The other day there was a vox-pop on RTE radio that asked people how they were going to vote. One voice said that he was from a family of 15, nine of whom had a vote and all of whom were registered in one house. He went on to say that his mother was waiting for the government to buy her an extractor fan in her kitchen. He concluded that whatever politician paid for the mother’s extractor fan would get all the votes in the house!
Is this the role of government? Is it the role of the state to install extractor fans? As I listened, I thought why didn’t this man and the nine able bodied voters in the house look after their own mother, chip in and buy her an extractor rather than wait for the “government” to pay for it? It is an example of dependency culture to the power of ten thousand; the journalist didn’t challenge the voter or even raise an eyebrow. A society like this can’t come to any good.
On reflection, this attitude is down to ‘auction politics’. If politicians didn’t go around claiming to be able to do things like install extractor fans with other people’s money, this guy wouldn’t have felt he had the right to make his vote conditional on getting the fan installed.
And this is one of the key problems with our Irish-style democracy where each party promises the earth to anyone who will listen in the hope of securing a vote. This leads to the situation we have this week where each party is abandoning any notion of prudence and is trying to buy the election in a Peronist-style “free for all”.
The economic debate is therefore reduced to who can give most, and sometimes to the least deserving. Every now and then, there is a semblance of indignation when one party spokesperson points out that there isn’t enough money to go round, and then the next day, having scored the point, they all carry on regardless.
So the economic agenda is reduced to one shower saying there’s loads of money in the kitty and they are going to spend it and the other shower saying there’s no money in the kitty but they are going to spend it too. But what they are actually talking about isn’t economics, it’s accountancy.
This is what I would term election economics as opposed to real economics.
Election economics in this country is reduced to static accountancy, where the number that falls out at the end of the national accounts, the budget deficit or surplus, becomes both the facilitator of political ambitions and the stick with which to bash the same ambition on the head.
The lamentable state of debate is largely the fault of the politicians and the political commentators who fixate on this deficit/surplus figure. However, this figure is only a residual: it’s the thing that falls out at the end when all the economic activity is counted and divvied up. It is an end point not a starting point.
Fixation on the final number of surplus or deficit misses the whole point of government spending in the economy. In reality, the government is a major player in the economy and without it, we would have very little. Unfortunately, the rhetoric of the frugal saver has dominated our discourse on government spending with commentators screaming that we have to balance our books. But does the state have to balance its books? As long as it’s not spending money on extractor fans at election time, why does the state need to balance the budget?
The easy answer is that we should live within our means. That’s what you hear all the time, isn’t it? I would like to make a clear distinction between election economics and real economics.
During election time, when the politicians are giving out sweeties, it is proper to admonish them for spending because most of the spending is to buy votes. But, hang on, what about government investment?
The idea that we should always live within our means, which sounds logical, pre-supposes that our means are given and are fixed in perpetuity and we cannot spend beyond them.
However, when you think about, for example, building a new school, you can see that our means in the future are determined by what we do today. The school will educate children and make them more productive in the future.
Therefore, in real economics, our means are not fixed and, as a result, the very idea of living within them loses its meaning.
For example, lots of students all over the world borrow for their college education and this enhances their future means and therefore, living beyond your means now is the right thing to do.
Consider governments at this juncture.
Like individuals, of course, a government can increase its means in the long run by borrowing to invest in things that will make the economy more productive, and thus increase the tax revenue. If a government invests in improving the transport system, it will make the country more efficient. Or if it invests in healthcare and education, that will make the workers more productive.
This is where today’s government spending can be of huge future significance. It raises the productivity and the wealth of the nation and it increases the “means” in the future. And so we see that notions like “living within our means” become more complex than the rhetoric suggests.
Unfortunately, because politicians engage in auction politics that leads voters to expect extractor fans for their mother (which they could put in themselves) in exchange for votes, we arrive at a place where all government spending is seen as wasteful.
This influences the debate because this is what people remember from the election and in the long-run real government spending, which is good for all of us, becomes contaminated with election spending, which is actually bad for everyone.
In the next few weeks, election economics will dominate the airwaves. Enjoy it if you can, but don’t forget that real economics will re-emerge by St Patrick’s Day.
