New party needed for PRIVATE sector efficiency and reform?

[feargach]

US multinationals make very high returns on their investments here,the no 1 indicator of efficiency, according to the IDA. The fact that Irish people in US multinationals work shorter hours does not indicate they are less efficient. The US workaholic culture is unhealthy psychologically and diminishes social and family life. If the multinationals were dissatisfied here,they have many choices for relocation in English bilingual countries like Holland,Sweden,Germany etc,so we must be highly competitive to attract such disproportionately huge inward investment.

High property prices resulted from the following: ultra low interest rates which caused property speculation all over Europe;rapid Celtic Tiger economic growth and immigration; the failure of Dublin's stupid councils to plan for high density development; and the legalistic planning system that allows kneejerk appeals by NIMBYs to delays big projects for about five years or more.

Retailing in Ireland tends to compete on convenience of location rather than price,which suits people who don't own cars and helps the tourist trade.

In the grocery industry,lack of population density and prevention of below cost selling in the past prevented price wars,a shakeout and consolidation of the industry among chains. The latter is a necessary condition for competing more on prices. Fortunately for the low income Irish,Lidl and Aldi are expanding rapidly and in the present recession,even the average income Irish are shopping there.

As for the banks,the managements have been negligent in managing property risk and should be sacked. Typically in a corporate rescue,the top layer of managers are taken out.

Finally,governments share a lot of the blame for the international financial crisis. In the EU,the low interest rates that led to rampant property speculation stemmed from very slow economic growth due to the inability of France,Italy and Germany to reform their bloated welfare states and business regulatory regimes. The taxes to finance welfare state bloat result in huge payroll taxes on employers and employees which cripple employers' ability to create jobs. While Germany achieved significant reform about five years ago,France has only begun serious reform and as usual Italy is hopeless. All reform efforts have been strenuously opposed by militant public sector unions. In France,they have shut down transport and other essential services,even though they represent only a small minority of the workforce.

In the USA,Greenspan and the Federal Reserve kept interest rates too low for too long, which led to the speculative property boom and excessive mortgage lending,the root cause of the banking crisis.In their greed for profits and bonuses, bankers were negligent in their complete failure to manage this risk,encouraged by the ideological Bush administration,which believed market forces coupled with ultra light touch regulation would suffice.

And it's true that market forces do correct excesses,but not in the way Bush understood. As shown in the history of financial crises which plague capitalism historically, when the debts from excessive lending default, banks' capital bases erode quickly,leading to financial panics. Banking is risky as banks lend about €10 for each €1 of shareholder capital,so if €1 of debt defaults,the shareholder capital is wiped out and the bank is insolvent. This leads to very destabilising recessions and was an important cause of the Great Depression.

One reason interest rates are low is the recycling of savings from Asia and Arab oil states through American and European financial markets. Excessive saving result from export led growth and its recycling encourages excessive consumer debt in America and the UK.

Blah blah blah, excuses excuses. Multinationals are profitable because the Bush-Clinton IRS is a ridiculously soft touch, because the US companies which benefit from the tax breaks legally bribed the GOP and Democrats to make it so. If the Irish operations were paying US corporate tax levels, those operations would be showing huge losses, because when you compare apples to apples, the USA extracts acres more profit per worker.

Your explanation for ludicrously inefficient Irish property prices is all very well. It´s still ludicrously inefficient.

Ditto with your retail excuses. You are still forced to admit that on a goods-per-Euro basis, Ireland is as inefficient as all get out and the worst in Europe be a long stretch.

The simple fact is this: when you measure the various rates of inefficiency in all the various sectors in Ireland, the public rates of inefficiency kick the stinking overpriced arse of the private.

Allegedly there are loads of efficient, decent value for money private sector operations out there, but they are certrainly nowhere near the majority. They are not even a significant minority of private business on Ripoff Island.

Why do we put up with this garbage? Business in Ireland is the world´s most inefficient, yet we tolerate their lackeys pointing the finger at our comparatively hyper-efficient public servants. It´s an outrage.

[constitutionus]

WTF are you smoking?

80% of GNP in this country comes from small and medium enterprises that employ less than 20 people !

get your head out of your arse.

the fact is the public sector is so inefficient that when it amalgamated 11 health boards it not only couldnt find a SINGLE person to sack, it HIRED another 6 thousand !

at least in the private sector when people are asked "whats your job?" they fecking KNOW the answer

[Schuhart]

80% of GNP in this country comes from small and medium enterprises that employ less than 20 people !

