Monthly Archives For October 2014

Five Points for a Citizen Economics

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Budget time is really the only window where citizens are encouraged to engage in economic debate, and even then the space of time is too short and the range of topics up for debate too narrow to make much impact. When it ends, and for the other eleven months of the year, economics is the preserve of technocrats.

That is a serious problem. Economics is the discussion of how things in our society are produced and distributed. If you leave it to experts there is a big cost for democracy. Yet, while people feel comfortable engaging in debate about politics in the Middle East or presidential elections in the United States, there is a reticence to talk about economics.

Part of this is down to economics as a discipline, which has become increasingly remote from day-to-day life. The primacy of the market as a means to resolve problems has led to the rise of ‘market scientists’, who are seen as the authoritative voices on running an efficient economy. The language deployed by these experts is deliberately exclusive. Certainly they are unlikely to start explorations of economics with parables about pin factories, as Adam Smith did in The Wealth of Nations.

Yet they dominate economics discourse. When economics is discussed with any substance in the mainstream press market scientists from universities, think-tanks and finance houses are given free reign to make objective statements about the common good. Research by Julien Mercille has shown that between 2008 and 2012 77% of commentators on austerity were from elite institutions.

Another factor leading to the retreat of ordinary people from economic debate is the narrowing space for democracy in the economy. The democratic sphere only extends to areas where there is or could be public ownership. Outside of this decisions are made by private individuals or organisations. As wealth becomes concentrated in fewer hands, fewer economic decisions are made with public participation.

This has bred a cynicism about what can be achieved by discussing economics. With capital increasingly breaking free from taxation – and mobile enough to defeat strikes – people have come to accept that social problems can only be resolved by appealing to private individuals and organisations to solve problems profitably through the market. And so we are relegated in the economy from citizens to consumers.

This must be reversed if we are to build a politics in Ireland that can reclaim our society from the political establishment and the interests they serve. Joan Robinson, one of the great economists of the twentieth century, was once asked why people should study economics. She replied, “so that economists can’t fool you”. Implicit in this comment is the need for citizen economics.

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Squeezing the Middle

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So the Government wants to give relief to the squeezed middle.

‘Taoiseach Enda Kenny has said easing the tax pressure on the “squeezed middle” will be a priority in the upcoming budget.’

The very first question is:  who exactly is the Taoiseach referring to?  The squeezed middle is an amorphous and infinitely elastic concept that can apply to just about anyone you want it to.  Let’s try and get a handle on this much-talked about but rarely defined group using the latest Revenue Commissioners statistical report.

Let’s define the squeezed middle as the middle 60 percent – between the lower and upper 20 percent group.  Remember, this doesn’t refer to everyone, just those in the workforce.  It excludes those without a job (pensioners, the sick and disabled, the unemployment, lone parents, etc.).

income_range

We can see that, according to the Revenue distribution tables, the middle 60 percent of earners have incomes between €8,700 and €51,300.  However, there is a big caveat here.  Couples where both spouses and civil partners are working are counted as one tax unit.  This means that while in the tables, a tax unit will show an income of €60,000 – this actually means the combined income of two people.  So they may both be earning well below the average income.

We can adjust for this but we have to make assumptions.  To breakdown the one tax unit where there are two people working, I assume that one spouse / civil partner earns 60 percent of the total, while the other earns 40 percent.  When this is done, the revised income range looks something like this.

revised_income_range

This is just an estimate (other might come up with slightly different numbers, working with this data – but it won’t change all that much).  However, looking at the two charts there are three striking things:

  • First, there are many in the squeezed middle that earn very little.  They will be low-paid, part-time, and underemployed (or precarious workers).
  • Second, those earning over €42,400 are in the top 20 percent   (€51,300 using the unrevised chart)
  • Third, between 64 and 73 percent of those in the squeezed middle (depending on which chart you use) are taxed at the standard rate, the marginal rate or are exempt.

A substantial number of the squeezed middle do not earn enough to pay income tax or earn below the top tax rate threshold – so any income tax cuts, never mind cutting the top rate of tax, will have no impact whatsoever.  Is this the group that the Taoiseach is referring to?

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TTIP Trade Deal: Bad for Democracy

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European and American civil society have deemed the Transatlantic Trade & Investment Partnership (TTIP) an anti-democratic threat to the environment, food safety and workers’ rights. Barry Finnegan explains.

While likely to generate increased profits for large companies by removing and reducing production costs associated with health and safety standards (referred to as ‘unnecessary and burdensome, restrictive barriers to trade’), neither citizens nor parliamentarians can get access to the details of the TTIP currently being negotiated by the European Commission and the US Department of Trade; while claims of economic and job growth have been exposed as mere marketing messages.

