Absolutely nobody thinks that Ireland needs a tax cut. Absolutely everybody thinks somebody else's taxes should go up. Is King Charles up to the task? Probably not.
Absolutely nobody thinks that Ireland needs a tax cut. Absolutely everybody thinks somebody else's taxes should go up. Is King Charles up to the task? Probably not.
Do you really think the center is being evicerated in NI? Alliance party is booming and combined with the greens, SDLP & UUP, moderate parties are polling ~36%. It's not great but it's an improvement and hopefully will continue to grow.
I thought is was a relatively uncontroversial statement - essentially short-hand for how DUP and SF took over from the parties of Trimble and Hume and now run things. If the centre is making a comeback we can only applaud - and hope they can begin to make a difference.
Dare I say, I think you were in danger of repeating Mary Lou McDonald’s line during the last general election campaign! When defending the SF retirement age of 65, and confronted with the demographic crisis her response was “the demographics will take care of themselves”. Either she foresaw a nasty pandemic soon or she, on a whim, completely rubbished all demographic forecasting with no scientific basis whatsoever.
You must acknowledge that there is surely a big difference between forecasting what markets will do over the the short term and the forecasting of long term demographic trends. It’s chalk and cheese! There are of course some uncertainties with demographic forecasts relating to mortality improvements, birth rates and inward migrations, but the long term nature of those trends makes those types of forecasts far more certain than crystal balling the markets.
For every reason you come out with for why the demographic crisis won’t be as bad as we think (more migration you mentioned), I can think of others that will make it far worse than the best estimate anticipates (better treatments and cures for illnesses emerging, greater affluence among the population providing better healthcare and lifestyles, falling birth rates, greater urbanisation improving ambulance response times, I could go on).
Those forecasts don’t necessarily mean we need a left wing agenda. Our economy needs to maintain similar levels of productivity in my opinion, so that means people working for longer and retiring later.
But I don’t think it’s wise to simply rubbish the demographic forecast and well-wish the issue away.
Yes, there are certain demographic trends that we need to assume are given and therefore need to prepare for. 'Ageing population' is one. The question becomes, 'what is the right response?' In the case of the pension age you start with asking why is the pension age 65 and are those reasons still valid?
Answer: it was, but is no longer, an actuary's dream. It first appeared after Bismark instated it for Prussian army officers who rarely lived until they were 65. When it became UK policy, few people made it to that age, those that did lasted 2 or 3 years. All has changed utterly, so the pension age, via its own internal logic, should go up. We know that if we don't raise it we risk almost certain fiscal disaster. We know something will happen but not quite when. My scepticism regarding demographic trends relates more to that 'when' rather than 'if'.
As you say, the demographics could certainly go against us. What to do? Answer: stop creating open-ended, unfunded liabilities. Start funding the state pension scheme, passing a law that says it will only ever pay out what it can do, on an actuarial basis. Pass a constitutional amendment that stops piling unfunded liabilities, unfunded pensions, on taxpayers yet to be born!
I have the benefit of being a life insurance actuary so I have a good feel for what underpins the assumptions projecting mortality improvements. There’s no crystal ball but like all estimates there’s a funnel of doubt, both upside and downside. Actuaries are used to setting a genuine best estimate assumption and then calibrating explicit margins for prudence using VAR type approaches. I wonder if your scepticism of that is unfounded given the methodical nature of the study.
What isn’t really an actuarial calculation is the rate of replacement from inward migration and births. That’s more difficult to predict.
I agree with what you’ve said though. Guaranteed pension benefits are expensive and should be avoided.
I was happy to see the government finally consider the society of actuaries proposals for more flexible retirement ages more seriously. That recommendation has been floating around a long time, and it’s quite an easy this to administer. Bigger state pensions if you choose to retire later. And it takes the retirement age arbitrary age limit off the table as a political hot potato.
I hope you didn't think I was being rude about actuaries! I don't think we are disagreeing about much. It would be much better if there was a state pension fund which paid out according to periodic actuarial assessments of its solvency.
No not at all. I just think your point dismissing the demographic time-bomb and the forecasts in general might have been a bit flippant. It’s not as if such assessments have been done in the interests of scaremongering to justify a left-wing agenda. The problem definitely exists and needs a solution - and I suspect we would agree a lot on what that solution could look like, and both disagree with that poxy tax commission solution to it is. Maintaining our average levels of productivity is key, but the left will go rummaging around for a free lunch again which either doesn’t exist or lowers our productivity making us collectively worse off.
