so that a history of rental payments will now be considered for approval for mortgages, a good thing I think, do you?
> There is also the consideration of finding a suitable property, or desired property. Its not a snooty thing, I think it is reasonable to find a home that is worth the asking price dont you? Its not like buying a bottle of milk. Most people will only carry out this transaction once or twice in a lifetime, so best to make sure you will be happy there long-term.
> The way you put it is that there is a 2 bed apt for €99,000, buy that! Any consideration allowed for a bigger family one day? The condition of the property relative to the price? The location, local amenities, neighbours, taste, management fees, property tax, refurbishing and repairs?



Yes, the history of rental payments being considered is good. Stupid that it wasn't previously. 

You've moved the goalposts from not being able to afford a home to not finding a property to match their desires. 



TheBigShort said:


> The way you put it is that there is a 2 bed apt for €99,000, buy that!



I didn't say that. 



TheBigShort said:


> Any consideration allowed for a bigger family one day? The condition of the property relative to the price? The location, local amenities, neighbours, taste, management fees, property tax, refurbishing and repairs?



I'd like 5 kids. I'll need a 6 bed house. I desire a detached house with good neighbours and a nice playground close by. I'd love a raise in wages to cover this. Is it time for wages increases? Yes, definitely. 

Sarcasm aside... if you want bigger and better you should then create a situation that allows you to afford bigger and better. There should be no expectation or entitlement to what you want by default.


----------



## TheBigShort

Purple said:


> $28,000 sounds about right to me. Should that income be increased before the income of people on $500 a year?



Its not about increasing average incomes, which include the incomes of the wealthiest and poorest in our societies. You are starting to miss the point again by not factoring in the cost of living.
Somebody who earns $5,000 in an economy that costs on average $500 a year to live in will probably be relatively happy. Ditto someone on $280,000 in an economy that costs $28,000 to live in.
Take a look at Brendans revenue chart showing the income bands and the level of income earners below incomes of €30,000. Many of whom rely on welfare benefits to supplement their incomes.
The richest economies in the world are seeing increasing numbers of population struggling to cope. This is causing political tensions. Political tensions are a recipe for conflict. Conflict destroys societies. And if the wealthiest societies destroy themselves, the poorest will (unlikely) fare much better.



Purple said:


> What if increasing wages just increases the cost of living?



Mute point, relative to the subject matter. Im talking about increasing the standard of living of the population at large, rather than the current winner takes all (or disproportionately more) approach.
The best way, in my opinion, is through wage increases. Yes, we are talking about an inflationary effect here, the cost living will go up, but the cost of (old) debt will decrease. I am talking about an environment where people will save capital (for future investment, for real productivity growth) rather than borrow it into existence through new debt.


----------



## Purple

Ok, so you are really talking about flattening our income distribution, not wage increases. Is that the case? 
You see wage increases as the best way of achieving this but they are not the end goal, equal or more equal income distribution is the ultimate aim. Yes?


----------



## TheBigShort

PGF2016 said:


> You've moved the goalposts from not being able to afford a home to not finding a property to match their desires.



My bad, when I said that they couldn't afford a home I was of course talking about the banks refusing to approve a mortgage. Admittedly, this is about events early in the year, things may have changed since then, I haven't heard.



PGF2016 said:


> if you want bigger and better you should then create a situation that allows you to afford bigger and better. There should be no expectation or entitlement to what you want by default



But who said anything about entitlement? They are working to create a situation that allows them to afford what they want im sure? Who said they werent? 
Its not easy, as im sure you are aware, but they do work hard, and are smart people. Im sure they will get there in the end.
They are only 27, whats the average age of owning your first home these days, 45?


----------



## PGF2016

TheBigShort said:


> The richest economies in the world are seeing increasing numbers of population struggling to cope.



Why are they struggling to cope though? You believe it's because wages aren't high enough. I believe it's because they consume more than they can afford to. The earnings can't cover their expectations. 

Your mechanic friend from Athlone is struggling financially, right? He can't afford a house of his own. A person from a less rich economy would love to have his lifestyle. Decent job and enough time off to play hurling, football and go mountain biking. In the far East they'll work 7 days a week without having a living standard near the mechanics.


----------



## TheBigShort

Purple said:


> You see wage increases as the best way of achieving this but they are not the end goal, equal or more equal income distribution is the ultimate aim. Yes?



Yes, my bad about the topic title, somewhat misleading.


----------



## PGF2016

TheBigShort said:


> They are only 27, whats the average age of owning your first home these days, 45?


The average age is higher than previous generations due to behaviour. My parents generation didn't go on foreign holidays, eat out, have 2 cars etc. If the current generation saved like previous generations there's nothing stopping them getting houses earlier.


----------



## Firefly

TheBigShort said:


> I believe there are moves afoot so that a history of rental payments will now be considered for approval for mortgages, a good thing I think, do you?



I think it's a good idea. It shows a capacity to pay and just as important that the person has paid. 



TheBigShort said:


> Most people will only carry out this transaction once or twice in a lifetime, so best to make sure you will be happy there long-term.
> The way you put it is that there is a 2 bed apt for €99,000, buy that! Any consideration allowed for a bigger family one day? The condition of the property relative to the price? The location, local amenities, neighbours, taste, management fees, property tax, refurbishing and repairs?



I wish more people did this, myself included! I would bet that many people spend more time scanning supermarket shelves comparing the prices of tins of beans than than the time when choosing a new car.


----------



## Firefly

TheBigShort said:


> Yes, my bad about the topic title, somewhat misleading.



I've just nearly soaked myself with a nice cup of tea I am enjoying! 22 pages and 438 posts later!


----------



## Purple

PGF2016 said:


> The average age is higher than previous generations due to behaviour. My parents generation didn't go on foreign holidays, eat out, have 2 cars etc. If the current generation saved like previous generations there's nothing stopping them getting houses earlier.


People are living longer so wealth is not being transferred as early and housing stock is not being released as early as previously. Obviously there's not much we can do about that but it's a major cause.


----------



## Purple

TheBigShort said:


> Yes, my bad about the topic title, somewhat misleading.


Right, let's start again.


----------



## Firefly

TheBigShort said:


> The best way, in my opinion, is through wage increases. Yes, we are talking about an inflationary effect here, the cost living will go up, but the cost of (old) debt will decrease.


So wage raises will be offset by increases in prices so no gain there. Old debt does get cheaper I agree, but those who have saved rather than borrowed are penalised. Is this fair?



TheBigShort said:


> I am talking about an environment where people will save capital (for future investment, for real productivity growth) rather than borrow it into existence through new debt.


Again, why would people save money when inflation will penalise them for doing so?


----------



## TheBigShort

PGF2016 said:


> I believe it's because they consume more than they can afford to. The earnings can't cover their expectations.



That is a fair point and exactly what im talking about. The system we have is built on wage restraint and credit expansion. It has benefits but like all economic models, has its limitations. I believe we have reached, or very close to reaching, the limits of this model to such an extent that civil unrest in developed countries is starting to simmer. This is reflected in political divergences being witnessed.



PGF2016 said:


> A person from a less rich economy would love to have his lifestyle. Decent job and enough time off to play hurling, football and go mountain biking. In the far East they'll work 7 days a week without having a living standard near the mechanics.



He doesn't get time off for football and hurling. That is his own time, his employer hasn't bought that time. If he tried, it would cost him. 
Thats why we develop Labour laws, permitting rest breaks, days off with pay etc. In the main western societies flourished relative to the rest of the world. Perhaps trade agreements with countries that hold the same labour standards would benefit everyone, rather than the race to the bottom.


----------



## PGF2016

Purple said:


> People are living longer so wealth is not being transferred as early and housing stock is not being released as early as previously. Obviously there's not much we can do about that but it's a major cause.



I can assure you that my parents didn't have any wealth transferred to them.  

I'm sure the housing stock not being released has some affect but I think behaviour has a bigger affect.


----------



## Firefly

TheBigShort said:


> The system we have is built on wage restraint and credit expansion.


I get the credit expansion part, but can you provide a reference for the wage restraint part? I'm not interested in something that shows what the wage rates are, but that we have a system built on wage restraint.



TheBigShort said:


> Thats why we develop Labour laws, permitting rest breaks, days off with pay etc. In the main western societies flourished relative to the rest of the world.


I have a book on my bookcase called Civilization that I am about to read ("Purple, I'll post what I think) and he identifies the 6 areas that have contributed to the West's success being: competition, science, the rule of law, consumerism, modern medicine, and the work ethic. You could argue that labour laws fall under the "rule of law", however I believe he is talking about law & order in the general sense (I'll confirm when I get to that chapter). So, if you could provide something to back up your assertion that would be welcomed.


----------



## TheBigShort

Firefly said:


> So wage raises will be offset by increases in prices so no gain there. Old debt does get cheaper I agree, but those who have saved rather than borrowed are penalised. Is this fair?



Interest rates will rise.
Currently on a major Irish bank, they are offering car loans up to €30,000 at APR 8.95%.
Savings account for regular savers, at best you can get 2%
House prices in Dublin, according to Dan O'Brien in the Indo, have risen 65% since 2012.
incomes have risen 3-4,% in the same period.
It appears to me, that the debt fuelled credit expansion is still at work. Not to the same extent, because large swathes of the population over still-over indebted. This time, those who didn't get caught up badly will continue to borrow beyond their actual worth until a recession hits, and a bigger pool of people will be caught in a debt trap - the blame will fall on welfare dependents and immigrants. Threatening the EU (if it survives) this time around.


----------



## Firefly

TheBigShort said:


> Interest rates will rise.



Perhaps not to the same extent though. Remember governments have the largest debts of all so it would not really be in the ECB's interest pushing governments over the edge due to increasing their rates.


----------



## TheBigShort

Firefly said:


> Perhaps not to the same extent though. Remember governments have the largest debts of all so it would not really be in the ECB's interest pushing governments over the edge due to increasing their rates.



Absolutely, it is a precarious situation. So we can continue with the QE and hope the 'wealth effect' kicks in and drives demand through more borrowing, or,
we can borrow heavily (or for sake of argument), the surplus nations of Europe, Germany, Netherlands etc can start spending aggressively to drive demand (tearing up fiscal pact).
I prefer latter option. The debt is unsustainable. Either countries start to default, or it is reduced by inflation. Wage increases are inflationary.


----------



## TheBigShort

Firefly said:


> I get the credit expansion part, but can you provide a reference for the wage restraint part? I'm not interested in something that shows what the wage rates are, but that we have a system built on wage restraint.



Wage restraint is probably my term. Typically wage moderation is the term more commonly used. Nothing wrong with it, it is a good thing, but in the face of unfettered corporate profits fuelled by credit expansion, it has created a mountain of debt, private debt and state debt.
That is the point, profits, while they are good thing, are unlimited, not taxed enough, and end up in excessively large tranches in the control of too few. The system facilitates this and we in the developed world fawn at the wealth of the 'great entrepreneurs'.
When really most of them are just ordinary hard-working people, with high developed skills and talents who were in the right place at the right time, had some luck, or stumbled onto something that they themselves had no idea how successful their idea was going to be.


----------



## Firefly

TheBigShort said:


> Absolutely, it is a precarious situation. So we can continue with the QE and hope the 'wealth effect' kicks in and drives demand through more borrowing


I'm against QE as I've mentioned before. As you have said it may have been a useful tool in the emergency we had, but it's sell-by date is long gone



TheBigShort said:


> we can borrow heavily (or for sake of argument), the surplus nations of Europe, Germany, Netherlands etc can start spending aggressively to drive demand (tearing up fiscal pact).
> I prefer latter option. The debt is unsustainable. Either countries start to default, or it is reduced by inflation. Wage increases are inflationary.



I agree that a fiscal stimulus would benefit working people more directly than QE ever could. However, "The debt is unsustainable" in either case.

I'm not familiar with the economies of other european countries, but the program announced by the EU for fiscal spending has specifically excluded us. I think based on the fact that we have rising employment, falling unemployment, almost balanced our books, already huge government debt and that we have engaged on a massive fiscal spending policy since 2008 means we have already implemented this. By all means it could be a good option for other countries, but not for Ireland.


----------



## TheBigShort

Firefly said:


> By all means it could be a good option for other countries, but not for Ireland.



Perhaps, but for it to take hold, countries like Germany cannot sit infinitely behind a fiscal pact of 3%. While I understand the sentiment of prudence, it is not always wise. There are times to spend aggressively and other times to restrain. 
The 3% fiscal deficit limit is an arbitrary figure. Perhaps a rolling average 3% deficit would be more realistic, say over a seven year business cycle?


----------



## Firefly

TheBigShort said:


> Typically wage moderation is the term more commonly used. Nothing wrong with it, it is a good thing, but in the face of unfettered corporate profits fuelled by credit expansion, it has created a mountain of debt, private debt and state debt.
> That is the point, profits, while they are good thing, are unlimited, not taxed enough, and end up in excessively large tranches in the control of too few. The system facilitates this and we in the developed world fawn at the wealth of



I think you might be mixing up a few things here. Governments are borrowing as they are spending more than they take in to keep the show on the road. Unless they reign in this spending they will need to continue to borrow. QE helps with this as they can do so at 0%. Now, in order to embark on a stimulus package (such as a large house building program) and to still keep the lights on, would require yet more borrowing. Now, if the ECB stops QE by buying up bonds at 0% then the cost to governments and taxpayers shoots up, both to keep the lights on and for the house building program. So it's not just as a case of stopping QE and embarking on a stimulus package - we might actually need QE to make the stimulus package affordable!


As for "unfettered corporate profits fuelled by credit expansion", the profits would still be unfettered. Workers would have more money for sure and should not need to borrow as much, by the borrowings would be done by the government instead in financing the stimulus package. Would you be happy then for these unfettered profits to be financed by government debt?


----------



## Firefly

TheBigShort said:


> Perhaps, but for it to take hold, countries like Germany cannot sit infinitely behind a fiscal pact of 3%. While I understand the sentiment of prudence, it is not always wise. There are times to spend aggressively and other times to restrain.
> The 3% fiscal deficit limit is an arbitrary figure. Perhaps a rolling average 3% deficit would be more realistic, say over a seven year business cycle?



I agree with this and since 2008 that's exactly what we have done. Now we have increasing employment, falling unemployment, we're almost balancing our books and we have the fastest growing economy in Europe. If you believe in counter-cyclical fiscal policy then surely now is the time to slow down and be prudent? Afterall the EU has told us not to engage in the spending that it thinks most of the EU should..


----------



## Firefly

By the way, I love the term "unfettered" - the People Before Logic use it all the time and it cracks me up! I'd love to know who said it first.


----------



## Firefly

Anyway, I'm off to take the kids out for dinner & ice-cream. Chat to y'all later!


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## TheBigShort

Firefly said:


> Anyway, I'm off to take the kids out for dinner & ice-cream. Chat to y'all later!



Good idea, and for fear of ending in a endless unresolvable debate, here are my calls.

Interest rates and inflation to rise quickly over next fours years.
The euro to come under severe pressure to survive (I think it will break up)
Brexit to fail, but Lisbon Treaty to fall
Wages to rise rapidly. Minimum wage here to hit €16-€18 an hour by 2020.


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## jjm

My own opinion on Firefly and TheBig Short Discussion is it time for a wage increase
TheBigShort Would Like an increase from whoever he/she is employed by he/she thinks he/she is worth it so lets have it if the employer can find the money,TheBigShort Employer will Increase all wages For all employees.
Firefly would like an increase from whoever he/she is employed/Hired by he/she thinks  he/she is worth it so lets have it if the employer can find the money. there is a good chance firefly will get his increase Employer may or may not increase wages for all employees.he/she may give Firefly his pay increase not because he/she cannot get a better firefly.He/she may not want to change for lots of reasons Firefly wage increase on its own will not affect companys cost base .Best of luck to Firefly. I know plenty of Firefly In 2016 I got an Increase myself that I was not expecting Thanks to our own firefly.
Lots of Private Companies Irish and Foreign Need to move out of Ireland to a lower cost base EU Country to survive and grow.I  Suspect Donald Trump Will spot the Competitive weakness in a lot of companies who at present are making Ireland Uncompetitive the are pricing tax into there wages Donald could with the stroke of a pin change all that.The EU/UK are also working on How Irish company's have an unfair competitive Advantage over there competitors At the higher end of the profit scale .We could have a lot of Distressed Business If these changes come to pass.


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## TheBigShort

jjm2016 said:


> TheBigShort Would Like an increase from whoever he/she is employed by he/she thinks he/she is worth it so lets have it if the employer can find the money



Im not looking for a pay rise for me personally. Im saying that wages need to rise in general terms, in Ireland, Europe, US.

