When Ibec warns that voting Left would lead to a period of political instability that would hurt the economy, it’s easy to understand cynicism from the Left-wing parties. Someone should remind Ibec that it was the people at the commanding heights of Irish business who ruined the economy last time.
The Irish boom/bust/bailout crisis was caused by incompetence and some of it by those who paid the heftiest subscriptions to Ibec. Unlike Greece, Ireland’s woes were not a result of Leftie-inspired government spending too much. Ireland’s disaster was caused by people who agitated for lower taxes, lower regulation, lower government spending, and spoke the meritocratic language of business while behaving like looters who happened to play golf.
However, acknowledging this fact doesn’t mean Ibec is wrong this time. Two very different things can be right at the same time. The business lobby is warning that a hung Dáil might be bad for business and that is – at a stretch – right.
The extreme Left has never delivered on its societal promises. There is no example of a country that has adopted confiscatory policies and grown rich, prosperous and confident.
The economy grows and is stable when lots of people are creating small businesses and backing themselves. This is the indomitable human urge for commerce that the great champion of democracy, John Maynard Keynes, called the “animal spirits” of capitalism.
Politicians should understand that they do not create jobs; nor do rich people. Jobs are created by general demand. Rich people don’t create demand. You and I create demand. Demand is what happens when the society has enough income to buy goods and services.
How does that happen? Where does income come from?
It comes from investment. It comes from people, you and me, going out and risking capital into projects today that we believe may deliver fruit in the morning. These are animal spirits unleashed. So if we are opening a shop, café or online business today, we believe that we will be able to gain enough business to make the returns to that business better in the future for us than if we did nothing today. In short, we back ourselves, our ideas and our own personal energy, drive and talent to create something out of nothing now that will be worth something far more than nothing tomorrow.
These are the animal spirits and these are both the will and wallet of capitalism.
First, people must have the will to take these risks, and second, we must have the wallet – or the means – to do so.
A recession destroys both the will and the wallet of commerce.
People, even the most resilient, get beaten down by the difficulties of a recession and if their capital has been destroyed by the downturn in asset prices, they will not have the wallet to back themselves.
Any political decisions that prolong this agony will destroy the animal spirits. This is why, obviously, debt forgiveness is a pro-business, pro-employment, capitalist policy as it accelerates the recovery in the commercial human spirit, which can be oppressed by too much debt.
It is also why very low interest rates help as they ease the cost of debt. Very low interest rates are a global phenomenon right now. For sure, the euro rates are extremely low but so too are British, Japanese and even American rates. These are instruments no Irish politician has any control over and therefore cannot be the subject of political instability.
Once the will and wallet of capitalism are pointing in the right direction, the forces of human nature and the animal spirits will take hold.
This is the process of economic recovery. It is a journey from pessimism to optimism that has very little to do with politicians, or business lobby groups for that matter.
The truth is, the will and wallet of capitalism are determined when the herd moves from greed to fear or from optimism to pessimism. It isn’t easy to explain. It just happens.
The State’s job is to hinder this natural process as little as possible – because it’s impossible to orchestrate. It stems from a form of irrationality.
Humans are unbelievably irrational animals, driven by all sorts of excitements, depressions, giddiness and mood swings.
Everything you do influences me, even though I don’t usually realise it. And my decisions affect you and vice-versa.
As JP Morgan observed: “Nothing so undermines your financial judgment as the sight of your neighbour getting rich.”
Equally, nothing puts the wind up you more than hearing a good friend has been laid off.
When we are optimistic, we are impossibly so. We think nothing can go wrong. We dismiss risk as something that doesn’t happen to us and we take the plunge confidently. And optimism is infectious.
We spend money we don’t have in the belief that our income is going to be bigger next year. Sometimes this works out, sometimes it doesn’t.
In economics, this optimism is reflected in more borrowing, more spending, more investing and more debt because the animal spirits cause us to believe we are going to be richer tomorrow as a result of our own genius than we were yesterday. It is almost impossible to time when human nature changes, but we know that when it does the herd can move from pessimism to optimism quickly and unexpectedly.
