19 August, 2013
Some of the best letters in the Irish Times are short and sharp. This gem appeared the other day.
Sir, – Brendan O’Donnell (August 13th) reminds us that on entering the Dáil in 1927, Éamon de Valera dismissed the oath of allegiance as an “empty formula”.
But what if he had regarded it as such in 1922? – Yours, etc, IAN SCOTT, Silchester Park, Glenageary, Co Dublin.
Yes, indeed. Remember that the main issue which gave rise to the “split”, and from which the catastrophic civil war arose, was not partition, but the oath of allegiance. So much death and destruction might have been avoided if Éamon de Valera had not been such a slow learner.
He repeated the slow-learning trick in the 1930s when he led Ireland into a crippling and unwinnable 6-year economic war with Britain over the land annuities, only to find a face-saving solution in 1938, which basically meant that Britain got fully paid.
To have nearly destroyed the country twice in barely more than a decade takes some beating, particularly when the main perpetrator, having come to his senses late in the day, blithely does an about-face on the supposedly inviolable underlying principle.
It is indeed depressing to think that Éamon de Valera is still so highly revered in some circles.
The profile of Irish investment preferences discovered by Barclays Bank in preparing their latest issue of Wealth Insights is depressing. According to press reports, their research shows that Irish high-net-worth individuals (HNWIs) hold an amazing 55 per cent of their wealth in property, despite the collapse in property values in the past 5 years. This is a higher proportion than any other nationality. Irish HNWIs also hold 18 per cent in cash, 16 per cent in financial investments and 7 per cent in assets such as collectables. And just how much private wealth do you think is invested in enterprise or business, the sector which is arguably the most vital to our economic future? A pitiful 2 per cent.
A long legacy of under-taxation of property assets and transactions, only partly being addressed now, is an important factor in this mis-allocation of investment funds. We all continue to pay a price for past policy failings in this area.
Historic factors are often also quoted as an explanation for our obsession with property. There is a pithy phrase in the famous Vanity Fair article by Michael Lewis (“When Irish Eyes Are Crying”) about how we crashed our economy:
Irish people will tell you that, because of their sad history of dispossession, owning a home is not just a way to avoid paying rent but a mark of freedom. In their rush to freedom, the Irish built their own prisons.
That sums it up nicely.
21 June, 2013
More economic nonsense from the Society of the Irish Motor Industry, reported in the Irish Times:
The motor trade is seeking a new incentive scheme, based on trade-ins rather than scrapped cars, to boost new-car sales next year. Work is under way on a submission to the Government seeking the introduction of a “swappage scheme”, in which motorists who trade in cars more than five years old would receive rebates of the order of €2,000 on the vehicle-registration tax due on the new cars.
The aim, according to Alan Nolan director general of the Society of the Irish Motor Industry, is to kick-start new-car sales and so increase the Government’s tax income.
“The Government’s tax take from the motor sector in 2007 was close to €1.8 billion. This has slipped to about €500 million. Meanwhile, employment in the sector has fallen from 50,000 to roughly 34,000. By boosting the sale of new cars we not only reduce the average age of the fleet but increase the tax take for the Government and secure thousands of jobs,” he says.
As I have noted before, this is the siren song of special-interest groups trying to derail proper financial governance, and promote their own causes at the expense of everybody else’s, just like Bastiat’s candlestick makers.
To quote Colm McCarthy from June 2011:
A good example of the futility of this line of thinking was the car scrappage scheme, recently phased out. This scheme directly subsidised imports, doubtless saved a few jobs in car showrooms temporarily but would have had its greatest impact in France, Germany and Italy, where they make the cars. A subsidy on foreign holidays would stimulate a few extra jobs in travel agencies too, but is hardly the most promising job-creation strategy. The car scrappage scheme was a similar mistake.
Car Scrappage: Car sales have collapsed and some car dealers have gone out of business. The same has happened with €1,000 handbags, and some handbag retailers are struggling. Ireland manufactures neither cars nor handbags. The Car Scrappage Scheme will spend taxpayer money to sustain, temporarily, the retail distribution network for an imported consumer durable. Why not a Handbag Scrappage Scheme? This scheme is plain daft for Ireland. …… These ‘Something Must be Done’ schemes provide harmless entertainment for economists, fodder for the 24-hour news cycle and a playpen for lobbyists. But they contribute nothing to sustainable employment, cost the Exchequer money and hinder the necessary post-Bubble adjustment. In contrast, the Economics of Doing Nothing is that this is often the best policy, and the cheapest.
SIMI’s proposed new incentive scheme is a blatant and brazen attempt to feather their own nest at the expense of everybody else’s. The trouble is that few politicians are clued in enough to see this reality.
6 December, 2012
A letter was published in today’s (London) Financial Times from Paul Sweeney, Chief Economist with the Irish Congress of Trade Unions. Ostensibly it was an attempted rebuttal of a provocative opinion piece called “the best reform of Corporation Tax would be its abolition” which the FT had the temerity to publish last Tuesday. The writer of the article was Michael Devereux of the Oxford University Centre for Business Taxation.
If Sweeney had restricted himself to the central issue dealt with by Devereux, that would have been fine. But he goes on to say “Ireland, Luxembourg and Holland, which exploit so-called “tax competition” to reduce taxes for corporations and rich people, must be persuaded to co-operate with other states in the EU if the single market is ever to be a level playing field for all businesses…..The dividing line between “business friendly” and “the public good” was crossed years ago in the area of corporation tax. The imbalance of taxation, which weighs heavily on citizens and lightly on multinationals, has been set by the agents of multinationals, their professional advisers and, in turn, their professional bodies, taxation “institutes” and commissioned “research” ”.