Do you have a source for this? I'm not saying you're wrong, I just want to see the context in which this holds.

I mean, I think we know that the economy isn't kept afloat by squads of hairdressing salons and Centras. We've also finally completed our experiment to see how long we could get away with borrowing money on international markets so that we could build and sell houses to each other.

At the end of the day, what keeps the place afloat is the extent to which we export goods or services. I think we know the reason that most of that goes on here is because of our tax regime. In other words, the folk in the Revenue Commissioners who design our tax laws do more to keep the place in corn than the managements of the foriegn subsidiaries that locate here. And those subsidiaries account for more of our exports than our domestic 'entrepreneurs', if we can glorify them with the title.

I think the essential quandry about the lack of a real Irish private sector is illustrated by the appearance of Bill Cullen on the Irish version of The Apprentice. Our idea of a businessman is someone who imports a product that someone else has developed and sells it to us.

at least in the private sector when people are asked "whats your job?" they fecking KNOW the answer

Indeed, but frequently they may not know why their job is here and not in Germany. They may also think Bill Cullen is an entrepreneur, and not just a very good car salesman.

So, indeed, going back to the thread title. We not only need a party to reform the private sector. We actually need to set up a private sector, because we don't have one which is why the public sector had to encourage FDI so they'd have something to tax.

[feargach]

WTF are you smoking?

80% of GNP in this country comes from small and medium enterprises that employ less than 20 people !

get your head out of your arse.

True, most GNP comes from sub 20 person companies. Sadly, most of those companies make their money by:

- building or selling shoddily made houses and apartments for many multiples of the price their German or French counterparts charge, for better buildings. (I´ll include any of the property related shops as a part of this sector.)
- selling goods and services for an insanely higher mark-up (35 to 55%, by and large) than the very richest parts of continental Europe.

Extreme inefficiency in Irish business is a democratic thing, affecting the smallest and the largest concerns alike.

[constitutionus]

no corner shops where you live then?

no hairdressers?

no pubs?

furniture stores, cafes, restaurants, taxis, garages, confectionary stores, book stores, designers....?

NOT everything is connected to multinationals and big busniness. like most countries, while it doesnt make people millionairs, the majority make their living providing services and products they made to each other and exporting the rest. even then theres still irish multinationals, which believe it or not DO exist, for instance we are one of the biggest providers of beds in the world. Those special beds for burns units in hospital? its an IRISH company that has the patent on the material their made from. not to mention financial services, a kerry based company is the superagent for western union for the entire of europe and scandanavia. christ even dunnes is an irish store.

the 80% figure comes from taking the 20% intel dell and microsoft and co provide (which should scare the hell out of people in terms of how reliant we are on them) off the gross figure. source is the CSO if memory serves.

we most certainly do NOT mainly deal in houses and appartments. that was an aberation FF/PD con men perpertrated on the economy to look after their own. the companies that were around pre the boom are still knocking about now that insanity is over, thats why for those of us in the private sector that didnt indulge in that maddness the recession hasnt really been that bad for us . as schuhart brought up theyre still exporting and competing with the best of em.

which is one of the reason they dont pay as good as the public sector. in the real world if you cost to much you go out of business. how do you deal with it in the public sector, where a minister for health will tell people "dont worry pet, you can stay there as long as you want despite the fact your redundant, we'll just abolish your job after you retire"

[Schuhart]

NOT everything is connected to multinationals and big busniness.

Yet, ultimately, that’s what our wealth depends on – the foreign owned exporting sector, attracted here by public sector tax breaks and not by domestic private enterprise.

the majority make their living providing services and products they made to each other and exporting the rest.

I’m not confident that this gives us a picture of the situation. I mean, according to CSO (page 8 of this report) our GNP in 2007 was 160 billion. Our exports in that year were 150 billion and our imports were 130 billion. Those three figures give you that picture of ‘what we consume we don’t produce and what we produce we don’t consume’. Even allowing for transfer pricing artificially increasing those figures, you can’t but notice that that a considerable amount of what folk spend their money on is imported. Those hairdressers will be rubbing all kinds of sweet-smelling imported stuff into my hair. That taxi driver will be driving me around in an imported car powered by imported fuel. Those book stores will be selling me books published abroad. And so forth.