After years of savings, pent-up demand is being released – and as this happens it becomes infectious. This is what is happening in Ireland right now: businesses are opening and unemployment is falling because ordinary people are buying, investing and backing themselves.
Taxes, as a result, are up and in general the economy is pointed in the right direction.
That’s about all we can say about the economy and this election.
Optimism is a fine thing. Some of us even remember so far back as to remember the last time that we had such optimism.
All systems require tension, and without an infrastructure that can produce ‘good commercial judgements’ we’re left with the money pouring back into the lowest risk, most tangible, and ‘market driven’ of investments. We live in them, and we work, if we do, in them.
These at worst might lose half their value, whereas anything else has the risk of going to zero.
It’s so 2000s, I’m almost expecting to wake up with more hair.
Which is why we need a government of balance ,where representatives can be called to heel when and if they screw it up. A coalition will always have a minority partner, and while the tail should not wag the dog,a smaller faction,be it left or right, should be able to counterbalance the opposite faction effectively. We have political representation of the worst type, the gombeen men and sleeveens who will sell their souls to stay in the Mercedes,and whose greatest fear is losing the bloated expense accounts and fat pensions that accompany office. Until our TDs cease to be exalted… Read more »
Somebody is showing their right wing credentials. The private sector can never create enough jobs. It is actually irrational for it to do so if you want it to work properly. Very simply imagine an economy where everything is made and done by robots and where the robots make themselves. Where is the money coming from to buy the output? So a fully productive economy is one that won’t work without somebody putting money into people’s hands first. So your choice is to put money into people’s hands, or wind back on your productivity to recreate a feudal system, or… Read more »
I liked this article but I do feel that government should be taking this opportunity of extremely low interest rates to spend on revenue generating assets for the future good of the nation. This could be a separate investment branch of government that builds for example the Cork to Limerick road. They could stick a toll on it (I know I don’t like paying them either but I do like driving on motor ways) and in 30 years time it would have more than paid for itself in the revenue it has generated. That does not even include the helpful… Read more »
Surprised at you David, the people who tanked the Greek economy were Fine Gael’s EPP friends in New Democracy when they cooked the books with the help of major international banks, not a Leftie-inspired government. PASOK had the misfortune to win the election and open a can of economic worms that devoured it. SYRIZA are a result of and a response to the Greek tragedy, not the cause of it. New Democracy are back as a power in the Greek parliament, a bit like Fianna Fail here. The Greeks must have even shorter memories than us
David McW, A timely and reflective piece of writing here. However, as I see it, as it stands we are set up to fail again, and a return to boom/bust, in particular in relation to the key economic dynamo of property, seems inevitable. On a societal level this failure could manifest itself in even bigger ways than ever before, in continued emigration and in regional and social division. The big reason that I say all of this is that despite of the property crash of 2008 our understanding of the role of housing in society, financial considerations around property in… Read more »
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If we want the economy to grow, we should vote for the politicians that promise us least
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Correct.
There has been an avalanche of excessive promises from the politicians inside 3 weeks.
It constitutes the biggest collective insult to the intelligence of the people since Irish Water.
Cheap housing ?
why stop there ? What about cheep booze, cheap cigarettes, cheap burger & fries ?
The EU wants Irish housing to be expensive. All those promising cheap housing are supportive of more imperial dictats.
Looking at the ballot paper, they are all a collection of lying chancers.
A very common promise from Irish politicians is that they will make the rich pay for the poor. This is completely dishonest. The rich are far too powerful to be asked to pay. In fact the rich are so powerful, that they can get the EU to produce instructions that the rich are to be subsidized – as evidenced in the various “bailouts”. The real truth of the matter is that the politicians are good at making the workers pay for everybdoy else. So here we are 100 years on from 1916, and the left in Ireland wants the workers… Read more »
“Unlike Greece, Ireland’s woes were not a result of Leftie-inspired government spending too much. Ireland’s disaster was caused by people who agitated for lower taxes, lower regulation, lower government spending”. Ehm, no, you appear to be wrong on that one. The current expenditure has grown in nominal terms by 138pc between 2000 and 2009, whereas the GDP has grown nominally only by 72pc. Even Mr. Micheál Martin has admitted (at his first Ardfheis with him as the leader) that their major mistake was that FF had overspent and run this country into debt, but now he changed his spiel and… Read more »
Forest for the trees – I fear for the EU this spring/summer – hordes of invading rapefugees that will make the last year seem like the salad days.
