Spending more money will not solve inflation issue. To tackle inflation would crest a recession and gov won’t allow that so therefore its inflation the trade off.
Jim & Chris, I have no doubt that this government would like to hold back a bit on the spending, but the political climate and media questioning is rewarding Sinn Fein, PBP and other leftists for promising the sun, moon and stars whilst also promising to tax the life out of wealth-creators and business people. Our industrial policy here in Ireland has been an amazing success but government get absolutely no credit for the massive tax intake which bankrolls all the public spending. It is worth noting that Germany's largest utility company, RWE, a major international investor, has warned in the UK that it will reconsider its planned £15 billion investment in renewable energy if a windfall tax is imposed on its electricity generators' profits. RWE's chief executive warned that it is monitoring political decisions and regulations and that "everybody would reconsider" if things change. This is a rational response from an international business with many options for how and where it deploys its capital. Ireland's income tax base and corporate tax base are dominated by the FDI multinational sector as you have pointed out many times on the podcast. Anyone who has ever operated at a senior level in a large international business will recognise that public policy, including taxation matters, along with regulatory policy matters, are monitored when making investment decisions.
Sinn Fein and People Before Profit support windfall taxation on energy companies. For leftists such as these, the benefits of globalisation and foreign investment are assumed to be both automatic and permanent.
These two parties also want to introduce a tax on private capital itself, not just on capital gains, by means of a so-called Wealth Tax. Sinn Féin say they can put more taxes on higher earners and on private wealth and that the result will be more revenue for Ireland's exchequer. The left's assumption is that MNCs will stay and continue investing, that high earning employees are not mobile and that they are willing to remain in Ireland if Sinn Féin or People Before Profit reduce and remove their personal tax credits. It is also assumed that those earning over €140,000 will be willing to pay a brand new additional "solidarity tax" planned by Sinn Féin.
People Before Profit's Paul Murphy says that salaries should be capped at €150,000 as part of a full roll-out of socialism in this country.
In my view Ireland's hugely important foreign direct investment sector is unlikely to benignly accept Sinn Fein and People Before Profit tax policies if ever they are implemented in this country. More focus must be applied to the manifestos and rhetoric of SF, PBP and the other leftist politicians, lobbyists and academics, before it is too late.
The problem is the centre right parties in Ireland are in coalition together, and are not at risk of being outflanked by an opposition to the right. So they keep leaning left to fend off the only opposition which threatens them.
Whether left or right leaning; all parties will be populist first and foremost (some more than others!). Wealth taxes generally involve a physical payment of money that’s already sitting in your bank account - making them deeply unpopular. Nobody likes parting with money in their account that they had gotten used to.
Wealth taxes will only be supported by those imposing them on people wealthier than themselves. We saw this with LPT and water charges. And too high a threshold for that tax net means not very much tax intake, particularly as the really wealthy will avoid any wealth tax too large thrown at them through their mobility.
Taxing higher earners might go down well with the lower earners though - even though that too is misguided. We already tax high earnings a lot in Ireland, which is evident from the Gini coefficient before and after income tax. But higher tax rates won’t necessarily bring in more income. A lot of high earners are self employed, and they have other options than declaring their earnings as income (company profits retained or pension). And high earners who don’t have such options will be incentivised to take it easier - take easier lower paid jobs or reduce their hours. Laffer curve.
The centre right should be less concerned with the policies on the left, and worry more about their own competency in my view.
Fair points although I don't think that we have any centre-right parties in Ireland any longer. Given the realities of tax and welfare in Ireland (one of the most redistributive tax & welfare systems in the OECD) and the penal rates of marginal tax in this country, put in place by successive FF and FG-led governments, I don't think we could call either FG or FF centre-right. The centre-left and far-left are have become crowded spaces and in such a political environment the loudest screamer will stand out most and probably be the most successful, sadly, at the next general election. The loudest screamer is Sinn Fein - their approach, again sadly, fits perfectly into the new Ireland with all its faux rage, victimhood and populism. From an FDI perspective, if we end up with a far-left SF-led government after the next election, it will be a very bad look for Ireland. Capital is mobile, especially in an incredibly open economy.
True. My “centre right” reference is made using the Irish political spectrum as the benchmark. I agree they wouldn’t pass for centre right in other countries, and there isn’t a proper centre right in Ireland.
If either FF or FG were to swing more to the right my guess is the other would either be forced to follow suit or face decline. Neither seem brave enough to do this and I don’t know why. My guess is they are comfortable so long as no other party outflanks them to the right, so they keep looking left.
