Peoples Economy Stephen Kinsella Day 2


Please visit with http://thepeopleseconomy.com/ for more details.

Questions Asked.

One question I have for the list, where can we get the biggest bang for our buck in terms of stimulating employment? – through tax credits for businesses or subsidies such as grants, etc
http://thepeopleseconomy.com/7-how-are-you-going-to-reduce-the-dole-queues/

Nollaig >> (All): What is the level of skillsets in management at Irish SME’s verses Multinationals Should there be compulsory training/certifcate for owner/mangers of Irish SME’s eg leansystems like 6 sigma

john doyle >> (All): what is your opinion on lowering rates for business by local governments. Can it be done and what are the problems you might face?

Steve Daley >> (All): Reducing the costs of labour to incentivise private sector employment doesn’t address the one-sided character of the Irish private sector. TBH most of the private sector is based on consumption, this needs to be restructured to move away from being a resller economy. We need to drstically expand labour productivity that creates surplus to fund public services employment.

Nollaig >> (All): Is the inflexability of the JLR’s costing jobs

Steve Daley >> (All): PPP is just another way of subsidising private sector and abdicating responsibility for public works. We need massive infrastructure so why not reestalish a public works programme that employs our surplus of civil engineers and labourers.

Nollaig >> (All): JLR = Joint labour court ruling on pay to sectors of the economy

Dan >> (All): What do you think of the politicians talking about supporting employment in the construction industry? Surely we should let it find it’s natural level, interference was the problem in the first place

Brian ONeill >> (All): Hi Stephen, I have my own business and have worked for myself all my life. Recently I have been questioning our system of basically people buying a lot of crap they don’t need with money they don’t have. I don’t want to come across as a complete lefty hippie as I said I am in business, and I know people need jobs, but are there no new economic ideas that involve sustainability and quality of life, rather than endless growth and consumption for the sake of it?

Steve Daley >> (All): Do you think domestic services and resellers really create value? I am ignoring internationally traded goods/services. Ireland has too many self-employed and small service businesses, which seriously impairs the opportunities for raising productivity. How would you restructuture the private sector to raise productivity?

Nollaig >> (All): What is the cost of credit to Irish business v Other Euro Area Countries and what can be done to bring this cost down What would you think of an electronic stock exchange for SME’s

Rory Mc Closkey >> (All): In the latest report on prices, we in Ireland are 30% more expensive than any other EU country, on average. What can be done to address this? To my mind prices have driven wages rather than the other way around as present dogma maintains.

john doyle >> (All): I read an article that Israel has the most start up companies aware in the world. What does Ireland need to do to compete with countries like Israel.
Steve Daley >> (All): So the explicit plans for structuring the economy in China are not something economists can imagine or transform for Ireland? This is short-sighted :%

Steve Daley >> (All): I think you’re missing the point about labour productivity. There are 2 ways to raise productivity, invest in new technology and processes or reduce wages. Your suggestion for jobs seems to only include the misery option.

DM >> (All): Do you think that the current “politicisation” of credit, i.e. politicians directing/pressuring banks to lend to meet credit targets is and will be a major problem over the coming years? Offices like the “Credit Review Office” are overturning bank decisions to extend credit for example. Politicians and bureaucrats cannot “pick and choose” sustainable investments, they’re likely instead to work for any voter/vested interest

Nollaig >> (All): I read that German SME’s put the suscessdown to 3 items 1. Access to cheap credit. This is why Germans dont want inflation becuase it raises rates. 2. Goverment are early adoptors of technology and inovation. 3. Access to highly trained people  How can we do this here

jo >> (All): Were costs higher here due to the large increase in credit? (so loads of money/credit chasing too few goods) Now we still have the debts but the money supply contracting!!!

Steve Daley >> (All): Sorry, I think your living on cloud cuckoo land. The notion that nerd startups will significantly provide jobs is ridiculous.

