McDowell: "Ireland in the 1980s was poor because it was state dominated"

[Steven Barrett]

A timely article no doubt prompted by articles saying that our parents had it better than we have it now...which I would guess all comes down to housing and the price of it. It is something that really needs to be addressed...even with lower BER ratings so the cost of building is lower.

One in three think economy is worse now than in their parents’ time, with under-25s reporting least positive views

Just under half of Irish consumers think the Irish economy is better now than in their parents’ time. One in three think it is worse, according to the Credit Union Consumer Sentiment Index.

www.independent.ie

McDowell's article highlights how tough a lot of life was in Ireland back then. There is so much now that is just taken for granted and not seen as an issue. The hassle of going anywhere in Ireland as there was no motorways. Flights were incredibly expensive...no weekend breaks! Unemployment was high, wages were low, cars were basic, not everyone had a phone in their house.

 

[T McGibney]

McDowell's article highlights how tough a lot of life was in Ireland back then. There is so much now that is just taken for granted and not seen as an issue. The hassle of going anywhere in Ireland as there was no motorways. Flights were incredibly expensive...no weekend breaks! Unemployment was high, wages were low, cars were basic, not everyone had a phone in their house.

One of the worst things was the ridiculously expensive price of phone calls.

My dad's sister lived an hour away from us and although they were close, they only got to meet a handful of times each year, and if was usually too costly to phone for anything longer than a few minutes.

She eventually twigged that if she rang lateish on a Sunday night, the operator would leave her on interminably so that became a long term custom for them.

Why the State phone company saw it necessary to screw people for the privilege of making a phone call has never been explained.

 

[Steven Barrett]

Or just being able to get anything. My mum & her friends used to get the ferry to Holyhead in November to go shopping. If Holyhead is better than Dublin, things are bad! They'd come back with biscuits and just ordinary stuff that you couldn't get here at all.

And don't get started on someone who's relative came home from America!! The stuff they'd bring back was seen as exotic. You'd go around in the fancy Nike t-shirt! You just couldn't get anything here. Now you can order it online in a few seconds.

 

[charlie007]

There were two advantages.

The first is that there was plenty of room for downside. Mortage rates were high, but there was a very reasonable prospect that, over the life of the mortgage, they would fall by a signficant amount (which in fact happened). Thus the financial stress cause by very high loan rates was short- to medium term. Now, there is minimal room for any downside, and the financial stress caused by high mortgage amounts is long-term.

The second is the inflationary climate. Even if mortgage rates didn't fall, inflation was much higher than it is today which meant that the real burden of a housing loan, and the real cost of servicing it, fell steadily. Again, this is not something that someone buying a hnouse on mortgage today can look foward to.

Tl;dr: High interest rates in the 1980s notwithstanding, home buyers today get a much, much worse deal than homebuyers in the 1980s got.

But how were we to know that back then?
There was no ceiling and as far as we knew, rates could have climbed much higher if eg there was a shock to the system.
This in fact happened during the currency crisis of the early 90s but was short term tbg.
Of course inflation then and now feeds in to affordability but there have been so many other changes in the country, that I believe we are in a far better society both economic and otherwise.

 

[TomEdison]

Why the State phone company saw it necessary to screw people for the privilege of making a phone call has never been explained.

Couple of factors:

80s (and pre-80s) telecoms technology was incredibly clunky and expensive by comparison with today's. It really did cost a lot more (in real terms) to provide the service.

Posts and Telegraphs was a monopoly service provider, and monopolists have no great incentive to improve efficiency. But also . . .

. . . improving efficiency would have required considerable initial capital investment to replace the (largely 1960s) equipment that P&T was using at the time, and that required a political commitment to spending money, at a time when the public finances were already in a parlous condition. (One of the reasons for spinning off the phone service into a commercial semi-state in 1983 was that it could raise money for investment by borrowing, without affected the budgetary situation.)

Plus, the pricing of calls was heavily distorted. There's a fixed cost to providing a home with a phone line, plus a marginal cost of connecting each call made. The cost of connecting the call doesn't really depend on how long the call lasts, or how far away the number called is. So if pricing had reflected costs accurately, renting a phone line would have been very expensive, but each call made would have been very cheap, and would have cost the same no matter where on the network you rang or how long the call lasted. But that would not have been acceptable to the market. So, very crudely, lines were provided below cost, and the cost of this was recovered in excessive phone charges, particularly for long-distance calls. Frequent users of phones — especially businesses — subsidised the provision of phone service to little old ladies who barely made one call a week.

