Making Dublin the capital of Ireland

James Wickham: Two opportunities are about to be lost for dramatic improvements to Dublin. There seems to be considerable push-back against Dublin City Council’s plan to turn Trinity Traffic Junction (officially still known as College Green) into a civic space worthy of a capital city.

Meanwhile the proposed DART Underground project has been deferred again.  Although both issues may appear to be just about transport, they also involve fundamental questions about social inclusion and social cohesion.  In this post I look at the first of these.

Complexity of inequality means we must move beyond single indicators

Cormac Staunton: Yogi Berra, the great American Baseball player who died last week at the age of 90, is credited with the immortal line: “It’s like déjà vu all over again”. In the wake of “Ireland’s Great Wealth Divide” on RTE last week, the recurring debate around inequality statistics in Ireland continues.

Part of the problem is complexity. While there have been many efforts to create single indicators that summarise economic inequality (such as the Gini coefficient), these have in turn only led to more discussion around how best to measure the distribution of economic resources.

Here I just want to address some of the issues that have arisen in response to my own take on this.

Ireland's Great Inequality Debate

Cormac Staunton: Irish people know that the world is an unequal place. The exact scale of this divide was brought home to viewers who watched David McWilliams’ documentary, Ireland’s Great Wealth Divide on RTE 1 this week.

It showed that people believe that the Top 20% in Ireland have more than 60% of all wealth. In fact they have 72% of all wealth – that’s 1 in 5 people owning almost three quarters of the value of all the land, housing and financial assets in the State.

In Ireland as elsewhere, the issue of inequality goes to the heart of most discussions in economics and indeed politics. It is, after all, the age-old question of who gets what, when and how. It’s about how we allocate resources which are, ultimately, scarce.

What about the PAYE Worker?

Paul Sweeney: For decades there used to be a refrain heard endlessly on taxation. It was “What about the PAYE worker?” Will we hear it more often soon if some get their way.

There has been a strong lobby by the self-employed and their lobbyist/advisors to get special income tax reductions for them in the forthcoming Budget on 13th October. They argue, correctly that the very high-earning self-employed pay a higher USC than PAYE workers and they don’t get the PAYE allowance - unless they are also employees (which they can be).

There is a surcharge of 3% on individuals who have non-PAYE income that exceeds €100,000 in a year. This surcharge applies to the non-PAYE income only. The PAYE credit is €1,650 a year for employees only. So do the Schedule D taxpayers or self-employed have a case for “similar treatment” with PAYE workers through special income tax reductions?

No, because their tax treatment is designed to give the PAYE worker approximately the same taxation. 

A Very British Coup

David Begg: About twenty years ago a television serial entitled ‘A Very British Coup’ was screened by the BBC. It featured Ray McAnally in the role of a left wing Labour leader elected to power in a landslide General Election.

From the beginning the Labour Government was opposed overtly by the media and covertly by the civil service and business establishment. It incurred the wrath of the US President by demanding the removal of nuclear bases in Britain.

Time to Curb Income Tax Privileges for Artists, Sports Stars and the Corporate Elite?

Paul Sweeney: Did you know that certain people enjoy special income tax privileges in Ireland? Some of them earn far more than the rest of us, but the government has decided that because they are deemed to have special talents, they should pay far less income tax than we do.
There are three groups who enjoy special income tax privileges.
1. artists
2. top executives of multinationals
3. sports people

More jobs, but a growing gap between good and bad jobs

Paul Sweeney: An important EU institution, which is based in in South Dublin and does valuable work, is Eurofound. It has just released “The European Jobs Monitor 2015” , an interesting report on the type of jobs which are being created. In spite of the recovery, the news is not all good.

Tax Breaks Won't Solve Homelessness

Nat O'Connor: Some campaigners have called for tax breaks to help provide more housing for people who are homeless. The homelessness crisis is serious and requires urgent responses. But tax breaks have all sorts of negative consequences compared to alternative options, not least the option of tax-and-spend to address the crisis.

What follows is a quick sketch of the problem and the scale of the solution required, followed by some observations on tax breaks.

Ireland's real dependency culture

Cormac Staunton: A well-balanced article about the challenges faced of our public finances by Davy Economist Conall MacCoille finished with a question as to whether ‘Ireland’s disproportionately high working-age benefit payments [can] be sustained and do they foster a dependency culture?’ 

This issue of a ‘dependency culture’ is common in the UK media and is used by the government as a reason to cut welfare spending. There seems to be little evidence that such a culture exists and the main effect of these policies seems to be that one million people in the UK are now reliant on food banks.

Is there any evidence of a ‘dependency culture’ in Ireland?

Does anyone have the vision to lead a housing revolution?

Nat O'Connor: While there is wide agreement that Ireland needs more housing supply, action is needed to encourage the right kind of supply based on a vision of the residential areas people are going to call home for the rest of this century.

The lack of supply stems from the bust in Ireland’s housing market which killed lending for new developments and caused the demise of many construction firms.

More people are now renting, while people on lowest incomes are squeezed out of the relatively small rental market and are at greater risk of homelessness.

Podcast on Working Conditions Research

The latest installment of the TASC podcast features an interview with Prof James Wickham about his research for TASC on working conditions in Ireland.

Lessons from the Greece Debacle

Guest Post Ronald Janssen: There is no point in denying reality. By crushing a rebellious Greek government and disciplining its voters, the ‘Masters of Austerity’ have won a great victory. Implications extend far beyond Greece itself. What is now being inflicted upon Greece rams home the message that the dismal results of austerity policy are preferable compared to the disaster the ‘institutions’ will unleash if a government dares to step outside the orthodox framework.  

