Tuesday, 1 September 2015

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.

Friday, 28 August 2015

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?

Thursday, 20 August 2015

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.

Friday, 31 July 2015

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.

Wednesday, 29 July 2015

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.

Tuesday, 28 July 2015

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.

Monday, 20 July 2015

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.

Friday, 17 July 2015

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.

Tuesday, 14 July 2015

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?

Wednesday, 8 July 2015

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.

Tuesday, 7 July 2015

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?

Friday, 3 July 2015

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:-

Wednesday, 1 July 2015

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.

Monday, 29 June 2015

What the Danish Election tells us

David Begg: The extraordinary success of the populist, anti - immigration, anti EU, Danish People’s Party (DPP) last week continues a trend in Scandinavia. The Progress Party in Norway and the Finns party in Finland have all upset the established political order and, it would seem at first sight, delivered a body blow to social democracy in a region famed for its combination of economic efficiency and social cohesion.

Friday, 26 June 2015

Solving the Greek crisis – by making inequality worse?

James Wickham: It seems the Eurozone finance ministers - and behind them the IMF – are rejecting the last proposals from the Greek government. These proposals attempt to reverse the trend of the last years where the crisis has exacerbated inequality – and the poorest are asked to solve the crisis by accepting even further cuts in living standards.

In Greece the crisis has meant growing inequality in terms of disposable incomes.  

Thursday, 25 June 2015

Do we want the fewest public services in Europe?

Cormac Staunton: One of the key indicators in TASC's analysis of economic inequality is the level of taxation and government expenditure.  We have argued that Ireland is trapped in a 'low-tax triangle' with low taxes leading to lower public service provision, leading to a higher cost of living, leading to calls for tax cuts. This is a downward spiral that ultimately exacerbates economic inequality.

Recent data confirm that there is no plan to reverse this and that Ireland will continue to have a low-tax, low public service economy. Indeed by 2019 we could end up with the lowest government expenditure in the EU.
Chart 1: Expenditure as a % of GDP in Europe (2014). Source: NERI 

Tuesday, 23 June 2015

UN Committee Response to Ireland on Economic, Social and Cultural Rights

Cormac Staunton: The UN’s Committee on Economic Social and Cultural Rights, in its concluding observations on Ireland’s third periodic report, makes a number of very interesting points. The report of the Committee is based a number of written and oral responses by both the State and Civil Society groups to questions raised by the Committee.

The Committee welcomes a number of recent developments in Ireland including: The establishment of the Low Pay Commission in 2015; The Adoption of the Irish Human Rights and Equality Act and the establishment of the Irish Human Rights and Equality Commission in 2014.

In the area of economic inequality, as well as welcoming some key recent developments, there are a number of 'subjects of concern' and recommendations. Here I quote some of the observations that relate to the issue of economic inequality with some additional comments.

Monday, 22 June 2015

No inflation due to low wage rises

Paul Sweeney: There has been no rise in overall prices in seven years! In fact, prices today are a little lower than they were at the peak - which was in June 2008. That was the year of the crash and prices fell substantially then – by almost 8% in a period.  Then prices rose a little they have stabilised over the past three years and are still lower than when the Crash occurred, as the graph shows.

A major reason why there has been no rise in inflation is the low or no rises in wages. Workers will now demand a share in the rising economic growth. Irish growth is very strong and the fastest in Europe. Most of the benefit is going to the owners of capital.

Wednesday, 17 June 2015

Lets start a race to the top: IMF on Inequality

Cormac Staunton: The IMF have released another staff paper on inequality with some very important findings for our understanding of both the causes and consequences of economic inequality.  It also contains some suggestions of policies to reduce inequality.

Most strikingly the research shows that economic growth declines if the share of income held by the top 20% increases.  On the other hand, a growth in the share of income at the bottom 20% leads to higher economic growth. The research also provides further insight into why inequality affects growth.

Tuesday, 16 June 2015

There are no jobs on a dead planet

David Begg: German Chancellor, Angela Merkel, appears to have achieved something of a victory in persuading the G7 group of leading industrial nations to embrace a serious initiative on climate change last week.

They agreed to back the recommendations of the IPCC, the United Nations’ Climate Change Panel, to reduce global greenhouse gas emissions at the upper end of a range of 40 % to 70 % by 2050, using 2010 as a baseline, by phasing out the use of fossil fuels by the end of the century.

This is an important development in the lead in to the crucial UN summit in Paris in December 2015. If followed through this could presage a green industrial revolution. What does this mean?