Private Corporate Courts

Despite the fact that the EU and the US have the world’s most advanced and well-financed legal systems, the TTIP makes provision for a new private ‘court’ called an Investor-State Dispute Settlement (ISDS) which would allow a company who imagines its future profits being reduced as a result of legislation, to sue a government by way of a private arbitration case.

In the absence of a list of clearly identified problems with the Irish and European justice system, only one conclusion can be drawn from the TTIP negotiators’ desire for a private international court for foreign investors which would allow them to bypass Irish and European courts: namely to avoid the jurisprudence and constitutional rights accompanying the application of justice in democratic societies.

This point was well made by Business Europe (the lobby organisation for 35 European national business federations – including our own IBEC) in their document, Why TTIP Matters To European Business, where they explained how they want to be able to use ISDS in TTIP to overthrow the right of the Americans to use the US constitution to protect themselves. They explicitly state: “If in the US a domestic law is adopted after TTIP enters into force and its content violates the [TTIP] Agreement, it can still be found constitutional by domestic courts. So the only possibility for the investor to ensure its adequate protection is to bring the claim to international arbitration”.

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No Easy Victories

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The campaign for the Right2Water in Ireland is rapidly growing in strength and confidence. Working class communities have been staging determined and inspiring protests to prevent the installation of water meters in their areas, the best of the trade union movement has mobilised to help support and coordinate these efforts at the national level and the Irish political left has rallied to the cause. In response to the growth of the movement, the Irish State has let loose its dogs of war. As a result of which recent days have witnessed heavy handed and provocative policing from An Garda Síochána, concentrated mainly in Edenmore, Donaghmede and Coolock.

Footage of Gardai man handling women and minors, and generally trying to intimidate and bully peaceful protestors has emerged. Many protestors have reacted to this with dismay, and believe that the Gardai are in breach of their “oath” because of the way in which they are trying to force through the installation of unwanted meters. This idea that the Gardai are acting abnormally ties into other quasi-legal arguments within the movement about the need for “consent” to be liable to pay the water charges and related matters.

As the movement grows in strength, it is important, also, that its energies be focused, so with that in mind it seems right to dispel some of the misconceptions about the role of the law, and the police, in the struggle for the right to water. The movement and campaign for the Right2Water is the most electrifying and significant development in Irish politics for some years, but in order for it to reach its full potential we should heed Amilcar Cabral’s advice that we ‘tell no lies. Expose lies whenever they are told. Mask no difficulties, mistakes, failures [and] Claim no easy victories’. By dispelling some of the appealing, but ultimately unhelpful, arguments swirling around the movement, it will be possible to move forward in a more determined, focused and effective manner.

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Apple Deal is ‘Tip of Tax-Dodging Iceberg’

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Press Release from Attac Ireland

Ireland’s deal with Apple, branded ‘illegal’ in a preliminary judgment by the European Commission, is just the tip of the iceberg when it comes to tax-dodging by corporations here – with full cooperation from the State.

So says Attac Ireland, the Irish branch of the global activist group that campaigns for financial justice, including shutting down tax havens and taxing transactions.

Findings from the European Commission suggest that the State cut a special tax deal with Apple in return for job creation in Ireland by the multinational corporation.

“While the jobs created are relatively few, the loss in revenue to the Irish state is enormous,” Marie Moran of Attac Ireland said.

Globally Apple has $54.4 billion in offshore profits that have been barely taxed at all, thanks in part to a complex arrangement of Irish subsidiaries, known as the ‘Double-Irish’.

“Under Irish law, if the Irish subsidiary is controlled by managers who meet outside of Ireland, then it is treated for tax purposes as if it is a non-Irish company,” Conor McCabe of Attac Ireland explained.

“Companies such as Apple and Google, as well as pharmaceuticals, assign patent rights to these subsidiaries, which then charge the main Irish company a royalty fee for using these patents.” McCabe continued. “Under Irish tax law, royalty payments are tax-deductible. In effect, these companies charge themselves for using their own products, and then use that charge as a tax write-off. This is the Double-Irish.”

Marie Moran noted that while international attention is fixed on the case of Apple, the practice “has implications for a very large number of corporations based in Ireland for tax purposes. In fact, according to the Revenue Commissioner’s own reporting, the majority of companies based in Ireland pay corporation tax far below the headline rate of 12.5%, with some corporations paying no tax at all.”

“This arrangement is a form of corporate welfare that is not only potentially illegal but deeply anti-social,” Harry Browne of Attac Ireland added. “At a time when Irish citizens are bailing out the losses of private banks, and have faced cuts to social welfare, the State is complicit in measures that shore up the enormous wealth of the corporate sector, and erode social fabric and infrastructure.”

As part of its campaign for financial justice, the European Attac Network is calling for a global taxation for corporations, ‘unitary taxation’. This means that large corporations would be taxed as a single entity on the basis of a joint report of the activities and profits of all subsidiaries worldwide.