Very good podcast again. Would it be possible to touch on mortgages and housing crisis in the next show please? A couple of points I have seen on this in recent weeks have raised concerns. The first is that BOI is going to be tightening its lending rules, an IT article today references that ICS has restricted loans to 2.5 times salary, which makes affordability impossible for even high income earners. The second is perhaps just as concerning, the banking committee of TDs and Senators has asked the banks not to increase interest rates. The idea of ECB rate hikes is to take the steam out of inflation, which includes putting the breaks on the rapid house price increases we have seen throughout the covid period. Politicians asking banks to halt these hikes is clearly them working in the interests of current property holders above the interests of potential buyers (higher interest rates eventually leads to decreasing house prices). And if the banks can indeed hold off on increasing the rates, this suggests they have been able to make super normal profits in the period before.
Very interesting and insightful as always even from someone who leans towards SF. Despite leaning left I do agree with your sentiment about how well Ireland has recovered in the past ten years and also the performance of the economy in the last 40 years. When I return home I don't understand the doom and gloom that seems infectious and almost like a bandwagon; I question do people even know what they're complaining about! A fellow emigrant said a while back that Ireland has a lot going for it and just has a small number of problems to fix.
Firstly do you think the doom and gloom is linked to the trauma of the financial crash and a lot of the country has yet to recover fully from it?
Also I think the taxation debate is quite politically toxic as during the boom years the great populist Bertie Ahern was able to deliver huge investment in public service on the back of the tax receipts from property.
Finally I don't think Sinn Fein are guaranteed to be in government next time around; their extra seats will come from the Left who'd they'd otherwise be relying upon to get a working majority. So I do think they'll need Fianna Fail (Jim O Callaghen led) to get the numbers for government and also for stability as the likes of Paul Murphy etc can not be relied upon for this.
Thanks. The doom and gloom has many drivers, some of which I don't fully understand. The media is partly to blame, giving voice to those self-loathing journalists who like to portray Ireland as a dystopian hell-hole. It must be something to do with the psychological distress caused by a lot of change as well as ideology.
Data just analysed by the FT shows that if you were poor (defined as near the bottom of the range on disposable household income) you were equally poor in Ireland and the UK at the beginning of this century. Today, you are fully 2/3 better off in Ireland than the UK at the same point on the income scale. Just one stat amongst many that shows how Ireland has changed - and for the better.
Do you really think the center is being evicerated in NI? Alliance party is booming and combined with the greens, SDLP & UUP, moderate parties are polling ~36%. It's not great but it's an improvement and hopefully will continue to grow.
I thought is was a relatively uncontroversial statement - essentially short-hand for how DUP and SF took over from the parties of Trimble and Hume and now run things. If the centre is making a comeback we can only applaud - and hope they can begin to make a difference.
Hi lads. You may not like my comment this week!
Dare I say, I think you were in danger of repeating Mary Lou McDonald’s line during the last general election campaign! When defending the SF retirement age of 65, and confronted with the demographic crisis her response was “the demographics will take care of themselves”. Either she foresaw a nasty pandemic soon or she, on a whim, completely rubbished all demographic forecasting with no scientific basis whatsoever.
You must acknowledge that there is surely a big difference between forecasting what markets will do over the the short term and the forecasting of long term demographic trends. It’s chalk and cheese! There are of course some uncertainties with demographic forecasts relating to mortality improvements, birth rates and inward migrations, but the long term nature of those trends makes those types of forecasts far more certain than crystal balling the markets.
For every reason you come out with for why the demographic crisis won’t be as bad as we think (more migration you mentioned), I can think of others that will make it far worse than the best estimate anticipates (better treatments and cures for illnesses emerging, greater affluence among the population providing better healthcare and lifestyles, falling birth rates, greater urbanisation improving ambulance response times, I could go on).
Those forecasts don’t necessarily mean we need a left wing agenda. Our economy needs to maintain similar levels of productivity in my opinion, so that means people working for longer and retiring later.
But I don’t think it’s wise to simply rubbish the demographic forecast and well-wish the issue away.
No offence taken!! Thanks again Sean.
Yes, there are certain demographic trends that we need to assume are given and therefore need to prepare for. 'Ageing population' is one. The question becomes, 'what is the right response?' In the case of the pension age you start with asking why is the pension age 65 and are those reasons still valid?