Rory Mc Closkey >> (All): Just to raise the question of prices again. Prior to the bust all we talked about was rip off Ireland. That is, exorbitant profits were reaped. Now it would appear never to have happened, there is absolute silence on it. Yet despite deflation over 3 years we are still 30% higher. Private sector doctors, vets, dentists, private sector insurance companies, oil companies, electricity prices raised falsely to make it more profitable for private companies to enter the market. Supermarkets that do not divulge profit levels in Ireland. Even the cheap supermarkets are 30% dearer than elsewhere in Europe. All appear to collude in price fixing.

DM >> (All): Steve Daley you’re living in cloud cuckoo land wanting to adopt a central planning style economy. The Chinese are heading for a major crash that will make ours look like a fairytale. They’re frantically trying to cool inflation now. How many increases in their interest rate have they had over the past 12 months??

Gavin Finlay >> (All): Re: capitalising on our culture. Isn’t this vital for the future success and sustainability of our tourist industry? Also, making our cities and environment beautiful. As u say – interesting, cool places to be. How important do you see tourism being in the future? Chinese & Indian middle-classes a potentially huge “market”?
Steve Daley >> (All): Where are the medium to large enterprises that can create thousands of jobs?

Joe Drumgoole >> (All): IDA is growing about 10k new jobs in the tech sector, but tech sector has 100% employment and every company I know has open slots. How do we create jobs in other sectors?
Nollaig >> (All): I think the best way to bring down prices is competition, If we look at where prices are still rising its in protected sectors like legal medical educational public transport how can we change this

Joe Drumgoole >> (All): Startups, bingo!

Joe Drumgoole >> (All): But startups are going to get screwed by the wage inflation caused by creatingt 10k new tech jobs in google et al.

DM >> (All): Is it just not “PC” to acknowledge the fact that in a dynamic economy some workers have to move into other areas of work? The government can’t guarantee a job for everyone in every sector, and they can only do more harm to the economy by attempting to disprove this! The number of unemployed now in the construction industry probably has something to do with a bubble we had recently, anyone heard of that?? 🙂

Steve Daley >> (All): US FDI is more keen to get a piece of the growth in Asia, so do we have the silver bullet of US firms to paper over the structural weaknesses of med-large enterprises here.

Stephen >> (All): Are those not the workers though that we want to spread around many startups rather than having one large tech company monopolise the market?karl >> (All): If you could make two taxation changes in the morning what would they be?

Nollaig >> (All): The other thing that Isreal has been sucessful in doing is benefiting for techology transfer from multinational localating there have we been good at that too?

David Hartery >> (All): what sectors would you say Ireland have a comparative advantage in? r&d? IT services?

karl >> (All): @nollaig a lot of their innovation comes from military R&D – don’t know that we can replicate that aspect of Israel’s performance!

DM >> (All): why does the new job have to be highly skilled or trained? 🙂

One thought on “Peoples Economy Stephen Kinsella Day 2

  1. Thanks for the seminar link Steve; a few of things struck me:

    1. You mentioned cutting the minimum wage was justified under the rubric of restoring competitiveness (internal devaluation). In my opinion a blanket cut in the minimum wage has increased income-replacement rates for passive unemployment among low earners. A targeted strategy would have been preferable:
    a) Limiting the scope of a €1 reduction to the least experienced whose marginal product may not be €8.75 p/hr. Employers have been cribbing about this for aeons.
    b) Abolishing JLC wage premia. During a decade of net inward migration we paid unnecessary wage premia to fill vacancies in our service sector. Little wonder our coffees, hair-cuts and Sunday lunches are so expensive when employers are bound by restrictive wage agreements sitting on top of the statutory minimum!

