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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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Demanding the Future: The Right2Water and Another Ireland

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This article was originally posted on Critical Legal Thinking on the 29th of September.

The American abolitionist Frederick Douglass once observed that if you find out ‘just what any people will quietly submit to … you have found out the exact measure of injustice and wrong which will be imposed upon them’ and that such injustices ‘will continue till they are resisted with either words or blows, or with both’. In Ireland, after six years of austerity and regressive tax reforms that have punished Irish working people for the benefit of Irish and European bond holders, it seems the Irish establishment may have finally discovered the measure of injustice that the people will not tolerate.

The Irish government is currently implementing a plan to install water meters, so that people’s domestic water usage can be monitored and they can be charged for the amount they use. In this way they are abandoning the traditional funding model for water provision in Ireland, which saw it paid for out of general taxation. This move by the Irish government is consistent with a global trend over the last twenty years towards the increased commodification of essential services, with water seen as a particularly lucrative market. Taking advantage of the economic crisis, as most governments in Europe have, the Irish government has accelerated a broad neoliberal policy drive (privatisation of services, cuts to public sector jobs, regressive taxes) under the well-worn mantra that “There Is No Alternative”.

However, this new tax–this commodification of an essential public good–is being met with trenchant resistance from working class communities throughout the island. From Crumlin to Togher, Edenmore to Caherdavin, communities have mobilised to prevent the installation of water meters in their areas. In these protests the community activists have remained resolute in the face of attempts at intimidation from both the company established to commodify the water service, Irish Water, and the police. As well as engaging in direct action to prevent the installation of meters, the bourgeoning movement is also encouraging a boycott of the attempts by Irish Water to enrol residents as “customers”, and calling for non-payment of any future bills.

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IBEC’s Myth Debunking is Just Bunk

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IBEC has published a paper entitled ‘Debunking Irish income tax myths’.  At its core it contains misleading, highly selective and ultimately disingenuous arguments.  In short, it is bunk.  Let’s go through one of their main arguments and see where they are misinforming the debate.

Personal Taxation – It is Lower than the EU Average

IBEC puts forward two graphs (Figures 2 and 3) to show that Irish personal taxation is much higher than in the EU-27.  This is an audacious presentation.  They use data selectively and exclude large parts of personal taxation.

(a)  Using GDP and GNP

IBEC produced the following calculations.

111According to IBEC, this proves that Irish personal taxation is higher than the average of the EU.  They further claim, that on these numbers, Irish ‘taxpayers’ are paying €3 billion more than the EU average on a proportional basis.  The problem is that they are not comparing ‘personal taxation’; they are comparing income tax.
They exclude a large portion of personal taxation; namely, social insurance or PRSI.  In almost all other European countries, PRSI plays a much greater role than income tax.  In the EU, PRSI makes up 37 percent of total personal taxation; in Ireland, it makes up only 12 percent.  In seven countries, revenue from PRSI is higher than revenue from income tax.  In the Netherlands, income tax raises €46 billion; social insurance, however, raises €63 billion.

Not only did IBEC ‘mould’ the data around the conclusions they wanted, they also mixed the measurements to suit their argument.  When comparing GDP, they used an ‘arithmetic’ average for the EU.  However, when using GNP, they used a ‘weighted’ average.  The difference is that in the former, you average the individual percentage of each country; in the latter you add up all countries together and calculate the average. It allows IBEC to claim that income tax makes up 7.8 percent of GDP (arithmetic) whereas using the weighted measurement gives a figure of 9.4 percent.

Here’s the actual data – using the weighted average.  All comparative data below is from Eurostat’s Taxation Trends in the European Union 2014.

IBEC 2

On all these measurements, Ireland is well below average.  On GDP we’re below, but we know that much of our GDP is multi-national froth.  Using the Fiscal Council’s hybrid-GDP (which compromises between GDP and GNP), we’re still below average.  Even when using GNI which is essentially GNP, we remain below, though less so.

If we use adjusted GDP we’d have to pay €3.6 billion more in personal taxation – income tax and PRSI combined.  However, this isn’t the best measurement.

(b)  A More Robust Measurement
There’s a problem in using GDP and GNP.  If, after years of recession and austerity, GDP and GNP are depressed, then you will probably not be comparing like-with-like with countries that didn’t have such an experience (or not in the degree we had).
There is a better measurement: the effective personal taxation rate.  This is the total amount of personal taxation revenue as a percentage of total wages and salaries.  The following is for employees (measuring the tax rate for self-employed is difficult as the data on self-employed income is limited) though it covers 83 percent of all those in work.