There have been a few sleeveens at my door already…one sitting TD admonishing me to ‘look after him’,another sitting TD avoiding me as he passed by the garden where I was outside talking to a neighbour. A Renua candidate crept up the steps yesterday evening and snuck a leaflet into the letterbox before slinking furtively back onto the street…it’s like being on the set of Killinaskully. You have reminded me that I need a new extractor fan though, and I’m sure that there’s a grant available for that sort of thing… As long as we live in a society where… Read more »
A once infamous politician used that very expression “as a nation we must live within our means”. Unfortunately the “we” in this case didn’t include himself or his close associates. Those throwaway vox pops do not represent the true electorate. Please give us a little more credit than that David.
That sort of reasoning – the man and the extractor fan – applies to the other end of the spectrum too. A friend, here in New Zealand, said she wasn’t going to vote for anybody who would raise her taxes! To my mind there is no difference between the two. Neither is thinking about their country and what should be provided for the people – in my case breakfast at schools for the children in those poor areas who go to school hungry. It’s all just about them. Perhaps this is the result of the last 30 years of encouraging… Read more »
I think a lot of people have the ‘they’re all the same, Its always been that way and you’ll never change it’ attitude to politics in Ireland. Because of this they are resigned to the fact that Irelands Governments will be wasteful with the taxes and continue to look after their buddies so they promise a vote to a gombeen politician in the hope that they might get a crumb from the table and have that extractor fan fitted. What kind of a child wouldn’t get their finger out and help their mammy in times of need? Dependency culture is… Read more »
Hidden within David’s purely academic thinking is something almost entirely missing from Irish commentary – the role of management. The Irish tolerate low standards in management in just about everything. It seems to be a national characteristic. Ireland’s third-rate health service is a reflection of Irish attitudes to management. Throwing money at hospitals will not fix them. Whether that money comes from taxes or from borrowing is a purely academic and futile exercise. Right now Ireland needs skilled hospital managers more than it needs doctors or nurses. How many school leavers do you know with a degree in hospital management?… Read more »
You coined the term expectocracy I believe. The following is what is happening in politics around the world. The Liberal Mind and The radical left’s efforts to regulate the people from cradle to grave. To rescue us from our troubled lives, the liberal agenda recommends denial of personal responsibility, encourages self-pity and other-pity, fosters government dependency, promotes sexual indulgence, rationalizes violence, excuses financial obligation, justifies theft, ignores rudeness, prescribes complaining and blaming, denigrates marriage and the family, legalizes all abortion, defies religious and social tradition, declares inequality unjust, and rebels against the duties of citizenship. Through multiple entitlements to unearned… Read more »
“As I listened, I thought why didn’t this man and the nine able bodied voters in the house look after their own mother, chip in and buy her an extractor rather than wait for the “government” to pay for it? It is an example of dependency culture to the power of ten thousand; the journalist didn’t challenge the voter or even raise an eyebrow” You made a classical mistake of the middle class patronising the poor. The country has been flooded with dirt cheap eastern European labour leading to exploitative practices and maybe these guys are rightly fearful they will… Read more »
Any genuwine Nation State that believes it has a historic mission knows that balancing the books is a crock and War Economics proves it everywhere you look from the Brits in WW2 to the Israelis now. Compare and contrast these two islands in 1945. Britain, with cities like Birmingham blasted by the blitz of the Lufftwaffe rising like a glorious Phoenix breathing fire and passion and self-belief. Bankrupt by America as part of their plot to use the Second World War to become the global hegemon, only joining battle when expedient and convenient, trying to appropriate the glory of the… Read more »
@David McWilliams
ALL BORROWING CREATES INTEREST
-> TO PAY INTEREST = MEANS MORE BORROWING
-> ITS A PONZI SCHEME
LIVING WITHIN “MEANS”
=> NEVER APPLIED TO URSURY
“by borrowing to invest in things that will make the economy more productive, and thus increase the tax revenue”
-> WHERE DOES THE EXTRA MONEY COME FROM?
-> HOW CAN THERE SUDDENLY BE MORE REVENUE?
.
.
.
ANS: MORE LOANS + MORE BORROWERS = MORE INTEREST + MORE DEBT
THE ONLY QUESTION TO ASK
-> WHERE ARE TOMORROWS BORROWERS
“WHERE ARE TOMORROWS BORROWERS”
I think McWilliams is a Keynesian and can’t be told if this is correct.