All of this was true not just in Ireland, but it was especially true in Ireland, and had a bigger impact, because of the relatively small market, the small number of long distance calls (because the island is not very big) and the relatively high level of political interference in the running of the phone service. For the reasons outlined Ireland was a later adopter of digital phone technology but the result of that was that, when we finally got around to adopting it, very advanced technology was available at relatively modest cost, so the improvement in service levels and the drop in cost between, say, the mid-80s and the early 90s was dramatic.

 

[TomEdison]

Of course inflation then and now feeds in to affordability but there have been so many other changes in the country, that I believe we are in a far better society both economic and otherwise.

On the whole, we are. But housing specifically is much more expensive, in real terms, than it was in the 1980s. This is true both for renters and for buyers. And the prospect of housing becoming cheaper is much less now than it was in the 1980s.

 

[charlie007]

On the whole, we are. But housing specifically is much more expensive, in real terms, than it was in the 1980s. This is true both for renters and for buyers. And the prospect of housing becoming cheaper is much less now than it was in the 1980s.

Maybe so, but contrary to popular opinion it is still affordable
After all virtually everything gets sold or rented?!

 

[Corola]

Maybe so, but contrary to popular opinion it is still affordable
After all virtually everything gets sold or rented?!

Housing is very affordable, if you already have a house.

 

[TomEdison]

Maybe so, but contrary to popular opinion it is still affordable
After all virtually everything gets sold or rented?!

That's consistent with there being lots of people who cannot afford to buy or rent. All it tells us is that there are enough people who can afford to buy the houses that are offered for sale, and enough people who can afford to rent the houses that are offered for rent, but it doesn't tell us what proportion of the population can afford to do either.

 

[Gordon Gekko]

I would suggest that pretty much everything is better nowadays with the exception of housing.

Despite the big spike in interest rates, prospective homeowners were better off then on a relative basis.

Regulation (and in some cases overregulation) also hadn’t done away with something that lots of people were really happy with, i.e. bedsits.

 

[charlie007]

That's consistent with there being lots of people who cannot afford to buy or rent. All it tells us is that there are enough people who can afford to buy the houses that are offered for sale, and enough people who can afford to rent the houses that are offered for rent, but it doesn't tell us what proportion of the population can afford to do either.

I've read this a few times and am assuming you mean can't and not can above?

If this is the case, then as we know we have to continue to up supply and then affordability gets better?!

 

[Bronte]

An interesting article in today's Irish Times.



The overall point is good. I am not sure that his taxation figures are correct. People had Tax Free Allowances so the first £500 or so was not taxed at all.

That's an excellent article and much of it resonates with me. I remember my father going do la li over the 70% tax rate and my husband told me all his overtime was taxed highly. He had to do an awful lot of extra hours and didn't come out with much of it.

The only thing I'd take issue with is McDowells contention that there was banking competition. AIB and BofI did not compete with each other. They acted as a duopoly. Early on when I joined AAM I gave a personal example of how entwined they were. And I'd warrant nothing has changed there now they have seen off all of the foreign banks.

 

[Bronte]

This article strikes a chord for me. He could have added in the mortgage interest rate in 1982 was 16.25%, a rate you would only find on a credit card these days.

It hit as high as 17% in 1993 if you were with Irish Life. Our first mortgage was 9.25%.

 

[Ceist Beag]

I would suggest that pretty much everything is better nowadays with the exception of housing.

Despite the big spike in interest rates, prospective homeowners were better off then on a relative basis.

Regulation (and in some cases overregulation) also hadn’t done away with something that lots of people were really happy with, i.e. bedsits.

I would add hospitals to the exceptions. Obviously there are factors such as the increase in population and average age of the population but in spite of all the money being spent on them our health system seems to get worse over the years, not better. I'm not saying the hospitals were great back in the 80s either but I do think they were run more efficiently and effectively. However, in all other areas I certainly think Ireland is a better place to live these days.

 

[Gordon Gekko]

I would add hospitals to the exceptions. Obviously there are factors such as the increase in population and average age of the population but in spite of all the money being spent on them our health system seems to get worse over the years, not better. I'm not saying the hospitals were great back in the 80s either but I do think they were run more efficiently and effectively. However, in all other areas I certainly think Ireland is a better place to live these days.

