Taxed off the face of the earth indeed. Hilarious. If it wasn’t so frightening. Because what Jim Power seems to call for is the same version of laissez faire capitalism / light-touch regulation / low-tax economy dogma that got Ireland into the mess it’s now in. Correct me if I’m wrong – after all, given the spirit of the election debate up to now, I wouldn’t be surprised if public sector workers are blamed for it – but exactly which class of society was it that ran up the massive debts, lent out the money to the developers, or borrowed the vast sums for their clever plans?
So the orthodoxy lives on. And it looks like folks are going to vote for more of it. The main parties are all committed to repaying the bank debt, albeit whilst renegotiating the bailout as best they can. Let’s not beat about the bush, though: a class of a few hundred or so entrepreneurs can eat and drink and buy cars and houses and holidays and enjoy fat bonuses for making big profits that, oops!, suddenly turn into losses (almost €18bn at Anglo Irish, which we are expected to pay) that they pass on to the citizenry. Privatized profits, socialized losses. Laissez faire capitalism / light-touch regulation / low-tax economy dogma. And what does the party tipped to lead the next government want? More of the same. In its manifesto [in which economic/economy is mentioned 98 times and business is mentioned 89 times while equality/fairness/justice are mentioned just 7 times], Fine Gael says it wants to ‘make Ireland, as it was in the late 1990s, one of the best countries in the world for doing business’. Scary. Wasn’t Ireland in the late 1990s just an earlier, pre-crisis version of the monster that eventually emerged? A laissez faire capitalism / light-touch regulation / low-tax economy dogma regime built on enabling corporate tax avoidance, befriending footloose financiers, and scamming the neighbours?
Ah but sure the new government will have a plan to cut public sector jobs (and pay?). And it will aim to lower taxes, as if it’s high-tax economies that cause all the problems. But €100bn is €100bn. Someone will have to pay. Who, then? Answer: We’re all going to pay. Unless we leave. Certainly that’s the plan for many. Emigration, escape, call it what you will. Jumping ship might be an appropriate term.
Ireland after NAMA 
February 21, 2011 at 12:38 pm
I’ve no problem with the idea that banks making such large profits should be paying a basic rate considerably higher then 1%. And I doubt most folks like Jim Power do either (though I’ll let him speak for himself)
Where I suggest the idea that the entrepreneur is being squeezed comes from is that the small scale business, say employing one-ten employees and growing or not growing are being hit badly (just as PAYE workers and State employees are).
Those small businesses are pretty essential to any economy and the Irish economy is no different. If we make it harder and harder to run and profit from a small business then people will decide that it isn’t worth the hassle costing the economy jobs and the wider society tax revenues and welfare payments.
It’s easy, and I’d argue correct, to point to the excesses of the top but we shouldn’t be ignoring that the same squeeze that impacts every worker in Ireland is impacting small business owners and start ups in a terrible was too and that will have a negative impact on future employment and growth!
Eoin
February 21, 2011 at 1:49 pm
My understanding of the term entrepreneur is someone who is in the process of building a business up from scratch. Now these may not be the people who Mr. Power was referring to, in which case his terminology is possibly questionable (or maybe mine is?). Still, arguably what the country needs is plenty of my definition of an entrepreneur, and undoubtedly fewer of the more privileged variety you allude to in the post. Perhaps an agreed definition is called for?
February 21, 2011 at 3:10 pm
Your analysis of Ireland’s problems is amazingly one-dimensional. Let’s leave aside for the moment arguments about whether the derogation of responsibility for regulating systemic markets onto the markets themselves (e.g. banks) is consistent with libertarian economics (I would argue it is no way consistent). The more obvious problem with your analysis is that for every €1 that will be added on to Ireland’s national debt through an idiotic (and far from right-wing) banking guarantee, at least €2 will be added via the deficit. With government spending in Ireland relative to national income among the highest in the EU, there is very little “right-wing” about Ireland’s most serious economic problems.
The banking debt may have sent us over the precipice, certainly, but spending commitments brought us to the edge.
February 21, 2011 at 4:42 pm
In my view an entrepreneur is somebody who takes risks, creates jobs, creates economic activity and ultimately generates the revenues that will pay for social services. If we do not encourage such people to do these things,then we will not be in a position to fund social services. I do not regard, and despite what Alistair Fraser implied,I never suggested that bankers are entrepreneurs.The role of a bank is to facilitate economic activity through acting as an intermediary – they should not be seen as or treated as wealth creators. I don’t care how much tax bankers pay, but I certainly care about how much tax real entrepreneurs pay. The quality of regulation should be the key issue and not the quantity. Proper regulation is obviously essential, and that clearly has been a failure of the past decade. I never mentioned the minimum wage issue in the piece Mr Fraiser is referring to, but he seems more than happy to attribute thoughts to me that I never had. An economy without entrepreneurs would not function in my view.
February 23, 2011 at 3:36 pm
Not all entrepreneurs are in the 100K+ bracket. In fact I’m willing to bet that very few of them are. Most are struggling to survive, or even to get started in the current climate. They are not being helped by banks who won’t lend – or ‘facilitate economic activity through acting as an intermediary’ to use your phrase. The current strategy to ‘save’ these banks does not have that objective in mind either.
February 21, 2011 at 7:42 pm
Hi Jim,
I’m sorry for implying that you commented on the cut in the minimum wage…not intended. All I was going on was what you were quoted as saying, which as I said, alarmed me. After all, inequality has risen in the last twenty or so years (in Ireland and more generally) and if I’m not wrong then ‘entrepreneurs’ (bankers and ‘developers’ are included in my definition) have done very nicely out of taxation changes that have contributed to that rising inequality. It hardly seems that entrepreneurs are being taxed off the face of the earth. And the Barclays issue just seemed to sum that up for me.
As for whether we need entrepreneurs – and whether we need to ‘encourage’ them – I have to express reservations. I’m in favour of a democratic economy, which in my view needn’t have the sorts of entrepreneurs you’re thinking of. An economy built on co-ops, for example, can still be globally competitive, dynamic, etc. The economy we’ve had and the one the new government seems to want to pursue will just lurch from crisis to crisis.. and in my view, that’ll happen regardless of the quality of regulation.
Alistair
February 21, 2011 at 11:49 pm
@RonanL
The more obvious problem with your analysis is that for every €1 that will be added on to Ireland’s national debt through an idiotic (and far from right-wing) banking guarantee, at least €2 will be added via the deficit.
That is crazy talk Ronan, and I do not mean crazy in an ironic sense.
There is nothing more right wing than siding with the wealthy and protecting private capital by reallocating resources from the poor to the rich. NAMA and the bank guarantee had as their first and last priority protecting the value of assets and the Euro. If the bailout had been entirely funded by slashing social provisions and services rather than by borrowing and taxes the right would have been absolutely comfortable with it.
The austerity programs the right yearn for will of course leave the rich both comparatively and absolutely better off relative to the poor.
As for the deficit do you think perhaps that there are benefits to state spending on the welfare of the people that might be absent from spending on the health of the market? Benefits both in terms of human happiness and progress? Have you lost the power to differentiate between them? Is it a Hayekian thing?
Its a disconcerting experience to see how closely faith in the market mirrors religious faith – both in its resistance to objective reality (Eugene Fama claiming that the bubble/crash somehow supported the EMH) and in how much suffering they are willing to inflict on non believers.