Like this;

http://www.rte.ie/news/business/2016/1124/834168-lidl-to-raise-pay-for-its-british-staff/


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## jjm

TheBigShort I know that.I know  you have no problem with our tax system taking a little more at the top rate so  some can filter d own to people who work just as hard if not harder on low income creating new wealth.Some times you can be creating new wealth on low margins.


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## Firefly

TheBigShort said:


> Im saying that wages need to rise in general terms, in Ireland, Europe, US.
> 
> Like this;
> 
> http://www.rte.ie/news/business/2016/1124/834168-lidl-to-raise-pay-for-its-british-staff/




Lidl is a case in point alright. It's clear from shopping there (and in Aldi) that their staff are engaged and deliver. A very efficient & profitable business so wages can be easily absorbed.


----------



## Purple

jjm2016 said:


> TheBigShort I know that.I know  you have no problem with our tax system taking a little more at the top rate so  some can filter d own to people who work just as hard if not harder on low income creating new wealth.Some times you can be creating new wealth on low margins.


A little more would be a fine thing...


----------



## Purple

Firefly said:


> Lidl is a case in point alright. It's clear from shopping there (and in Aldi) that their staff are engaged and deliver. A very efficient & profitable business so wages can be easily absorbed.


Exactly; as long as people are adding more value then wage increases can happen without reducing productivity.


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## Purple

On BS's larger point about wage increases; as long as it happens on a global level I'm all for it but Ireland should follow, not lead, as we are already a very high wage economy.


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## Sunny

Firefly said:


> I agree with this and since 2008 that's exactly what we have done. Now we have increasing employment, falling unemployment, we're almost balancing our books and we have the fastest growing economy in Europe. If you believe in counter-cyclical fiscal policy then surely now is the time to slow down and be prudent? Afterall the EU has told us not to engage in the spending that it thinks most of the EU should..



And despite the increasing employment, the falling unemployment, the balancing of books, the fastest growing economy in Europe, we still have near to 0% inflation. And long term 0% inflation is just as dangerous for an economy as inflation of 4-5%. I don't think most sensible people are calling for the money to be thrown around and the recent disputes in Luas and the public sector do smack of political grandstanding last seen with FF. But that doesn't mean that anyone suggesting that wages need to rise are talking through their hat....


----------



## TheBigShort

Firefly said:


> Lidl is a case in point alright. It's clear from shopping there (and in Aldi) that their staff are engaged and deliver. A very efficient & profitable business so wages can be easily absorbed.



Its not just them though is it? There is a clear trend in the sentiment for wage increases, not just from unions and workers, but also at a political and business level also.
What is happening in Lidl and elsewhere is more to with economic forces, rather than a desire for employers to have to pay higher wages.
When your employees cannot afford the rent, childcare, mortgage etc, then its bad for business all round.


----------



## jjm

I expect We will have to increase tax on the top 20% who for the most part work in the high profit sectors/ Because the wage increase at the top will feed down and have to be absorbed by companies on lower margins who cannot pass on the higher cost .This will hold back wage increases in these sectors. Any company who can move out of Ireland in this position should already be gone or planning to go if they can. I would agree with TheBigShort Euro will break up.If companies think Like TheBigShort and expect Minimum  Wages to Hit 18 Euro in Ireland by 2020 .Company now paying 14 to 17 Euro need to be planning to move out of Ireland as fast as the can.Ireland is no place for companies operating on low margins like you have in other EU Country's.


----------



## Purple

Sunny said:


> And despite the increasing employment, the falling unemployment, the balancing of books, the fastest growing economy in Europe, we still have near to 0% inflation. And long term 0% inflation is just as dangerous for an economy as inflation of 4-5%. I don't think most sensible people are calling for the money to be thrown around and the recent disputes in Luas and the public sector do smack of political grandstanding last seen with FF. But that doesn't mean that anyone suggesting that wages need to rise are talking through their hat....


Wages here can only grow if wages everywhere are growing. We cannot increase wages if they are not increasing faster in the countries we trade with.


----------



## Purple

It looks like Trump will stimulate the US economy with massive infrastructure investments and China may need to stimulate their economy as well. If they can avoid a trade war that will cause oil prices to rise which in turn will cause commodity prices to rise. This will lead to global inflation and knock-on growth and inflation here. If that happens we will have inflation which will eat away at real debt levels without hurting our competitiveness. 
The Donald will give you what you want DB. How does that make you feel?


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## jjm

Very interesting article on average wage Hourly levels across EU in last mondays Irish independent. Ireland in 2nd place Behind Denmark .Ireland Over 20 Euro hour. Germany 15 Euro.UK 14 Euro per Hour.Ireland pays  top 20 %higher  wages than any other country .A must read for anyone posting on here .If Euro breaks up New Irish punt well need to be devalued by about  30%.


----------



## Protocol

Eurostat data on median gross hourly earnings 2014


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## Protocol

Note that although at 20.20 ph, our median gross hourly earnings were the second highest in 2014, we have a lot of low earners, so our labour costs are not second highest.

See table below.

Over 20% are defined as low earners in Ireland.


----------



## Protocol




----------



## Protocol

The next table is some interesting data on the *distribution *of earnings.

Disparities in gross hourly earnings within a country can be measured using deciles, and in particular the lowest and highest deciles, which correspond to the 10% of employees earning the least *(D1)* and to the 10% earning the most *(D9)*. As a consequence, a high D9/D1 interdecile ratio indicates large disparities. D1 is the maximum gross hourly earnings received by the 10% of employees earnings least. D9 is the minimum gross hourly earnings received by the 10% of employees earning most.


----------



## Protocol




----------



## Protocol

I think there is a typo in that table, the right-hand three columns seem to be mixed up?


----------



## Protocol

The top earners in Ireland are very well-paid, compared to the rest of the EU.

Even though our median is 2nd highest, our 90th percentile is the highest, at 43.60 per hour.

So high-earners in Ireland are overpaid compared to the EU averages.

Irish workers earn more than their EU neighbours, but the premium for the top 10% in Ireland is even more.

This comes as no surprise, when you hear the legal/medical/accountancy/brokerage fees discussed in many threads.


----------



## Protocol

Our labour costs are 10th in the EU, 2015 data:

http://ec.europa.eu/eurostat/statistics-explained/index.php/Hourly_labour_costs


----------



## Purple

Protocol said:


> The top earners in Ireland are very well-paid, compared to the rest of the EU.
> 
> Even though our median is 2nd highest, our 90th percentile is the highest, at 43.60 per hour.
> 
> So high-earners in Ireland are overpaid compared to the EU averages.
> 
> Irish workers earn more than their EU neighbours, but the premium for the top 10% in Ireland is even more.
> 
> This comes as no surprise, when you hear the legal/medical/accountancy/brokerage fees discussed in many threads.


That's all meaningless unless it's measured against productivity.
We have some very high earners because of the "professions" as well as some sectors which are open to real competition but are very productive. We have some very low earners because we have so many under educated and unskilled people in the workforce.

We also have the highest level of social transfer in the EU so net incomes (after tax take and welfare handouts) is very even here.


----------



## Protocol

Is there any evidence that our solicitors/doctors/CEOs/accountants/landlords are more productive than in every other EU country?

Or is it that their high pay is as a result of restrictive practices and cartels? And too high commercial rents?


----------



## Purple

Protocol said:


> Is there any evidence that our solicitors/doctors/CEOs/accountants/landlords are more productive than in every other EU country?
> 
> Or is it that their high pay is as a result of restrictive practices and cartels? And too high commercial rents?


I'd say it's the latter but I only have personal experience to support that.


----------



## newtothis

I suspect the data in the tables above are badly distorted - the note says it refers to enterprises with 10 employees and more. I believe that there are a particularly high number of very small enterprises here, and I'd be very surprised if discounting these wouldn't have a significant distorting effect.


----------



## trasneoir

TheBigShort said:


> Perhaps a rolling average 3% deficit would be more realistic, say over a seven year business cycle?


Say I'm minister for finance for an unpopular government. If I borrow this money today, I leave the next guy that much less room to work with. 

Do I need to spend the money, or can I just set it on fire?


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## TheBigShort

https://www.bloomberg.com/amp/news/...-decent-pay-shows-ecb-can-t-slow-stimulus-yet

I think what Draghi might be saying here, is that wages are inflationary. And if you are pursuing an inflationary policy then wage increases would help.


----------



## Purple

TheBigShort said:


> https://www.bloomberg.com/amp/news/...-decent-pay-shows-ecb-can-t-slow-stimulus-yet
> 
> I think what Draghi might be saying here, is that wages are inflationary. And if you are pursuing an inflationary policy then wage increases would help.


The second bit is incorrect.
Oil prices and international competition, coupled with a lack of growth in productivity in the Eurozone is the reason for wage stagnation. If we want high paid jobs then we need high skilled people who are more productive. The only thing that creates wealth is productivity.


----------



## Firefly

TheBigShort said:


> https://www.bloomberg.com/amp/news/...-decent-pay-shows-ecb-can-t-slow-stimulus-yet
> 
> I think what Draghi might be saying here, is that wages are inflationary.



With the public sector getting a pay rise over the next 2 years we are going to see inflation here I'll tell ya.


----------



## TheBigShort

Firefly said:


> With the public sector getting a pay rise over the next 2 years we are going to see inflation here I'll tell ya.



And do you think, in the context of the ECBs asset purchasing program, that some inflation would be desirable?


----------



## Firefly

TheBigShort said:


> And do you think, in the context of the ECBs asset purchasing program, that some inflation would be desirable?



At an EU level, probably. However, from a link you yourself provided earlier in this thread: 

_"Ireland is not one of the countries being asked to spend more, however."_

http://www.independent.ie/business/...ees-creation-of-budget-ministry-35221841.html

Firefly.


----------



## Purple

Firefly said:


> At an EU level, probably. However, from a link you yourself provided earlier in this thread:
> 
> _"Ireland is not one of the countries being asked to spend more, however."_
> 
> http://www.independent.ie/business/...ees-creation-of-budget-ministry-35221841.html
> 
> Firefly.


Of course we shouldn't; we are already spending far more than we take in taxes. Borrowing even more for day to day expenditure would be madness.


----------



## TheBigShort

Purple said:


> Of course we shouldn't; we are already spending far more than we take in taxes. Borrowing even more for day to day expenditure would be madness.




But why are trying to limit the topic to public sector wages. The topic refers to wages in the round. 
A substantive increase in minimum wage would be a good starting point.


----------



## Purple

TheBigShort said:


> But why are trying to limit the topic to public sector wages. The topic refers to wages in the round.
> A substantive increase in minimum wage would be a good starting point.


I'm not. I was just giving an example.

Why do you think an increase in the minimum wage would be a good thing?


----------



## TheBigShort

In a growing economy like ours, wages increases are good. Stimulates further economic activity and minimises any potential disproportionate transfer of wealth to capital over labour.


----------



## TheBigShort

Public sector pay increases in a vacuum are not good. Pay increases across the economy are required. Starting at minimum wage.


----------



## Firefly

TheBigShort said:


> In a growing economy like ours, wages increases are good. Stimulates further economic activity and minimises any potential disproportionate transfer of wealth to capital over labour.



Sounds pro-cyclical to me..


----------



## TheBigShort

Firefly said:


> Sounds pro-cyclical to me..



Can you elaborate on that pls?


----------



## Firefly

TheBigShort said:


> Can you elaborate on that pls?



Pro-cyclical means that when things are going well you spend even more money and when things are not going well you tighten your belt. It is generally agreed that _counter_-cyclical policies are better, when the economy is growing you keep money back and when things are not going well you have the resources to put into a depressed economy. We have the worst of both worlds here - during good times people are looking for higher wages and lower taxes and then when the bad times come the same people are demanding more being spent when it's not there.


----------



## Purple

TheBigShort said:


> Can you elaborate on that pls?


It was summed up well my Charlie McGreevy; "When I have it I'll spend it". 
It's what got us into this mess in the first place. The EU, as well as individual EU finance Ministers (more notably the Dutch one) were warning us about this since the mid 90's.

Government policy should be to minimise the swings. We did the opposite for 15 years.


----------



## TheBigShort

Firefly said:


> Pro-cyclical means that when things are going well you spend even more money and when things are not going well you tighten your belt. It is generally agreed that _counter_-cyclical policies are better, when the economy is growing you keep money back and when things are not going well you have the resources to put into a depressed economy. We have the worst of both worlds here - during good times people are looking for higher wages and lower taxes and then when the bad times come the same people are demanding more being spent when it's not there.



Yes I see what you are saying, but I am talking about something a bit different.
One, it is not limited to public sector finances for a start.
Two, when an economy is growing, that is, the value of what we produce in goods and services, our outputs, is growing at a faster rate than the cost of the inputs, costs of productions. This creates wealth. I am talking about how best that wealth is shared throughout the economy. To my mind, the concept of trickle-down (or trickle-up, as I prefer) economics leads to a disproportionate amount of this wealth lending itself to capital over labour. This is bad, as instead of actually trickling down, this new wealth is spread through the economy in the form of credit expansion (the pressure is on the Central Bank again to loosen limits on mortgage-lending). This is not good, preferably a greater proportion of any newly created wealth should distribute via wages increases. This ensures a greater spread, greater participation in the workforce, less reliance on welfare etc.


----------



## Purple

TheBigShort said:


> Yes I see what you are saying, but I am talking about something a bit different.
> One, it is not limited to public sector finances for a start.
> Two, when an economy is growing, that is, the value of what we produce in goods and services, our outputs, is growing at a faster rate than the cost of the inputs, costs of productions. This creates wealth. I am talking about how best that wealth is shared throughout the economy. To my mind, the concept of trickle-down (or trickle-up, as I prefer) economics leads to a disproportionate amount of this wealth lending itself to capital over labour. This is bad, as instead of actually trickling down, this new wealth is spread through the economy in the form of credit expansion (the pressure is on the Central Bank again to loosen limits on mortgage-lending). This is not good, preferably a greater proportion of any newly created wealth should distribute via wages increases. This ensures a greater spread, greater participation in the workforce, less reliance on welfare etc.


It very much depends on where the wealth is being produced within the economy. If it is just Pharmaceutical companies churning out XXXXXXXXXXXXXXXXXXXX, vials and powder and declaring their profits here then it’s a bad thing. If it is the indigenous sector, specifically the SME sector engaged in internationally traded good and services, then yes, pay increases are no harm as long as they do not exceed the increase in output.

What happened during the boom was construction, which creates no net wealth for the country, and the State Sector, which also creates no net wealth for the country, became the main drivers for economic growth and wage inflation. That in turn created a consumer boom which led to wage growth, as well as an increase in rents and property values. None of these created any net national wealth either.

During the early 90’s the majority of the jobs created in Ireland were in the internationally traded good and services sector. They are the engine of the economy. Wage and cost inflation outside that sector has the knock-on effect of wage pressures within that sector and so we lost competitiveness and so lost the fuel that powered Ireland Inc. We must learn from the mistakes of the past and ensure we don’t do the same thing again.


I am not suggesting that those wealth creating jobs are more important for the country but they are the driver of the real economy. Certainly an efficient State Sector helps and the Sate can help create the conditions in which wealth is created. It just can’t create the wealth itself.


We should have a target getting into and remaining in the top 5 most productive economies in the world.

In order to do that we need a fair income tax system, a great education system, good transport infrastructure, good Broadband access and a simple and efficient taxation system.

We are not doing too badly in any of those areas, though we could and should be doing better. We just have to make sure we make decisions based on where we are, not where we’d like to be.


----------



## Firefly

TheBigShort said:


> Yes I see what you are saying, but I am talking about something a bit different.
> One, it is not limited to public sector finances for a start.



The state of the public finances (whether good or bad) has a profound effect on the rest of the economy and cannot be ignored, especially when the capacity of the government to spend anything depends on it. 



TheBigShort said:


> Two, when an economy is growing, that is, the value of what we produce in goods and services, our outputs, is growing at a faster rate than the cost of the inputs, costs of productions. This creates wealth. I am talking about how best that wealth is shared throughout the economy. To my mind, the concept of trickle-down (or trickle-up, as I prefer) economics leads to a disproportionate amount of this wealth lending itself to capital over labour. This is bad, as instead of actually trickling down, this new wealth is spread through the economy in the form of credit expansion (the pressure is on the Central Bank again to loosen limits on mortgage-lending). This is not good, preferably a greater proportion of any newly created wealth should distribute via wages increases. This ensures a greater spread, greater participation in the workforce, less reliance on welfare etc.



