Calling bullshit on the negotiations narratives

I’ve been hearing talk that another election would cost us €40 million euros, everyone is saying it. It came from Noonan so it must be true (leaving aside that he is not the expenditure minister) and that the caretaker government of the moment were perfectly capable and comfortable enough to pluck numbers out of their arses whenever it was convenient during the last Dáil term.

But even if it were true, and for the purpose of this piece I’ll accept Noonan’s word on face value, what does this figure mean??

Whatever way I look at it, it means fuck all, this is just foreplay so that party partisans can accommodate the unthinkable.
Don’t fall for it.

In other news the government is continuing to overspend because their economic projections were padded with bullshit. Caretaker ministers have the power, but lack the interest to rein them in. This reining in won’t happen until a new government is formed.

So at least a couple of hundred million has wasted since the last Dáil was dissolved, compounding this, tax receipts are running €700 million below expectations for the first quarter.

As things stand it could easily be July before we have a functioning government, by which stage billions will have been pissed away.

€40 million only sounds like big money to you or I. But it’s less than a tenth of one percent of annual government spending.

That’s the kind of money a limbo government loses in a week.

We’ve to be careful of the stories that are playing out, the game of the moment has two actors and three audiences, the players are FF and FG, the audiences are the partisans of both parties, and then also the poor bedraggled electorate who possibly have to vote for these guys in the future.

The party leaderships are in the middle of a process where each side has to convince their partisans that they’ve no other option but to enter goverernment with the old enemy.

The secondary game is to convince the “possibles” that if the talks are not working it is because of that other shower of bastards.

The party leaderships are going to string this out until the partisans accept that there is no alternative, and this stretching out process is way more expensive than another election would be.

It may be that having a second election (soon) is cheaper than letting FF/FG fumble around in the dark for months, thus having a second election (soon) may be the least worst option – the decision to call a second election (if necessary) ought not be impeded if the alternative is just a psycho-drama acted out for the benefit of the party faithfuls.

What can we do? We can make the story about how much this fucking around is costing, and ignore the PR speak which is targeting the partisans (€40m etc.) and do our best to decode what is actually happening

It’s one thing for us to be talking about €40m elections, but if we talk about instead the €30 million a week it is costing us because back benchers from both parties are more concerned about what happened in Ballyseedy, and Beál na Bláth back in 1922 than they are in what is happening in those places today.

Call them out on their bullshit.

They need to get into government and start governing, there is nothing between the two parties, in terms of policies, neither is there in terms of seats.

Both of them need to realise that a unity government is the only viable government that is available to us for probably the next 8+ years, and that their relationship is now akin to the German CDU/CSU.

Maybe it’ll take another election to get there, I don’t know, but indulging in the fiction that they are rolling out at them moment will leave their party honour intact. Fuck that. We’ll end up here again in another 18 months (the longest any prospective government is likely to last anyway).

Face reality or GTFO, those are the only options that we should leave open to the members of the Oireachtas.

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Free markets and the sovereignty of the human spirit

Having recently pissed off the members of the Institute of Economic Affairs (IEA) and their peers in the Adam Smith Institute and of course those at the Freedom Organisation for the Right to Enjoy Smoking Tobacco (FOREST) who are an tobacco industry funded sock puppet (all of whom seem to be a little  thin skinned )

I’ve been forced to clarify, for myself, my views on free markets.

Simon Clark and other trolls tend to sail under the flag of free markets, as if free markets were an end, in and of themselves.

This is a bizarre contention for organisations which are primarily funded by companies, firms that are themselves mechanisms for avoiding the costs associated with utilising the marketplace. As Coase argued , firms exist because they circumvent the market: That is their raison d’être. Companies are tools which we use to in order to escape the volatility of prices on the open market.

By creating organisations which are sustained over long periods of time costs such as that of discovering what the present market price of a given factor of production or say, temporary collapses in supply for some other factor of production the company exchanges the organisational costs of the enterprise for those of the marketplace. Where firms can produce their product for less that or equal to the market price, the firm produces profit for its owners, when it can’t, then it ceases to have a function and, ideally, is liquidated.

