Would you give a lot of food to someone really hungry, or give everyone with a stomach a morsel? Will you use the state’s resources to give a little to all, or a lot to some? These are the big questions of public policy. Given scarce resources, we elect politicians to make these choices, and we elect them based on their pre-election promises. You’ll be hearing a lot more of them fairly soon.
Governments aren't the most logical of organisations at the best of times. When election season rolls around, any pretense at rationality gets firmly shoved down the list of important things.
One logical element that deserves a place in the government's calculus is the number of people in full time employment. Jobs, we are constantly told, are the central focus of the government.
Take one hundred economists. Punch each of them. Now that you’re feeling better, stick your hand in some ice and ask them each a question: do they think rent controls, or price ceilings of any kind, are a good idea? They will already be a bit annoyed at you, but suggesting rent control will probably offend them more than a knuckle sandwich.
You’d be more likely to successfully herd cats into a bath than get economists to agree on something, but when it comes to rent controls, the evidence is in: they just. don’t. work. We’re talking more than a thousand papers written on the subject.
Sometimes failure really is success in progress. The headline unemployment is now 9.8%, more than 212 thousand people. On the face of it, a total policy failure, and nothing to be happy about, apart from the fact that that number is dropping from a high of over 15%, and has been dropping since mid 2011. Over 1.9 people are employed in Ireland today, getting us back to 2009 levels. There are large increases in full time employment and decreases in part-time employment. Of all the new jobs, 19,000 of them are in construction. Long-term unemployment is falling like a stone.
Is it fair to call the current unemployment rate a failure of policy? Any unemployment rate above three or four per cent is probably too high, but policies focused around building stronger labour market activation programmes, a more connected welfare system and an increase in investment by small and medium enterprises is very important. Well-designed strategy documents to the contrary, not many of these policies are in place, and there are few evaluations showing us just how good the programmes are.
David Cameron’s re-election has stunned pollsters and put the issue of the United Kingdom leaving the European Union firmly on the table. Showing how far removed the UK’s voters are from the long term interests of their nation, they have re-elected a party which promises to impose more austerity, weaken social structures, and cut them off from one of their largest markets. Democracy is a funny thing. The ‘mediamacro’ type of analysis done by the British media shows us that the tradeoff was sold in terms of benefits to migrants and costs to the taxpayer of being in the EU--as a rich nation the UK contributes more than it receives from the Union in many cases.
Readers, and especially students, will know I'm a fan of Bill Janeway's big book on Doing Capitalism, which if you haven't read, you should. Bill has a really interesting interview up here where he goes through some of the main ideas in the book. Make sure to listen.
Michael Noonan thinks there are some people who are work shy, people who, if a job was a bed, they’d sleep on the floor, people who run from employment like upper middle class people run from foods with gluten in them because of their ‘allergies’.
This week, during a Kilkenny Chamber of Commerce lunch, The Minister said “we all know there will be people who will never work. They're allergic to work.”
Language is so important. Let’s dig a little bit into how Mr Noonan made his assertion. He started by saying ‘we all know that’. ‘We all know that’ is a very dangerous piece of language. It tells us a few things. The Minister thinks his opinion is shared by a majority of people. Maybe it is. Maybe it isn’t. The Minister thinks his opinion isn’t just an opinion but knowledge—we all ‘know’—and the finality of the rest of the sentence, ‘ who will never work’. Not ‘they might never work’ or ‘they could never work’. They will never work.
Let’s read that comment again.
“…we all know there will be people who will never work. They're allergic to work.”
Backslapping. Clarity. A break from the policies of the past. Balance. Forecasts as anchors for expectations. Prudence. Long-term thinking. These were the phrases I scribbled down while listening to Ministers Noonan and Howlin during last Tuesday’s spring statement.
First things first: Olympic-level backslapping. The government has a good news story on the economy and wants to let everyone know about it. By the standards of Irish politics they weren’t too over the top about it, and didn’t give the opposition anywhere near as much abuse as I thought I might see beforehand, but the ministers might get repetitive strain injuries and end up in back braces if it keeps up much longer.
Clarity. The government wanted to frame the next few budgets in terms of moving away from income taxes and towards taxes which put the economy on a sounder footing, as well as planning for demographic changes which will impact public spending, particularly on health and education. This was really well done in my view, and proper fiscal forward guidance. The level of analysis was excellent and the assumptions did not seem either too rosy or too conservative. The balance and prudence the government was hunting for is reflected in their numbers, particularly in the programme update documentation. An example: investment in the economy is predicted to rise by 15% in 2015, 12% in 2016, and 8.1% in 2017, and 4% in 2018. So the impulse from investment, or exports, or any other category, is much smaller than we have seen in previous periods.
Taxes are the price you pay for social services. You might think the price is too high, too low, you might think the service you’re getting is great, or rubbish, but there is no getting away from the need for someone to pay for these services. When it comes to tax, the first principle is NFMBPB--not from my back pocket, buddy.
Everyone wants someone else to foot the bill. The rich want tax breaks on the passive incomes their capital gains give them. The poor want to pay nothing because their disposable incomes are too low. They pay most of their taxes through VAT and other consumption-type taxes like excise duty. The middle classes grumble about everything but put up with it and, in the end, do end up footing a large part of the bill, in particular those on over about 70,000 euros. Nobody likes the corporations and their low-low tax regime, except when they provide us with well paid jobs.
The banking inquiry is starting to get expensive and soon it will start getting expansive. Clocking in at more than 2 million euros so far, the context phase of the inquiry is nearly over. While watching the inquiry daily, it often felt like the witnesses had overdosed on hindsight pills. I kept thinking ‘I know this, I know this’. Sparks rarely flew between the inquiry’s members and the witnesses, and I’m sure viewer figures online would be very low so far.
Despite this, DIT’s Harry Browne and UCD’s Dr. Julien Mercille both highlighted something new in the run up to the crisis: the role of the media as a cheerleader for it. The debate on the media’s role hasn’t really been had, and so this new ‘strand’ is already out there. Dr Elaine Byrne’s and Prof. Niamh Hardiman’s evidence on the banks’ behaviour on behalf of developers will hopefully change the debate on corruption and governance in the sector. Before Frank McDonald and Marie Hunt discussed it during the inquiry, the spatial dimension of the crisis hasn’t been looked at in much detail, though an excellent academic book on spatial justice edited by Gerry Kearns, David Meredith and John Morrissey does address the issue.