Will the lackey Irish Govt accept them because the “house is full” and Merkel worries about losing the election in Germany?
Before you vote, Ask yourself; Which parties are against Open Borders and Political correctness?
Which Parties are not the Globalists’lackeys?
The Irish election is meaningless.
My short opinion on politicians and political parties in Ireland following the debates. 1. FG/Labour. I cannot express it in a better way than Mr. John Leahy from Cork in his excellent letter to the Irish Independent: http://www.independent.ie/opinion/letters/coalitions-record-of-achievements-is-hard-to-credit-34484336.html The only thing I can add is that I think that the coalition have just been lucky in that their Dublin-limited recovery (recovery measured only in cooked unemployment numbers and bubble in assets prices, not in labour participation rate numbers and emigration statistics). If any other from 4 big parties was in power, it probably would not have been much different. If… Read more »
David the heading on this article:- “If we want the economy to grow, we should vote for the politicians that promise us least” I would have preferred something like:- If we want the economy to grow, we should vote for the politicians that promise us more for less. Spell it out man. The state is damned inefficient. It’s overweight and with that excess weight comes things like “free” pensions for state employees that push up the cost of everything else for everyone else. The single most important thing any government can do is reduce the numbers in state employment and… Read more »
“Well guys what do you think, which is it? Sabotage or Gross Incompetence or BOTH.” I do not believe it’s sabotage. I tell you though what I see as sabotage: http://www.independent.ie/irish-news/election-2016/how-much-was-your-legal-bill-lucinda-lucinda-creighton-suffers-blow-to-campaign-after-states-ethics-watchdog-refuses-request-34484308.html I think it’s gas that the otherwise charming Fine Gael candidate, Ms. Kate O’Connell, should have picked up on that in case of Fine Gael’s renegate (and the papers should have hyped it up to main headlines) GIVEN THAT ALL FINE GAEL MEPs AND THEIR PRESIDENTIAL CANDIDATE HAVE VOTED IN THE PAST TO MAKE THEIR EXPENSES IN THE EU PARLIAMENT SECRET – a story brought up by me to… Read more »
PROMISE THE LEAST –
-> SOON THERE WONT BE ANYTHING TO GIVE
SEE ANNEX 1 ->
https://ec.europa.eu/priorities/sites/beta-political/files/5-presidents-report_en.pdf
” debt forgiveness is a pro-business, pro-employment, capitalist policy as it accelerates the recovery in the commercial human spirit, which can be oppressed by too much debt.” I voted FG in the last two elections. Then Enda went to Davos and told the world that Irish people went MAD. Enda told us that FF wrecked the economy. Now I have to agree with Micheal Martin It was GROSSLY OVERVALUED – UP FRONT BONUS – BANKERS VALUED DEBT – that wrecked the economy. – False Value Debt. Not FF. Not Building Houses. It was the “DEBT” on Commercial Property, Land Banks,… Read more »
The article is a bit of a filler, it goes around and around in circles. Oh well, can’t be fantastic all the time.