Firms therefore compete to have the most efficient internal structures as large numbers of firms compete (in an effort to become internally ever more efficient, and therefore profitable) where they maintain the supply of given factors of production the increase supply, thus driving down their product’s price where there is no excess demand. In so doing, the marketplace as a whole becomes more efficient in its use of the factors of production, and precisely because the marketplace has been evaded.

Free markets are not important simply because the exist, they are important because they allow our individual preferences to be expressed via the price mechanism. When other actors invade the marketplace and affect the market prices of available products, they corrupt the information associated with the price, artificial reductions in supply (say from import limits, licences, or monopolies) lead to higher prices which distorts other prices as purchases are diverted away from the ideal product, and towards other alternative products that do not match our individual preferences as closely, therefore overall utility declines from the ideal.

Tools, such as free markets, can easily be mishandled, and a tool mishandled quickly becomes a weapon. Where factors of production are not priced correctly, say if resources are held in common, and therefore accessed for free; or where freedom of occupation is repressed, this will depress the wage price of labour. Then, commonly held assets are despoiled, or liberty is crushed under serfdom.

Those who profit from the status quo (by transferring the costs of production onto others, via some non-market method like the adverse health effects which can result from pollution) have always turned the argument towards “free markets”. Knowing that a correct price would reduce their profits they rationally utilise their excess profits to maintain the circumstances which so benefit them. Therein we find that some of those who would be free marketeers are merely rent-seekers that clothe themselves in the vestments of liberty to continue current oppressions.

And so we return to the game that Clarke et al. in FOREST are playing when they rationally promote their self-interest under the cloak of free markets:

They undermine the purpose of free markets (as a tool to establish what set of relative prices maximise total utility) by manipulating the individual preferences of consumers. They do this through the mechanism of addiction; addiction which they claim, like Jardine and Matheson before them, doesn’t exist:

Addiction is the fracture point of their paradigm, either we are all rational, and therefore those that smoke do so of their own choosing, or we are acting irrationally in some fashion. Addiction is not a rational act, addiction is a form of chemical duress, those under addiction are compelled to consume the chemicals their brain has become accustomed to.

Different drugs have different powers of addiction; caffeine is addictive, but only weakly so. Furthermore, caffeine hurts us only in our pockets, we do not enter into caffeine thraldom, people do not sell their children for caffeine as they do for alcohol and opiates. Nicotine does not have alcohol’s power to bludgeon consciousness into submission, neither does it have opium’s powers of withdrawal, but for a large cohort it is strongly addictive. In the  Eurobarometer report that Chris Snowdon  is so fond of cherry-picking from we find that the majority of smokers have tried quitting, and have failed. A third of smokers have tried to quit only in the last year. Of the 12,700 respondents who had ever smoked 2,600 had never tried to quit (predominantly younger and poorer people) 4,400 had tried to quit and failed; 5,700 had quit and were still off tobacco (predominantly older or wealthier people).

The arithmetic is simple, recruit as many people to smoking as is possible, a fifth of those that pick up won’t ever bother to stop, a third will try to quit, but you’ll control them regardless of their will, and the balance you’ll lose. The trick is to get them when they are young and impressionable, and there, tobacco companies excel themselves, 70% of people who have ever smoked started before the age of 18. It’s a good thing for the tobacco industry that those who initiate smoking between 14 and 16 are 1.6 times more likely to become dependent on nicotine than those who start later in life.

Something that the apologists blissfully ignore with their line that children know the risks they are taking when they pick up tobacco:

Whether they are rational and competent to make a decision with such long-term effects is irrelevant to them.

In willfully, actively,  addicting children to tobacco the industry undermines the most basic tenet of the market economy: That of consumer sovereignty. In the absence of consumer sovereignty there is no consumer power shaping that the market requires and the edifice of the market economy crumbles, and with it the purpose of free markets.