    2. Your discussion of job matching was interesting. Chris Pissarides Nobel lecture at LSE was on matching and should be soon. The motivation behind job matching has some interesting parallels with industrial policy and the process of matching Irish businesses to export opportunities. A Chinese colleague has some interesting things to say about Chinese industrial policy. Local agencies essentially map their skills and resources (capabilities) and are proactive in matching capabilities to lists of opportunities derived from promotion events or other (opaque!) networking. The objective is to maximise the attractiveness of a region’s offering by identifying any deficits (human capital, infrastructural) and addressing them. I’m trying to encourage him to write this up in English.

    3. On graduate emigration, I’ve been trying to find any studies (or data) on the percentage of England’s graduates who “default” on their student loan through emigration. Anecdotally Australia does pretty well out of England’s higher education system. Even though the return of university fees through deferred payment has its merits, I wonder how the incidence of default will be affected by our outwardly mobile labour force? It would be strange indeed if the burden of repayment fell entirely on graduates who remain in Ireland.

    4. Business wants to see a reduction in local authority rates and they maintain the absence of domestic rates makes local authority funding inequitable. A reduction in rates under the current non-system will leave a revenue gap to be filled either by service charges, development levies, a local property tax, or… through reform of what local authorities do and how they do it. FG’s href=”http://www.finegael2011.com/pdf/Fine%20Gael%20Manifesto%20low-res.pdf” title=”manifesto” rel=”nofollow”> proposal to reduce the number of (grossly overpaid) city/county managers stops within an inch of the real finish line which ought to be consolidation. The UK addressed this 30 years ago.

    5. In terms of infrastructural works – specifically refitting mains and installing water meters. At the moment water infrastructure is provided/maintained by local authorities. Allocations from href=”http://www.environ.ie/” title=”DoEHLG” rel=”nofollow”> are used by councils either for small scale remediation or to put large projects out to tender. Let’s be blunt about this: European solidarity has taken a hammering of late, not least with discussion of a common consolidated corporation tax. Perhaps before we rush to tender multi-million euro contracts for water works we should ask ourselves, “what would the French do?” What are the prospects of German or UK civil engineering firms getting equivalent contracts in France? Our situation is thus 1) direct labour is likely to be inefficient, fragmented and bad value for money, 2) open tendering (at least some of it) may suffer from leakage and not provide the employment we desperately need. Can the PPP model be adapted in such a way that would include conditionality on the use of local labour, e.g. from a talent pool registered with the public employment service? Would that proposal sound as un-European if the French did it first?

    6. One of the contributors asked why discount grocery retailers are more expansive here than in Germany. Various local authorities (including An Bord Pleanála) have interpreted the Retail Planning Guidelines as imposing a cap of 1,500m2 on the floor area of vertically integrated “discount grocery retailers”. The Competition Authority have href=”http://www.tca.ie/images/uploaded/documents/grocery_monitor_report_3.pdf” title=”written” rel=”nofollow”> about this and href=”http://www.environ.ie/en/Publications/DevelopmentandHousing/Planning/FileDownLoad,23264,en.pdf” title=”reviewing” rel=”nofollow”> are supposed to be reviewing it. Ironically enough, impeding the growth of vertically integrated retailers has played into the hands of Irish wholesalers (known to be ) and multiples like Tesco whose is 3 percentage points more that of its UK operation.

    7. Lastly, someone raised an interesting point on the politically-correct reluctance to refer to labour flexibility. There is certainly some debate to be had on the balance between “finding” employment for people in industries that were unsustainably large (construction and trades) and society’s willingness to support peoples’ time outside of the labour market while they retrain. Denmark’s href=”http://en.wikipedia.org/wiki/Flexicurity” title=”flexicurity” rel=”nofollow”> model does the latter: a social contract exists that acknowledges involuntary and structural unemployment. It provides for generous income replacement (to the actively unemployed) subject to counselled/monitored progression through retraining. In my opinion the economy’s investment in supporting that expensive contract is repaid many times over through the future earnings and success of those retrained. FG’s manifesto proposal to substitute “FÁS courses” with training vouchers probably makes sense but needs to be accompanied with a rigorous employment counselling service – of which diarying is only a part.

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