Here are two lessons from the Greek debacle the Left in Europe needs to reflect upon seriously.

Inequality: The gap between space travel and food banks

David Begg: It is quite interesting that the British Tory Party, which originally opposed the introduction of a minimum wage, has committed itself to bringing in ‘A living wage of £9.35/hr by 2020'. This is all part of George Osborne’s scheme to reinvent himself as a modern day one nation Disraeli. But if the idea of the Tories as ‘The Workers Party’ stretches credulity – he did also make massive welfare cuts after all, and is bent on emasculating the trade unions – perhaps it is a recognition that inequality is becoming a major issue.

In fact there is a growing awareness that inequality undermines economic performance. Even Christine Lagarde of the IMF has said ‘Recent IMF research tells us that less inequality is associated with greater macroeconomic stability and more sustainable growth’¹.

What do the OECD health statistics tell us about Ireland?

Paul Sweeney: The OECD has recently published its “Health at a Glance: Europe 2014”. This is very useful even though I am critical of this organisation for purveying some extreme liberal ideology on economics, taxation and other matters.

For example, OECD rarely uses the word “taxation” without attaching the ideologically-loaded word “burden” to it. Thus tax is always a “burden” to these tax-funded civil servants and they rarely describe it as it is – as a charge or payment.

The OECD’s data is based on national statistics and is very useful for comparisons. So if you ignore many of its economic recommendations, the data is useful in most cases and this international comparative health data/information is helpful. This is a flavour of what is in the report.

Fact-checking the National Economic Dialogue Factual Guides on Tax and Equity

Cormac Staunton: The National Economic Dialogue concludes today. The Department of Finance have published guiding documents for each of the breakout sessions.  They state that they should “not be seen as prescriptive but rather seeks to set out the current factual situation and to suggest some of the key questions which participants may wish to consider”.

Here are a few comments on the ‘factual situation’ as presented in document for the Economic Growth and Equity in Tax Policy group.

Survey results show Ireland wants a "Social Recovery"

Cormac Staunton: New research carried out by ‘Behaviour and Attitudes’ on behalf of TASC shows that there is strong support for investing in public services over tax cuts in the next budget.  It also shows that the vast majority of the Irish public are in favour of a rise in the minimum wage and that more than three-quarters believe that the minimum wage should be a ‘living wage’. 

As the National Economic Dialogue convenes this week, and as the Low Pay Commission prepares its report, what signals does this give to government in the run up to the Budget and indeed the next election?

European integration should not come at the cost of humiliating an entire people

David Begg: The Greek situation looks difficult. The economy is in danger of seizing up if the current standoff between the Greek Government and the rest of Europe cannot be resolved. Earlier reports that the parties were within €60m of a settlement had not been convincingly denied.

So we can assume that there is more at stake here than money. Given the failure of the austerity programme over the last seven years and the unsustainable level of its debt, Greece has a strong case for debt relief. It has a strong case for shifting the emphasis away from austerity and towards economic growth. The European establishment wanted regime change in Greece.

They didn’t get it and the result is that the legitimacy of EMU is now challenged in a way that goes beyond money. There is much media concern about the absence of trust between the eighteen prime ministers and Tsipras, but that cuts both ways.

How to Pay for a Living Wage?

Nat O'Connor: A single person working full-time needs to earn €11.50 per hour to afford a minimum decent standard of living. This is a rise in the cost of living of 5 cent since this time last year.

Full details of this year's figure are available on LivingWage.ie. In brief, while some costs have gone down, and the USC changes have reduced taxes on lower earners, the large increase in rents has pushed up the average cost of living for low income workers.

Many commentators and analysts agree that anyone working full-time (39 hours/week) should be able to afford to meet their basic set of needs, but the question arises: how can we afford it? In particular, how can struggling small businesses afford it?

The Greek Crisis: Lessons from Ireland

Jim Stewart: The Greek crisis and tragedy is a seminal moment for the Eurozone and the EU.

The Taoiseach has stated “For Greece there is a lesson from Ireland” (CNN news March 4th 2015). There are certainly lessons for Greece from Ireland, but the improved Irish economy is not one.

The deep recession in Ireland was largely of our own making, but Troika policies exacerbated and prolonged the recession. An important part of economic improvement has been due to the devaluation of the Euro against the Dollar and especially the Euro devaluation against Sterling, given the unique influence of the UK in the Irish economy.

At the same time the US and UK experienced robust recoveries. In contrast the Greek economy has not been able to benefit from Euro devaluation. Valuable lessons may be learned by Greece from Irish interactions with the Troika, especially the ECB. No doubt Greece has also much to share with other Eurozone citizens.

Testimony by Kevin Cardiff (former Secretary General at the Department of Finance, available at https://inquiries.oireachtas.ie/banking) to the Committee of Inquiry into the Banking crisis illustrates much of Greek Government complaints about the anti-democratic nature of the Troika programme, its irrationality and self defeating nature in terms of hindering economic growth and the stabilisation of public finances.  Some examples:-

Call to Europe on Greece: The European Progressive Movement must and will play a crucial role

Prof. Stephany Griffith-Jones, Ernst Stetter and Vassilis Ntousas: There is still time to reach a fair and equitable deal with Greece, a deal that ensures the country’s fiscal, financial and debt sustainability and that offers a clear pathway out of the crisis.

At the same time, the lessons learnt from the Greek crisis should lead the Eurozone to greater institutional convergence.

The underlying assumption of this convergence, which would comprise of concrete steps towards stronger governance, enhanced common fiscal and investment instruments, debt mutualisation, and more shared sovereignty, is the sense of common responsibility that must be gradually strengthened amongst the Eurozone’s member states in how they address future challenges in the global economic and financial arena.