This is where the involvement of the IEA is so peculiar, their support of the tobacco industry is not internally consistent with their philosophy of freedom of action, it is something which has been grandfathered into the present by the key role that the inveterate smoker Ralph Harris, Baron Harris of High Cross played in the formation of the IEA, and later as the chairman of FOREST, a position that he held until is death in 2006 by way of an aortic aneurysm (a condition seriously impaired by smoking) and irony which has ricocheted of the pig-iron prejudice of those at FOREST.

 

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November 7, 2013 · 7:37 pm

Storytelling and the dangers of myth making in politics

It is always tempting to look back upon an event and form an egocentric view that those things that one did, or did not, do were crucial to the end result. Political parties have PhD’s in this type of post hoc confabulation. Take for example the Fianna Fáil response to the 2004 local election. They were disastrous for the party, or at least for the locally elected members of the party. The internal reaction to this defeat was to blame the councillors (and would-be councillors) for their failure to get elected. My recollection at the time was that the lack of support for the councillors was actually a manifestation of an unhappiness with the actions of the central party after the 2002 general election. Those within the party HQ quickly determined that the principal cause of the party’s poor results in the election was the failure of the local councillors to listen to the advice of the professionals in HQ. The party officials argued that strong party branding led to the party’s success in the 2002 general, but that the failure to maintain this brand cohesion in the 2005 local elections. The greatest aspect of this story for the HQers was its unfalsifiability. The result was what it was because HQ didn’t have enough power “Give us more power over the party,” they said “and we’ll give you the results you want.” 
 
It pays to be wary of such self-serving storytelling, because they are the fonts of hubris.
 
I wonder if Fine Gael has been supping a little too much from this cup of hubris. 
 
My sense of the last two general elections was this, that Fianna Fail & Co. won the 2007 election because Enda Kenny failed to present himself as a credible leader, and that in 2011 Fianna Fáil lost the general election because they destroyed the economy. 
 
It is clear, from the academic literature, that there is no prescribed route to winning elections. Every election has so many attendant variables that every election is unique. Across countries there are so many cultural factors to be considered and factored in that the field of political science is merely a hodge-podge of just-so stories, where South American states are looked at from one perspective, western European states are viewed through another prism, Post-Soviet states are understood by looking upon them in yet another way. Within states elections happen so infrequently and against a background of massive social and economic transformations that it is impossible to discover and pattern to electoral success.
 
Professional political campaigners are as sailors at sea, who think that their actions will influence the wind. 
 
The founder of the Behaviourist school of Psychological thought, Professor Skinner, conducted a wonderful experiment with pigeons. He would submit his pigeons to a range of stimuli, flashing lights, noises, buttons that would react when they were pecked at, and then feed the pigeons at random. The pigeons came to associate (and if you are not a behaviourist, possibly believe) that their actions influenced the likelihood of them being fed. They spontaneously developed complex rituals with the aim of receiving a food reward. They searched for patterns where there were none, and found them. This is a process which we are all vulnerable to, and leads to an obvious pathway towards superstition, if not organised religion, but that is a digression for another day.
 
Within this context so, as someone who has participated in many electoral campaigns to date, I’ve come to the opinion that elections (and referendums) are lost by those in power through some fuck up or other. The sailors as it were, cannot direct the wind, but they can sink the ship.
 
I suspect that when the Fine Gael insiders looked back upon the 2011 election, they came up with a story along the lines of: The country was lacking real leadership (after the mis-rule of one Taoiseach who was a mere manager, and another who was a mere drunk). Enda Kenny, as a leader, contrasted sharply with the hucksterism of Fianna Fáil leaders. So Enda Kenny won the election because he showed leadership.” This is a convenient myth, for the party insiders, because it allows them to take credit for Enda’s successes, as it was the backbenchers, and PR flaks that taught Enda (the back-country, mediocre, longest-sitting-TD that he is) to be leaderly. 
 