Debt is a major problem. People in debt have spent tomorrow’s earnings today. Consequently there is less income next year than would have been the case than if there had been no debt. The largest debts are created by the production of money. Namely the central banks and their surrogates the commercial banks. 98% of our money is created as a debt and on which interest is paid. If borrowing today spends tomorrow’s income then having the whole world in debt will surely mean that there is far less income to spend than is actually earned. That is the banking… Read more »
There is a lot of the usual corporate/business propaganda seeping through here. ‘What’s good for business is good for you’ presents the usual lie that business exists to create employment, provide income, or generally spread happiness rather than to make profit via any means possible which literally includes killing its customers and/or workers to that end. If the business lobby is warning that a hung Dáil ‘might be’ bad for business then this validation of corporate approval for the status quo coming at a time when the peoples quality of life has been measurably undermined should be all the evidence… Read more »
That is, since the Brexit debate has emerged) gold is up 22% in pound terms, and the ascent is steepening.
http://dollarcollapse.com/precious-metals/this-is-what-gold-does-in-a-currency-crisis-british-edition/
Millions of Brits will be wishing they had bought gold as the pound crashes!!!!!!
This is the budget for BC.
https://www.central1.com/sites/default/files/uploads/files/analysis_report/report_file/BC%20BUDGET%202015.pdf
It shows a modest surplus for each of the next 3 years.
Nationally the Trudeau government made heavy plans. The national Budget was basically balanced before the Liberals but is now projected to be a deficit 18 Billion. Alberta , with the oil bust is negative 10 billion. Ontario is Negative 10 Billion if I remember the figure correctly, including capital expenditure.
http://news.nationalpost.com/news/canada/ontario-budget-2016-a-rising-debt-free-university-for-lower-income-families-and-31-things-you-need-to-know
How to run a budget off the road http://the-moneychanger.com/eCampaign/commentary.php?Key=20160224 “A MARK OF THEIR DESPERATION: Illinois’ state budget and pension fund crisis is the worst in the US, save for California. From a friend who lives across the border in Indiana comes this mark of their desperation. The utility company cut off electricity to the Illinois State Police outposts for failure to pay the bill. My friend also drives an agricultural truck through Illinois & says they are setting up roadside scales, stopping every truck, and ticketing and fining if loads are even 100 lb. over limit. Clearly they are desperate… Read more »
It has been a very listless election campaign.
By contrast how much fun is The Donald v Hilary going to be. Assumptions assumed
So folks, I wonder who is David voting for – if he is voting? I doubt he will ever tell us, so any guesses? I reckon, based on his recent articles, his heart is with Mr. Stephen Donnelly, but he might vote for Fine Gael, given their chances (btw, do you think that Prime Minister’s Cameron for An Taoiseach Enda Kenny might actually do some damage to Fine Gael lol)? Surely he cannot be voting for the Party That Dares Not Speak Its Name (that is Fianna Fáil, forgiven by the short-memoried electorate for all their sins and trespasses even… Read more »
Looks like it’s FG and FF lads.
You shower of utter muppets.
(not you guys, the Irish people).
They get what they deserve. Fuckwits.
Voted Non Party 1
Renua 2
FF after 12
FG after 15
Galway West.
I think that there is no longer a lifetime FF’er or FG’ er.
They are not fucking football teams.
These institutional politicians can no longer blame the system. There should be attachment to their pensions if they blatently ignore the greater public good.
We hopefully are the last lazy unconstitutional generation that wishes to throw the next generation ” the dirty shirt”.
For fuck sake.
Its like stealing from your children and possible grandchildren.
A terrible election result. The people have voted to place the country in a crock of sh!t. And just shows how immature and feckless bunch we are. we are now witnessing the real impact of the 2008 crash and subsequent bailout. Our political system has been totally destabilised and our future is very unclear. Over the last seven years the governments of the day have put a lot of effort into widening the tax base. In the process they’ve lost a lot of political capital. Here’s just a couple of examples of what is going to happen next. One of… Read more »
Morning McCawber.. don’t worry…..result will not make any difference…Political Parties do not run this Country..Senior civil servants do..Country will carry on fine without a Government. If you want to see a crock of shit..check out elections in early eighties. Right wing agendas will be implemented as per usual.This is all just optics…something to talk about , musical chairs if you will…just giving the people the illusion of choice. F.G and Labour got a well deserved kicking…..Politics is changing and we are going to have more diversity over the next Generation. There is no unchartered territory,,,everybody’s been somewhere before..the Media just… Read more »