I understand the point you are making. In relation to the PS pay rises though, given the gap that already exists between the private and public sectors would you not think that the same money could be spent by reducing income taxes for everyone rather than giving pay rises to the few?


----------



## TheBigShort

Firefly said:


> I understand the point you are making. In relation to the PS pay rises though, given the gap that already exists between the private and public sectors would you not think that the same money could be spent by reducing income taxes for everyone rather than giving pay rises to the few?



No, because any tax cuts will disproportionately favour those who pay most taxes. And if public sector wages are greater than private sector wages then effectively increasing the (purchasing power) gap even further, whilst simultaneously leaving a bigger hole in public finances.
Alternatively, a wage increase, will tend to have knock on effects throughout the economy, spurring wage increases elsewhere, inducing demand, reducing reliance on welfare, increasing tax take, reducing wealth gap as more capital is transferred to labour.
I'm not saying that there is no time ever for tax cuts, just not now. The focus should be on reducing wealth gap. Increasing wages can help that.


----------



## Firefly

TheBigShort said:


> No, because any tax cuts will disproportionately favour those who pay most taxes. And if public sector wages are greater than private sector wages then effectively increasing the (purchasing power) gap even further, whilst simultaneously leaving a bigger hole in public finances.



If group A has higher wages than group B and you cut taxes for both then group A will still take home more money as they earn more, I get that. But if instead you just raise wages of group A only, are you not increasing the gap further?


----------



## TheBigShort

Firefly said:


> If group A has higher wages than group B and you cut taxes for both then group A will still take home more money as they earn more, I get that. But if instead you just raise wages of group A only, are you not increasing the gap further?



No, because one of the bug bears of AAM is that so many do not pay any tax at all! Typically the lowest of income earners. If you cut taxes, only those who pay tax will benefit directly, leaving a tax gap to fill. The higher the earner, the less likely the need to spend additional money from tax cuts and instead the money is hoarded.
Lower earners, through wage increases, will tend to spend near 100% of additional money, inducing demand, creating jobs, less reliance on welfare.
Most public servants will fall into the category of spending most of their pay increase, inducing demand, creating jobs, less reliance on welfare.
We have an increasing wealth gap in this country. Forcing lower paid workers onto welfare reliance. Higher income earners feel they carry the tax burden. Solution? Close the gap.


----------



## Firefly

TheBigShort said:


> No, because one of the bug bears of AAM is that so many do not pay any tax at all! Typically the lowest of income earners. If you cut taxes, only those who pay tax will benefit directly, leaving a tax gap to fill. The higher the earner, the less likely the need to spend additional money from tax cuts and instead the money is hoarded.
> Lower earners, through wage increases, will tend to spend near 100% of additional money, inducing demand, creating jobs, less reliance on welfare.
> Most public servants will fall into the category of spending most of their pay increase, inducing demand, creating jobs, less reliance on welfare.
> We have an increasing wealth gap in this country. Forcing lower paid workers onto welfare reliance. Higher income earners feel they carry the tax burden. Solution? Close the gap.



But you're saying you want to increase wages in the Public Sector rather than cut income taxes for all. As Public Sector wages are already higher than in the Private Sector, how will that not widen the gap further?


----------



## TheBigShort

Firefly said:


> But you're saying you want to increase wages in the Public Sector rather than cut income taxes for all. As Public Sector wages are already higher than in the Private Sector, how will that not widen the gap further?



I'm am saying that wages need to start increasing for the vast majority, not just public sector worker's.
The fact that public sector worker's have negotiated better terms with their employer is down to their collective bargaining power through trade unions. Something private sector worker's have given up on. Instead, they have been bought out through a system of perpetual debt.
The report in RTE today around house prices exemplifies it
https://www.rte.ie/news/business/2017/0703/887315-myhome-property-prices/

Houses prices aren't increasing because of increasing wealth, but because of increasing debt.

Private sector worker's need to mobilise. The LUAS workers showed how it can be done.


----------



## Firefly

TheBigShort said:


> I'm am saying that wages need to start increasing for the vast majority, not just public sector worker's.



Ah right, thanks for clarifying.


----------



## Purple

TheBigShort said:


> I'm am saying that wages need to start increasing for the vast majority, not just public sector worker's.
> The fact that public sector worker's have negotiated better terms with their employer is down to their collective bargaining power through trade unions. Something private sector worker's have given up on.
> 
> Private sector worker's need to mobilise. The LUAS workers showed how it can be done.


So businesses are all making lots of money but just not passing it on to the wurkers? We just need to share more of the output of production with the wurker rather than the greedy capitalists who control the means of production... is that it?



TheBigShort said:


> Instead, they have been bought out through a system of perpetual debt.
> The report in RTE today around house prices exemplifies it
> https://www.rte.ie/news/business/2017/0703/887315-myhome-property-prices/
> 
> Houses prices aren't increasing because of increasing wealth, but because of increasing debt.


Sweet This post will be deleted if not edited immediately... if people have more money then they can afford to borrow more. 

You cannot escape from the link between supply and demand, just as you cannot escape from the link between economic value/ labour market supply and demand, and wages.


----------



## TheBigShort

Purple said:


> So businesses are all making lots of money but just not passing it on to the wurkers? We just need to share more of the output of production with the wurker rather than the greedy capitalists who control the means of production... is that it?



In the main, with positive economic growth figures, increasing employment figures, it would suggest that wealth is being created. 
Wages are also showing signs of increasing, which is good thing, but more can done here.



Purple said:


> Sweet This post will be deleted if not edited immediately... if people have more money then they can afford to borrow more.



I don't know if you read the RTE report or not, but it clearly points to increases in lending due to a relaxing of central bank lending rules. It clearly states that this lending is increased debt.



Purple said:


> You cannot escape from the link between supply and demand, just as you cannot escape from the link between economic value/ labour market supply and demand, and wages.



Yeah, so what is your point? Are wages too high, or too low? Or just right?


----------



## Purple

TheBigShort said:


> In the main, with positive economic growth figures, increasing employment figures, it would suggest that wealth is being created.
> 
> Wages are also showing signs of increasing, which is good thing, but more can done here.



Right, so wages are going up as the economy is recovering. Let the market decide.






TheBigShort said:


> I don't know if you read the RTE report or not, but it clearly points to increases in lending due to a relaxing of central bank lending rules. It clearly states that this lending is increased debt.



That and the utterly stupid, utterly populist first time buyers grant. A twelve year old could have told the government that increasing money supply would result in an increase in prices. Populist left-wing politics which ignored economic realities.






TheBigShort said:


> Yeah, so what is your point? Are wages too high, or too low? Or just right?


 My point is that your drive to increase wages ignores market forces and every time we do that we screw things up. Look at the relaxation of the Central Bank rules you just cited!


----------



## TheBigShort

Purple said:


> Populist left-wing politics which ignored economic realities.



How do you figure that this is left-wing politics? Can you name one left-wing party that supported this?
This is a sop to the developers trying to wrangle their way out of NAMA.

The left-wing parties are arguing for the state to build social housing.

It seems your interpretation of what is left-wing or right-wing is based on whether you like a policy or not, rather than any understanding of its origins or motives.


----------



## Firefly

TheBigShort said:


> This is a sop to the developers trying to wrangle their way out of NAMA.



Would you mind expanding on this as I'm not sure of the point being made?


----------



## Purple

TheBigShort said:


> How do you figure that this is left-wing politics? Can you name one left-wing party that supported this?
> This is a sop to the developers trying to wrangle their way out of NAMA.
> 
> The left-wing parties are arguing for the state to build social housing.
> 
> It seems your interpretation of what is left-wing or right-wing is based on whether you like a policy or not, rather than any understanding of its origins or motives.


State intervention in the market is a fundamental of left-wing politics.


----------



## TheBigShort

Purple said:


> State intervention in the market is a fundamental of left-wing politics



You mean right-wingers cannot see any benefit to state intervention in terms of implementing h&s standards, licensing, regulation, business start ups, education policy, etc...all of which have immediate, short-term and long-term impacts on markets and pricing, profit and loss? 
If right-wingers are opposed to state intervention in the market, then they are opposed to any tax on profits?


----------



## TheBigShort

Firefly said:


> Would you mind expanding on this as I'm not sure of the point being made?



The Help to Buy scheme was concocted to increase house prices, bring developers back into the game of house building to stand on their own two feet.
House prices went up, developers haven't started building (or at least at sufficient pace).
Scheme looks like being scrapped.


----------



## Purple

TheBigShort said:


> The Help to Buy scheme was concocted to increase house prices, bring developers back into the game of house building to stand on their own two feet.
> House prices went up, developers haven't started building (or at least at sufficient pace).
> Scheme looks like being scrapped.


When the State should have gone to the open market EU wide and looked for companies to tender for high volume factory built units to be placed all over the country thus removing Irish developers and highly priced Irish labour from the market. We would have got higher quality units to a higher spec than the rubbish Irish builders are capable of producing at a much lower unit cost. As that becomes the norm in the market and EU suppliers gain traction in the market lower volume developments will become economical and prices will drop throughout the market. Basically if local suppliers can't provide the product at a competitive price then buy it from someone who can. The State should not concern itself with propping up an inefficient and delinquent construction sector.


----------



## Firefly

TheBigShort said:


> The Help to Buy scheme was concocted to increase house prices, bring developers back into the game of house building to stand on their own two feet.



I am struggling to think of an example where interference in _any_ market by the government has improved things. Can you?


----------



## Purple

TheBigShort said:


> You mean right-wingers cannot see any benefit to state intervention in terms of implementing h&s standards, licensing, regulation, business start ups, education policy, etc...all of which have immediate, short-term and long-term impacts on markets and pricing, profit and loss?
> If right-wingers are opposed to state intervention in the market, then they are opposed to any tax on profits?


Are you seriously telling me you can't see the difference?


----------



## TheBigShort

Firefly said:


> I am struggling to think of an example where interference in _any_ market by the government has improved things. Can you?



Lots of examples, h&s standards, licensing, product regulation, minimum wage, bank holidays, annual leave, taxation, consumer protection etc


----------



## TheBigShort

Purple said:


> Are you seriously telling me you can't see the difference?


 
I can, but I don't think you can. State intervention is not the preserve of left-wing ideology.
It is the purpose and manner of any intervention that is reflective of whether it is left-wing or right-wing.
The Help to Buy scheme was the preserve of developer lobbying of government with the purpose to draw developers back into the market to meet the renewed demand.It hasn't worked.


----------



## TheBigShort

Purple said:


> removing Irish developers and highly priced Irish labour from the market.



How much is Irish labour on construction sites these days?


----------



## Purple

TheBigShort said:


> I can, but I don't think you can. State intervention is not the preserve of left-wing ideology.
> It is the purpose and manner of any intervention that is reflective of whether it is left-wing or right-wing.
> The Help to Buy scheme was the preserve of developer lobbying of government with the purpose to draw developers back into the market to meet the renewed demand.It hasn't worked.


That's just cronyism and market intervention by a political lobby group, in this case the CIF, to increase the income of their members on the backs of normal people (just like Public Sector Unions do). Capitalism does not embrace such practices. Capitalism is based on accepting the reality of economics so accepts that in order to reduce prices we need to increase supply. The best way to do that is to open up the market to other players.


----------



## Purple

TheBigShort said:


> How much is Irish labour on construction sites these days?


The average hourly cost for a tradesman is €32-€35.
The issue is really how many hours of labour are required per square meter built.
A friend who works in construction in Boston said that they had less than half the labour hours per square meter over there due to more automated building methods; far more built in factories, so higher quality, and far more power tools and better material flows on site. In essence if labour costs are 25% of construction costs then if you buy a €400,000 house you are paying €50,000 for inefficient construction methods.
If you are interested in reducing debt levels how about changing things so people need to borrow less because the house costs less?


----------



## TheBigShort

Purple said:


> The average hourly cost for a tradesman is €32-€35.



Link please. It doesn't correlate with these rates.

http://www.payscale.com/research/IE/Industry=Construction/Hourly_Rate


----------



## Purple

TheBigShort said:


> Link please. It doesn't correlate with these rates.
> 
> http://www.payscale.com/research/IE/Industry=Construction/Hourly_Rate


http://isabelbarrosarchitects.ie/blog/building-costs-in-ireland-2016/

Your link suggests that bricklayers are earning about €30,000 a year or around €115 a day. I know a few bricklayers. They earn between €200 and €300 a day and prices are climbing. During the boom they were getting up to €600 a day.


----------



## TheBigShort

Purple said:


> http://isabelbarrosarchitects.ie/blog/building-costs-in-ireland-2016/
> 
> Your link suggests that bricklayers are earning about €30,000 a year or around €115 a day. I know a few bricklayers. They earn between €200 and €300 a day and prices are climbing. During the boom they were getting up to €600 a day.



I know some too, they are generally the exception.
I can't see in your link where it gives the average hourly rates

Here is CSO.

[broken link removed]


----------



## TheBigShort

https://www.irishtimes.com/opinion/...th-isn-t-making-you-richer-1.3327231?mode=amp

Interesting piece from McWilliams, touching on some of the points raised here.


----------



## Purple

TheBigShort said:


> https://www.irishtimes.com/opinion/...th-isn-t-making-you-richer-1.3327231?mode=amp
> 
> Interesting piece from McWilliams, touching on some of the points raised here.


Good piece. A few points; 
In a globalised labour market increasing wages in a small open economy can be devastating.
Productivity in capital intensive Multinationals distorts the gap between productivity and wages for the vast majority of people who work in the indigenous/SME economy.


----------



## Purple

It looks like we are getting those wage increases, with the least well off getting the biggest lift. In fact we've never had it so good!


----------



## MrEarl

> Is it time for wage increases?



Yes



> Why ?



Simple, the true cost of living (forget the basket of goods, I'm talking about the real cost of living) is going up and we need to keep pace with it.




> Why not rely on the government to reduce taxes to offset these increases ?



Because the government cannot be replied upon to distribute tax breaks appropriately to those who pay the tax in the first place, they are too easily influenced and swayed by other voters such as the blue-rinse brigade, a minority of their colleagues who think they can fix things if they visit North Korea etc. etc.



.


----------



## RETIRED2017

MrEarl
Wage Increases will bring in extra Prsi usc and income tax 50% of any pay increase will finish up being used to sway voters,
I hate to be a kicker
I always long for peace
But the wheel that squeaks the loudest
Is the one that gets the grease


----------



## MrEarl

RETIRED2017 said:


> MrEarl
> Wage Increases will bring in extra Prsi usc and income tax 50% of any pay increase will finish up being used to sway voters,
> ....




Sure, but the 50% taken in various taxes and levies will then be divided up and those who first earned it will get a bit of it back in tax breaks ... they also get the remaining 50% of the pay rise, so are better off than if they just rely on the government to reduce taxes.


----------



## Purple

MrEarl said:


> Simple, the true cost of living (forget the basket of goods, I'm talking about the real cost of living) is going up and we need to keep pace with it.


The cost of living is a reflection of wage levels as much as anything else. If everyone gets a pay increase then nobody is really any better off. They only think that produces true wealth in an economy is increased productivity.


----------



## RETIRED2017

MrEarl said:


> Because the government cannot be replied upon to distribute tax breaks appropriately to those who pay the tax in the first place, they are too easily influenced and swayed by other voters such as the blue-rinse brigade, a minority of their colleagues who think they can fix things if they visit North Korea etc. etc.





MrEarl said:


> Sure, but the 50% taken in various taxes and levies will then be divided up and those who first earned it will get a bit of it back in tax breaks ... they also get the remaining 50% of the pay rise, so are better off than if they just rely on the government to reduce taxes.



So the Government can be relied upon to distribute tax breaks appropriately to those who pay it in the first place .The Government is pushing for pay increase because they know there are lots of people like in the example above see no connection between Ireland cost of living being driven up by the Government just so they can take in more tax from  employer through taxing there employees,

The employee sees extra money in there pay packet when the get a pay rise  they don't feel so bad about the other 50% tax going to the Government ,


----------



## Purple

RETIRED2017 said:


> The employee sees extra money in there pay packet when the get a pay rise they don't feel so bad about the other 50% tax going to the Government ,


The irony is that someone on €20 an hour who is paying the higher marginal rate ends up with less than the minimum wage for each extra hour they work.


----------



## RETIRED2017

Purple said:


> The irony is that someone on €20 an hour who is paying the higher marginal rate ends up with less than the minimum wage for each extra hour they work.


Purple I know ,Driving up the cost base on employers who pay good wages and driving up the cost of living on employee who go out to work every day,


----------



## TheBigShort

Purple said:


> The irony is that someone on €20 an hour who is paying the higher marginal rate ends up with less than the minimum wage for each extra hour they work.