Under unitary taxation, profits would be split by a levy allocated to those countries, for example, based on the variable wage payments, fixed assets and sales. This measure would ensure that corporations cannot avoid tax payments through complex transfer pricing and other arrangements.

In addition to calling for unitary taxation, Attac Ireland calls for an immediate investigation into the legality of Irish tax arrangements, and a commitment from the Irish government to close down the socially costly and morally bankrupt ‘double Irish’ loophole.

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China’s is the world’s greatest contribution to the real development of human rights

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The following article was originally published on 2 June 2014 and dealt with a resolution passed by the US House of Representatives. However its arguments clearly deal with the issue of human rights in general. For the reason’s given in it, China’s is easily the greatest contribution made to human rights by any country in the world.

This version is taken from John’s post on Key Trends in Globalisation which was published today.

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On May 28, the U.S. House of Representatives chose to debate a resolution expressing its concern over the issue of “human rights” in China. This makes it appropriate to make a comparison of the real records of the U.S. and China on human rights.

This is a vital issue as human well-being is certainly the sole goal of any correct policy — including in that the right of each nation to pursue its national sovereignty and national culture, which is why China’s “national revival” and overall human progress are inseparably linked.

Real human beings have an immense number of needs and desires ranging from basic ones, to have good health and enough to eat, through to the most complex — the most advanced fields of human culture or science. Objectively only extremely developed societies, with enormous economic and social resources, can approximately meet all these needs.

Consequently the attempt to reduce “human rights” to a Western style political structure, as though having a “parliamentary” system were the most important question facing human beings, is ridiculous. The real issue was very well put by the BBC’s correspondent in China, Humphrey Hawksley:

“I hear from an Iraqi wedding photographer who had lost so many friends and family members that he would gladly have exchanged his right to vote for running water, electricity and safety; from an Argentine shoe maker who bartered trainers for food because his economy had collapsed; and from the African cocoa farmer whose belief in the Western free market left him three times poorer now than he was thirty years ago.”

The example of women in China and India can readily be taken to illustrate the real issues involved in human rights. A Chinese woman’s life expectancy is 77 years and literacy among Chinese women over the age of 15 is 93 percent, an Indian woman has a life expectancy of 68 and literacy rate over the age of 15 is 66 percent. India may be a “parliamentary republic” but the human rights of a Chinese woman are (unfortunately)far superior to the human rights of a woman in India. Anyone who does not understand or admit that there are better human rights if a person lives nine years less or more and whether they are literate or illiterate is either out of touch with reality or a liar.

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Mark Fielding Speaks to the Nation: We Don’t Owe You Squat

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In the excellent Irish Times series on the Living Wage, Mark Fielding, Director of ISME (Irish Small and Medium-Sized Enterprises) has put it bluntly to workers and the nation:

‘It’s not our responsibility to give someone a living wage.’

That’s telling them, Mark. You want a wage that can afford you a minimum adequate standard income, don’t come to us. Not our problem. Be lucky to have a job – if we decide to hire you.

This is Thatcherism Irish-style. There is no such thing as society, only Mark’s members. But to be fair to Mark, he’s got form on this issue.

‘ISME chief executive Mark Fielding called on the Government to scrap the minimum wage . . . He said the minimum wage had failed to benefit the low paid . . . ‘

So scrapping the minimum wage would ‘help’ the lower paid. Hmmm.

Mark is at pains to explain the extraordinary burden his members suffer:

‘The minimum wage is €8.65. But it’s really €9.68, when you take into account employers’ PRSI contributions.’

Oh, my – a wage floor of €9.68 per hour. That sounds really bad. Workers in our hospitality sector (hotels and restaurants) must be really costing Irish employers a bomb – especially in comparison to other EU-15 countries. But is this the case?

hos_sectOur labour costs (made up almost exclusively of wages and employers’ PRSI) are far lower than most other EU countries in the graph. Labour costs would have to rise by 27 percent just to reach the mean average; they would have to rise by over 50 percent to reach French levels.

Of course, this data (the latest from Eurostat) is from 2011. Maybe Mark is worried about recent trends in low-paid sectors. Let me put his mind at ease. Irish labour costs in hospitality rose by 1.3 percent up to 2013; in the EU they rose by 3.2 percent. We’re even further behind.

That a representative from a business organisation would give out about wages, or paying higher wages, or even paying a decent wage is nothing new or unexpected. However, this ‘whether-people-can-live-on-the-wage-I-pay-has-nothing-to-do-with-me’ position got me to thinking: do all employers think like this? Would they all agree?

It’s hard to say in this country where the debate is dominated, loudly and persistently, by so many Mark Fieldings. But it is interesting to take a look at business organisations overseas, in the US, where such groups are no slouch when it comes to promoting their economic interests.

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