It is (to put it mildly) disappointing to find ICTU trying to undermine our 12.5% Corporation Tax rate in such a manner. At a time of crisis in our national finances, some might even call it treasonable.
30 August, 2012
Incredibly, the Government has not yet decided how the looming domestic property tax (to be levied in 2013) is to be calculated. Talk about sticking one’s head in the sand. It’s not going away, you know.
One of the big issues is that a straight value-based tax on the whole property would impact severely on urban residents, particularly those in Dublin. I can imagine a heated urban-rural divide in the cabinet on this point, and that government TDs for Dublin constituencies are scared silly of the retribution that would follow on doorsteps and in the next election.
Back in 2010, I suggested that the best way to structure a self-assessed annual property tax would be to use the aggregate of two measures: (a) based on house size, at a rate of €5 per square metre plus (b) based on site value, at a rate of 0.2%; against the total calculated in this manner allow a credit for each property of €500.
This theme has been taken up by a letter-writer in today’s Irish Times. A Mr Neil McDonnell writes that “Assuming the last Central Statistics Office national average house price of €247,000, the average property tax would be €1,235 per year. Reducing the valuation element of the tax to a quarter of a per cent, and levying a tax of three to four euro per square metre of floor area, would yield roughly the same revenue, without discrimination between rural and urban housing”
This approach has the advantage of not disproportionately taxing urban dwellers while, as another letter-writer today points out, discouraging “the building of houses larger than needed by normal families at a time when we are being pressured to reduce our carbon footprints”.
My suggestion of a credit of €500 against the calculated aggregate tax reflects my feeling that a high degree of progressivity is required to make the tax politically and socially acceptable. It also recognises that people are already paying waste and water charges which are (or will be) largely fixed. The credit can always be whittled away over the course of time, yielding extra revenue.
I just wish the government would show itself capable of making a decision and getting on with it. It’s over three years since John McManus wrote the following (about the Government’s reaction to the publication of the McCarthy Report): “… despite the hard lessons of the recent past, we are engaging in the same sort of gutless dysfunction politics that got us into this mess….We still have a political class that is by and large congenitally unwilling and unable to devise and implement policy, and bizarrely doesn’t really think that such is the job of Government.”
7 June, 2012
The irritating double standard in gender portrayal in advertising continues. If an advertiser dares to portray a woman as slow-witted or lazy or as a total slob, the person responsible is liable to be horse-whipped and the newspapers and airwaves are filled with the shrieks of hyper-sensitive gender police.
But men are fair game, it seems. There is a crass advertising campaign running in Ireland at the moment which seeks to promote the services of (I think) a buy/sell website. There are different versions for radio and television, but the basic premise is that the husband is an ignorant, lazy slob and his long-suffering wife decides to sell him for whatever she can get. Here is a sample on YouTube: http://www.youtube.com/watch?v=KjNcFwXh5XI&noredirect=1
It’s always the same now. The moronic bloke can’t understand the financial services ad so the bright and lively girlfriend/wife puts him right in a thrice. The sub-literate man can’t get the tumble-drier to work (he’s probably shown holding the instruction book upside down), but the sassy young girl presses a couple of buttons and all is well, leaving Joe Six-pack scratching his head.
Reverse the genders and there would be war. Yes, women were subject to similar advertising stereotyping at one time, but this (rightly) stopped about 40 years ago. No, I am not just suffering from a sense of humour failure. The effect of such stereotyping must be insidious and highly damaging to the self-regard and the feelings of young men and boys growing up.
This double standard has been around for a long time now. In 2005, the New York Times ran a thoughtful article headlined “Men Are Becoming the Ad Target of the Gender Sneer”:
Are today’s men incompetent, bumbling idiots? Judging by portrayals in some advertising, the answer seems to be yes – much to the dismay of some men.
The portrayals began as a clever reversal of traditional gender roles in campaigns, prompted by the ire of women and feminist organizations over decades of ads using stereotyped imagery of an incompetent, bumbling housewife who needed to be told which coffee or cleanser to buy. As those images disappeared, the pendulum swung, producing campaigns portraying men in general, and husbands and fathers in particular, as objects of ridicule, pity or even scorn.…. The “man as a dope” imagery has gathered momentum over the last decade, and critics say that it has spiralled out of control. It is nearly impossible, they say, to watch commercials or read ads without seeing helpless, hapless men.
In the campaigns ….. men act like buffoons, ogling cars and women; are likened to dogs, especially in beer and pizza ads; and bungle every possible household task…..
“You can’t routinely denigrate a given segment of the population mercilessly,” said Richard Smaglick, a founder of an organization known as the Society for the Prevention of Misandry in the Media ….. “We’re trying to wake up the industry to get business leaders to recognize that this isn’t the way to build relationships with their customers.”
Some critics label the campaigns a reaction to the political correctness that makes it no longer permissible to use stereotypes of women.
Paul Nathanson, who wrote “Spreading Misandry: The Teaching of Contempt for Men in Popular Culture,” with Katherine K. Young, said the issue was larger than just what was presented in advertising. “Negative imagery in advertising is part of negative imagery in popular culture in general,” Dr. Nathanson said. “If you add up the way men are presented in popular culture, then it is a problem because the message is that that’s what men are.”
Then there are the longer-term effects, Dr. Nathanson said, asking, “How do boys form a healthy identity?” if they are constantly exposed to anti-male stereotypes.
Enough already! Men and women are pretty much equally useless at most things, so let’s see advertising that reflects a fair balance of stupidity!