The Irish Economy

It has been very strange living In Ireland in recent times. Ireland is a country which even at the best of times experiences a great deal of rainfall. And during summer 2009 we had one of the wettest Summers on record. Then in November the country experienced some of the worst floods in living memory. This was followed - starting in mid-December - by a long spell of snow and ice. Yet after all this we are experiencing great problems with our water supply. For example in Dublin many houses have been cut off for several days. In many others water supply has been greatly restricted. What on Earth is happening? Unfortunately heavy rainfall does not necessarily translate into a properly functioning water supply. Like so much other infrastructure, insufficient attention has been paid to the maintenance of the water system in Dublin and elsewhere in the country. Most of the underground piping that serves Dublin was laid in the late 19th century (when the population of the city...

I have been reading David McWilliam’s most recent book "Follow the Money". It provides a gripping account of the nature of our recent economics problems with the mania for property and easy money being likened by him to a serious drug problem! However what is always a little weaker in accounts such as this are practical suggestions as to how the problem might be eventually alleviated. Just as the drug addict becomes especially prone to need the constant "quick fix" solution, popular commentators such McWilliams often fall into the same trap of creating the impression that there are likewise "quick fix" solutions to be found (if only the authorities could fully embrace the author's own particular pet scheme of the moment). So in the final stages of the book, McWilliams offers as his key solution to the present recessionary crisis in Ireland that we should leave the Euro. Now to be fair I would not completely deride this suggestion as the validi...

Well! The Irish Budget which promised draconian cuts in expenditure certainly lived up to expectations with most of the burden falling on public servants and welfare recipients. Naturally both Trade Unions and members are extremely angry as a result. However the important question that really arises relates to the existence - if any - of more palatable alternatives. From one perspective I actually applaud Brian Lenihan for at least having the guts and leadership qualities to follow through on what he considered necessary and yet which was bound to be highly unpopular among large sections of the population. And indeed there is a valid case for the measures he took. Overall expenditure is way out of line with revenue receipts. Also surveys show that public sector pay in general is much higher than the private sector in an economy that is seriously lacking in competitiveness. Quite simply the price of most products and services is excessive at present in Ireland. Likewise due to an actual...

"Prime Time" last night on RTE dealt with the issue of social welfare fraud. The total Social Welfare bill in Ireland is currently running at over €20 bl. per annum with at least 10% of this relating to fraudulent claims. Thus at a time when stringent cuts in expenditure are required we have a massive case of over-spending that simply is not being properly addressed. Unfortunately to a certain extent we have long had a mentality - no doubt relating to our colonial past - that leads to a lot of petty fraud. Many people while paying lip service to the system do not really respect it. So if telling a little white lie, or indeed a big major lie (and perhaps many such lies) helps people beat the system in some way they feel justified in doing so taking comfort from the assertion "Well! isn't everyone doing it? In a recent survey for example it was found that up to 70% of people taking out car insurance in one county had lied in providing information. Many who are self emp...

The Health Minister, Mary Harney has mentioned a new proposal (likely to be included in the forthcoming Budget) regarding the making of a nominal charge (50c) for every prescription. As well as providing some additional revenue to the Exchequer this would perhaps have the benefit of discouraging many freely availing of prescriptions (on the Medical Card) which they don't subsequently use. It is estimated that up to a quarter of the drugs dispensed by pharmacies in this way are wasted! However there are more serious issues that need to be addressed. A critical matter relates to the fact that the cost of drugs in Ireland is exceptionally high compared to other countries. One important contributing factor relates to the excessive mark-up enjoyed by pharmacies for dispensing drugs. In fairness this was addressed earlier in the year by the Minister leading to a tentative compromise resolution with the pharmacies in August. However the key factor has not yet been addressed which rela...

There is a great deal of unrest with much simmering anger evident in Ireland at present. The economy is in deep recession with borrowing rapidly mounting (both in the public sector and private households). Meanwhile the Government is making preparations to bring in a draconian budget which threatens to depress living standards further for those already struggling to make ends meet. How have we got ourselves into such a mess? Also what is the best way forward in such trying circumstances? On the face of it per capita income in Ireland is still very high and - indeed - well above the EU average (which - by world standards - remains a highly privileged area). Yet so many people genuinely seem to be faced here with real financial worries and potential hardship. There are indeed many possible explanations for this. Firstly, because of the highly artificial nature of the Irish economy. which is so dependent on multinational activity, official figures overstate true per capita income. Seco...

I have considered for many years that the Irish economy suffers from a fundamental lack of competitiveness. Unfortunately this was persistently ignored during the crazy property bubble years of the 2 nd phase of the Celtic Tiger. So what was misleadingly trumpeted then by politicians as "inherent strengths" of the Irish economy e.g. continuing high growth and employment were in effect hiding the true reality of a highly artificial economy, with bad value and poor work practices evident in every sector. One of the unchallenged assumptions that was made here was that removal of barriers in the EU internal market would in itself guarantee competition in Ireland. However for a number of reasons this argument is highly suspect due to grave faults with respect to the way the market operates. Though the market works better in relation to freely traded goods, even here major impediments exist. For example Governments prevent cars being freely imported from lower price jurisdiction...