Shrewd observation there Purple.


----------



## Purple

TheBigShort said:


> Shrewd observation there Purple.


Yes, marginal tax rates are far too high; nobody, no matter what their income, should pay a marginal tax rate of over 50% and people on an average enough wage shouldn't be paying the same marginal tax rate as someone earning millions.


----------



## TheBigShort

Purple said:


> people on an average enough wage shouldn't be paying the same marginal tax rate as someone earning millions.



I agree with this. Marginal rate kicks in too early on average incomes.


----------



## Purple

TheBigShort said:


> I agree with this. Marginal rate kicks in too early on average incomes.


... and they are too high.


----------



## TheBigShort

https://www.bloomberg.com/view/articles/2018-02-08/germany-s-wage-deal-is-good-for-europe-too

"_The end of pay moderation will help the European Central bank meet its inflation target"_

Who would have thought it? Wage increases could be the tool needed for the ECB to reach its inflation target!


----------



## RETIRED2017

TheBigShort said:


> https://www.bloomberg.com/view/articles/2018-02-08/germany-s-wage-deal-is-good-for-europe-too
> 
> "_The end of pay moderation will help the European Central bank meet its inflation target"_
> 
> Who would have thought it? Wage increases could be the tool needed for the ECB to reach its inflation target!


Wage increases work in Germany because it is a manufacturing Country will not work out the same way in Ireland ,
There are lots of groups in Ireland who will have to take a pay cut or pay more into the system if the want the same take home pay as there German Co Workers,


----------



## TheBigShort

RETIRED2017 said:


> Wage increases work in Germany because it is a manufacturing Country will not work out the same way in Ireland ,
> There are lots of groups in Ireland who will have to take a pay cut or pay more into the system if the want the same take home pay as there German Co Workers,



The topic is about the ECB policy to induce inflation into the eurozone economy. The arguement was that wage increases are inflationary and not QE.
The article attached supports the notion that wage increases can help the ECB reach its inflation target. There is no mention of QE.


----------



## Purple

TheBigShort said:


> The topic is about the ECB policy to induce inflation into the eurozone economy. The arguement was that wage increases are inflationary and not QE.
> The article attached supports the notion that wage increases can help the ECB reach its inflation target. There is no mention of QE.


Given that we are a peripheral economy which is already high ware and high cost with low rates of productivity in the indigenous economy we should sit back and let wage increases in Germany solve the ECB's problems while maintaining our current pay rates thus clawing back some of the losses in relative wage productivity we have suffered over the last two decades.


----------



## TheBigShort

We are a peripheral economy in the Eurozone. The ECB has its mandate to manage monetary policy in the Eurozone. Its expressed policy is to create an inflationary effect in the Eurozone, with a target circa 2%. It has chosen the QE method to do this. 
I am merely pointing out that wage increases are inflationary. The article attached above supports this. This will be a more effective way of inducing an inflationary effect.

Im not sure why you would highlight the apparent low rates of the indigenous economy, instead of the economy as a whole? Which is, apparently, purring along nicely with projected forecasts being met, if not being beaten.

Since this thread was started, the national minimum wage has increased from €9.15ph to €9.55ph, an increase of 4.37% in less than 18 months.

Average wages are relatively flat over the period.

http://www.cso.ie/en/releasesandpublications/er/elcq/earningsandlabourcostsq22017finalq32017preliminaryestimates/

However productivity increases, employment participation, retail sales are all going nicely.

[broken link removed]

I think the case for wages increases to the sectors of the economy that are productive are beyond dispute at this stage – this will hopefully have a knock on effect of boosting the ‘indigenous’ economy resulting in wage increases there too.

Ireland can, and is doing its bit for the ECB target of 2% Eurozone inflation, through wage increases.


----------



## Firefly

RETIRED2017 said:


> Wage increases work in Germany because it is a manufacturing Country will not work out the same way in Ireland ,
> There are lots of groups in Ireland who will have to take a pay cut or pay more into the system if the want the same take home pay as there German Co Workers,



_Since 2011, unit labor costs in Germany have begun to rise in line with the objectives of the central bank. However, even these increases have been insufficient to fill in the competitiveness gap which has opened up with other member states. _

Looks like the increases are only going to allow the German workers get what most workers have gotten.


----------



## Purple

TheBigShort said:


> Im not sure why you would highlight the apparent low rates of the indigenous economy, instead of the economy as a whole? Which is, apparently, purring along nicely with projected forecasts being met, if not being beaten.


Because the capital intensive multinational sector is highly labour productive and so it gives an artificially good impression of productivity as a whole in this country. I don't think we should fool ourselves into thinking that we are efficient based on what a few global giants do in this country (the same ones that give us so much or our Corporation tax take), just as we shouldn't have fooled ourselves into thinking we were rich during a construction and debt bubble. 


TheBigShort said:


> I think the case for wages increases to the sectors of the economy that are productive are beyond dispute at this stage – this will hopefully have a knock on effect of boosting the ‘indigenous’ economy resulting in wage increases there too.


 The average pay rate for Google direct employees is  €94,000. The figures for many of the jobs in the MNC sector are similar. They are doing fine on what they get.


----------



## Firefly

Purple said:


> The average pay rate for Google direct employees is  €94,000.



Didn't know that....wait until the union in the ESB finds out!


----------



## TheBigShort

Purple said:


> The average pay rate for Google direct employees is €94,000. The figures for many of the jobs in the MNC sector are similar. They are doing fine on what they get.



There are over a 1,000 MNC's in Ireland, nice of you to use the cream of the crop for your example. Here are some wage stats with reflective of the economy as a whole, including MNC's.

http://www.cso.ie/en/releasesandpublications/ep/p-fdi/fdi2015/awe/

In any case, how is what you are posting about Google Ireland or our indigenous sector going to assist the ECB in achieving a 2% Eurozone inflation target?
Perhaps at this juncture you could offer a proposition as to how they might achieve this?


----------



## RETIRED2017

Firefly said:


> Didn't know that....wait until the union in the ESB finds out!



The problem is the wages and cost of living /housing for the people serving them Latte we need to worry about long term,


----------



## TheBigShort

RETIRED2017 said:


> Wage increases work in Germany because it is a manufacturing Country will not work out the same way in Ireland ,
> There are lots of groups in Ireland who will have to take a pay cut or pay more into the system if the want the same take home pay as there German Co Workers,



Just to come back to this briefly, according to

https://tradingeconomics.com/ireland/manufacturing-value-added-percent-of-gdp-wb-data.html

https://tradingeconomics.com/germany/industry-value-added-percent-of-gdp-wb-data.html


Manufacturing, value added (% of GDP) in *Ireland* was reported at *34.69 % in 2016*, according to the World Bank collection of development indicators, compiled from officially recognized sources.


Industry, value added (% of GDP) in *Germany* was reported at *30.49 % in 2016*, according to the World Bank collection of development indicators, compiled from officially recognized sources.


----------



## RETIRED2017

TheBigShort said:


> There are over a 1,000 MNC's in Ireland, nice of you to use the cream of the crop for your example. Here are some wage stats with reflective of the economy as a whole, including MNC's.
> 
> http://www.cso.ie/en/releasesandpublications/ep/p-fdi/fdi2015/awe/
> 
> In any case, how is what you are posting about Google Ireland or our indigenous sector going to assist the ECB in achieving a 2% Eurozone inflation target?
> Perhaps at this juncture you could offer a proposition as to how they might achieve this?


Ireland is changing fast the Government do not have the money to increase wages like in the old days the were spending money paid in by workers for there future pensions the hens are Comimg home to roost any extra wage increase will mean more tax needs to be collected so Ireland cannot help the ECB 
Ireland needs to take money out of the system to service pay for its past sins,


----------



## TheBigShort

RETIRED2017 said:


> Ireland is changing fast the Government do not have the money to increase wages like in the old days the were spending money paid in by workers for there future pensions the hens are Comimg home to roost any extra wage increase will mean more tax needs to be collected so Ireland cannot help the ECB



I'm not talking specifically about Irish government wages.
I'm talking about the ECB policy to attain a 2% inflationary rate for the Eurozone.
Have you any ideas as to how they could achieve this? They are trying QE, to my mind all it has done has prop up asset prices.


----------



## Firefly

The price of oil has doubled since this time 2 years ago....the ECB could be trying to reduce inflation to 2% soon enough...

http://www.macrotrends.net/2516/wti-crude-oil-prices-10-year-daily-chart


----------



## RETIRED2017

[QUOTE="TheBigShort, post: 
I am merely pointing out that wage increases are inflationary. The article attachinhttp://www.cso.ie/en/releasesandpub...urcostsq22017finalq32017preliminaryestimates/


Ireland can, and is doing its bit for the ECB target of 2% Eurozone inflation, through wage increases.[/QUOTE]

 Ireland is in no position to help ,Ireland has let its cost of living get out of control driven by past wage increases,


----------



## TheBigShort

Firefly said:


> The price of oil has doubled since this time 2 years ago....the ECB could be trying to reduce inflation to 2% soon enough...
> 
> http://www.macrotrends.net/2516/wti-crude-oil-prices-10-year-daily-chart



Yes, particularly if prices rise to offset oil increases and wage demands follow. If wage demands don't kick in, or are not met, then this will be the most significant factor in keeping inflation subdued.


----------



## TheBigShort

RETIRED2017 said:


> Ireland is in no position to help ,Ireland has let its cost of living get out of control driven by past wage increases,



I disagree. Past wage increases are nearly irrelevant at this point. Pub sector benchmarking was when? 2002? Nearly half a career life-time away. Even since then, the cuts since 2008 have clawed most of those increases back.
We simply cant forever point to the distant past and cry "we cant afford it" even though the economy continues to grow

https://tradingeconomics.com/ireland/gdp-growth-annual


----------



## Delboy

Purple said:


> The average pay rate for Google direct employees is  €94,000. The figures for many of the jobs in the MNC sector are similar. They are doing fine on what they get.


How many Google Direct employees in Ireland? 
What % of the total Google workforce here do they represent?


----------



## RETIRED2017

TheBigShort said:


> I disagree. Past wage increases are nearly irrelevant at this point. Pub sector benchmarking was when? 2002? Nearly half a career life-time away. Even since then, the cuts since 2008 have clawed most of those increases back.
> We simply cant forever point to the distant past and cry "we cant afford it" even though the economy continues to grow
> 
> https://tradingeconomics.com/ireland/gdp-growth-annual


Any extra money the Government takes in the first call is to build a fund to pay future pensions while we have the working population to do so,


----------



## TheBigShort

RETIRED2017 said:


> Any extra money the Government takes in the first call is to build a fund to pay future pensions while we have the working population to do so,



You are kidding right? The government raided the national pension reserve as soon as things got out of control.
In any case, why the persistent referral to Irish government and Irish wages?

The topic is about the ECB and its attempt to create a 2% inflation rate in the Eurozone.

Germany is the biggest trading bloc of the Eurozone.
I've attached an article that claims that deals to increase wages in Germany will help the ECB to achieve its inflation target of 2%.
I've argued that wages increases are inflationary, and if some inflation is what is desirable, then wage increases are the best to go about it, not QE.
Do you agree, or not?


----------



## Purple

Wage increases across the Eurozone are a good idea.
Wage increases in Ireland at the same time are a bad idea.



TheBigShort said:


> Manufacturing, value added (% of GDP) in *Ireland* was reported at *34.69 % in 2016*, according to the World Bank collection of development indicators, compiled from officially recognized sources.
> 
> 
> Industry, value added (% of GDP) in *Germany* was reported at *30.49 % in 2016*, according to the World Bank collection of development indicators, compiled from officially recognized sources.


We all kow that is due to the activities of MNC's.


----------



## Purple

Delboy said:


> How many Google Direct employees in Ireland?
> What % of the total Google workforce here do they represent?


Google employ around 3000 people in Ireland with another 3000 people on full and part time contracts employed through other companies such as Accenture. I presume these are generally low paid jobs. 
The average wage in US Multinationals in Ireland is around €60,000.


----------



## Delboy

Purple said:


> Google employ around 3000 people in Ireland with another 3000 people on full and part time contracts employed through other companies such as Accenture. I presume these are generally low paid jobs.
> The average wage in US Multinationals in Ireland is around €60,000.


So the 3,000 people directly employed are on an average wage of €94k???


----------



## TheBigShort

Purple said:


> Wage increases across the Eurozone are a good idea.



Hooraay! That settles that then. 



Purple said:


> Wage increases in Ireland at the same time are a bad idea.



Ah boo! not settled.
Ireland is in Eurozone. How can wage increases _across the eurozone _be good thing and a bad thing at the same time?
In the context of trying to attain an inflationary rate of 2%, I think it is agreeable now that wage increases are an effective way of achieving that.


----------



## Firefly

TheBigShort said:


> Yes, particularly if prices rise to offset oil increases and wage demands follow. If wage demands don't kick in, or are not met, then this will be the most significant factor in keeping inflation subdued.



Oil prices alone could cause inflation to rise to or above the EU's inflation target of 2% without any need for wages to increase.


----------



## Firefly

Purple said:


> Wage increases across the Eurozone are a good idea.
> Wage increases in Ireland at the same time are a bad idea.



But, we have the lowest wages in Europe


----------



## RETIRED2017

TheBigShort said:


> You are kidding right? The government raided the national pension reserve as soon as things got out of control.
> In any case, why the persistent referral to Irish government and Irish wages?
> 
> The topic is about the ECB and its attempt to create a 2% inflation rate in the Eurozone.
> 
> Germany is the biggest trading bloc of the Eurozone.
> I've attached an article that claims that deals to increase wages in Germany will help the ECB to achieve its inflation target of 2%.
> I've argued that wages increases are inflationary, and if some inflation is what is desirable, then wage increases are the best to go about it, not QE.
> Do you agree, or not?


As you said Germany is the biggest trading bloc of the Eurozone ,
For change do a bit of reading about German Manufacturing A good place to start would be Old World Tiger How Germany Became The China of Europe written for the times on Feb 24 2011 by Michael Schuman,
By the way The company I worked for last 35 years until I retired Manufacture and supply this segment of the German market in 2008/2009 we were taking on people to meet a spare parts market brought on because in the down turn machinery was being refurbished rather than replaced,

I am glad for the people  I used to work with because there wages unlike most in Ireland are linked to German Manufacturing ,

As someone who can see that higher inflation hits the people who have to spend all of there wages to live the hardest .I don't agree with you unless you are prepared to to take home less money to fund a system like they have in Germany for Workers long term,

When you look at How the Germans fund for there workers then look at how Ireland fund for there workers future you will see the so called Socialist posters on hear do not care once they are looked after Themselves,


----------



## TheBigShort

Firefly said:


> Oil prices alone could cause inflation to rise to or above the EU's inflation target of 2% without any need for wages to increase.



Yes they could. But only if the oil price results in higher consumer prices. If that happens you can expect wage demands to follow to keep up with the price of living.

The issue here is that the ECB is trying to reach an inflation rate of 2% across the Eurozone. It has chosen QE as the method in which to bring that about. To my mind all it has done is raise asset prices, which are typically (inexplicably imo) excluded from inflation figures. In my opinion there is not one shred of evidential material to suggest that QE is any use for this purpose.

I'm simply arguing that wages are inflationary. I think that is agreeable? So if the aim is to induce inflation, then policies that give rise to wage increases will create the inflation that is being sought. Such as governments raising minimum wages, sectoral pay agreements would help also, increased capital expenditures and tax reforms creating employment are other measures. These are broadly government policies, outside the remit of ECB.

I don't even agree with the concept of a 2% inflation target - I think that is based on hocus-pocus economics. Just as the Growth and Stability pact is an artificial construct devoid of any real economic understanding. The principle of sound prudent financial management and growth is fine, but has no bearing in reality to the infinite and constant variable activities in economies that lead to circumstances where prudent government spending is simply futile. There are times when governments should invest heavily into their economies, other times when they shouldn't.

But we are where we are, as part of the Eurozone, monetary policy has been ceded to the ECB. The ECB wants 2% inflation (why 2%? why not 3%?). It has chosen QE to do this - where is the concept of stability that is ingrained in the fiscal pact now?