I see that Enda Kenny is trying to turn the Regency Hotel gangland attack into an anti-Sinn Fein election stunt – what a wanker that guy really is:
http://www.independent.ie/opinion/comment/paul-williams-more-bloodshed-expected-as-allout-war-is-declared-34432153.html
True story:- Date: Early 1975. Yours Truly: Fresh out of college (ie Educated. For those that think it’s not worth it, you’re so wrong it’s unreal), unemployed and prospects not looking too rosy. Source of income: State unemployment assistance (not full dole) as it was called then. So I invested in a set of chimney sweeping rods and associated paraphernalia. I went from house to house etc, business was slow. Anyway I called to this house where a man about 30 answered the door and had the business discussion and what it cost. Was told they were waiting for the… Read more »
All the debate and not a mention of the new political party that suggests politics of a revised version of sanity and a move from the current corruption.
How about a review of Direct Democracy.
https://en.wikipedia.org/wiki/Direct_Democracy_Ireland
A successful businessman who has legitimately avoided paying tax for many years will vote for the party with policies most favourable to his business, regardless of Health, Education, Environmental, Foreign or other pledges. The Public Sector workers who often tell me they can’t do it any quicker “because the Government” won’t give them enough resources!” The Bank worker who complains about having to now make a contribution to his previously non-contributory pension even though every taxpayer in the country has contributed to saving his job. Hearing that phrase: “it’s the governments fault” oh so often from people who seem to… Read more »
“By no means can we count on our politicians to solve the problem. As we’ve seen so many times, politicians with the guts to try for painful but necessary structural reform have a funny way of not being re-elected.””
–Money Morning
http://moneymorning.com/2016/02/08/whats-really-wrong-with-the-economy-and-how-to-fix-it/
Banking collapse indicated
https://mail.google.com/mail/u/0/?ui=2&ik=649b918298&view=fimg&th=152c1af031027b03&attid=0.5&disp=emb&attbid=ANGjdJ_s5epzFvQFDB2mvhEoJb8s3gHsxinUaM4a4DcOqpsSNnCbMGtk-9XFMYA8BPyLvZ_M8rGD5dJF–C1RRC7JLyNt0Bjdwlwc3CtnuUtARikTtgHUVFIk-9N8w8&sz=w1768-h982&ats=1454957876940&rm=152c1af031027b03&zw&atsh=1
JUSTIFICATION and ACCOUNTABILITY Politicians or Health care managers in Ireland are NOT required to be accountable or offer ANY justification for their actions by our “write down irish journalism” who are also PLAYERS in the dont rock the boat baby 2016 irish culture. Grzeg/Pat OECD health report 2014 tells us that Poland have 5.5 nurses per 1000 population servicing 6.5 hospital beds. UK have 8.2 nurses per 1000 pop servicing 2.8 beds. Ireland have 12.6 nurses per 1000 pop servicing 2.8 beds. They leave 90 year old men on trolleys for more than 24 hours. The answer to not leaving… Read more »
http://www.jsmineset.com/2016/02/08/youll-know-it-when-you-see-it/
There will be market gaps both up and down. There will be market closures to settle the markets. On re-opening the prices will gap again, up or down. This process will continue until the government and banking distortions are wrung out of the market.
This will be the great reset. Which side do you want to be on. The ups or downs.
Faites vos jeaux.
http://theeconomiccollapseblog.com/archives/22-signs-that-the-global-economic-turmoil-we-have-seen-so-far-in-2016-is-just-the-beginning
An extraordinary list of negative events indicating anything but green shoots.
More like root rot and attacks by fungi and pests. The economic garden looks like late fall after a drought heading in to the devastation of winter. There is not much produce in the garden. Have you bought your winter woollies?
http://usawatchdog.com/dow-6000-extreme-sell-off-coming-gregory-mannarino/
Mannarino now says the Dow is going to “6,000–or lower.” Mannarino warns, “People need to be ready for a major, extreme sell-off in equities which are inflated in a bubble.”
In closing, Mannarino warns, “Bond yields are screaming, and the bond market is warning every single one of us that something is very ugly, and it’s right around the corner.
Some more interesting comparison on Health. Surprisingly the UK scores top with one of the lowest spends/capita.
http://www.theguardian.com/society/2016/feb/09/which-country-has-worlds-best-healthcare-system-this-is-the-nhs
p
@tonybrogan;
The premium on my coin supplier for 1oz silver coins is now 20%.
The spot at this time is 13.70 euro and the individual coins are 16.20 euro.