The contribution of domestic exporting industry to this is quite small. A quick google brings up this article as corroboration. It quotes a review by the Irish Exporters Association which states that foreign owned firms account for 90% of our exports. Hence, the main basis for our economy is the FDI attracted in over the years by successive Governments due to the inherent weakness and lack of enterprise in our private sector.

Let me stress I completely agree that public sector wages have to come down, same as in other sectors. The reason is very simple. Tax receipts are down, and that’s what public sector wages are paid out of. But I’m not saying that with some kind of blinkers about the nature of the Irish private sector, most of which is just as clueless as most of the public sector about what the economy of this little rock is really dependent on.

even then theres still irish multinationals, which believe it or not DO exist, for instance we are one of the biggest providers of beds in the world. Those special beds for burns units in hospital? its an IRISH company that has the patent on the material their made from. not to mention financial services, a kerry based company is the superagent for western union for the entire of europe and scandanavia. christ even dunnes is an irish store.

But the simple fact is those domestic firms account for very little of our exports. As for the rest, I’d assume (but don’t know) that Fexco is a superagent for tax reasons and Dunnes mostly sell us stuff manufactured elsewhere. If it wasn’t for the export earnings of IDA attracted companies, Dunnes shops would be empty.

I’m not, let me say, particularly worried about Dell. As I’ve said elsewhere, I feel their contribution to our economy tends to be spun too high. But the foreign sector generally is vital to our economy – the weakness of our domestic private sector being another of these obvious features of our country that we seem to talk about far less than we should.

[patslatt]

Blah blah blah, excuses excuses. Multinationals are profitable because the Bush-Clinton IRS is a ridiculously soft touch, because the US companies which benefit from the tax breaks legally bribed the GOP and Democrats to make it so. If the Irish operations were paying US corporate tax levels, those operations would be showing huge losses, because when you compare apples to apples, the USA extracts acres more profit per worker.

Your explanation for ludicrously inefficient Irish property prices is all very well. It´s still ludicrously inefficient.

Ditto with your retail excuses. You are still forced to admit that on a goods-per-Euro basis, Ireland is as inefficient as all get out and the worst in Europe be a long stretch.

The simple fact is this: when you measure the various rates of inefficiency in all the various sectors in Ireland, the public rates of inefficiency kick the stinking overpriced arse of the private.

Allegedly there are loads of efficient, decent value for money private sector operations out there, but they are certrainly nowhere near the majority. They are not even a significant minority of private business on Ripoff Island.

Why do we put up with this garbage? Business in Ireland is the world´s most inefficient, yet we tolerate their lackeys pointing the finger at our comparatively hyper-efficient public servants. It´s an outrage.

America can't tax multinationals as much as it would like or you think possible given international tax competition. Britain wanted to tax international operations heavily in the budget and was forced to back down as companies threatened to set up abroad,including in Ireland. Germany has ostensibly high corporate taxes that in practice are reduced to very low levels by loopholes. Capitalism breathes through loopholes in tax laws,as Paul Samuelson said.

If Obama starts taxing US multinationals heavily,they will move HQs to low tax jurisdictions.Moving HQs would make sense anyhow as America's share of global US multinational sales diminishes steadily over the next twenty years which will persuade US multinationals to present a global image instead of a purely US image.

As for high prices in Irish property markets,that is due to circumstances beyond the industry's control,mainly the sudden economic shock of the boom and excessively low interest rates made in Brussels. Property development can't increase production without long planning times,which drives up prices. But at least the industry built a fantastic number of houses,unlike the UK which produced very little housing in response to booming prices. And the Irish property prices could become reasonable if Dublin's councils learn to plan for high densities and the government legislates to curb endless kneejerk planning appeals.

As for retailing,NI prices are lower because the UK government abolished "retail price maintenance" in the 1970s,which led to price wars and industry consolidation around price competitive chains. THis process is only starting here, with the abolition of the prohibition on below cost selling a few years ago. So blame the Irish government if you want a culprit,since it supported the presence of large numbers of retailers competing on convenience of location instead of far fewer retailers competing on price.