----------



## TheBigShort

RETIRED2017 said:


> As someone who can see that higher inflation hits the people who have to spend all of there wages to live the hardest .I don't agree with you unless you are prepared to to take home less money to fund a system like they have in Germany for Workers long term,



I'm not sure what it is you don't agree with me about? I'm not advocating for higher inflation, the ECB is! It wants 2% inflation, I don't! I never said I did.
What I did say was that wages were inflationary. If the ECB aim (not my aim) is to get 2% inflation, it is my view that policies that induce wage demands are more effective to realizing that aim.
If wages increase by 4% (as the minimum wage in Ireland has done, as the pay deals in Germany will do) and the inflation rate remains subdued, those workers are benefitting.

Where they will lose out is through the continuing depreciation of their currency through QE. Guess what? House prices are unaffordable to many people once more -typically those people who have to spend all their wages to get by.

I'm not suggesting that wage increases should be on-going on a perpetual basis, I'm suggesting that there is scope now, throughout the Eurozone, to raise wages and improve the standard of living for working people. It will also assist the ECB in achieving its inflation target to 2%.


----------



## RETIRED2017

TheBigShort said:


> I'm not sure what it is you don't agree with me about? I'm not advocating for higher inflation, the ECB is! It wants 2% inflation, I don't! I never said I did.
> What I did say was that wages were inflationary. If the ECB aim (not my aim) is to get 2% inflation, it is my view that policies that induce wage demands are more effective to realizing that aim.
> If wages increase by 4% (as the minimum wage in Ireland has done, as the pay deals in Germany will do) and the inflation rate remains subdued, those workers are benefitting.
> 
> Where they will lose out is through the continuing depreciation of their currency through QE. Guess what? House prices are unaffordable to many people once more -typically those people who have to spend all their wages to get by.
> 
> I'm not suggesting that wage increases should be on-going on a perpetual basis, I'm suggesting that there is scope now, throughout the Eurozone, to raise wages and improve the standard of living for working people. It will also assist the ECB in achieving its inflation target to 2%.



If wages go up  the amount people are allowed to borrow also goes up As you said inflation also goes up the only people winning are the people who are already well off,

People who need to spend all of there wages to live  are most affected by the high cost of living in Ireland ,


----------



## TheBigShort

RETIRED2017 said:


> If wages go up  the amount people are allowed to borrow also goes up As you said inflation also goes up the only people winning are the people who are already well off,



Says who?

If wages go up, over and above the rate of inflation, then wage earners benefit - they have more purchasing power. This does not automatically correlate with increased borrowing. In fact it can reduce personal debt levels significantly. I would suggest that, given the experience of the last ten years, personal debt levels will fall first before it starts to increase again. (this is actually occurring at the moment)

If the loan sharks in the financial institutions try to capitalize by offering increased credit, well that's another days work.


----------



## RETIRED2017

[QUOTE="TheBigShort, post: 1554461, me

If the loan sharks in the financial institutions try to capitalize by offering increased credit, well that's another days work.[/QUOTE]

There are also well connected groups who would capitalize on wage increases who don't care what affect wage increases have once more money is transferred to them  the don't care about the common good and need to be called out for what the are another version of the above,


----------



## Purple

TheBigShort said:


> Hooraay! That settles that then.
> 
> 
> 
> Ah boo! not settled.
> Ireland is in Eurozone. How can wage increases _across the eurozone _be good thing and a bad thing at the same time?
> In the context of trying to attain an inflationary rate of 2%, I think it is agreeable now that wage increases are an effective way of achieving that.



Wage increases in the Eurozone will increase inflation across the whole zone but we are already paying ourselves more than our mainland counterparts so we should stop and let them catch up. 
The problem with wage increases in the wealth creating private sector is that they are used by the Brethren (bearded or otherwise) to stoke claims for increases in the non-wealth creating State sector.


----------



## Purple

TheBigShort said:


> Says who?
> 
> If wages go up, over and above the rate of inflation, then wage earners benefit - they have more purchasing power. This does not automatically correlate with increased borrowing. In fact it can reduce personal debt levels significantly. I would suggest that, given the experience of the last ten years, personal debt levels will fall first before it starts to increase again. (this is actually occurring at the moment)


No, but it leads to a loss of competitiveness, a reduction in exports, an increase in imports and growth based on a consumption bubble rather than wealth generating export growth. That's what turned the real growth of the early 90's into the bubble of the late 90's/ early 00's


----------



## Purple

RETIRED2017 said:


> When you look at How the Germans fund for there workers then look at how Ireland fund for there workers future you will see the so called Socialist posters on hear do not care once they are looked after Themselves,


Ouch! Very true though.
Socialists in Ireland aren't interested in working people. They are interested in people who don't work.


----------



## Firefly

TheBigShort said:


> The issue here is that the ECB is trying to reach an inflation rate of 2% across the Eurozone.



You seem awfully concerned about the EU meeting its inflation rate as you keep mentioning this. Do you mind me asking where your interest in inflationary policy has come from?


----------



## TheBigShort

Purple said:


> The problem with wage increases in the wealth creating private sector is that they are used by the Brethren (bearded or otherwise) to stoke claims for increases in the non-wealth creating State sector.



Ya! I think we have been through all this before. Simple examples, the budget for Dept of Justice - €2.6bn, providing for Gardaí, Court services, prison services etc.

Without it, the insurance industry would collapse. Without the insurance industry, the whole economy would shut down.
How is a €2.6bn spend on Dept of Justice not considering to be wealth creating I just don't know?


----------



## Purple

TheBigShort said:


> Says who?
> 
> If wages go up, over and above the rate of inflation, then wage earners benefit - they have more purchasing power. This does not automatically correlate with increased borrowing. In fact it can reduce personal debt levels significantly. I would suggest that, given the experience of the last ten years, personal debt levels will fall first before it starts to increase again. (this is actually occurring at the moment)


Since borrowing limits are set as a multiple of incomes as wages increase the price of houses will increase by the same multiple. That is until supply meets demand.


----------



## Purple

TheBigShort said:


> How is a €2.6bn spend on Dept of Justice not considering to be wealth creating I just don't know?


I know you don't. That's the problem.


----------



## TheBigShort

Firefly said:


> You seem awfully concerned about the EU meeting its inflation rate as you keep mentioning this. Do you mind me asking where your interest in inflationary policy has come from?



Sorry, but this is how we go around in circles. You ask a question,  I try to answer. I ask you a question (or questions) and you don't answer.



TheBigShort said:


> I'm simply arguing that wages are inflationary. I think that is agreeable?





TheBigShort said:


> But we are where we are, as part of the Eurozone, monetary policy has been ceded to the ECB. The ECB wants 2% inflation (why 2%? why not 3%?). It has chosen QE to do this - where is the concept of stability that is ingrained in the fiscal pact now?



When you at least try to answer some questions, then perhaps we can move on, otherwise there is no point in continuing.


----------



## RETIRED2017

Purple said:


> Wage increases in the Eurozone will increase inflation across the whole zone but we are already paying ourselves more than our mainland counterparts so we should stop and let them catch up.
> The problem with wage increases in the wealth creating private sector is that they are used by the Brethren (bearded or otherwise) to stoke claims for increases in the non-wealth creating State sector.


To be fair to the Brethren (bearded or otherwise) they only exist because some people see them as  Socialist most are bottom feeding capitalist sucking off there brothers and sisters they only reason they exist in Ireland is because the people who don't like them keep electing the same people FF/FG /LAB who feed them,


----------



## TheBigShort

Purple said:


> I know you don't. That's the problem.



I'm sorry, I don't understand your perspective.
We live, or so we are told. in one of the richest countries in the world. Are you suggesting otherwise? Are we a poor country, or a wealthy country? If we are poor, can you back it up pls with some data, links, references?
If we are a rich country, (there is plenty of data to suggest we are), where did the wealth come from? The magic leprechaun economy?


----------



## Firefly

TheBigShort said:


> I'm simply arguing that wages are inflationary. I think that is agreeable?


I agree.



TheBigShort said:


> But we are where we are, as part of the Eurozone, monetary policy has been ceded to the ECB. The ECB wants 2% inflation (why 2%? why not 3%?). It has chosen QE to do this - where is the concept of stability that is ingrained in the fiscal pact now?


I have no idea and I never really got behind the idea of QE at all anyways.

So....you seem awfully concerned about the EU meeting its inflation rate as you keep mentioning this. Do you mind me asking where your interest in inflationary policy has come from?


----------



## Purple

TheBigShort said:


> I'm sorry, I don't understand your perspective.
> We live, or so we are told. in one of the richest countries in the world. Are you suggesting otherwise? Are we a poor country, or a wealthy country? If we are poor, can you back it up pls with some data, links, references?
> If we are a rich country, (there is plenty of data to suggest we are), where did the wealth come from? The magic leprechaun economy?


We are a rich country, as is every country in Europe. That came from an export driven economy which was built from the mid 80'd to the mid 90's. Much of that was based on our location; we just had to learn to trade with our rich neighbours for most of the growth to happen, and from a harvesting other countries taxes. 
Are you suggesting that our police force and judicial system is vastly better than a country like Botswana?


----------



## TheBigShort

Firefly said:


> I agree.



Hooraay! That's that settled then 



Firefly said:


> So....you seem awfully concerned about the EU meeting its inflation rate as you keep mentioning this. Do you mind me asking where your interest in inflationary policy has come from?



I'm not at all concerned about the ECB meeting its inflation target. The ECB, it would appear, very concerned about meeting its inflation target. So much so, they have engaged in a €3trn-€4trn money printing operation.
My interest in inflationary policy comes from the fact that I have a stake in the economy.


----------



## Firefly

TheBigShort said:


> Yes they could. But only if the oil price results in higher consumer prices.



I'm not sure whether or not the price of oil is included in the official inflation rate, however rising oil prices affects the price on consumer goods - more expensive to manufacture and transport etc. Over in the US, the recent increases in oil prices have already affected the price of consumer products:

https://www.rte.ie/news/business/2017/1213/927148-us-consumer-index/


----------



## Purple

TheBigShort said:


> I'm not at all concerned about the ECB meeting its inflation target. The ECB, it would appear, very concerned about meeting its inflation target. So much so, they have engaged in a €3trn-€4trn money printing operation.
> My interest in inflationary policy comes from the fact that I have a stake in the economy.


If the question is "Is increasing wages a better and more equitable tool to stimulate an increase in inflation?" then my answer is yes.


----------



## Firefly

TheBigShort said:


> Hooraay! That's that settled then


What's settled exactly? I am agreeing that wages are inflationary...hardly ground breaking?



TheBigShort said:


> I'm not at all concerned about the ECB meeting its inflation target.


Then why keep bring it up? Why not just admit that you just want to see higher wages and the fact that it might help inflation is beside the point?


----------



## TheBigShort

Purple said:


> We are a rich country, as is every country in Europe. That came from an export driven economy which was built from the mid 80'd to the mid 90's. Much of that was based on our location; we just had to learn to trade with our rich neighbours for most of the growth to happen, and from a harvesting other countries taxes.
> Are you suggesting that our police force and judicial system is vastly better than a country like Botswana?



 Talk about rabbit holes!

In order to grow an economy it needs a lot of things. One of them would be political stability, another would be access to education, health services etc. A functioning judiciary supported by adequate law & enforcement is also a plus for attracting investment. Environmental protection measures is another. Policies that support free trade is another. The list is endless, from democratic values and legislature to social supports for children with learning difficulties.


----------



## TheBigShort

Purple said:


> If the question is "Is increasing wages a better and more equitable tool to stimulate an increase in inflation?" then my answer is yes.



Thank you. That is my point.

The other point is, the ECB thinks QE is the tool stimulate inflation. I disagree.


----------



## RETIRED2017

TheBigShort said:


> Hooraay! That's that settled then
> 
> 
> 
> I'm not at all concerned about the ECB meeting its inflation target. The ECB, it would appear, very concerned about meeting its inflation target. So much so, they have engaged in a €3trn-€4trn money printing operation.
> My interest in inflationary policy comes from the fact that I have a stake in the economy.


We need to take money out of the economy in Ireland to fund  pensions in the future which will be anti inflationary which is in our long term interest to ensure there will be money there when required in the future,

Whether we like it or not our take home pay has to drop in Ireland to fund for the future  and the Fund needs to be ring fenced ,

First call on any extra tax taken in should be to replace the money taken out of the pension fund along with adding to the fund each year,


----------



## TheBigShort

Firefly said:


> What's settled exactly?



That we agree that wages are inflationary.



Firefly said:


> I am agreeing that wages are inflationary...hardly ground breaking?



Absolutely not, as I stated in the very first line, in the very first post of this topic.



TheBigShort said:


> In the context of general economic theory, wage increases are inflationary.




And that's the whole point. If the ECB wants inflation, and wages are inflationary....go figure!

Instead the ECB have embarked on a money printing scheme at levels never witnessed in the history of humankind in order to stimulate inflation. When, without having to break any ground, the answer is simple and obvious. Don't take my word for it;

https://www.theguardian.com/busines...b013613fffb49a#block-57d16664e4b013613fffb49a

_Draghi: We need higher wages

https://www.rte.ie/news/business/2016/0907/814967-us-federal-reserve-be/_

_Some thoughts from David McWilliams

"If any single indicator can tell where the economy is headed it might be wages...stagnant wage growth has been one the hallmarks of the weakest economic recovery since WWII"_



Firefly said:


> Then why keep bring it up? Why not just admit that you just want to see higher wages and the fact that it might help inflation is beside the point?



I keep bringing it up because I believe the QE program is ultimately deflationary - that is, my currency, my savings, are being deflated by the very thing that is supposed to stimulate inflation.


----------



## Purple

TheBigShort said:


> In order to grow an economy it needs a lot of things. One of them would be political stability, another would be access to education, health services etc. A functioning judiciary supported by adequate law & enforcement is also a plus for attracting investment. Environmental protection measures is another. Policies that support free trade is another. The list is endless, from democratic values and legislature to social supports for children with learning difficulties.


yes, those things are necessary in order to create the environment in which wealth generating economic activity can take place but they are not wealth generating. 
We need rain for grass to grow, for cows to feed on, for milk to be produced, for cheese to be made from... but rain is not cheese. see? Same thing.


----------



## Purple

TheBigShort said:


> Thank you. That is my point.
> 
> The other point is, the ECB thinks QE is the tool stimulate inflation. I disagree.


I agree with you on both counts but neither indicate that wage growth is a good thing for the Irish economy or Ireland generally and certainly not outside the wealth generating sector of the economy; internationally traded goods and services, (particularly those provided by Irish companies).


----------



## TheBigShort

Purple said:


> I agree with you on both counts but neither indicate that wage growth is a good thing for the Irish economy or Ireland generally and certainly not outside the wealth generating sector of the economy; internationally traded goods and services, (particularly those provided by Irish companies).



Wage growth is generally a good thing for every economy, notwithstanding if wage increases exceed productivity levels. But it would take a lot of wages increases in Ireland to even come close to the current productivity levels.


----------



## Firefly

TheBigShort said:


> And that's the whole point. If the ECB wants inflation, and wages are inflationary....go figure!



Higher wages are not the only thing that cause inflation. Higher evergy prices also lead to higher prices.

If we simply increase wages for everyone, what do you think will happen prices? They will increase and then you'll be back here advocating even higher wages to counteract the effects of inflation!



TheBigShort said:


> I keep bringing it up because I believe the QE program is ultimately deflationary - that is, my currency, my savings, are being deflated by the very thing that is supposed to stimulate inflation.



You have mentioned QE over and over again and I think we are all in agreement with you. With respect I don't think that is why you are bringing this up. I think it's because it suits your narrative for higher wages. As per above, if inflation was running at say 5% I have no doubt you would be calling for even higher wages to counteract the effects of inflation.

One basic question if I may. Assuming the boffins in the EU calculate that raising wages by 3% would enable inflation to rise to its state target of 2%, how do you think this could be achieved fairly across every sector, every industry, every town/village,city, across the entire EU on an equal basis?


----------



## RETIRED2017

TheBigShort
. But it would take a lot of wages increases in Ireland to even come close to the current productivity levels.[/QUOTE]

If you take out all of the companies who are hear because of our low tax and all of the people who earn a living Indirectly  from the same sources ,
if anything happens to the above over the next 20 years we will be in a sorry state,


----------



## TheBigShort

Firefly said:


> Higher wages are not the only thing that cause inflation. Higher evergy prices also lead to higher prices.



I agree. But as you have pointed out, oil has doubled in price recently. Inflation has barely moved over the same period.



Firefly said:


> If we simply increase wages for everyone, what do you think will happen prices? They will increase and then you'll be back here advocating even higher wages to counteract the effects of inflation!



Prices will start to increase.