All his actions seem to develop from this sense of being a leader, from his incessant extemporising at the cabinet table to his mis-handling of the Fine Gael rebels of conscience, he seems to have come to the opinion that being Leader (or Taoiseach, as Gaeilge) means never being wrong. 
 
There are so many things wrong with this sentiment, that I doubt Dear Leader will ever manage to disentangle them. 

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Debt fictions, and blinding optimism

We need to kill this fiction that the debt that Ireland is on the hook for is sustainable. It is not, the only people who say that it is are the liars, the credulous, or the misinformed.

Last year, at the DEW Annual Policy conference, the chairman of the national fiscal advisory John McHale said that debt on Ireland’s books would top out at 120.3% He was wrong. Today the Debt is at 123%.

Prof McHale said that, all else being equal, there was a 60% chance that Ireland could pay off these debts (and optimistically assumed that good outcomes were at least as likely as bad outcomes, when making this projection).

A year on and this weekend sees another DEW Anual policy conference. Things are more fucked than they were, the policy makers are still thinking that hope will see us through, and we are more indebted than ever. The country is covered in “Green Jersey” bullshit once again, the government is hoping for 2% GDP growth, and this is despite the undemining of the GDP statistic by the accounting tranactions of the multinationals that have benefitted so much from our tax-haven loopholes.

In an era when the Gov’t is coming under an OECD level of pressure (i.e. the US is paying the OECD) to root out the gamification of the international tax environment, in the developed world. Making Noonan promise that Apple won’t be allowed to have stateless companies that allegedly comply with international treaties on taxation. When Pfizer can’t get a lift out of the Viagra patents, when Lipitor has dropped off patent too, when the HSE will have to reduce spending by almost 900million (they are  booking last years overspend this year, and will carry up to 200million in 2013 overspending into next years spend, up from 140million last year), when they have already booked 250 million in savings through the Haddington Road. When all this, and more, is going on, the government hope that the GDP will increase.

It might even do so. But even if it does, the country is growing more slowly than the debts it has to carry, and our debt flies along its unsustainable tragectory.

Making this worse, the country will have to refinance €80 Billion in debt by the end of the decade, and will have to borrow at least another €30 billion just to keep the lights on in the meantime.

And all of this fails to take notice of the 100,000 households who have had to give up paying their mortgages, the costs associated with settling this problem, the growing hole in the banks balance sheets as a result of missed payments. Then there is the ever extending hole in the Banks balance sheets, where the collateral for their mortgage loans (the houses) are still over valued (by about €40 Billion, at today’s prices).

A sink hole that will drag in so many more Billions if when the british banks finally decide to cut their losses, take possesion of all the houses of those who are more than 2 years behind in their mortgage payments, and ultimately dump them on the market.

These are things which are not talked about in Leinster House, because facing our shared reality is more uncomfortable than hoping that diminishing chance of everything working out alright in the end. They know that all this budget bullshit and debt drama, is a hail mary punt; that it is an unlikely outcome, and one that can only ever occur if, somehow, the rest of the world sorts out their own problems but somehow continues to believe our lies.

 

