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  • irishtimes.com - Posted: March 4, 2009 @ 6:36 pm

    Beware what you wish for…

    Harry McGee

    Brian Cowen this morning said something he will regret later this year. He told the Dáil that this wasn’t like the 1980s when unemployment rose to 17 per cent.

    That was after he dropped the bombshell that unemployement rose by a staggering 26,000 in February brining the grand total to 354,000, an incredible 200,000 more than at the time of the General Election in 2007.

    It is 10.4 per cent at this moment in time. Cowen is now saying that the jobless total could rise to 450,000 by the end of the year. But given the accuracy of previous predictions – woeful! – it’s likely that the picture will deteriorate worse than that. There’s no guarantee unemployement won’t creep up to 600,000, a truly frightening prospect.

    And where will that leave us? At 17 per cent. And where will that bring us? Right back to the 80s.

    Whatever uplift that Cowen and FF got from the Ard Fheis has been lost. It was pointless self-defeating approach by him yesterday to refuse to say the ‘Budget’ word. He created a mini controversy out of nothing. He said supplementary budget this morning and it was fine.

    The Government looks like it’s flying on a wing and a prayer too. Until the weekend it was holding on an autumn budget, saying that everything would be determined by its Holy Grail, the Commission for Taxation’s report in early September.

    Now we have a supplementary budget that will need to find not much shy of an additional €5 billion in cuts and in taxes… and in the last nine months of the year. Just to stay within the 9.5 per cent of GDP on which the Government gave a commitment to the European Commission.

    Cowen can be justifiably be accused by the oppositon of heel-dragging on the tax issue. But there is a valid argument that his floundering isn’t worse than any other leader. Last week’s silver bullet becomes this week’s dud – look at what happend to AIG in the US yesterday with its fourth bail-out in as many months. Sure, it’s the fifth time the Government came back to it. But as he pointed out we are not looking at a static situation.

    However, the big political charge is what the Government got up to over a decade where they allowed windfall taxes and temporary gains (all from the property bubble) to finance permanent costly expenditure. The expenditure remains the same now but the money source has completely dried up.

    Cowen refused to say the B word. Equally impetuous has been his refusal to use the S word. To say sorry for the mistakes that he has made. As I write I’m listening to Gillian Bowler make a profuse apology on behalf of Irish Life and Permanent (and not before time!)

    Is there more coperation between government and opposition. Lenihan seems more open. Cowen is flinty with the opposition leaders. Dempsey is filling the old Cowen role – the ultimate Fianna Fail partisan.

    In a world where wholescale hubris has been exposed, humility is the most important political quality that’s required right now.

    We need to see lots of it from all those who assume leadership roles for themselves in our society.

    • Highway61 says:

      Humility from a FF pol? You have got to be dreaming.
      FF will deal with this as they always do, by assuming that they are the State, not servants of it. Too long in power, too close to issues and basically incompetent, we have a Govt of teachers/public employees on lucrative career breaks.

      Not advocating violence, but that day is coming.
      Who hasnt already heard comments about Polish/foreign workers and whether they should be allowed to stay/sign on?
      Its a small step from this to mobs on the streets, something which is coming as surely as 600,000 on the dole.

    • Harry says:

      I must say that I’m in agreement with you. There’s a surfeit of anger out there and it’s unevitable that some of it will be exploited and chanelled against foreign workers, many of whom do drudge work that others no longer want to do.

    • Highway61 says:

      Mostly it comes back to greed, we behaved for 8 years like teenagers with our first pay packets, spend and splurge! But our leaders never lead, instead they indulged, they allowed this orgy to continue without ever thinking of tomorrow.
      We voted for this, because it was easier than having a mature approach to our own futures.
      In many ways we now face actually growing up as a nation, finally after 60 odd years as an independent country!

      The anger is also a funny kind of self harming, almost as if we have to express our guilty feelings by lashing out at anybody but ourselves for letting it come to this. The obsession with the Anglo 10 encapsulates this perfectly, a sideshow really but a handy diversion from facing reality.

      Whether we continue in this vein, or grow up and start to act with maturity will determine so much of the future of this democracy.

    • Peter B says:

      I don’t really think that Brian Cowen saying sorry is going to make any difference at this stage in the game. Less than two years ago FF was voted back into power by the Irish people. The electorate were motivated by greed and took what they perceived to be the safe option in terms of keeping the good times flowing.

      Did people question the crazy tax reductions, massive current spending increases or indeed any of the other wastages? Not at all – blind eye and deaf ear as long as they had what they wanted. In the ’80s the percentage of people unemployed was higher because the number in the workforce – on which the percentage is based – was lower. This was due to years of emigration.

