Sunday, April 3, 2011

Ireland:The Dunphy Show- Economist Marc Coleman gets it horribly wrong AGAIN (3/3/2011)

Today's Dunphy Show was compered by Ger Colleran. On the panel were Leo Varadkar, Marc Coleman,Constantin Gurdgiev and Jennifer O'Connor.
Jennifer O'Connor made her points in a measured manner. However Marc Coleman and Constantin Gurdgiev adopted a hectoring, lecturing, "know all" tone.
Marc Coleman presumed to have all the answers. Unfortunately for him he got caught out BADLY in some of his pronouncements.
He argued for a referendum on the bailout on the basis that it was necessary to educate German taxpayers in relation to Ireland's problems. He then proceeded to state that Angela Merkel’s CDU lost Baden-Wuerttemberg in the state elections last Sunday mainly because of German voters perceptions on Ireland. This is pure and utter nonsense. Leo Varadkar CORRECTLY pointed out that the Greens made huge gains because of Merkel’s nuclear power policy. Coleman continued to bluff his way through the argument. Marc Coleman should read this article from the Washington Post on the Baden-Wuerttemberg elections and keep up to date on European politics.
BERLIN — Chancellor Angela Merkel pledged Monday to press ahead with a review of nuclear power’s future in Germany after her coalition suffered a “very painful” defeat in a weekend state election dominated by Japan’s nuclear crisis...
The nuclear issue determined the outcome. Period. So Mark learn to admit that you can be wrong. A little humble pie is in order.

Coleman also argued that there was a relatively easy way of cutting €12 billion from public expenditure. Once more he is talking through his hat.
He argued for cuts in public sector pay on those earning over the average
industrial wage. He proceeded to claim that this would insulate teachers nurses et al. Once more he displayed an astounding ignorance. Most teachers and nurses earn over the average industrial wage. Leo Varadkar pointed this out to him. Coleman failed to outline where the 12 billion in cuts would come from. Oh of course he spoke about the salaries of Irish professors being far in excess of those in other European countries. Cutting their salaries to European levels would at best save a couple of MILLION euros. This is a far remove from 12 BILLION euro.
The approach being advanced by Coleman would further crash the economy.
When challenged about the effects such cuts would have in relation to public sector mortgage holders Coleman’s only retort was to talk about the suffering of the private sector. He DID NOT address the fact that several hundred thousand mortgage holders (public servants and public servants married to those in the private sector) would default.
Coleman needs to wake up. Many public servants are married to people in the private sector.
In the discussion on the Croke Park deal one of panellists was heard to utter "bring it on" in relation to public sector strikes- if the Croke Park deal were torn up unilaterally. We need strikes like a hole in the head. Varadkar pointed this out.
Coleman should listen to a podcast of this programme. His comments on ESB workers were over the top. I will not dignify them by repeating them here. He should apologise.

A word of advice for Coleman: populist sound bytes will not solve the economic crisis.
Also I want to see a DETAILED plan from Coleman spelling out EXACTLY where the 12 billion in public expenditure cuts would come. Marc you FAILED ABYSMALLY to spell it out this morning. It is time for you to "put up or shut up"


Marc said...

Dear John,

These are not "populist" proposals but have been costed and checked by three senior economists and praised by Constantin Gurdgiev. Here is the link to an overview of the plan. A more detailed version is available.

hAny questions I'm happy to answer them on 01-6599457

Marc Coleman

John Barry said...

Thanks Marc for replying
I was very unhappy with some of your comments today.
I see problems with SOME of your proposals on a FIRST GLANCE. You state:
(1)Many of the McCarthy proposals are wortwhile but cannot be implemented immediately. Local government reform is a more difficult task than McCarthy imagines. I agree that it is a sine qua non.

Marc believes "information technology should be used to develop a smart, centralised system of welfare means testing so that future benefits are based on real need rather than a sense of entitlement. That way welfare cuts faced by the weak can be reversed".
That proposal will not work instantly.It could take several years. So will not make IMMEDIATE savings of 700 million

(2)■PAY BENCHMARKING: 620 million by benchmarking public pay over €35.5k to EU norms – as distinct from much lower British norms – fairness can be achieved in the public private pay differential without hurting front line workers.
All fine in theory. No explanation of the mechanism to achieve this.
Wont work: This would further cut middle income spending power and increase mortgage default. So no net 620 million will be saved by the state. It will hit front line workers such as teachers and nurses and further hit the banks as more people default on mortgages.

(3)SAVINGS 950 million from means testing free University fees. I have no problem with that. But it will not save 950 million net. You must take out the cost of means testing. You may also face problems where families have broken up.

(4)PENSION CUTS: 380 million from cuts public pension incomes that exceed the average industrial wage.
Major difficulty. May face legal challenge. Public servants paid superannuation on certain conditions. It will also cut spending power in the economy and hit businesses. Government loses tax revenue.

(5)RESTRUCTURING INCOME TAX BANDS & CREDITS: 1,500 million from fair reform of income tax system.
Where is the detail on the mechanism to achieve this?

I have no problem with that. I have no doubt that the government will follow a similar approach

(7) 2,100 million from a programme privatisation of semi state companies.
You have not spelled out what you would privatise. The ESB most certainly should not be privatised. The privatisation of Eircom was a disaster. Owners of privatised companies must recoup their investment. This will be done by higher charges.

(8)800 million from local authority taxes – for services provided rather than on a tax on the family home
What services are you speaking about? Bin charges are alredy quite high. Taxes are taxes whether levied on incomes or services or property.
I have no problem with water charges levied after a generous free allowance.

When I have more time I will look in more detail at your ideas.

rainywalker said...

What is needed now is more action from leaders who really know what they are doing. Talk, smoke and mirrors are fine during a magic show. But this is real life and the subterfuge is just making the poor and average family that worse off.

John Barry said...

The incoming government has inherited an economy with a budget deficit of €19 billion+ a burst banking system +an unemployment crisis++++. It will have its work cut out for it. The EU/IMF are now calling the shots.
Hopefully its jobs budget due in about 80 days time can come up with some original ideas. However any spending in this will have to be balanced by cuts elsewhere to satisfy the IMF/EU.