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Dorris and #Fannygate

It is being argued that David Norris’s comments regarding regarding Regina Doherty were sexist and offensive.
Insofar as Regina was offended then yes they were offensive, and many found then to be sexist (my own bias is that I believe that rather than being misogynistic Dorris, alight with the fire of his witticism, couldn’t resist the pun).
Whether Regina or others offended or not is, I believe, irrelevant. It is dangerous to protect people from offence; regardless of how banal a statement is there are seven billion people in the world, and seven billion interpretations of the statement, and seven billion ways to find offence, therefore somebody somewhere will find offence regardless of what is said. To limit the ability to speak to only those concepts which are inoffensive is to preclude public discourse on any issue.
People have argued that Dorris was unprofessional in his behaviour, which is correct, and then continue that our politicians ought be professional in their behaviour; this is dangerous because it strictly limits the political class to professionals, or at least polite society – those who can be relied upon to behave in socially appropriate ways – and that is a recipe for social stagnation as counter-cultural constituencies are de facto excluded.
I’ve a problem with the whole “professionalism” argument when it comes to politicians, not least because so many would fall short of that standard. Politicians are responsible to their electorate and it is to their electorate that they should answer (I know this is weak when we consider the Seanad, but David is at least elected by a constituency – however I believe that it does hold more generally, and more strongly, in the wider political population)
There is a view, propounded by Ceann Comhairle Sean Barrett, that there should be certain social standards that public representatives should meet (like men having to wear suits and ties), should you fall below this bar your access to the house (your ability to represent the people who you were elected to represent is thus restricted)
letting any body determine appropriateness in politicians will cause the process to become increasingly less democratic because the ultimate arbiter of appropriateness ought only be the people and any restriction on that would be a restriction on the will of the people.
letting political correctness determine what is taboo will only hand that authority to those people who yell loudest in the public sphere because what is correct is determined by contesting voices in the public sphere excluding some people or topics from that because they are wrong, immoral, inappropriate, or whatever epithet you want to use is a mechanism for continuing the status quo of whatever hegemony determines political correctness. Freedom to speak is meaningless unless we offer it to people we vehemently disagree with. But when we let assholes speak, then they can’t hide that they are assholes, or fanny’s for that matter too.
There is an important distinction between something being wrong to say, and it being forbidden say something which is wrong.
The code for parliamentary language excludes describing another as a brat, buffoon, chancer, communist, corner boy, coward, fascist, fatty, gurrier, guttersnipe, hypocrite, rat, scumbag, scurrilous speaker or yahoo; or to insinuate that a TD is lying or drunk; or has violated the secrets of cabinet, or doctored an official report – use of the term handbagging is precluded as well
in this government members have lied, were drunk, and doctored official reports (though apparently no one is allowed talk about it)
Parliament only works because people have the opportunity to debate freely. When people can speak freely, and speak truly, they reveal themselves sunlight is the best disinfectant because arseholes become known where there are no shadows in which to hide.
Countering this position is the discussion on being tolerant of intolerance (Rawl’s paradox of tolerance). Do we allow hateful people freedom of expression? I think we must.
If we do not accept that harm is caused by people taking offence, then there is no harm in intolerant speech. Harm is, I believe, caused by action. We, the people, should alway limit harm to other, and take responsibility to prevent harm occurring wherever we encounter it but protecting people from hearing hard words only harms ourselves.

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WTF is happening with Labour

Martin Ferris has is as “[Gilmore] has destroyed every party he was ever in, and he’ll destroy this one too”

The man who recruited Gilmore into the CPI believes that he is “a weak man, a coward” so I’d expect him to be tremendously risk adverse, he’ll take the path that requires him to take no action.
Obviously the younger generation are going to get raped in the next election, but even if the party splits (which is what Keaveney’s move looks to be aiming at) they only need nine td’s to maintain a majority
I’d say that they could hold onto
Gilmore            57
Quinn               66
Howlin              56
Rabbitte            63
Jan O’Sullivan    61
Joe Costello      67
Eric Byrne         65
Emmet Stagg    68
Sean Kenny      70
Jack Wall         67
Alex White       54
without difficulty
Then there is also the Juniors Sherlock and Lynch, who might just stick around if the Govt ain’t going to fall
Eamon Maloney is a hand picked coward he’ll stick with Rabbitte, this job is a reward for years of good service
Kevin Humphreys could go either way, but seems a long term party loyalist
Lyons could go either way, but he shares a constituency with Shorthall so he doesn’t have much to gain from jumping into a lefty-Labour life raft
Spring, Tuffy,Conway, MacNamara, Dowds, McCarthy, Burton, Phelan, Ó Riordáin, Nolan, Conaghan could easily regroup with
Penrose, Shortall, Broughan, Nulty, and Keavaney
A couple would have to shift constituencies, if a deal could be done there, you could see Lyons jump ship, and maybe Humphreys too
They might also go for a wresting of the party from Gilmore strategy, but that could be messier than a defection
you have the old bull and the young bull battling for supremacy, but I suspect that the internal Labour party rules will be fierce convoluted, and will delay a usurpation for some great period of time.
More immediately the problem will be the seanad.
Gilmore can count on Higgins and Hayden,
Whelan, Landy, Kelly and Heffernan are looking very shaky
but if the bad piss from the Girls vs Boys spat continues to have an effect that could shift Bacik and O’Keefe away from the rebels
so there could be a hilarious situation where those girls vote for what is perceived to be anti-female measure
Marie Moloney and Mary Moran have been fierce friendly with Shorthall of late.
in any respect, you’ll have the quislings in the Endapendents voting with the Govt (tough call for JvT on which way she swings there)
2nd stage is on Tuesday, committee on Wednesday there are plenty of murmerrings that the govt no longer has control of the seanad
fun and games