I wouldn’t agree with that at all. We’re conditioned to think that our healthcare system is terrible, but it’s not. Advances since the 1980s like BreastCheck or bowel cancer screening programmes are simple examples. And whilst I accept that specifics don’t prove generalities, any experience that either I or my wider family have had has been positive. We hear a lot from whingers who have to wait ages in A&E, but the biggest reason for a long wait in A&E is that you’ve been triaged as not being that urgent a case. And one of the biggest issues is eejits showing up at A&E when they should be availing of other, simpler options.

 

[Steven Barrett]

Regulation (and in some cases overregulation) also hadn’t done away with something that lots of people were really happy with, i.e. bedsits.

I was reading an article about the coffin cubicles in Hong Kong this morning. Looking for the article, I came across an older one with better pictures of how bad they really are
https://www.theguardian.com/cities/...g-kong-coffin-cubicles-cage-homes-in-pictures

I would add hospitals to the exceptions. Obviously there are factors such as the increase in population and average age of the population but in spite of all the money being spent on them our health system seems to get worse over the years, not better. I'm not saying the hospitals were great back in the 80s either but I do think they were run more efficiently and effectively. However, in all other areas I certainly think Ireland is a better place to live these days.

Not at all. Yes, there is waiting lists but if you are an acute case, most are seen quick enough. Then there is medical science. My dad had to get stints in his heart...he was a day patient!

And I know a lot of people disagree with it on principle but if you can afford it/ have insurance, the speed of getting everything done in the private sector is unreal. My son got a knee injury playing rugby. From getting in touch with the surgeon to him having surgery was 2 weeks and we'd a 1 week delay as my son had exams in school!

 

[ClubMan]

I wouldn’t agree with that at all. We’re conditioned to think that our healthcare system is terrible, but it’s not. Advances since the 1980s like BreastCheck or bowel cancer screening programmes are simple examples. And whilst I accept that specifics don’t prove generalities, any experience that either I or my wider family have had has been positive.

Same here over the past 20 years or so.

 

[Ceist Beag]

I wouldn’t agree with that at all. We’re conditioned to think that our healthcare system is terrible, but it’s not. Advances since the 1980s like BreastCheck or bowel cancer screening programmes are simple examples. And whilst I accept that specifics don’t prove generalities, any experience that either I or my wider family have had has been positive. We hear a lot from whingers who have to wait ages in A&E, but the biggest reason for a long wait in A&E is that you’ve been triaged as not being that urgent a case. And one of the biggest issues is eejits showing up at A&E when they should be availing of other, simpler options.

I am delighted to hear that you don't agree. I fully admit that I am in the lucky position of not yet having first hand experience of the issue so you may well be right - I'm conditioned to thinking this based on the perception put out there, mainly in the media. I don't think it's right to bring in the enhancements in modern medicine in explaining the improvements - sure of course there have been huge improvements in things like cancer treatment and medical devices. That's obvious. I was more pointing to the spend on health versus the perceived service provided (and the waiting lists!). But as I say, if the actual experience is much better than what is portrayed then that's great, love to hear that.

 

[Steven Barrett]

I am delighted to hear that you don't agree. I fully admit that I am in the lucky position of not yet having first hand experience of the issue so you may well be right - I'm conditioned to thinking this based on the perception put out there, mainly in the media. I don't think it's right to bring in the enhancements in modern medicine in explaining the improvements - sure of course there have been huge improvements in things like cancer treatment and medical devices. That's obvious. I was more pointing to the spend on health versus the perceived service provided (and the waiting lists!). But as I say, if the actual experience is much better than what is portrayed then that's great, love to hear that.

It's 100% relevant in seeing how far life has come in the last 40-50 years. What used to be major, life threatening operations is now a minor surgery. Even my son's knee surgery was key hole surgery and they even gave us a USB with a copy of the surgery on it so we could see his meniscus being sown up! Years ago, they would have opened his knee right up!

Part of the reasons for the strain today's health services are under is the expanding population of sick people. We are all living longer but generally unhealthier lives. In the 1980's, if you lead the lives that some people lead today, you'd simply die younger. Now, thanks to modern medicine, you are living longer but are adding to the strain of the health system. Then add in the cost of modern medicine.

That's not to say there isn't massive inefficiencies but the HSE aren't entirely to blame, we have to look at the lifestyle that we lead (as a nation) first.

 

[TomEdison]

All it tells us is that there are enough people who can afford to buy the houses that are offered for sale, and enough people who can afford to rent the houses that are offered for rent, but it doesn't tell us what proportion of the population can afford to do either.

I've read this a few times and am assuming you mean can't and not can above?

It's the same thing. If we know that, e.g, 70% of the population can afford to house themselves then we also know that 30% can't.