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Consumerism and Equality

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The consumerism generated by capitalism throughout the  ‘Developed‘ or ‘Western’ World is a major obstacle to tackling climate change, the biggest problem facing mankind.  So the next question must be: why is capitalism still so widely accepted?   Why do workers in the ‘West’ vote overwhelmingly for pro-capitalist parties?

One of the less obvious features of capitalism is that by exponentially expanding its ‘free’ market into every corner of  life it puts a price on everything, and it thereby becomes a great social leveller: kings and lords, upper-class birthrights and privileges decline as possession of money, which by chance can be acquired by anyone, comes to measure everything.  As a result, other than the massive inequalities of money, we now live in a society with a level of personal equality that was unimaginable throughout  human history up to perhaps 40 years ago for gender, race, single mothers, LBGT, etc.  But crucially this equality drive of capitalism has always encouraged constantly growing agitation by workers for a just and equal economic share of their social production. They now see themselves as the social equals of their bosses, which causes desperate problems for capitalists.  Capitalism thereby lacks the acceptance of difference which earlier civilizations did, and which could last thousands of years in spite of vast degrees of inequality, class divisions, emperors, slavery, etc.

England’s history demonstrates this capitalist dilemma. In response to the rapidly growing agitation the capital-owning class must react, like any ruling class, in two ways: some groups are violently repressed and exploited; some are bribed to keep them loyal. Thus colonies were plundered by Imperialism to deliver ‘bribes’ to English workers (noted in England by Engels1 ) finally resulting in the compromise of social democracy.    For example while the famine was devastating Ireland massive amounts of food were exported under British army guard to Liverpool. Violence was used in the 1819  Peterloo massacre of protesters.  But when Chartist agitation for equality  grew towards 1850, this time instead of violence the Corn Laws were ended to allow imports of cheap food to quieten the agitation. It is clear that most wars fought during Hobsbawm‘s Age of Empire2  and continuing today were concerned with access to cheap labour,  food, raw materials, and later oil.  The home working class was comfortable enough to forgo  dangerous agitation, even gaining the vote over the years. But after 2 diverting world wars, which were much caused by imperial rivalry, in the 1970’s there arose further demands for economic equality by English workers (e.g. the miners strike) and also agitation by the colonies for their own liberty, for the equality of nations.  As there were no new colonies to invade Thatcher and others in the West had to find another source of wealth to answer this new agitation.

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Investment Remains the Key to a Real Recovery

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The Irish recession which began in the final quarter of 2007 is the most severe in the history of the state. GDP contracted by 12.1% in a little over two years ending in the 4th quarter of 2009. That slump is not over. The latest data shows that the economy still remains 3.4% below its pre-recession peak. In effect it is likely to take 5 years or more simply to recover the output that was lost in the slump.

Even then, the economy will remain way below its previous trend rate of growth. This is illustrated in Fig 1 below, which shows real GDP and real GNP from 1997 to the present. The average annual growth rate of the Irish economy from 1997 to 2007 was approximately 6%. Maintaining the trend rate of growth would have led the economy to be approximately 50% larger than it is currently, and there is a danger that this potential is lost permanently.

Fig.1 Medium-Term GDP & GNP

Fig.1 Medium-Term GDP & GNP

The causes of the slump are very clear. Over the entire period of the crisis the fall in investment more than accounts for the entirety of the decline in aggregate measures of output, either GDP or GNP. GDP in the 2nd quarter of 2014 is still €6.6bn below its late 2007 peak. Investment (Gross Fixed Capital Formation, GFCF) is €14.4bn below its peak. There are other compoents of GDP which have also failed to recover, notably personal consumption and government expenditure. But even taken together, their combined fall of €10.1bn is less than the fall in investment. The only component of GDP which has risen is net exports. The change in components of GDP is shown in Fig.2 below.

Fig.2 GDP & Components In the Slump. Source: CSO

Fig.2 GDP & Components In the Slump. Source: CSO

This data belies the notion that there is an ‘export-led recovery’ under way. Recorded net exports have grown very strongly, up €30.5bn over the period. But only one quarter of this or €7.4bn is a rise in the export of goods. A much larger statistical contribution has arisen from the decline in the imports of goods, down €14.6bn. As both investment and consumption have fallen, this simply suggests that both firms and households have been priced out of world markets by reduced purchasing power. The remainder of the rise in net exports is derived from international trade in services. These are particularly prone to the tax-induced flow of funds that plague the Irish economy and completely distort the economic data. There is little benefit from attempting to unravel them.