As for other Irish businesses,their prices are often high by international standards because of high minimum wages in labour intensive activities,high fuel and electricity costs (ESB),high import costs in an island nation and lack of economies of scale outside of Dublin and Cork.

If Ireland is as inefficient as you say,how have our wages caught up so fast to the rest of Europe and overtaken wages in many of the advanced EU countries (especially in take home pay)? Wages in the long run are a function of the marginal productivity of labour,which means that a worker is paid wages equal to the value of his production, including a margin of employer profit. If the value of the production is less than that,the worker loses his job.

[Seos]

More magic mind reading from Left Femme. Tell me, what number am I thinking of now? Can't? Well then, don't pretend to know what I know.
I base my 20% figure on
a) the amount of public sector wages that could be saved (nearly a BILLION)
b) the minimum proportion of skiving gits I've encountered in any government department or state agency (this proportion rises to a staggering 100% in one particular office).
A one in five cut would get rid of much of the dead wood, and allow us to stop killing pensioners and teenage girls.
Then we could get another half billion by enforcing benchmarking on the public service. It is estimated that when side benefits and perks such as pensions and flexitime are factored in, that the public sector is now 20% OVERPAID in comparison to the public sector.
I only proposed that half of that be retrieved for the exchequer, liberating another half billion.

Skin Flicks: Civil Service Skiving

less then a billion? a 20% job cut in the public sector is less then a billion?? That can't be right it suggests that if the public sector worked for free we would still be borrowing...

Then another half a billion saved in a way which would cause massive strikes and cost the state much more then they save if they stuck it out through the strikes which they wouldn't so they'd get the cost without the savings.

[patslatt]

Yet, ultimately, that’s what our wealth depends on – the foreign owned exporting sector, attracted here by public sector tax breaks and not by domestic private enterprise. I’m not confident that this gives us a picture of the situation. I mean, according to CSO (page 8 of this report) our GNP in 2007 was 160 billion. Our exports in that year were 150 billion and our imports were 130 billion. Those three figures give you that picture of ‘what we consume we don’t produce and what we produce we don’t consume’. Even allowing for transfer pricing artificially increasing those figures, you can’t but notice that that a considerable amount of what folk spend their money on is imported. Those hairdressers will be rubbing all kinds of sweet-smelling imported stuff into my hair. That taxi driver will be driving me around in an imported car powered by imported fuel. Those book stores will be selling me books published abroad. And so forth.

The contribution of domestic exporting industry to this is quite small. A quick google brings up this article as corroboration. It quotes a review by the Irish Exporters Association which states that foreign owned firms account for 90% of our exports. Hence, the main basis for our economy is the FDI attracted in over the years by successive Governments due to the inherent weakness and lack of enterprise in our private sector.

Let me stress I completely agree that public sector wages have to come down, same as in other sectors. The reason is very simple. Tax receipts are down, and that’s what public sector wages are paid out of. But I’m not saying that with some kind of blinkers about the nature of the Irish private sector, most of which is just as clueless as most of the public sector about what the economy of this little rock is really dependent on. But the simple fact is those domestic firms account for very little of our exports. As for the rest, I’d assume (but don’t know) that Fexco is a superagent for tax reasons and Dunnes mostly sell us stuff manufactured elsewhere. If it wasn’t for the export earnings of IDA attracted companies, Dunnes shops would be empty.

I’m not, let me say, particularly worried about Dell. As I’ve said elsewhere, I feel their contribution to our economy tends to be spun too high. But the foreign sector generally is vital to our economy – the weakness of our domestic private sector being another of these obvious features of our country that we seem to talk about far less than we should.

I read recently that in America,giant multinationals account for most of exports,so maybe Ireland isn't any different in the domestic focus of indigeneous companies.

[123456789]

In my opinion we have a very bloated and limping public sector in this country and as mentioned could do with some serious culling. If the HSE and most other state run agencies were to be run correctly we would not need the numbers we currently have. Then if we take the 'hard working and smart public servants' and release them into the private sector the wage bill would be significantly reduced. The funding made available from a lean and well run state could then be used to support SME's in the development and creation of viable businesses that would employ all aforementioned individuals. This then would create a more stable and viable economy based on hard work and innovation, bringing money into the country as opposed to recycling and inflating it, as we have done to date. With this model we kill 2 birds with one stone...