      In absolute terms, the number unemployed at present is the highest ever in the history of this State. Even if the rate of increase reduces by half (from 26,000 in Feb to 13,000) for the rest of the year – and I think that’s the best case – there will be 500,000 unemployed by the year end – 550,000 is a more likely number.

      FF and the defunct PDs used temporary tax revenues from the building boom and motor industry to fund cavalier decreases in income tax levels and weckless increases in spending on public services. Most of the increased employment of the last decade was in the public and construction sectors. The very low interest rates that followed ‘euroisation’, greater levels of disposable income as a result of lower income tax, and tax schemes to stimulate an already active construction sector, led to massive price inflation, a part of which was the property bubble.

      The bubble was full of air (nothing) and the real stuff like exports fell dramatically over the past ten years. Meanwhile massive cost and price inflation led to Ireland being one of the most expensive countries on the globe and well above other Eurozone countries such as Germany and France.

      Highway is right – Ireland partied for the best part of a decade. Like drunks in a choir we all believed we sounded like Pavarotti and now that the ‘champers’ is gone the hangover is starting to hurt. The concept of citizenship and being good, responsible citizens is something the Irish don’t seem to understand. We live in a country, a society and that cannot function properly unless everyone (well, the majority) are contributing fairly and squarely. It’s sink or swim time. If there isn’t a collective, national effort, then the future of this country is bleak. Unfortunately the current Government is not providing much by way of inspiration.

    • Dan Sullivan says:

      Peter B, the rate was higher in the 80s because the workforce was smaller, i.e. fewer women worked and so were not included in the assessment of the available workforce. Odd I know, but the unemployment rate is not simply the number of unemployed people divided by the number of adults in the country. The stats disallow those who are not looking for work for various reasons, the elderly, people with long-term disabilites and so on. I’m not supporting the system, just saying that is how it works and is one of the reasons why with a great many more people not working now than in the 80s that the % rate is less.

      Also emigration peaked under the late 80s under FF, a massive saving to the public purse that FF have never acknowledged as one reason why they had more wiggle room than FG/Lab. The yearly figures in the early 80s were 30/50K per year but hit up close to 80K in the last few years of the decade. That meant considerably less strain on social welfare than might have been the case.



    • Peter B says:

      Dan, I made the point in relation to the percentages – unemployed numbers can only be looked at in the context of the workforce and not the entire population.

      In relation to rates of taxation, I don’t think anyone is proposing a return to the draconian days of 65% rates. I was referring to the late 90′s when rates were quite reasonable, and there was little need for the cuts which followed. Taxation rates are about fairness and equity. They should be such that enough revenue is generated, but not too much, etc, etc.

    • Dan Sullivan says:

      “In the ’80s the percentage of people unemployed was higher because the number in the workforce – on which the percentage is based – was lower. This was due to years of emigration.”

      My apologies Peter B, I read the above as meaning you thought the size of the work had been reduced by emigration. My bad. The fact is those women (and not looking to start a Newton Emerson on it) who were not counted as part of the workforce then but who are counted now could have worked then, it was just that we didn’t really think to include them.

      As for the tax rates of the late 90s, I personally favour the idea of tax rebates in situations of excessive surplus as was the case in the late 90s rather than permanent tax cuts. I don’t know why we don’t think to do it.

      Anyway, much of the problem we have as a society in my view comes from the great unfinished sentence of the PD’s ideology. The PDs believed in reducing state control in areas like health and education and others, because they believed in personal choice (or least many of them said they did) and reducing the state involvement in these areas it would lead to a reduced need for state spending and hence reducing the need for taxes to be collected.

      The problem was the unfinished sentence from the PDs in talking to the electorate about this. The sentence went something like this “we will lower taxes, reducing state spending and put more money in your pocket for you to make your own choices about your health and education.”

      The missing word at the end was “spending”, people didn’t take on board at all the idea that if the state lets you have more of your own money and reduces its involvement in school spending then you, the citizen, are meant to use that extra money on your education needs as you choose.

      The problem is that the last bit of the PD message both tailed off in the telling of it, and was drowned out in the cheering for lower taxes. People thought they could have lower taxes and still have the state providing all the money for schools and hospitals. Where the state was going to get this money from it didn’t seem to occur to anyone to ask (ok some did, but most didn’t) but while the boom cash was flowing that gap was adequately covered.

