Is Ireland ruined, or is there a way out?

[shnaek]

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

 

[Latrade]

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

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

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

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

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

 

[TarfHead]

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

+1

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

 

[onq]

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

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

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

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

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

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

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

all in the private sector.

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

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

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

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

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

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

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

Not Fourteen Million Dollars = $14,000,000

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

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

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

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

Totally unmonitored

Unregulated.

Untaxed.

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

ONQ.

 

[Chris]

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

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

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

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

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

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

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

The operation of the unregulated free market means you're going to end up looking at; -

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

all in the private sector.

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

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

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

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

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

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

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

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

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

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

Not Fourteen Million Dollars = $14,000,000

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

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

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

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

Totally unmonitored

Unregulated.

Untaxed.

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

ONQ.

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

 

[Firefly]

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

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

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

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

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

 

[Chris]

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

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

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

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

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

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

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

 

[Firefly]

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

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

 

[Chris]

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

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

 

[Firefly]

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

 

[Chris]

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

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

 

[z107]

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

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

Is that the new TD wage agreement?

 

[Firefly]

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

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

 

[Chris]

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

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

 

[Firefly]

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

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

 

[Chris]

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

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

 

[Firefly]

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