Regardless of policy, I think there’s a perception of incompetency from them poorly executing their briefs. There are numerous examples of this, from the children hospital fiasco to the land development agency, not policy disasters but poor execution - and that’s damaging their credentials.
Sadly the government has no policy ideas to foster additional growth. They throw money at things without restrictions. Look at our National Broadband fiasco, our lack of wind, solar and wave electricity generation and the utter madness of paying huge sums to hotels for refugees… all outgoing and no feeding will dry that money tree up very quickly🥲
Yes, it’s all so short-term. I understand the need to buy votes, the politics. But it would be nice to see a bit more balance between running scared of the Shinners and strategic thinking. We have all of the former and none of the latter.
Indeed. The engines on the helicopter money have now cooled - a post pandemic solution (to a problem that didn’t exist) pedalled by certain economic commentators. Similar to how Gordon Brown famously said he abolished boom and bust only for the Great Recession to happen, many champions of MMT had thought the concept of inflation was also abolished, demanding that governments now print money unreservedly and hand it to the people they believe deserve it the most - usually people like themselves!
And now that inflation is back with a bang, all the self proclaimed Keynsians opposing austerity in the wake of the Great Recession seem to have abandoned their beloved economic philosophy in favour of the opposite - a populist raising of tax thresholds and increases in government expenditure to “fight inflation” (not fuel it of course!).
What I would have liked to have seen is very little from government and a building up of some surplus funds. Maybe strike a deal with energy companies to smooth the energy price increases out over time, providing temporary state subsidy on the basis of clawing it back through higher energy prices in the future - smoothing the hikes out. But little beyond that.
I see our finance ministers admit we can’t chase inflation while at the same time say we will increase spending by 6.5 billion. Why no one in the media even challenges this policy is amazing. Is there any public figure / media commentator that will go on tv and say only way to solve inflation is cut spending and stop printing money. Also a 9 billion (at least euro )metro on the way. Yet politicans want to stop inflation. Where the cost benefit analysis of that mentioned.
Spending more money will not solve inflation issue. To tackle inflation would crest a recession and gov won’t allow that so therefore its inflation the trade off.
Jim & Chris, I have no doubt that this government would like to hold back a bit on the spending, but the political climate and media questioning is rewarding Sinn Fein, PBP and other leftists for promising the sun, moon and stars whilst also promising to tax the life out of wealth-creators and business people. Our industrial policy here in Ireland has been an amazing success but government get absolutely no credit for the massive tax intake which bankrolls all the public spending. It is worth noting that Germany's largest utility company, RWE, a major international investor, has warned in the UK that it will reconsider its planned £15 billion investment in renewable energy if a windfall tax is imposed on its electricity generators' profits. RWE's chief executive warned that it is monitoring political decisions and regulations and that "everybody would reconsider" if things change. This is a rational response from an international business with many options for how and where it deploys its capital. Ireland's income tax base and corporate tax base are dominated by the FDI multinational sector as you have pointed out many times on the podcast. Anyone who has ever operated at a senior level in a large international business will recognise that public policy, including taxation matters, along with regulatory policy matters, are monitored when making investment decisions.
Sinn Fein and People Before Profit support windfall taxation on energy companies. For leftists such as these, the benefits of globalisation and foreign investment are assumed to be both automatic and permanent.
These two parties also want to introduce a tax on private capital itself, not just on capital gains, by means of a so-called Wealth Tax. Sinn Féin say they can put more taxes on higher earners and on private wealth and that the result will be more revenue for Ireland's exchequer. The left's assumption is that MNCs will stay and continue investing, that high earning employees are not mobile and that they are willing to remain in Ireland if Sinn Féin or People Before Profit reduce and remove their personal tax credits. It is also assumed that those earning over €140,000 will be willing to pay a brand new additional "solidarity tax" planned by Sinn Féin.
People Before Profit's Paul Murphy says that salaries should be capped at €150,000 as part of a full roll-out of socialism in this country.
In my view Ireland's hugely important foreign direct investment sector is unlikely to benignly accept Sinn Fein and People Before Profit tax policies if ever they are implemented in this country. More focus must be applied to the manifestos and rhetoric of SF, PBP and the other leftist politicians, lobbyists and academics, before it is too late.
I totally agree.
Well said.