Answer: it was, but is no longer, an actuary's dream. It first appeared after Bismark instated it for Prussian army officers who rarely lived until they were 65. When it became UK policy, few people made it to that age, those that did lasted 2 or 3 years. All has changed utterly, so the pension age, via its own internal logic, should go up. We know that if we don't raise it we risk almost certain fiscal disaster. We know something will happen but not quite when. My scepticism regarding demographic trends relates more to that 'when' rather than 'if'.
As you say, the demographics could certainly go against us. What to do? Answer: stop creating open-ended, unfunded liabilities. Start funding the state pension scheme, passing a law that says it will only ever pay out what it can do, on an actuarial basis. Pass a constitutional amendment that stops piling unfunded liabilities, unfunded pensions, on taxpayers yet to be born!
I have the benefit of being a life insurance actuary so I have a good feel for what underpins the assumptions projecting mortality improvements. There’s no crystal ball but like all estimates there’s a funnel of doubt, both upside and downside. Actuaries are used to setting a genuine best estimate assumption and then calibrating explicit margins for prudence using VAR type approaches. I wonder if your scepticism of that is unfounded given the methodical nature of the study.
What isn’t really an actuarial calculation is the rate of replacement from inward migration and births. That’s more difficult to predict.
I agree with what you’ve said though. Guaranteed pension benefits are expensive and should be avoided.
I was happy to see the government finally consider the society of actuaries proposals for more flexible retirement ages more seriously. That recommendation has been floating around a long time, and it’s quite an easy this to administer. Bigger state pensions if you choose to retire later. And it takes the retirement age arbitrary age limit off the table as a political hot potato.
I hope you didn't think I was being rude about actuaries! I don't think we are disagreeing about much. It would be much better if there was a state pension fund which paid out according to periodic actuarial assessments of its solvency.
No not at all. I just think your point dismissing the demographic time-bomb and the forecasts in general might have been a bit flippant. It’s not as if such assessments have been done in the interests of scaremongering to justify a left-wing agenda. The problem definitely exists and needs a solution - and I suspect we would agree a lot on what that solution could look like, and both disagree with that poxy tax commission solution to it is. Maintaining our average levels of productivity is key, but the left will go rummaging around for a free lunch again which either doesn’t exist or lowers our productivity making us collectively worse off.
Very good podcast again. Would it be possible to touch on mortgages and housing crisis in the next show please? A couple of points I have seen on this in recent weeks have raised concerns. The first is that BOI is going to be tightening its lending rules, an IT article today references that ICS has restricted loans to 2.5 times salary, which makes affordability impossible for even high income earners. The second is perhaps just as concerning, the banking committee of TDs and Senators has asked the banks not to increase interest rates. The idea of ECB rate hikes is to take the steam out of inflation, which includes putting the breaks on the rapid house price increases we have seen throughout the covid period. Politicians asking banks to halt these hikes is clearly them working in the interests of current property holders above the interests of potential buyers (higher interest rates eventually leads to decreasing house prices). And if the banks can indeed hold off on increasing the rates, this suggests they have been able to make super normal profits in the period before.
Thanks Niall - we will take a good look at all of your points. Housing is a regular topic for us
Very interesting and insightful as always even from someone who leans towards SF. Despite leaning left I do agree with your sentiment about how well Ireland has recovered in the past ten years and also the performance of the economy in the last 40 years. When I return home I don't understand the doom and gloom that seems infectious and almost like a bandwagon; I question do people even know what they're complaining about! A fellow emigrant said a while back that Ireland has a lot going for it and just has a small number of problems to fix.
Firstly do you think the doom and gloom is linked to the trauma of the financial crash and a lot of the country has yet to recover fully from it?
Also I think the taxation debate is quite politically toxic as during the boom years the great populist Bertie Ahern was able to deliver huge investment in public service on the back of the tax receipts from property.
Finally I don't think Sinn Fein are guaranteed to be in government next time around; their extra seats will come from the Left who'd they'd otherwise be relying upon to get a working majority. So I do think they'll need Fianna Fail (Jim O Callaghen led) to get the numbers for government and also for stability as the likes of Paul Murphy etc can not be relied upon for this.
Thanks. The doom and gloom has many drivers, some of which I don't fully understand. The media is partly to blame, giving voice to those self-loathing journalists who like to portray Ireland as a dystopian hell-hole. It must be something to do with the psychological distress caused by a lot of change as well as ideology.
Data just analysed by the FT shows that if you were poor (defined as near the bottom of the range on disposable household income) you were equally poor in Ireland and the UK at the beginning of this century. Today, you are fully 2/3 better off in Ireland than the UK at the same point on the income scale. Just one stat amongst many that shows how Ireland has changed - and for the better.