It is reported that the Minister Richard Bruton will propose that tax cuts are needed to keep the economy on course. Well, at least this has the virtue of consistency since this is the same Minister who proposed that high-paid company executives should pay hardly any taxes at all. Over the next few months we will get a Goldilocks debate over taxation – is it too hot, is it too cold, is it just right. But there’s an elephant in the room ready to stomp on the poor girl – and this will hardly get a mention.
For we are a low-waged, low-earning economy – and it is getting worse.
According to Eurostat Irish earnings have always been below EU averages. Even in 2008, when Irish earnings peaked, we were still well below average. Today, after four years of wage stagnation, we are falling further behind.
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On the morning prior to the first day of the 2013 G8 meeting in Fermanagh, BBC Breakfast presenter Naga Munchetty admitted to being ‘cynical’ about the thirty-ninth meeting of world powers. The widespread media proclivity for hyping these conclaves and what they might mean for the world is never met by any commensurate action from G8 leaders, she complained. It was a rare moment of media introspection; for all the lavish optical fanfare bestowed on this meeting of the leaders of twelve per cent of the global population, few journalists have either the honesty or temerity to ask questions regarding the role of the media in aggrandising an event that invariably ends with the dampest of squibs.
This role of the media – local, national and international – in facilitating the fabrications of the G8, its narrative of progress, its obfuscation of the substantive facts of world inequalities, is surely the major issue to emerge from this conference. The big issues (war, inequality, taxation) become like tributaries of truth dispersed into a Lough Erne of floating inanities. Headlines scream about the ‘Lockdown’. Countless column inches amplify hysterical predictions about violent protests, mad anarchists, crusty clowns and dissident threats. The provincial naval-gazing of ‘let’s showcase the new Northern Ireland’ trumps the global implications of a small minority stewarding the rest of the world into austerity for the masses and unprecedented wealth for the few.
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Ministers are fond of telling us that we are 80 percent through the dark austerity forest. Soon, maybe within a couple of years, we will enter into the light where all will be well and normal fiscal policy can be resumed. Just one more push and austerity will be no more. Should we put a lot of faith in this? I would recommend caution – extreme caution.
The Government has published a long-term scenario – stretching out to 2019. This builds on the projections up to 2016 in the recent Stability Programme Update. The Government is at pains to state that this is an illustration:
‘Again it must be stressed that this is purely an illustrative scenario.’
They even underlined it. Yet, it is consistent with the Government’s SPU projections and it is certainly consistent with reports of a new plan being developed by the Minister for Finance.
‘The State’s anticipated exit from the bailout this year will not mean a relaxing of austerity targets as Mr Noonan hopes Government will approve a fresh regime with firm timelines similar to the EU-IMF-ECB programme.’
Minister Richard Bruton was also giving a warning:
‘Mr Bruton rejected the accusation that the public had expected the end of the bailout term would signal an easing of austerity by saying no “crock of gold” was available to the Government.’
Mr Bruton suggested that this situation would continue for some time.
So it is worthwhile to look at the Government’s ‘purely illustrative scenario’ as there is a very good chance it will morph into the ‘only scenario’ (TINA will become TIOOS – There is Only One Scenario). Let’s look at primary public expenditure – that is, public expenditure excluding interest. This identifies how much money will be spent on public services, social protection and investment. I have used ‘real’ expenditure – that is, expenditure after inflation using the GDP deflator (the economy wide inflation indicator).
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Deadline for applications for this scholarship is Monday, July 1 – please circulate
A scholarship covering full course fees for the MA CEESA at Maynooth, awarded on the basis of practitioner excellence in community education, action for equality and / or social movements.
The MA in Community Education, Equality and Social Activism at NUI Maynooth has now completed three very successful years in the course of which we have worked with a wide range of social movement activists and community educators who are using the course to reflect on their own experience, develop their practice and build links across movements with others committed to equality and social justice.
To mark this, and in keeping with the course’s own commitment to equality, we are offering a scholarship for one student entering the course this autumn. The scholarship is named after the Dublin Lockout of 1913, which marks a historical moment in the encounter between social movements and Irish society, and a landmark in struggles for equality. It has also become a key reference point in community education and popular culture.