The problem is the centre right parties in Ireland are in coalition together, and are not at risk of being outflanked by an opposition to the right. So they keep leaning left to fend off the only opposition which threatens them.
Whether left or right leaning; all parties will be populist first and foremost (some more than others!). Wealth taxes generally involve a physical payment of money that’s already sitting in your bank account - making them deeply unpopular. Nobody likes parting with money in their account that they had gotten used to.
Wealth taxes will only be supported by those imposing them on people wealthier than themselves. We saw this with LPT and water charges. And too high a threshold for that tax net means not very much tax intake, particularly as the really wealthy will avoid any wealth tax too large thrown at them through their mobility.
Taxing higher earners might go down well with the lower earners though - even though that too is misguided. We already tax high earnings a lot in Ireland, which is evident from the Gini coefficient before and after income tax. But higher tax rates won’t necessarily bring in more income. A lot of high earners are self employed, and they have other options than declaring their earnings as income (company profits retained or pension). And high earners who don’t have such options will be incentivised to take it easier - take easier lower paid jobs or reduce their hours. Laffer curve.
The centre right should be less concerned with the policies on the left, and worry more about their own competency in my view.
Fair points although I don't think that we have any centre-right parties in Ireland any longer. Given the realities of tax and welfare in Ireland (one of the most redistributive tax & welfare systems in the OECD) and the penal rates of marginal tax in this country, put in place by successive FF and FG-led governments, I don't think we could call either FG or FF centre-right. The centre-left and far-left are have become crowded spaces and in such a political environment the loudest screamer will stand out most and probably be the most successful, sadly, at the next general election. The loudest screamer is Sinn Fein - their approach, again sadly, fits perfectly into the new Ireland with all its faux rage, victimhood and populism. From an FDI perspective, if we end up with a far-left SF-led government after the next election, it will be a very bad look for Ireland. Capital is mobile, especially in an incredibly open economy.
Mark, i cannot possibly disagree with you on any of those points. The narrative about right wing governments in this country is sickening.
True. My “centre right” reference is made using the Irish political spectrum as the benchmark. I agree they wouldn’t pass for centre right in other countries, and there isn’t a proper centre right in Ireland.
If either FF or FG were to swing more to the right my guess is the other would either be forced to follow suit or face decline. Neither seem brave enough to do this and I don’t know why. My guess is they are comfortable so long as no other party outflanks them to the right, so they keep looking left.
Regardless of policy, I think there’s a perception of incompetency from them poorly executing their briefs. There are numerous examples of this, from the children hospital fiasco to the land development agency, not policy disasters but poor execution - and that’s damaging their credentials.
Sadly the government has no policy ideas to foster additional growth. They throw money at things without restrictions. Look at our National Broadband fiasco, our lack of wind, solar and wave electricity generation and the utter madness of paying huge sums to hotels for refugees… all outgoing and no feeding will dry that money tree up very quickly🥲
Yes, it’s all so short-term. I understand the need to buy votes, the politics. But it would be nice to see a bit more balance between running scared of the Shinners and strategic thinking. We have all of the former and none of the latter.
Sadly yes, and now that Marylou is making the “it will take two terms” excuse for not changing anything… we’re on a total hiding to nothing🤣
Indeed. The engines on the helicopter money have now cooled - a post pandemic solution (to a problem that didn’t exist) pedalled by certain economic commentators. Similar to how Gordon Brown famously said he abolished boom and bust only for the Great Recession to happen, many champions of MMT had thought the concept of inflation was also abolished, demanding that governments now print money unreservedly and hand it to the people they believe deserve it the most - usually people like themselves!
And now that inflation is back with a bang, all the self proclaimed Keynsians opposing austerity in the wake of the Great Recession seem to have abandoned their beloved economic philosophy in favour of the opposite - a populist raising of tax thresholds and increases in government expenditure to “fight inflation” (not fuel it of course!).
What I would have liked to have seen is very little from government and a building up of some surplus funds. Maybe strike a deal with energy companies to smooth the energy price increases out over time, providing temporary state subsidy on the basis of clawing it back through higher energy prices in the future - smoothing the hikes out. But little beyond that.
I see our finance ministers admit we can’t chase inflation while at the same time say we will increase spending by 6.5 billion. Why no one in the media even challenges this policy is amazing. Is there any public figure / media commentator that will go on tv and say only way to solve inflation is cut spending and stop printing money. Also a 9 billion (at least euro )metro on the way. Yet politicans want to stop inflation. Where the cost benefit analysis of that mentioned.