You are assuming something that has not happened. I have been party to, in the past, to wage agreements that increased wages less than the inflation rate, wage deferrals to assist with bringing down the inflation rate, and even wage cuts.
As for 'advocating even higher wages to counteract the effects of inflation', what do you think will happen if inflation does, somehow, reach 2% and there have been no wage increases?
The point behind all of this is that there is scope to increase wages, probably at levels over and above the desired inflation target rate of 2%, thus protecting, and increasing, the value of those wages for the betterment of the Eurozone economy as a whole.
Why do think the ECB itself has said "we need higher wages"?
Again, don't take my word for it, I have posted plenty of links on this thread that support my views.



Firefly said:


> With respect I don't think that is why you are bringing this up. I think it's because it suits your narrative for higher wages.



With respect, you are wrong and again making assumptions. See previous paragraph.



Firefly said:


> As per above, if inflation was running at say 5% I have no doubt you would be calling for even higher wages to counteract the effects of inflation.



I'm not calling for higher wages.
I'm merely pointing out that wage increases are inflationary. The ECB is calling for higher inflation, it has called for higher wages,

_Draghi: "We need higher wages"._

That is my point, I agree with Draghi - if the ECB is to attain its 2% inflation target rate, we need higher wages. Not QE.



Firefly said:


> Assuming the boffins in the EU calculate that raising wages by 3% would enable inflation to rise to its state target of 2%, how do you think this could be achieved fairly across every sector, every industry, every town/village,city, across the entire EU on an equal basis?



I don't know how this could be achieved fairly across every sector, every industry, every town/village, city, across the EU on an equal basis. Do you?


----------



## TheBigShort

RETIRED2017 said:


> If you take out all of the companies who are hear because of our low tax and all of the people who earn a living Indirectly from the same sources ,
> if anything happens to the above over the next 20 years we will be in a sorry state,



I agree. But what it has to do with this topic I'm not sure.

In any case, this topic which started in Sept 2016 is somewhat outdated.

Wage increases are being felt across the Irish economy, and also in other parts of the eurozone. Notably Germany.
Inflation is on its way, as desired by ECB (not me!)

What will happen to the QE €trns however? God only knows!


----------



## Firefly

TheBigShort said:


> I agree. But as you have pointed out, oil has doubled in price recently. Inflation has barely moved over the same period.


It will obviously take time...existing goods will have already used up energy at the lower prices. This is why IMO it would be better to wait until the effects are known before looking at rising wages.




TheBigShort said:


> Prices will start to increase.



And if prices start to increase, which direction do you see wages? See where this is going? A spiral.. 



TheBigShort said:


> I don't know how this could be achieved fairly across every sector, every industry, every town/village, city, across the EU on an equal basis. Do you?


No idea either. I would have thought a socialist would have ideas though....equality n'all...


----------



## RETIRED2017

TheBigShort said:


> I agree. But what it has to do with this topic I'm not sure.
> 
> In any case, this topic which started in Sept 2016 is somewhat outdated.
> 
> Wage increases are being felt across the Irish economy, and also in other parts of the eurozone. Notably Germany.
> Inflation is on its way, as desired by ECB (not me!)
> 
> What will happen to the QE €trns however? God only knows!



Wage increases are being felt across the Irish economy since 2016 I agree  for the most part . Some are having a party including myself.Others not so good,


----------



## TheBigShort

Firefly said:


> It will obviously take time...existing goods will have already used up energy at the lower prices. This is why IMO it would be better to wait until the effects are known before looking at rising wages.



What if oil prices fall in that time? Because of low demand in economies, due to stagnant wages?
You are still avoiding the basic point. It is the ECB, not me, that wants 2% inflation.
Can you offer them any advice on how it could be achieved in eurozone economies?
I have suggested wage increases. The ECB agrees. Other central banks, economists, business people have all pointed to wage constraint as a cause of the lack of any inflation. I have linked their commentaries throughout this thread. 
The message is getting through, wages are increasing across the eurozone, notably germany. 
If its inflation they want, this is how to get it, not QE.



Firefly said:


> And if prices start to increase, which direction do you see wages? See where this is going? A spiral..



Do you not consider that wages can grow in excess of its inflationary impact? The minimum wage has grown 4.3% since this topic started, economic growth continues. 





Firefly said:


> No idea either. I would have thought a socialist would have ideas though....equality n'all...



Sorry to disappoint you. I didnt think the concept of equality was exclusive to socialists.


----------



## Firefly

TheBigShort said:


> What if oil prices fall in that time?



Then consumer prices should fall, which means people can buy more so the less need to raise wages.



TheBigShort said:


> You are still avoiding the basic point. It is the ECB, not me, that wants 2% inflation.
> Can you offer them any advice on how it could be achieved in eurozone economies?


I'm sure the EU has an army of economists and as I am not an economist myself I wouldn't even try. I'm not against wage increases per se, but I don't see increasing wages as a magic bullet either. 



TheBigShort said:


> Do you not consider that wages can grow in excess of its inflationary impact?


For some lucky people yes, but for most no. 



TheBigShort said:


> Sorry to disappoint you. I didnt think the concept of equality was exclusive to socialists.


Maybe not, but for socialists it is surely a central tenet?


----------



## TheBigShort

Firefly said:


> Then consumer prices should fall, which means people can buy more so the less need to raise wages.



The economy, prices, wages, etc dont work in a vacuum. If oil price falls, it signals less activity in the economy. Less activity signals rising unemployment and downward pressure on wages.
On the otherhand, economies that are stuttering to grow, if wages increase this _may _lead to increased consumption, employment etc.

Look, nothing is a given in any economic cycle. But the topic, from the opening post, was to address the ECB dilemma of targeting 2% inflation. They chose a path of QE, which has inflated asset prices. They have since called, as have many others, the need for wage increases.
That is now occuring, and economic growth with it.



Firefly said:


> I'm sure the EU has an army of economists and as I am not an economist myself I wouldn't even try. I'm not against wage increases per se, but I don't see increasing wages as a magic bullet either.



No-one declared it as a magic bullet. It is a tool. At the time this topic started, economic growth across the eurozone was subdued. Heading for a deflationary trap.
There is a time for wage increases, that can spur on economic growth. That time is now


----------



## Firefly

TheBigShort said:


> No-one declared it as a magic bullet.


But it seems impossible to implement in an equitable way though. As a declared capitalist yourself , would you not agree that the fairest and most equitable way to higher wages is via the market economy?



TheBigShort said:


> if you are homeless and hungry or a bankrupt property developer,  you are going to need a handout.


We're veering off topic here, but yes, I agree that in times of trouble having a safety net for people is a fantastic option for those in a rich country like ours. Sadly though, it gets abused..


----------



## TheBigShort

Firefly said:


> But it seems impossible to implement in an equitable way though. As a declared capitalist yourself , would you not agree that the fairest and most equitable way to higher wages is via the market economy?



For sure. But we need to establish a market economy in the first instance. We live in a centralised banking economy.
These guys at the ECB were put in charge of setting interest rates to control inflation. Now they are trying to set inflation to control interest rates.  It is sad. World turned upside down economics.

The 'market' economy was destroyed virtue of the laissez faire approach to the financial sector. The one sector that should never been allowed to do what it did.
All that is happening now, is to try put humpty dumpty back together again.
Increasing wages, in my opinion, is the quickest and fairest way to do that.


----------



## RETIRED2017

TheBigShort said:


> I agree. But what it has to do with this topic I'm not sure.
> 
> In any case, this topic which started in Sept 2016 is somewhat outdated.
> 
> Wage increases are being felt across the Irish economy, and also in other parts of the eurozone. Notably Germany.
> Inflation is on its way, as desired by ECB (not me!)  Cheer Leader
> 
> What will happen to the QE €trns however? God only knows!


Wage Increases will work out Well For The ALright there Jack = people with no Mortgage or a small mortgage people near the top of there pay  scale and people on high Incomes people in protected Employment and so forth and the people with the bank of mam and Dad


What about the people who do not have the bank of Mom and Dad

With Inflation the first thing to get hit is Mortgage rates what good is 4.3% of 9 euro an hour to them ,

Someone on 30 euro an hour getting 4.3 has a better chance of working out better in Ireland

I can see how  I Am Alright there jack likes to see wage Increases ,


----------



## TheBigShort

RETIRED2017 said:


> Wage Increases will work out Well For The ALright there Jack = people with no Mortgage or a small mortgage people near the top of there pay  scale and people on high Incomes people in protected Employment and so forth and the people with the bank of mam and Dad
> 
> 
> What about the people who do not have the bank of Mom and Dad
> 
> With Inflation the first thing to get hit is Mortgage rates what good is 4.3% of 9 euro an hour to them ,
> 
> Someone on 30 euro an hour getting 4.3 has a better chance of working out better in Ireland
> 
> I can see how  I Am Alright there jack likes to see wage Increases ,



The only rational I can see in the above is that you are opposed to wages at all! 
Otherwise it makes no sense to me - dont increase wages because some people have smaller mortgages than others ?!?!


----------



## RETIRED2017

TheBigShort said:


> The only rational I can see in the above is that you are opposed to wages at all!
> Otherwise it makes no sense to me - dont increase wages because some people have smaller mortgages than others ?!?!


You know well that is not what i am say :time and time again you see people using the people on low wages to feather there own nest and getting away with it,


----------



## TheBigShort

RETIRED2017 said:


> You know well that is not what i am say :time and time again you see people using the people on low wages to feather there own nest and getting away with it,



Yeh, typically by preying on their extra income by offer loans.
However, by offering wage increases over and above the inflation rate working people will have more purchasing power.
The trick of the last 30-40 yrs was to offer moderate wage increases in return for tax 'reform' and low interest rates. Allowing the blood-suckers to peddle their perpetual debt model on working people.
It has its benefits, to a point. But when the reality of continuously borrowing in order to sustain moderate lifestyles becomes the norm, it is time for a reality check.

Increasing wages at this point will drive economies forward. Smash bloated stock markets and crucify the blood-suckers who gain on the perpetual debt system.

In bad times they tell workers, cant afford to pay.
In good times they tell workers, cant afford to pay in case it brings back the bad times.

We live in centralised banking economy, driven by corporate agenda and facilitated by subservient governance.


----------



## RETIRED2017

TheBigShort said:


> Yeh,
> 
> We live in centralised banking economy, driven by corporate agenda and facilitated by subservient governance.





TheBigShort said:


> Yeh, typically by preying on their extra income by offer loans.
> However, by offering wage increases over and above the inflation rate working people will have more purchasing power.
> The trick of the last 30-40 yrs was to offer moderate wage increases in return for tax 'reform' and low interest rates. Allowing the blood-suckers to peddle their perpetual debt model on working people.
> It has its benefits, to a point. But when the reality of continuously borrowing in order to sustain moderate lifestyles becomes the norm, it is time for a reality check.
> 
> Increasing wages at this point will drive economies forward. Smash bloated stock markets and crucify the blood-suckers who gain on the perpetual debt system.
> 
> In bad times they tell workers, cant afford to pay.
> In good times they tell workers, cant afford to pay in case it brings back the bad times.
> 
> We live in centralised banking economy, driven by corporate agenda and facilitated by subservient governance.



I am not going to fall for that the biggest blood-suckers are the leeches With Bristles who feather there own nest off the backs of Irish working people ,
Great to see Labour at 4% pity the got the seventh seat ,


----------



## TheBigShort

RETIRED2017 said:


> I am not going to fall for that the biggest blood-suckers are the leeches With Bristles who feather there own nest off the backs of Irish working people ,



I have to call this out at some point.

Everytime I try to get to, what I believe to be, the heart of the dysfunction in our monetary system there seems to be, involuntary reflex to talk about bodily hair, notably beards!
You are not the only one in fairness. Perhaps you, or others prone to this fetish could open a thread on 'Beards and the Economic Consequences'?
Until then, perhaps you could stay on topic.

Why do you think the Fed Reserve, ECB, numerous economists, business people, and numerous economic commentators are advocating for wages to increase?
Dont take my word for it, it takes about 5mins to read through the headlines of the links ive attached.

After that, unless you have something of substance to add, then I might join you in the 'Beards...' thread.


----------



## RETIRED2017

TheBigShort said:


> I have to call this out at some point.
> 
> Everytime I try to get to, what I believe to be, the heart of the dysfunction in our monetary system there seems to be, involuntary reflex to talk about bodily hair, notably beards!
> You are not the only one in fairness. Perhaps you, or others prone to this fetish could open a thread on 'Beards and the Economic Consequences'?
> Until then, perhaps you could stay on topic.
> 
> Why do you think the Fed Reserve, ECB, numerous economists, business people, and numerous economic commentators are advocating for wages to increase?
> Dont take my word for it, it takes about 5mins to read through the headlines of the links ive attached.
> 
> After that, unless you have something of substance to add, then I might join you in the 'Beards...' thread.



Now Now TheBigShort The others think they are left wing Socialist because the have a Beard

Beards are used to hiding there true colors you can see by the Behavior of Most Posters On Hear How It Actually Works ,You need to look at the Company the keep to see there true colors,

I know they are Right Wing Bottom Feeders Who Wear A Beard so they don't get noticed,


----------



## TheBigShort

RETIRED2017 said:


> Now Now TheBigShort The others think they are left wing Socialist because the have a Beard
> 
> I know they are Right Wing Bottom Feeders Who Wear A Beard so they don't get noticed,



Mario Draghi "_We need higher wages"_
Janet Yellen "_Wage pressure is desirable"_
David McWilliams, NY Times...etc...

Not a five o'clock shadow amongst them!


----------



## TheBigShort

TheBigShort said:


> In the context of general economic theory, wage increases are inflationary. Central banks *around the world *are trying to stoke inflation.





TheBigShort said:


> The quickest and fairest way to stoke inflation _*into developed economies *_is through increased wages.



I blamed myself for poor OP leading to rabbit holes about LUAS drivers and public sector workers.
But on reflection, it is clear from the OP that I was not talking about exclusively about the Irish economy.


----------



## RETIRED2017

TheBigShort said:


> I blamed myself for poor OP leading to rabbit holes about LUAS drivers and public sector workers.
> But on reflection, it is clear from the OP that I was not talking about exclusively about the Irish economy.



Just for the record in case you are pigeonholing me in with posters on hear who give public servants a hard time DON'T

I have a very high regard for public servants I believe many of the gains in the private sector Employment can be traced back to gains made by public servants first

If fact public servants were the first to Notice the Boys With The  beards Were Right Wing Bottom Feeders When Push Came to Shove,

It was the public servants who Sorted out the  Labour Party and gave it a good trimming in the last election and I thank them for doing so ,

As we found out Labour eat out of the same pocket as FF/FG and still do,


----------



## TheBigShort

http://www.independent.co.uk/voices/uk-wages-economy-inflation-pay-rise-malaise-a7662631.html

I missed out on this one from April 2017.

_"What if wage increases for workers did not always need to follow productivity growth, but could precede it, perhaps even cause it? What if the egg came before the chicken? Some fascinating research posted on the Bank of England’s Bank Underground blog by Alex Tuckett last week provides some evidence that wage-led productivity growth may indeed be a possibility."_

Who would have thought that?


----------



## RETIRED2017

TheBigShort said:


> http://www.independent.co.uk/voices/uk-wages-economy-inflation-pay-rise-malaise-a7662631.html
> 
> I missed out on this one from April 2017.
> 
> _"What if wage increases for workers did not always need to follow productivity growth, but could precede it, perhaps even cause it? What if the egg came before the chicken? Some fascinating research posted on the Bank of England’s Bank Underground blog by Alex Tuckett last week provides some evidence that wage-led productivity growth may indeed be a possibility."_
> 
> Who would have thought that?


That rabbit almost smothered waiting for you to pull it out of the bag
Do Bunnies shed whiskers,


----------



## Purple

TheBigShort said:


> Allowing the blood-suckers to peddle their perpetual debt model on working people.


 You really don't like banks or bankers, do you?




TheBigShort said:


> It has its benefits, to a point. But when the reality of continuously borrowing in order to sustain moderate lifestyles becomes the norm, it is time for a reality check.


 That model has been in place since the 1950's.




TheBigShort said:


> Increasing wages at this point will drive economies forward. Smash bloated stock markets and crucify the blood-suckers who gain on the perpetual debt system.


 Increases in wages may be a good thing as the link between labour and productivity/profit diminishes in a more automated world where Capital is king. 




TheBigShort said:


> In bad times they tell workers, cant afford to pay.
> 
> In good times they tell workers, cant afford to pay in case it brings back the bad times.


 True.




TheBigShort said:


> We live in centralised banking economy, driven by corporate agenda and facilitated by subservient governance.