Any thoughts?
http://silber.celticgold.eu/nl_en/buy-silver/1-oz-silver-coins.html
http://www.zerohedge.com/news/2016-02-08/after-crashing-deutsche-bank-forced-issue-statement-defending-its-liquidity
The blow up above will do far more damage than this one;
https://www.youtube.com/watch?v=qLjb2dEHhN4
How scambridge destroys real job opportunities;
https://youtu.be/hEwFmRm7ExU
So the $20T and €20T question. Who will be the winners and losers of the forthcoming crash near you? Answers not so much with explanation but one liners because I think if you try to explain yourselves two things will happen. 1. Your posts will be extremely long. 2. You’ll lose me and probably a few other less adroit individuals than your good selves. PS I still have my chimney sweeping kit but only use it for personal use. However keep me mind in my if(when, apologies) the sh!t hits the fan and you need your chimney cleaned AND can… Read more »
“Who will be the winners and losers of the forthcoming crash near you?” I wish I knew lol One liners and no explanation then Losers: 1. People who bought properties for renting 2. Graduates with debt 3. Some multinationals (like Apple, Amazon) 4. Stock market investors 5. D4 heads 6. People keeping all their money in banks should we go Cyprus-style. Winners: 1. People who can cook and grow vegetables 2. Gun producers and owners due to increased levels of criminality. The current government has blood on their hands when it comes to the elderly, self-defence and rural burglaries: “I… Read more »
Apparently it is mathemathically impossible to have a balanced economic system while there is such a thing called interest attached. Apparently we need Usuary…
Excellent article.
People badly need to pass it around.
Local Democracy is an even bigger sham, because the “free stuff” demands are even less compromised by debates on national issues.
The whole system, from top to bottom is loaded with this nonsense, of vote for the candidate that gets you free stuff at other people’s expense.
From bankers to the chancer expecting a free fan extractor.
http://investmentresearchdynamics.com/will-deutsche-bank-be-saved-from-collapse/
Assets only 3.4% of liabilities. (Fractional reserve banking)
Plus dirivitives in trillions
http://dollarcollapse.com/money-bubble/2007-all-over-again-part-3-banks-starting-to-implode/
Election economics are all over the place and so are the coming results. Posted at lemetropolecafe.com Ireland: PM Kenny likely to fall short of majority: Bloomberg cited analysis by Cantor Fitzgerald which showed that Irish PM Kenny’s coalition government will fall well short of a majority in this month’s general election on 26-Feb. It noted that Cantor’s tally, based on five opinion polls since the end of January, shows the Kenny’s Fine Gael-Labour Party administration will secure 62 seats in the ballot, 17 short of a majority. Cantor added that the coalition’s combined 37% support compares with 55% in the… Read more »
Getting Right Down to BASICS and assuming you have some free cash which might possibly be confiscated by your back or the state or both. Food, Water, Heat, Shelter and Security (I think). Water – Rain water will suffice although there are health risks but the human gut is adaptable. Shouldn’t be an issue in Ireland and in fact might be a useful bartering chip for the state. Heat – For those that use oil or solid fuel, the answer is obvious, TOP UP and keep it TOPPED UP. Mains Gas and Electricity – Get your insulation up to scratch,… Read more »
http://www.bloomberg.com/news/articles/2016-02-10/how-low-can-central-banks-go-jpmorgan-reckons-way-way-lower
How negative can one get without busting the bank?? People will withdraw their money creating the very run they try to avoid.
This is the prime reason for banning cash as then you cannot put your cash under the mattress to avoid the charges on your savings.
http://investmentresearchdynamics.com/
The only thing demonstrated to me by DB’s bond buyback bravado is that investors learned nothing from 2008/2009 and bank upper management and directors are even more corrupt now than they were 8 years ago.
A Trump beats all other cards
The Spook In the Casino—–Recession Just Ahead, Part 1
by David Stockman • February 8, 2016
http://davidstockmanscontracorner.com/the-spook-in-the-casino-recession-just-ahead-part-1/
In the next installment we will review the reasons why Keynesians and Wall Street bulls cannot see the recession coming, starting with the phony notion of the oil tax cut. But here is a hint.–David Stockman
Hi all,
I know I have been going off the rails a bit recently with nuclear weapon detonations etc but JESUS H CHRIST the board is going very fatalistic and morbid.