Tomorrow Fintan O’Toole, Irish Times Deputy Editor, Author, Angry chap, and all-around ledge-bag will be giving a seminar from 4.30 to 6 in GL1-01 in the Library. Everyone interested in Irish public policy and public life should head along, it will be well worth it.
Update: A recording of the seminar is here.
In today’s Irish Times, Fintan O’Toole calls for a bold restructuring of the Irish economy to cope with what will almost certainly be it’s worst performance in GDP terms for 60 years.
Fintan proposes a basic effective income tax of 25% on every one, with high earners having their incomes capped at 80,000 for two years. Scrapping the tax shelters, inefficient tax breaks, and whacky subsidies like the Horse and Greyhound fund (70 million euros? Really?) should go a long way towards plugging the 20 billion euro gap in the public finances. Finally, scrap wasteful overlaps of public and private life, and introduce universal preschool education where now only a child benefit allowance exists.
The plan is bold, it is thoughtful, and it might change some minds.
Does it change yours?
Image via Wikipedia Not entirely sure how I missed this, but my colleague Dr Tony Leddin has a piece called How wage agreements eroded competitiveness in the Irish Times describing the recent history of Ireland‘s attempts to get to grips with the spiral of wage increases following inflation following wage agreements. It seems clear from the article that what Tony feels we need is quite severe wage moderation, to reduce inflation and make us more competitive relative to our export partners. We are told right away that
THE MOST comprehensive indicator of price competitiveness – the real effective exchange rate index – indicates that the Irish economy is now at its most uncompetitive since the early 1970s.
This is serious stuff, and the mechanism to get us out of this position of ever-increasing wage demands coupled to inflation is not entirely clear, because right now, I can’t see any government calling for further wage restraint following the collapse of the pay talks earlier this summer. No other actor in the system has an incentive to change the status quo either.
What is clear is that we did achieve a deflationary, policy driven inflation moderation for a few years, so this has happened before—when Ireland wanted to gain entry to the European Monetary System, the precursor of the Euro system. Tony shows we did actually achieve inflation and wage moderation targets for a few years.
As Tony rightly points out, now we’re in the Euro system, we can’t devalue our currency and get out of the inflationary spiral that way. The only way to slow things down is to use fiscal policy—the government budget—and this will be unpleasant, because it means cutbacks.
On whether such an action is politically feasible, I’m not sure. On whether it is economically necessary, I am sure.
Check out the article itself for more information on this topic.
Update: the Irish Time server seems to be down. I’ve copied the text from my RSS reader below, just click on the ‘read more’ link to get access to the article.
Click below to listen to Dr Stephen ‘Absolutely-Context-Irish Times‘ Kinsella, Gerard O’Neill, and Ray Hammond spout off to Rachel English about Ireland in 2050. I wrote an article about it, you know.
I had a great time at the interview, though I was quite nervous. Rachel was excellent, and I learned a lot from talking to Gerard after it was finished. So: a good way to spend a Saturday morning!
(Download) Rachel English Interview
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Delicious. Audioboos.