The 1913 Lockout Memorial scholarship is innovative in form, representing the course’s status as a practitioner course and the University’s commitment to community engagement. Rather than duplicate the various scholarships based on academic criteria, this scholarship is awarded on the basis of practitioner excellence in the field and by a committee comprising both practitioners and scholars in the area.
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Barack Obama’s nomination of Irish-born academic and writer Samantha Power to the post of US Ambassador to the UN is yet another example of the increasing trend toward ‘humanitarian’ war by the US government’s hawks in sheep’s clothing.
Samantha Power is, at first glance, a poster-girl for the image the Obama administration has sought to convey since 2009: a caring, liberal woman with a deep passion for human rights and a no-nonsense approach to the evil dictators and tyrants of this world. Born in Ireland in 1970, Power emigrated with her parents to the US in 1979. She subsequently lived the quintessential American Dream, an immigrant girl who worked hard in the Land of the Free to rise to the very top of US academic and political life. She was a journalist from 1993 to 1996, working for various US papers, known chiefly for covering the Yugoslav Wars, during which she saw all the horrors of that conflict that instilled in her a lifelong commitment to the cause of human rights and freedoms. America’s liberal intelligentsia rejoiced when she was appointed to the US National Security Council in 2009 – here at last was someone who would bring a morality, a conscience, nay, even a heart to US foreign policy. That’s the well-polished image, anyway. But as so often with such facades, it hides an ugly reality.
Power rose to prominence in 2002 with the release of her book A Problem from Hell, in which she chided the US for its supposed indifference to genocides that took place from Yugoslavia to Rwanda; she asks “why does the US stand so idly by?”. No mention in the book’s 600-odd pages, of course, of the myriad atrocities perpetrated at the behest of the US government and the CIA since the end of World War Two – the mass slaughter of communists in Indonesia in 1965 and 66 by the US-backed Suharto regime, or that country’s savage invasion of East Timor, readily approved by US president Ford and Secretary of State Henry Kissinger, one of history’s worst war criminals. No mention of the disastrous UN sanctions against Iraq in the 1990s that killed hundreds of thousands of Iraqi children. In fact, not much mention at all of any horrific war crimes and mass killings that were committed with the intention of furthering America’s goals for global hegemony. But of course, one could hardly rise to the top of the US political pyramid by telling the truth.
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As a prelude to a more detailed discussion about the household debt crisis in subsequent posts, I’d like to present a few graphs that should become central to the debate. They come from the data in the Department of Environment’s Housing Statistics. The first measures the growth of average wages between 1991 and 2007 which covers the period of the boom years.
In this period, wages grew by 92 percent (seems like a lot but when inflation is factored in wages grew by about 30 percent, or less than 2 percent annually in real terms).
Now let’s overlay the growth in house building costs.
Interesting. The cost of building a house rose at almost exactly the same pace – 98 percent.
Now let’s overlay the growth in house prices.
Hmmm. House prices rose at the same pace as building costs and average wages up to 1996. After that the gap widens – exponentially. Over the entire period new house prices rose by 379 percent.
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Progressive Film Club Update
Firstly, we would like to thank all of you who supported our recent fundraiser. We didn't get a full house but what we received will help pay off some debts. Unfortunately the screenings coincided with one of the nicest days, so far this year. We would also like to thank all of you who support us with donations throughout the year and who come along to our shows.
We are back again with our normal free screenings and this month we have two shows within a week of each other
Please, please, please note that the screenings are at different venues.
The Condition of the Working Class
Followed by Q&A with the film makers
Saturday 22nd June 2013 – 3pm
in The New Theatre, 43 East Essex Street, D2.
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Public sector pensions – is there any three-word formulation more likely to angry up the blood? Not likely (except, maybe, ‘public sector pay’). Mention public sector pensions in polite company and animal sounds will be heard. We are constantly told that we can’t afford public sector pensions, they are a burden on the taxpayer (the private sector taxpayer, the public ones don’t count as they will become a burden when they retire), that they will in a few years sink the economy.