 We live in a globalised world with a globalised economy where capital can move far more freely than labour. Banking just a (big) cog in the machine. The up side is a far more even global distribution of wealth as billions have moved out of absolute poverty over the last 20-30 years. That has been done at the expense of the top billion "normal" people; the people who don't control the big capital.

It will be interesting to see what happens over the next 20 to 30 years as wage levels start to equalise between the top billion and the next 4 billion and the link between labour and wealth is re-established. Until then vast amounts of wealth will be generated and concentrated among the tiny elite who control the large chunks of the global economy. The same thing happened in the USA during and after the great depression.

The thing about elites is that they have kids and their kids have kids and they all pay inheritance taxes and their wealth gets diluted and dissipates. Intergenerational wealth does last for some but not for most.


The big gap isn’t between the guy who can spend a €250,000 on a car and the guy who can only spend €1000. The big gap is between the guy who can only afford to spend €1000 on a car and the guy who has to watch his family starve to death. To the last guy we are all super rich.


----------



## Purple

TheBigShort said:


> http://www.independent.co.uk/voices/uk-wages-economy-inflation-pay-rise-malaise-a7662631.html
> 
> I missed out on this one from April 2017.
> 
> _"What if wage increases for workers did not always need to follow productivity growth, but could precede it, perhaps even cause it? What if the egg came before the chicken? Some fascinating research posted on the Bank of England’s Bank Underground blog by Alex Tuckett last week provides some evidence that wage-led productivity growth may indeed be a possibility."_
> 
> Who would have thought that?


Lots of may's and might's in there.


----------



## TheBigShort

Purple said:


> You really don't like banks or bankers, do you?



Only those who engage in, or collude in, unethical and/or corrupt manipulative practices for the purposes of self-gain that otherwise would not have occurred. 
All other banks and bankers are perfectly fine. 




Purple said:


> That model has been in place since the 1950's.



And even before that. 
But inherent in the credit expansion model was underlying concept of repaying debt before further credit was afforded. 
Not such an issue for governments and corporations not to repay, as long as they were prudent with spending and investment. 
But once the concept of perpetual debt was afforded to citizens...circa 1970's, then it was bound to lead to trouble.



Purple said:


> Increases in wages may be a good thing as the link between labour and productivity/profit diminishes in a more automated world where Capital is king.



This is actually touches on the basis of future distribution of wealth. Concepts such as living wage, basic income, an end to the structure of  employee/employer relationship replaced instead by ownership of productivity for the producer at individual level. 




Purple said:


> The up side is a far more even global distribution of wealth as billions have moved out of absolute poverty over the last 20-30 years



Certainly there has been plenty of upside. But just because levels of famine and starvation have been reduced is no cause for celebration. There is enough wealth to eradicate famine and hunger altogether. Bob Geldolf, and many others before , recognised it 30yrs ago. 
The fact that my son comes home from school with a Trocaire box each year - 40yrs since I did, indicates to me that the fundamental causes of poverty are still highly prevalent in the world. 




Purple said:


> It will be interesting to see what happens over the next 20 to 30 years as wage levels start to equalise between the top billion and the next 4 billion and the link between labour and wealth is re-established.
> Until then vast amounts of wealth will be generated and concentrated among the tiny elite who control the large chunks of the global economy. The same thing happened in the USA during and after the great depression.



I disagree, wealth is created and generated by everybody. 
Wealth however is controlled by an elite. Big difference.



Purple said:


> The thing about elites is that they have kids and their kids have kids and they all pay inheritance taxes and their wealth gets diluted and dissipates. Intergenerational wealth does last for some but not for most.



I disagree, wealth tends to attract more wealth. It's how economies grow. It's so much that personal wealth dissipates, more a case that wealthy people tend to congregate.



Purple said:


> The big gap isn’t between the guy who can spend a €250,000 on a car and the guy who can only spend €1000. The big gap is between the guy who can only afford to spend €1000 on a car and the guy who has to watch his family starve to death. To the last guy we are all super rich.



Agreed.


----------



## TheBigShort

Purple said:


> Lots of may's and might's in there.



Of course, all theoretical. Hence the topic title "Is it.... ?" 

I would argue it is, as would others.


----------



## RETIRED2017

TheBigShort said:


> The only rational I can see in the above is that you are opposed to wages at all!
> Otherwise it makes no sense to me - dont increase wages because some people have smaller mortgages than others ?!?!


The government small Mortgage will cost a tidy sum to service with higher Interest rates could mean some people may have to fore go a wage increase in the not so distance future  because there Employer will have to service the debt before wage increase

We are already seeing Irish people leaving Ireland because of the catch 22 situation if we pay them higher wages it means they and others will have to pay more tax Irish people do not want to pay more tax   Wages in lots of sectors are being driven down so no extra tax coming in,

Expect lots of unrest in Ireland once  higher Inflation and interest rates kick in,

Wage increases followed by highe r interest rates may affect the Irish economy and Government more than you Think,


----------



## TheBigShort

According to OECD Ireland, after the US, has the highest percentage of low paying jobs in the world.

http://www.thejournal.ie/ireland-has-a-lot-of-low-paying-jobs-1696421-Oct2014/#comments

Is it time for wage increases?


----------



## Purple

TheBigShort said:


> According to OECD Ireland, after the US, has the highest percentage of low paying jobs in the world.
> 
> http://www.thejournal.ie/ireland-has-a-lot-of-low-paying-jobs-1696421-Oct2014/#comments
> 
> Is it time for wage increases?


The data is 4 years old and refers to percentages, not actual income.
It tells us that there are large gaps between the highest paid and the lowest paid. That is a reflection of the large skills gap between the highest paid and the lowest paid, not what the low paid actually get in their pay packet. If you want to be paid more then make yourself more valuable or, in this country, get handouts from your neighbours through the tax they pay.

The "problem" of pay (labour value) disparity is balanced out by the fact that we have just about the most aggressive income tax system in the world which punished hard work and high skills by taking from the those who are skilled and work hard and giving to those who are unskilled and don't work hard.

You seem to think paying low skilled people more is a good thing. Why?


----------



## Protocol

Eurostat 2014 data on low earners


----------



## Protocol

Of course, we have very low tax and PRSI on low earners, so their net wages tend to be higher than other countries.

*Tax rate indicators on low wage earners, 2015 (%) YB17.png*


----------



## Protocol

*Low-wage earners*
Low-wage earners are defined as those employees earning two thirds or less of the national median gross hourly earnings. Hence, the threshold that determine low-wage earners is relative and specific to each Member State.

*One in every six employees in the European Union is a low-wage earner




*


----------



## Purple

Protocol, what do they mean by a low wage trap?


----------



## Protocol

*Net earnings and tax burden*


*Tax wedge*
Information relating to the tax wedge measures the burden of tax and social security contributions relative to labour cost. This information is provided in relation to low-wage earners. The tax wedge for the EU-28 was 38.4 % in 2015 (see Table 1). The highest tax burdens on low-wage earners in 2015 were recorded in Belgium, Hungary, Germany, Austria, France, Italy, Latvia and Sweden (all above 40.0 %). On the other hand, the lowest tax burdens for low-wage earners were recorded in Malta, Ireland and the United Kingdom (all below 30.0 %).

The other three indicators presented in Table 1 provide information on the proportion of gross earnings that is ‘taxed away’ (higher tax rates and social security contributions and/or reduction or loss of benefits) when people return to employment or move from lower to higher incomes. In 2015, the overall proportion of income ‘taxed away’ when an unemployed person moved into employment stood at 74.0 % in the EU-28 (76.5 % for the euro area). The highest rate was recorded in Belgium (92.0 %) whereas the lowest was in Slovakia (44.7 %).

_*The UN trap seems to be the tax on moving from unemployment into a job, combined with loss of benefits.*_

_*The "low wage" trap is also known as the poverty trap, the extra tax on extra income, combined with loss of benefits.*_

For low wage earners seeking higher incomes a higher proportion of their earnings would be ‘taxed away’. In the case of a single-earner married couple with two children, the low wage trap was recorded at 59.8 % in the EU-28 in 2015 (58.0 % for the euro area), with the lowest rate observed in Italy (5.2 %) and the highest rates in Luxembourg (105.8 %). By contrast, in the case of a single person without children the low-wage trap for the EU-28 in 2015 stood at 44.6 % (44.9 % for the euro area); the highest rate was observed in the Netherlands (75.2 %) and the lowest in Bulgaria (21.6 %) and Greece (21.7 %).


----------



## Protocol

Purple, this may help:

http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=earn_nt_lowwtrp&lang=en


----------



## TheBigShort

Purple said:


> The data is 4 years old and refers to percentages, not actual income.



Fair point, accepted. 

Some useful data produced by @Protocol .


----------



## Zenith63

Purple said:


> You seem to think paying low skilled people more is a good thing. Why?


The same question can be asked of you though; why is low skilled people the same or less is an inherently good thing?  But personally I think have the discussion this way is somewhat pointless, if you ask a few different people the question you'll get different answers, same as you do when you ask should we pay less, the same or more tax, should or shouldn't the government provide a health service etc.  It tends to be based on subjective opinion rather than taking a look at the facts.

I think a more relevant and productive question, from a discussion point of view, is what do you think the minimum standard of living for Joe Public working a low skilled job should be, then go from there on where wages should be, what taxes should look like, how house prices should ideally look.
- Should Joe (or Jill) be able to support their spouse and say two kids on a single income to allow the kids to be raised by one of the parents? For me, ideally yes, certainly two parents commuting an hour each way and working 8 hours all their children's life is not leading to the best outcome for those childrens' interactions with society in future.
- Should Joe be able to purchase a home and expect to have it paid off by the time he reaches retirement? For me, yes.
- Should Joe be able to purchase a house in the capital city and have it paid off by the time he reaches retirement?  Absolutely not for me.
- Should Joe only be able to afford a house 2 hours commute from his job?  No for me.
- Should Joe be able to put a few quid aside beyond the state pension? For me, ideally yes.
- Should Joe be able to afford a family health insurance policy or is relying on the public system OK?  For me probably not.
- Should Joe be able to afford to put away money to save for one budget family holiday a year, maybe to Spain or somewhere like that?  For me yes.
- Should Joe be able to buy a brand new car every 3 years?  For me no.
- Should Joe be able to build up a rainy day fund of 6 months income over a 5-10 year period.  For me yes.
- Should Joe expect to see higher-skilled workers etc. driving around in nicer newer cars, living in the affluent city centre and earning multiples of his earnings because of that extra skill level?  For me yes within reason.

Some of this is surely pie-in-the-sky, I get that, but I'd love to hear from those that think lower income earners should be paid less and contribute more tax, and whether they also feel that 'no' is the right answer to all those questions and are comfortable with that.  Because with a median income of what, €25-28k, the answer will need to be no to most of the questions...


----------



## Purple

Zenith63 said:


> The same question can be asked of you though; why is low skilled people the same or less is an inherently good thing?  But personally I think have the discussion this way is somewhat pointless, if you ask a few different people the question you'll get different answers, same as you do when you ask should we pay less, the same or more tax, should or shouldn't the government provide a health service etc.  It tends to be based on subjective opinion rather than taking a look at the facts.
> 
> I think a more relevant and productive question, from a discussion point of view, is what do you think the minimum standard of living for Joe Public working a low skilled job should be, then go from there on where wages should be, what taxes should look like, how house prices should ideally look.
> - Should Joe (or Jill) be able to support their spouse and say two kids on a single income to allow the kids to be raised by one of the parents? For me, ideally yes, certainly two parents commuting an hour each way and working 8 hours all their children's life is not leading to the best outcome for those childrens' interactions with society in future.
> - Should Joe be able to purchase a home and expect to have it paid off by the time he reaches retirement? For me, yes.
> - Should Joe be able to purchase a house in the capital city and have it paid off by the time he reaches retirement?  Absolutely not for me.
> - Should Joe only be able to afford a house 2 hours commute from his job?  No for me.
> - Should Joe be able to put a few quid aside beyond the state pension? For me, ideally yes.
> - Should Joe be able to afford a family health insurance policy or is relying on the public system OK?  For me probably not.
> - Should Joe be able to afford to put away money to save for one budget family holiday a year, maybe to Spain or somewhere like that?  For me yes.
> - Should Joe be able to buy a brand new car every 3 years?  For me no.
> - Should Joe be able to build up a rainy day fund of 6 months income over a 5-10 year period.  For me yes.
> - Should Joe expect to see higher-skilled workers etc. driving around in nicer newer cars, living in the affluent city centre and earning multiples of his earnings because of that extra skill level?  For me yes within reason.
> 
> Some of this is surely pie-in-the-sky, I get that, but I'd love to hear from those that think lower income earners should be paid less and contribute more tax, and whether they also feel that 'no' is the right answer to all those questions and are comfortable with that.  Because with a median income of what, €25-28k, the answer will need to be no to most of the questions...



I'm broadly in agreement with you here but the follow on question is should the cost of that social burden be placed on the employer or should society, through taxation and income redistribution, level the playing field.
In general I do not think that any employer should be forced to pay anyone more than the value of their labour. Otherwise it is just a form of stealth taxation on the employer. 
If that person cannot then have a reasonable standard of living then that's where social transfers come in. There was a time when men were paid more than women for the same job. Thankfully that doesn't happen anymore. There was a time when married men got paid more than single men. Thankfully that doesn't happen anymore  either.
I accept that some social transfers can act as a form of employment subsidy but high minimum wages and wage increases based on broader social engineering desires are not the answer.


----------



## Zenith63

Purple said:


> I'm broadly in agreement with you here but the follow on question is should the cost of that social burden be placed on the employer or should society, through taxation and income redistribution, level the playing field.
> In general I do not think that any employer should be forced to pay anyone more than the value of their labour. Otherwise it is just a form of stealth taxation on the employer.


I think having a minimum wage is a good thing, but I agree that working towards improving inequality will not be solved with it, it's just there as a floor.  So I would not be suggesting that employers (as I am myself) should just be forced to put up wages across the board.

I wouldn't really be in favour of going too much further down the social transfers route either.  I don't think it's a good thing for society for there to be a large cohort of people who feel they are getting handouts and aren't necessarily earning their income, or for all the other people who watch this happening and feel they are supporting these cohort.

Having recently read Capital in the 21st Century (cannot recommend it highly enough!), it is clear to me that the balance has shifted too far from labour and towards capital, favouring those who already have wealth.  So while I definitely would not want to see wages forced up across the board (which would crush smaller business, less profitable businesses etc.), I think something that ensures employees of businesses that are profitable share equitably in that success would be one solution.  FWIW I am fairly strongly opposed to unions, so I'm by no means suggesting that route!

The next piece for me then would be to try and shift taxation towards capital (wealth), with less focus on income.  As the book lays out very well, the more capital you have the more money you can make, which has only one possible outcome - the further concentration of capital.  And those earnings come from only one place, labour.  So take a larger and larger share of those earnings and labour sees a smaller and smaller share, ultimately keeping Joe Public on a smaller salary than he needs to live the life we'd like him to be able to live.

Again I know this cannot be fixed easily and there are loads of really big challenges, but I'd love to see more discussion about this and less about how he thinks taxes/wages/benefits should be higher, she thinks low and the other guy is happy where they are...


----------



## Purple

Zenith63, I agree with all of that, particularly the shift from taxing labour to taxing capital.
I also agree with ensuring that everyone benefits in a profitable company. A personal goal of mine where I work is to have everyone who is there more than two years earning a minimum of €30,000 a year.  That should be achieved by running the company in a very efficient manner and training and investing in the employees so that their labour is worth €30,000 a year, not by just paying them more than they are worth.


----------



## Firefly

Zenith63 said:


> - Should Joe be able to purchase a home and expect to have it paid off by the time he reaches retirement? For me, yes.
> - Should Joe be able to purchase a house in the capital city and have it paid off by the time he reaches retirement?  Absolutely not for me.
> - Should Joe only be able to afford a house 2 hours commute from his job?  No for me.
> - Should Joe be able to put a few quid aside beyond the state pension? For me, ideally yes.
> - Should Joe be able to afford a family health insurance policy or is relying on the public system OK?  For me probably not.
> - Should Joe be able to afford to put away money to save for one budget family holiday a year, maybe to Spain or somewhere like that?  For me yes.
> - Should Joe be able to buy a brand new car every 3 years?  For me no.
> - Should Joe be able to build up a rainy day fund of 6 months income over a 5-10 year period.  For me yes.
> - Should Joe expect to see higher-skilled workers etc. driving around in nicer newer cars, living in the affluent city centre and earning multiples of his earnings because of that extra skill level?  For me yes within reason.



Joe should look at the market and figure out how he can upskill for work that pays more!