More importantly, it is clear that exports have not led a broad-based recovery at all. All the main domestic indicators of activity, consumption, government spending and investment are still far below their pre-recession peaks.

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From Alpha to Omega Podcast #054: Councils Upon Councils

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This week I am glad to welcome C. Derrick Varn back to the show. We discuss the council communism and the Ultra-left, a man who told Stalin where to go and survived, autonomous Marxism and the Occupy Movement, and the failure of revolutions.

Enjoy!

The music and voice used on this show are:

‘The Order of the Pharaonic Jesters’ by Sun Ra and his Arkestra

Paul D’Amato discussing the life and work of Antonio Gramsci

‘The Charleston’ by Django Reinhart

‘Working Class Hero’ by John Lennon

‘Destroy Everything’ by Dr. Peacock & Repix

‘Wild Colonial Boy’ by Tommy Makem and The Clancy Brothers.

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Spatial Justice and the Irish Crisis

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Book Review: Spatial Justice and the Irish Crisis, eds: Gerry Kearns, David Meredith, and John Morrissey, Royal Irish Academy (2014) 

The new book Spatial Justice and the Irish Crisis, edited by Gerry Kearns, David Meredith, and John Morrissey and published by the Royal Irish Academy is extremely timely given its extensive analysis and detail on the causes of the Irish financial crisis, its socio-spatial impacts on inequality and suggestions for alternative, social-justice based, economic development. The Irish elite, government, big business and media are trumpeting that ‘austerity’ and ‘neoliberalism’ have worked. The Irish economy is now fully in ‘recovery’ it is claimed, ‘austerity’ will be eased with tax breaks again to be given out to the middle classes, employment is rising and we have a mini property boom in Dublin to celebrate. Even potential social partnership agreements are floating in the political air. However, it is now more than ever that critical political, economic, and socio-spatial justice analysis of the Irish economy is required. Rather than cheerleading blindly into another boom and bust cycle based on inequality and spatial injustice there is a need for academics and policy makers to engage in rigorous analysis and reflection on the crisis and the political economic trajectory for the coming decades.

Prof Gerry Kearns, of the Maynooth University Department of Geography, in the Introduction to the book, draws on President Higgins’ reflection on the importance of ‘critical thought’ in the wake of ‘failed orthodoxies’  as ‘the crisis is one of ideas as well as of policy’. Now more than ever, space and time must be given in the academic and public sphere in Ireland to identify the causes of the crisis, its impact on inequality, and alternative (non-capitalist) policies and approaches based on the common good and social justice rather than the interests of the minority elite – the 1%.

This book does this by placing social and spatial justice as an urgent consideration in all areas of social and economic policy. Interestingly, Kearns highlights how government responses to the current crisis go against Articles contained in the Irish Constitution including commitments of the state to ‘promot[ing] the welfare of the whole people by securing and protecting as effectively as it may a social order in which justice and charity shall inform all institutions of the national life’ (Article 45.1). Significantly, this also includes ensuring that ‘the ownership and control of the material resources may be so distributed amongst private individuals and the various classes as best to subserve the common good’ (Article 45.2.ii).

The book covers the origins of the financial crisis, its political and territorial implications such as the outsourcing of state power to international credit rating agencies, the links between crisis, housing and planning, the uneven impacts of the crisis in different parts of the country and unevenly within cities such as failed regeneration, impacts on equality of opportunity, marginalization of migrants, and sustainability. Within these areas it addresses the questions of spatial justice and where the pain of crisis and the opportunities of recovery are distributed, geographically and socially. It highlights the uneven development that was at the heart of the Celtic Tiger in the inequalities that persisted through that period, how they were worsened by the crash and the forms in which they continue today.