Listening to the debate, you’d think it was public sector pensioners that caused the fiscal and economic crisis, sank the banks and forced us into a bailout.
But a few facts that are emerging suggest otherwise (a few facts are always a healthy tonic to unsubstantiated assertions). WorldByStorm over at Cedar Lounge Revolution pointed to the Sunday Business Post article based on documents obtained under the Freedom of Information legislation:
‘A quarter of public service pensioners receive a pension of only €5,000 annually, according to government documents [and] almost half of all public service pensioners get a pension of about €10,000 or €11,000 annually.’
25 percent received a pension of only €5,000? Almost half on €11,000 or less? Can this be true? And, if so, where does that leave the ‘public-sector-pensions-are-ruining-us-school’?
Well, yes, it can be true. The latest Analysis of Exchequer Pay and Pensions Bill shows that the average public sector pension is €20,800 a year. It should be noted that much of this includes payments for spouses. Further, many recipients do not receive a social insurance top-up pension.
Of course, this doesn’t cost the state an average €20,800 per year. Some of this will be returned via the tax system. Further, the pension income is returned to the economy in spending, resulting in greater economic activity and consumption tax revenues.
This doesn’t deter the great campaigners.
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One of the main criticisms of NAMA, and there are many, is that rather than dealing in the most effective way, both in terms of cost and social benefit, with the legacy of bad debt created by frenzied speculators during a credit bubble, it is instead designed to soften the losses for those who benefited substantially from that socially manufactured glut of liquidity and to reignite the property market speculation that got us where we are today.
Proving that or even making such a claim is not straight-forward of course, due to the opacity of the institution itself and the length of time that it is supposed to do its work, for the benefit, we are told, of those who live and work in Ireland.
However, I couldn't resist the temptation to provide a rough sketch of what appears to be going on at the moment. The following is a bit scrappy, so I apologise in advance if its difficult to follow my point, but these posts are often an attempt to work things out with a view to improving on them at a later date.
Of the original NAMA portfolio fifty-four percent are in Ireland, around 34 percent in mainland Britain and 13% in the rest of the world, which oddly includes Northern Ireland.
Around eighty percent of NAMA's sales so far have been in Britain.
This suggests that much of the UK portfolio has been sold off.
“NAMA is viewed by international investors as having been a very good idea,” U.S. billionaire Wilbur Ross, whose WL Ross & Co. owns 9 percent of Bank of Ireland Plc, said in an e-mail. The strategy of focusing on U.K. sales first “provided near- term proceeds from a relatively stronger market while not flooding the Irish market before the sovereign had stabilized,” he said.”
So NAMA is now focusing on selling it's Irish portfolio as the market 'has found its floor'.
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We are on the verge of avoiding the fundamental issue regarding the childcare crisis; namely, that a private sector model of delivering childcare will keep the service beyond the reach of most parents (except at an exceptionally high cost) and will undermine the quality of care for children. Fintan O’Toole gets it:
‘Preschool education is a vital public good. There is an overwhelming public interest in the provision of high quality early education to all children, regardless of their family circumstances. . . Childcare is a public project, an expression of a shared social commitment to common values. . . .This was recognised in the commitment of public resources to the provision of one year of free preschool education. But that commitment is trumped by a very different imperative – the logic of profit. Instead of childcare being a collective public project, it has been turned into just another business. . . The outrageous practices of some of the biggest commercial childcare providers are not throwbacks to the past. They are harbingers of the future.’
In the weekend media there was a fight back against any idea that childcare should be a public affordable service accessible to all parents regardless of means. We had Brendan O’Connor with these bon mots:
‘What was most evident from last week’s discussions is that the State is not even able to get it together to properly inspect crèches. How this proves it should be running them instead is beyond me.’
Ooookkkkaaaayyyy – let’s see if I get the logic of this. Public sector inspections cannot keep up with the negligence of certain commercial childcare providers. This is proof that we must continue to rely on . . . those same commercial childcare providers. Geez, it must be great to write for the Sunday Independent.