      This is not a ideology I personally favour as much as the PDs appear to have, for the simple pragmatic reason that I think the state or any large group for that matter can do some things more cheaply than the individual can. But that is where the problem lies for me, people bought half the PD message. Better not to buy it at all than to buy half it.

    • Highway61 says:

      Dan is correct in relation to emigration. It was a massive safety valve for FF. And now that isn’t there, unless we count South Africa, the reputed destination for our recent €10bn flight of capital. It’s about the only English speaking developing economy left and we all know that the Tiger cubs wont be able to cut it in a non-English speaking country!!!

      Peter, 65%tax rates in the top band will return, most definitely, in fact if I was offered a guaranteed job at 65% tax rate right now I’d take your hand off to grab it!!!

      Most people here have no idea how bad this is going to get, and now today we hear that Cowen says that it was only in the last week that he was told by Department of Finance how severe the situation had become!!

      If this is true it suggests two things:

      1. Cowen is criminally incompetent and
      2. The DoF and wider Civil Service are both running the country and unanswerable to anybody.

      It’s a living Chinese curse, we are living in interesting times, to put it mildly!

    • John O'Grady says:

      I watch with great sadness the way Ireland’s prosperity has just about evaporated. I left Ireland for the USA in early 1980 and have always kept in contact by reading the newspaper and now watching the news on the web.
      I was so proud of the growth of the Irish economy over the past 10 years though did not really know that that growth was born out of a rotten-to-the-core financial system and completely incompetent politicians.
      With that said, can someone out there wiser than I, advise, exactly what qualifies the current crop of politicians to actually manage an economy?
      They all remind me of a bunch of really bad second-hand car salesmen.

    • Peter B says:

      The answer to your question John is that nothing qualifies them to do so. This question was raised a few weeks ago – Cowen and Lenihan are lawyers, The Tánaiste, Mary Coughlan was a social worker and the remainder were mostly teachers or nothing at all. Not an accountant or economist in sight! Alas John, to run for office one does not need any academic standard or qualification. McCreevy was an accountant and I would suggest his policies as Minister for Finance caused much of the present damage. Rumour has it that Ahern too, was an accountant, though no accountancy body has claimed him, so I don’t know how true that rumour is. Interestingly he refused to answer a question in the Dáil about his academic record. It was cited as irrelevant by the Ceann Comhairle – who was a solicitor!

      In relation to the Financial Regulator’s Office, I heard a well known-economist, Brian Lucey, speaking recently and he said that only 13% of its staff have a degree-level qualification. Garret Fitzgerald has raised the question many times about the lack of economists in the Department of Finance. This Department have made mammoth errors in recent years in relation to financial projects and they seem unable to provide basic costings on a range of things. I have heard that officials in Finance get paid 10% more than their counterparts in other Departments! It isn’t a surprise that Cowen is not receiving timely or accurate information from the DoF! If I was in his position, I wouldn’t rely on anything coming from them – based on their dreadful track record!

      I guess John many thought the boom and the Celtic Tiger were too good to be true! Well you know what they say about things that appear too good to be true! It’s amazing what people can believe when it suits them to do so!

    • Patrick Hennessy says:

      I would like to compliment Higway61 on his astute comments above .

      Aged 29 I rented a small room in the old town of Geneva, a city I then worked in. After about two/three years I discovered (and always by accident) that many of the Swiss locals I drank with in the local bistros were millionaires several times over. What was it I asked myself that made them so apparently secret and almost frugal in their lifestyles. Calvinism? Swissness?

      Twenty years later I stood across the street from a McDonalds in central Geneva as several Swiss police were trying to persuade a young Arab-looking man to park his Maserati before entering McDonalds for his burger. No way.

      What happened I asked the Swiss policeman. Nouveau riche he replied. Il va apprendre avec le temps.( he will learn with time.)

      So it will be with the Irish. Nouveau riche. They will learn with time.

      If properly used money accompanies happiness. It does not replace it.



    • Migrant says:

      To Brian Cowen & FF, I need to say Beware the Ides of March or even April definitely October.

      The little people are upset ( I don’t mean the Sídhe) For the workers, the students, their parents and the grandparents are more than dismayed. They are so very angry at the pompous behaviour of the elected government, so close to boiling point anything may happen, a riot on a large scale – a terrible rebellion.

      It was mainly dissatisfaction with FF that caused the people to vote No on the EC referendum,
      (regardless of Cowen’s investigations) And won by a small majority – what then will be the majority in October ?

      Highway61 People know the Polish immigrants work hard, some will stay on, just as there are Irish in the USA and elsewhere in the world. Given time they will be part of us or vice versa.

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