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Thoughts on the early opening of pension pots in the 2013 Budget

 

[From your perspective] Allowing members of the public to access pension savings is a step in the right direction. It is the “Additional Voluntary Contributions” part of the pension pot which will become accessible. 30% of it’s value may be withdrawn (and then taxed).
If an employer requires that an employee contribute 5% of their income to a company pension plan, then it is the excess over this which an employee may have voluntarily put aside for their retirement that will be accessible.
It is perhaps unsurprising that a pension product so beloved by the civil service is the one which has become accessible.
People who are self-employed cannot have an Additional Voluntary Contribution pension pot.
There are two types of people who can use such a scheme. Those in possession of an Additional Voluntary Contribution pension pot and who are still in employment, and those who are no longer still in employment.
For the first set of people, they are likely to be unable to use these released monies as an investment to increase their income in the short to medium term (as they are employees) so it is likely that should they choose to use such a scheme, they will use the scheme to de-leverage (pay down debts).

Used wisely, this should allow them to increase their disposable income, at the cost of their long term earnings. This is not an unreasonable position for some to take, as the purpose of a pension is to reduce income variance across time. If they realise now that they are not as rich as they thought that they were going to be, then an inter-temporal transfer could be wise (particularly if they are paying down expensive debt).

As these people are currently in employment then the monies recouped are likely to be taxed at the effective marginal rate 41% income tax + 6.6% Pay Related Social Insurance + 7% Universal Social Charge.
For an employed person, 54.6% of monies withdrawn from an Additional Voluntary Contribution pension pot will be transferred to the Exchequer in recouped taxes.
The other set of people who may access such a pot are people who are now unemployed, and have previously paid into an Additional Voluntary Contribution pension pot.

For these it’ll make a lot more sense as they will be operating off a primary income of nil so they can probably withdraw enough to have a small basic wage for a year or two without incurring too much of a tax liability.

For former employees hoping to be entrepreneurial this may be of benefit.

There may be a missed opportunity in not also including the self-employed in this scheme. De-leveraging (for those with incomes) may  have some benefit for wider economy if those who  use it pay down expensive debt and then spend their increased disposable income.

As the Government seems to be engaging in financial repression (by increasing taxes on savings – increased Deposit Interest Retention Tax – Applying Pay Related Social Insurance to Deposits, along with last years Universal Social Charge) this might force people to spend in the present, rather than save for future rainy days.

However looking to the past suggests that people would rather fill their mattresses with cash instead.
For those without an income (including those who were self-employed) who are looking for capital for a fresh start, then this scheme could be very useful.

If however you are a deeply indebted person, then the fear is that the banks will simply use your pension pot as an extra asset to squeeze on the path towards bankruptcy.

Such capital would be used to pay down foreign debt (of the banks) the individuals long term income will decline, while short-medium income will remain unchanged, thus there is no net benefit to the economy (or even the exchequer, as someone on that path will probably only pay Universal Social Charge on the sum they redeem from their pension pot).

This seems to be the reason why the scheme is not being extended further.

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