The chapter by Prof Danny Dorling, Professor of Geography at the University of Oxford, on Spatial Justice, Housing and the Financial crisis makes important links between rising inequality and housing crises internationally. This chapter is very interesting for an Irish audience as it highlights how the current housing crisis in Ireland has similar causes to other countries and there is much we can learn in regard to social justice based responses. Dorling argues that “we really need to think of housing again as a way in which we feel safe about where we are: not as a source of investment or a pension or something that can be used for profit, but instead as primarily a source of shelter”.  He offers suggestions to address this such as a mansions tax, rent control, and using second and third homes for housing for those who need it. He explains that “housing is fundamental. It is what lies at the bottom of this crisis. Housing is one of the basic things that everybody needs and that policies can work out a way to guarantee.” He surmises that the reason this is not the case is because current policy appears to be ”trying to protect the equity interest of a small proportion of people who happen to own quite a lot of very expensive housing”.

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Wittgenstein in Exile

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Book Review

Wittgenstein in Exile, James C. Klagge (MIT Press)

Groundless Grounds: A Study of Wittgenstein and Heidegger, Lee Braver (MIT Press)

 

For James Klagge in his study of Wittgenstein and his philosophy, exile becomes a metaphor that help identify the enigmatic nature of his subject. Wittgenstein’s rootless, itinerant life was a crisscross of journeys across western Europe, from his home in Austria  to England, to Norway, to Ireland – returning to Austria to teach children in a rural location, returning to England in 1929 (‘God has arrived. I met him on the 5.15 train’, announced Maynard Keynes to his wife), returning to Norway to live. Always he travelled, as he lived, alone. He exiled himself from family, friends and academia and, given the strangeness of his temperament, exile serves as a description for his state of mind. Everyone feels alienated to some degree of other – those who don’t are spooky or just plain numpties – but Wittgenstein’s estrangement from the society and culture of his age was profound and the author’s understanding of this underlies what he writes about the man.

Wittgenstein in Exile is enjoyable to read because it does not indulge in abstruse, intricate arguments and is mercifully free of the mind-numbing prose that results when the author of a book about philosophy solely addresses a professional audience of people assumed to share his interests. Klagge’s comfortable style of writing, reaching out to a wider readership, succeeds in presenting the peculiarity of a man who could not separate his philosophical work from the way he conducted his own life. Unable to avoid remorseless self-examination, Wittgenstein was an artist of the intellect not just in his writings but in his  relationship with the world and to demonstrate this Klagge draws considerably on reminiscences of those who knew Wittgenstein and who experienced in conversation aspects of his austere genius.

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China’s Economic Growth in the Light of the Findings of Modern Western Economic Research

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This article was originally posted on John’s blog Key Trends in Globalisation on the 2nd of September. 

Since 1978 China has seen the most rapid economic growth of any major country in world history, and the most rapid increase of living standards of any major economy. Furthermore, following the beginning of the international financial crisis, China far outperformed any other major economy – in the seven years from 2ndquarter 2007 to 2nd quarter 2014 China’s economy grew by 78% and the US by 8%. In a single generation China has gone from a ‘low income’ economy to the verge of achieving ‘high income’ status by World Bank criteria.

This unprecedented economic development is sometimes explained in terms of unique ‘Chinese characteristics’, but Western economic research over the last 30 years confirms that the reasons for China’s economic growth are rooted in universal economic processes. To be more precise, while the combination of global forces producing economic growth is unique in China, and produces unique ‘Chinese characteristics’, the forces propelling China’s growth operate throughout the world economy.

These modern advances in Western measurement and analysis of the causes of economic growth have major implications for China. Some economists in China have claimed that its very rapid growth is ‘aberrant’ and not in conformity with economic theory. Instead, supposedly China must switch from a growth pattern based on high investment and exports to one based on productivity, more precisely Total Factor Productivity (TFP), growth. Unfortunately such arguments are based on economic methods and concepts that are 30 years out of date and which have been formally replaced by the UN, US and OECD.

Modern economic methods show that growth in the world economy, therefore including China, is fundamentally driven by high levels of investment and by globalisation, which is division of labour on an international scale. The aim of this article, therefore, is to outline the results of the most advanced Western economic methods and their implications for China. First a brief characterisation of the scale of China’s economic achievement will be given, as this establishes the fundamental implications of this for economic theory, and then the implications of modern Western economic research for understanding China’s growth will be analysed. In particular, attention will be given to the formally registered advances of measurement and understanding of economic growth in general, by international economic agencies, and to the most comprehensive application of these to the study of China and Asia’s economic growth – Vu Minh Khuong’s masterpiece The Dynamics of Economic Growth: Policy Insights from Comparative Analyses in Asia.

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