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Arthur Beesley in his May 22nd article Scrutiny of Ireland Begins to Bite in Apple Tax Enquiry suggests that foreign companies come to Ireland primarily for the tax benefits, but does so by using inaccurate information. So the reason for the movement of investment into Ireland, according to Beesley, is entirely due to our ability to facilitate tax avoidance even though the government has gone to some lengths to deny that. But in order to make that argument he has to distort what is already widely known.
Note the use of 'continual improvement' in the following:
“The continual improvement of the tax terms Dublin offers investors has fostered a huge increase in the amount of business funnelled through the Irish operations of multinational companies. The headline tax rate was reduced to 12.5 per cent in 2003 from 38 per cent in 1997, when the combined net profit of US corporations in Ireland stood at $8.58 billion. By 2005, this had risen to $48 billion.”
The increase is due to a number of factors, but the change in the headline corporate tax rate in 2003 was not one of them.
Dr. Proinnsias Breathnack of NUI, Maynooth corrects him in a letter to the Irish Times on the 4th of June.
A chara, – Arthur Beesley (Business, May 22rd) wrote that Ireland’s rate of corporation tax was reduced from 38 per cent to 12.5 per cent in 2003. This is incorrect.
Prior to 2003, the rate of corporation tax on profits from manufacturing and international (ie export) services – which covers most activity of foreign firms operating in Ireland – was just 10 per cent. The 38 per cent rate applied to all other corporate activity, and related to non-manufacturing activity within the Irish economy (mainly conducted by Irish businesses).
Following a finding by the EU that this distinction was discriminatory, a standard corporation tax rate of 12.5 per cent, applicable to all corporate activity in Ireland, was introduced in 2003. Thus, what was, in effect, the tax rate applying to foreign companies was increased in order to compensate the government for the tax lost through the reduction of the tax rate on domestic non-manufacturing activity.
As it happens, the “headline” rate of 12.5 per cent is of little relevance as far as the foreign corporate sector is concerned, as the average rate of tax paid by this sector is nowhere near this level. – Is mise,”
Not only did the headline rate for foreign companies increase in 2003, for many years before that it was officially zero. Apple and many other MNCs that set up here in the 80s were able to enjoy a 10 year tax holiday, for example. So why does Beesley distort this well established fact?
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Syrian government forces, reinforced by fighters of the Lebanese resistance movement Hezbollah, have today made a major breakthrough in their fight against foreign-backed militants holding the strategic town of Al-Qusayr, which lies on the road from Damascus in the south of the country to the north-western coastal cities of Tartus and Latakia. Syrian state television and the Lebanese Al-Manar channel, run by Hezbollah, stated this morning that Syrian troops and Hezbollah fighters had re-taken the town after a decisive two-week battle with rebels.
A Hezbollah fighter reportedly told news agency Reuters: “We did a sudden surprise attack in the early hours and entered the town. They escaped”, ‘they’ referring to the insurgents. Sources for the various rebel groups fighting the government in Syria confirmed that their militias had abandoned the town and retreated north to the area of Debaa, not far from Qusayr; like most rebel sources this claim is unverified. What is certain is that after two weeks of intense fighting and many casualties on both sides, the town of Al-Qusayr, a vitally important waypoint on the main arterial roads linking the north and south of the country, is back in Syrian hands. For the rebels, it is a major defeat.
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Unemployment falling to 13.7 percent. Employment increasing by 20,000. THe CSO's new Quarterly National Houshould Survey should be good news. So why isn’t it? When we dig a little under the numbers, what do the numbers tell us about the kind of economy that is emerging? Why should we be concerned?
First, let’s run the headline numbers.
On the face of it, these are positive numbers: employment up by 20,000 over last year – returning to the level of employment in 2011 while unemployment has fallen by well over 1 percent. But now, let’s look at some numbers below this headline.
(a) The Rise of the Precarious Work
Probably the most disturbing aspect of the CSO release is the rise in precarious work. This can be seen in the rise in under-employment.
The economy is still shedding full-time jobs. In the last year, the numbers working full-time fell by 6,000. The difference was largely made up by an increase of 17,000 in precarious work (a 12 percent increase) – people working part-time but wanting more work.
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