----------



## Zenith63

Firefly said:


> Joe should look at the market and figure out how he can upskill for work that pays more!


That's sort of missing the point.

There are always Joe Publics out there upskilling and moving up the value chain, then another Joe comes along and takes that low-skilled piece of work.  The point though is that there's always a Joe in that low-skilled work, because the low-skilled work doesn't go away when somebody moves up.  So for the purposes of this discussion, lets assume that the Joe in question actually started out on minimum wage and has worked really hard, upskilled himself as much as he is possibly capable of and is in this median-paid relatively low-skilled job.


----------



## Firefly

Zenith63 said:


> There are always Joe Publics out there upskilling and moving up the value chain, then another Joe comes along and takes that low-skilled piece of work.  The point though is that there's always a Joe in that low-skilled work, because the low-skilled work doesn't go away when somebody moves up.


I'm glad you recognise that someone on low skilled income works their way up. Some people round these parts seem to think that it's a permanent outcome no matter what!



Zenith63 said:


> So for the purposes of this discussion, lets assume that the Joe in question actually started out on minimum wage and has worked really hard, upskilled himself as much as he is possibly capable of and is in this median-paid relatively low-skilled job.


It's a difficult one for sure as it's all subjective and for each individual / family there could be a million factors at play.

At least with the market, they can get what they can afford, and you'll usually find, where the government gets out of the way, someone will provide a service / product at most price points. Walk into DFS and you'll get a cheap and cheerful sofa, go around the corner and you'll find a sofa maker charging a lot more for something bespoke.


----------



## Purple

Zenith63 said:


> That's sort of missing the point.
> 
> There are always Joe Publics out there upskilling and moving up the value chain, then another Joe comes along and takes that low-skilled piece of work.  The point though is that there's always a Joe in that low-skilled work, because the low-skilled work doesn't go away when somebody moves up.  So for the purposes of this discussion, lets assume that the Joe in question actually started out on minimum wage and has worked really hard, upskilled himself as much as he is possibly capable of and is in this median-paid relatively low-skilled job.


That Joe is the person who should be in social housing near where he works/ grew up/ where his family infrastructure is. Unfortunately the home which could be provided for him is occupied by someone who is willfully unemployed/underemployed. That means that Joe has to buy or rent an hour from where he works. What should happen is the person who doesn't work is given a social house an hour away and Joe is given the house locally.


----------



## Zenith63

Purple said:


> That Joe is the person who should be in social housing near where he works/ grew up/ where his family infrastructure is. Unfortunately the home which could be provided for him is occupied by someone who is willfully unemployed/underemployed. That means that Joe has to buy or rent an hour from where he works. What should happen is the person who doesn't work is given a social house an hour away and Joe is given the house locally.


I don't think the government should be providing social housing to every Joe Public on or below the median wage, that's half the working population and puts us well on track for some sort of bizarre form of socialism.  Surely the aspiration here should be that somebody on or around the median income should easily be able to afford to buy a home in their lifetime?


----------



## Zenith63

Firefly said:


> At least with the market, they can get what they can afford, and you'll usually find, where the government gets out of the way, someone will provide a service / product at most price points. Walk into DFS and you'll get a cheap and cheerful sofa, go around the corner and you'll find a sofa maker charging a lot more for something bespoke.


Are you suggesting the wealth inequality we're seeing is being caused by people spending beyond their means?  There are certainly lots of cases of people who could improve their circumstances by not smoking, gambling, drinking, buying a new car every three years, but they're choosing that path and are in the minority of the people we're talking about I think.


----------



## Firefly

Zenith63 said:


> Are you suggesting the wealth inequality we're seeing is being caused by people spending beyond their means?  There are certainly lots of cases of people who could improve their circumstances by not smoking, gambling, drinking, buying a new car every three years, but they're choosing that path and are in the minority of the people we're talking about I think.



I would agree. I think that buying a house near a large urban centre is becoming more and more difficult for the lower paid.


----------



## Purple

Zenith63 said:


> I don't think the government should be providing social housing to every Joe Public on or below the median wage, that's half the working population and puts us well on track for some sort of bizarre form of socialism.


 I've no problem with that as long as they are paying up to and including the market rate in rent and that the landlord can move people around after as agreed rental period (say 3 or 5 years) in order to maximise the utilisation of the social housing stock. In other words; no more live tenancies and no more inherited tenancies. If there was lots of social housing rents would drop for everyone. 



Zenith63 said:


> Surely the aspiration here should be that somebody on or around the median income should easily be able to afford to buy a home in their lifetime?


 It should be but a could on low wages could never afford a house in most parts of Dublin.


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## Protocol

If GDP/GNP/GNI are high and rising in Ireland, and yet real wage growth has been subdued, then isn't it the case that profits are rising fast?

I don't have any data to hand on this.

But maybe profit margins are too wide?


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## newirishman

A couple of interesting points here. 



Zenith63 said:


> The same question can be asked of you though; why is low skilled people the same or less is an inherently good thing?  But personally I think have the discussion this way is somewhat pointless, if you ask a few different people the question you'll get different answers, same as you do when you ask should we pay less, the same or more tax, should or shouldn't the government provide a health service etc.  It tends to be based on subjective opinion rather than taking a look at the facts.
> 
> I think a more relevant and productive question, from a discussion point of view, is what do you think the minimum standard of living for Joe Public working a low skilled job should be, then go from there on where wages should be, what taxes should look like, how house prices should ideally look.
> - Should Joe (or Jill) be able to support their spouse and say two kids on a single income to allow the kids to be raised by one of the parents? For me, ideally yes, certainly two parents commuting an hour each way and working 8 hours all their children's life is not leading to the best outcome for those childrens' interactions with society in future.


There's enough research out there that shows that this makes no difference. What's the point having one parent around if there's a lot of stress due to lack of money to clothe, feed, and house the kid? 



Zenith63 said:


> - Should Joe be able to purchase a home and expect to have it paid off by the time he reaches retirement? For me, yes.


I'll probably never understand the obsession with owning a property. My parents are retired, and they rent. They have in fact rented most of their lives - simply because they were not in a financial position where they could have afforded buying a place. What's the point owning a one bed apartment if you want to raise kids? Rather rent a 2-bed that they couldn't afford to buy. The fact that this is a bit of a challenge in Ireland is of course a problem, not the least due to the obsession of owning a property, and if at all possible a house.



Zenith63 said:


> - Should Joe be able to purchase a house in the capital city and have it paid off by the time he reaches retirement?  Absolutely not for me.


Agreed.



Zenith63 said:


> - Should Joe only be able to afford a house 2 hours commute from his job?  No for me.


If you live and work in a large metropolitan area, what is the problem with it? Say you work as a porter (low paying job) in a major corporation. The corporation is probably in whatever main business district. Does Joe really want to live there?



Zenith63 said:


> - Should Joe be able to put a few quid aside beyond the state pension? For me, ideally yes.


Pensions are tricky - putting money aside when you are already on a low wage is almost impossible, even more so if you are trying to raise kids. I'd say that any state pension should be high enough to be that "living wage"



Zenith63 said:


> - Should Joe be able to afford a family health insurance policy or is relying on the public system OK?  For me probably not.


Fix the public system to ensure it is actually OK. It is expensive enough already.



Zenith63 said:


> - Should Joe be able to afford to put away money to save for one budget family holiday a year, maybe to Spain or somewhere like that?  For me yes.


My 2(!) family holidays when growing up where visiting friends or relatives and live in their house for a week or two. A proper foreign holiday (like going to Spain or Greece) would have been impossible. And that was only in the 70ies and 80ies. 
Your budget holiday is only possible by having cheap labour keeping the costs down. So other low-paid people actually pay for it.



Zenith63 said:


> - Should Joe be able to buy a brand new car every 3 years?  For me no.


Cars seems to be another obsession of many folks. I agree with you.



Zenith63 said:


> - Should Joe be able to build up a rainy day fund of 6 months income over a 5-10 year period.  For me yes.


so 50% of net income saved over 5 years (=500% net income). That means, you need to put away 10% every month. Should be reasonable, could be tricky on a minimum wage.



Zenith63 said:


> - Should Joe expect to see higher-skilled workers etc. driving around in nicer newer cars, living in the affluent city centre and earning  multiples of his earnings because of that extra skill level?  For me yes within reason.


What does "within reason" mean? The only alternative I see here is a communist/socialist type structure where wages are defined by committee, not the market. 
I mean, the question is: "Who are you to think you can define how much I am allowed to earn"?



Zenith63 said:


> Some of this is surely pie-in-the-sky, I get that, but I'd love to hear from those that think lower income earners should be paid less and contribute more tax, and whether they also feel that 'no' is the right answer to all those questions and are comfortable with that.  Because with a median income of what, €25-28k, the answer will need to be no to most of the questions...



I think that everyone should contribute some taxes. I think it was about 50% of the Irish working population doesn't pay any tax. I don't think that this is fair.


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## Zenith63

Thanks for taking the time to reply newirishman, lots of food for thought there.  Some responses below!



newirishman said:


> There's enough research out there that shows that this makes no difference. What's the point having one parent around if there's a lot of stress due to lack of money to clothe, feed, and house the kid?


Yes to be fair it seems to be generally accepted that creche/pre-school is better for children than no creche/pre-school time.  There's a fair bit of distance between a couple both working but dropping their kids off at 8 and collecting and 5, and the fairly common scenario now of kids being dropped off much earlier and being collected much later because both parents need to work and commute much longer to make ends meet.
On the second point, all my questions are asking whether Joe should earn enough money to make something financially possible, so where I'm saying "yes I'd like Joe to be able to be a single earner" then the implication is that the other parent is not sitting at home stressing about lack of money.  But I see your point here, this one is probably more personal opinion.



newirishman said:


> What's the point owning a one bed apartment if you want to raise kids? Rather rent a 2-bed that they couldn't afford to buy.


Again when I say "yes Joe should be able to afford to buy a home" I'm assuming he can buy an appropriate home, not cram into a 1-bed apartment.  It's probably fodder for another thread, but when it comes to renting in many cases the rent and mortgage repayment is similar, the difference is the deposit, which brings you to my points later about wealth inequality - for Joe I'd like him to have enough to be able to buy a modest home, maybe borrow from their parents to help with the deposit.



newirishman said:


> If you live and work in a large metropolitan area, what is the problem with it? Say you work as a porter (low paying job) in a major corporation. The corporation is probably in whatever main business district. Does Joe really want to live there?


Sorry I should have been clearer on this one.  It was to be read in context of the previous one where I said Joe should not be able to purchase a house in the middle of the capital city.  Joe certainly does not need to be in or near the business district, I'm saying a 30-60 minute commute is totally fine but over 2 hours is getting ridiculous.



newirishman said:


> I'd say that any state pension should be high enough to be that "living wage"
> Fix the public system to ensure it is actually OK


I'm not up for a socialist state by any means, but I'd 100% agree with you on pensions and healthcare, make them sufficient and if high income peeps want to top theirs up then fine.



newirishman said:


> My 2(!) family holidays when growing up where visiting friends or relatives and live in their house for a week or two. A proper foreign holiday (like going to Spain or Greece) would have been impossible. And that was only in the 70ies and 80ies.
> Your budget holiday is only possible by having cheap labour keeping the costs down. So other low-paid people actually pay for it.


Interesting point re. the cheap labour, Joe is off to Doolin on his holidays so  ....



newirishman said:


> What does "within reason" mean? The only alternative I see here is a communist/socialist type structure where wages are defined by committee, not the market.


This is by no means easy to answer I get that, but you know it when you see it.  Travel through various less developed parts of the world (India jumps to mind as an example) and you'll see fabulous wealth side-by-side with abject poverty.  Ireland is one of the leaders in dealing with inequality so you don't see the same extremes here for sure, but inequality is worsening in most countries, so unless something changes we'll see more of it.
I don't think a communist/socialist structure is required at all.  All you have to do is compare India (shocking inequality) to the US (pretty bad inequality) to Ireland (some of the best levels), there's no communism/socialism in the US/Ireland and yet we've made huge inroads.



newirishman said:


> I mean, the question is: "Who are you to think you can define how much I am allowed to earn"?


I wouldn't say you want to define how much people can earn, like come up with a number, but I think it's important to ensure that there are checks and balances in-place to ensure that a small number of individuals do not end up with a huge concentration of wealth.
To take a reductio ad absurdum, if I alone was to invent true AI, I would very quickly become the wealthiest man on earth, potentially sucking up the vast majority of the worlds generated income.  I could pass all that money to my children along with the secret and we'd suck up all the wealth of the world for generations.  Would that be fair, given that I only got to where I did because of thousands of years of scientific work and all of the income I would be earning would be generated by other peoples labour?
We've been here before with the aristrocy of the 1800s, so it can and does happen unless things are structure to prevent it, and all indications are that we are not doing enough to prevent it for the current times.  There's no real benefit to society of these extremely wealthy people being more wealthy than they already are, but it certainly has a negative effect on those less well off because they are getting a smaller share of the output of their country.
Just to be clear, I'm not talking about people earning €100/200k and becoming moderately wealthy in their lifetimes through hard work and enterprise, I'm more concerned with large-scale generational wealth...



newirishman said:


> I think that everyone should contribute some taxes. I think it was about 50% of the Irish working population doesn't pay any tax. I don't think that this is fair.


Yep I'd fully agree, I think people are more bought into societies when they see a contribution to it from their pay check, always confuses me when you hear the govenment announce they have managed to take X thousand people out of the tax net as if that is an end in itself.  I'd prefer to see Joe having a higher salary but being taxed more.


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## WolfeTone

Biden urges more than doubling of minimum wage


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## Firefly

WolfeTone said:


> Biden urges more than doubling of minimum wage


Wow. That's even higher than ours!


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## NoRegretsCoyote

Firefly said:


> Wow. That's even higher than ours


Even more so when you consider low price levels in US.

Sales tax depends on state, but no VAT means most goods are cheaper.


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## joe sod

NoRegretsCoyote said:


> Even more so when you consider low price levels in US.


Will spark off inflation, it's coming,  that's what they want to do anyways to erode the massive debts that have been built up. Agricultural commodities are already rising, so double wages ends up as higher food prices, higher fuel and electricity,  they use greenhouse gases as reason to push all these prices. Welcome to the 1970s but without the disco and music,  1970s Moscow or warsaw more like because that all stopped by pandemic.


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## Purple

NoRegretsCoyote said:


> Even more so when you consider low price levels in US.
> 
> Sales tax depends on state, but no VAT means most goods are cheaper.


There is a massive variation in the cost of living across the US. A minimum wage of $15 in Manhattan is quite low. In North Dakota it's very high.


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## NoRegretsCoyote

Purple said:


> There is a massive variation in the cost of living across the US. A minimum wage of $15 in Manhattan is quite low. In North Dakota it's very high.



Yes, the logic was that a federal tax was a minimum, and states and cities could set higher ones themselves, and often did.

In principle I don't like price controls (and that's what MWs are). But I think the evidence shows that a MW close to the market rate (say +15%) doesn't cost all that much in the way of jobs.

But $15 could be as much as 50% above the market rate for unskilled labour in rural Alabama, and that is going to cost jobs.


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## Purple

NoRegretsCoyote said:


> Yes, the logic was that a federal tax was a minimum, and states and cities could set higher ones themselves, and often did.


I'm aware of that. My point is that $15 is very high for many areas, as per your example above. 
I'd far rather see better laws around hiring and firing, in the so called "right to work" States it is far too easy to sack or lay off employees.


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## NoRegretsCoyote

Purple said:


> I'd far rather see better laws around hiring and firing, in the so called "right to work" States it is far too easy to sack or lay off employees.



Yes, but this pushes down average wages too - see Spain!

If you can never lay someone off you're not going to take a risk on paying them a high wage.......


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## Purple

NoRegretsCoyote said:


> Yes, but this pushes down average wages too - see Spain!
> 
> If you can never lay someone off you're not going to take a risk on paying them a high wage.......


I'm not talking about never sacking someone. I'm talking about sacking someone on a whim.


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## NoRegretsCoyote

Purple said:


> I'm not talking about never sacking someone. I'm talking about sacking someone on a whim.


And I'm using conversational language, not technical language


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## Purple

NoRegretsCoyote said:


> And I'm using conversational language, not technical language


I don't think an employer should have to right to sack an employee without cause, paying them no severance. I'm a bit of a socialist though.


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## WolfeTone

Job vacancies at record highs in the US
Vacancies

US House builds starts fall

"..._likely due to rising cost for lumber and other materials and difficulties to find workers_."

US inflation rate on the increase.


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