Archive for the ‘Ireland’ Category
Much of the developed world is suffering a jobs crisis, and the experience for Ireland is worse than most. The Irish legal framework for the jobs market, beyond a basic minimum wage, has also had a complicated system of “Joint Labour Committees” which are capable of imposing additional wage requirements on particular sectors of the economy (affecting about 200,000 people). This system was found to be unconstitutional last summer. Replacement legislation is coming down the pipeline now, with the government promising to extend an employer’s right to plead “inability to pay“.
The current legislative proposals permit an employer – subject to certain conditions – to apply to the Labour Court for a derogation from the wage rates set in the sectoral wage agreement on the basis of inability to pay.
The derogation can be granted for between three months and two years – provided an employer has not been granted an exemption within the previous five years for the same workers.
The Labour Court must be satisfied that without the exemption, there would be a substantial risk to jobs or to the sustainability of the employer’s business.
The change is described by a government spokesman as “minor”. They don’t want to be seen to be undermining the wages of the low-paid, but the truth is that this system does no good at all for the people who need the most help, who are just below the bottom rung of the jobs ladder: those who are looking for work.
Involuntary “unemployment” would not exist in the free market; anyone who can work would be hired, if they would only lower their asking price. When market-clearing wage rates are illegal, however, unemployment is inevitable.
Thought experiment: Imagine that the price of a new car was set by government at an artifically high level, as a result of the government having been lobbied by manufacturers of some of the more expensive models. Imagine that you could only negotiate a lower price if you presented your case formally to a special government committee, who would decide whether or not you could afford it. Do you think that more or fewer new cars would be bought?
What’s been lacking from the debate on the proposed Irish blasphemy law is any framing of the discussion in its proper context: property rights. Once we do this, the correct criticism of the law becomes clear.
We begin by noting that all communication has a physical form, a form which is always the property of some agent. Read the rest of this entry »
It’s a sign of the times that every public debt offering in Europe has become a “risk event”, with the Irish government among the most vulnerable to what would be a catastrophic collapse in demand. And no longer empowered to produce its own counterfeit money, it is ultimately reliant on the ECB to remain solvent.
The Sunday Independent reports that the ECB has finally started to play ball, providing the funds to ensure that no Irish government bond is left unbought:
Irish banks are using billions of euro from the European Central Bank (ECB) to buy up Irish government debt, the Sunday Independent can reveal.
It has emerged that the banks were “active” in a recent Irish government bond sale of about €1bn, and it was confirmed yesterday the repossession of Irish bonds at the ECB has occurred.
Irish banks are using ECB funds to “create the illusion” of demand on the international markets.
Market abuse may arise in circumstances where investors have been unreasonably disadvantaged, directly or indirectly, by others who:
* have used information which is not publicly available (insider dealing);
* have distorted the price-setting mechanism of financial instruments;
* have disseminated false or misleading information.
Of course, the governments themselves would never do anything like that.
Thanks to Cavok at politics.ie who brought our attention to the latest industrial production release by Eurostat, in which the Irish figures for January and February 2009 are the only ones listed as “Confidential”. Who made the decision not to release the figures, why were they not released, and can we assume that Ireland’s annual variation figures are worse than Latvia’s -24%, or Estonia’s -30%?
Two more articles on the state of the Irish economy.
First up is Paul Krugman’s “Erin Go Broke“. Nothing really surprising; he laments that the Irish government isn’t able to
destroy stimulate the economy. Writes Krugman:
But there’s more to it than that: to satisfy nervous lenders, Ireland is being forced to raise taxes and slash government spending in the face of an economic slump — policies that will further deepen the slump.
Next up is John Engle’s “Celtic Kitten: The Failure of Intervention in Ireland“.
Apparently the cure to the social ills brought on by insatiable public spending is simply more public spending. Only now, the money being frivolously dithered away is not from a surplus but borrowing from the future….The government’s only remedy seems to be even further government involvement in the economy. Already it is on the way to nationalizing its major banks and the aforementioned artificial propping up of the housing market.
Good to see an Austrian presence at Trinity College!
I’d also like to remind anyone interested in discussing classical liberal, libertarian and conservative views that our Forumotion message board is the place to do it. All welcome.
CNBC has a spectacular powerpoint of the world’s top 15 debtor nations. External debt is measured as a proportion of GDP. Guess who’s number one?
With an external debt 811% of GDP, Ireland is head and shoulders above second place the UK (336%) and third place Belgium (327%).
I want to feel irrationally exuberant again.