Competitiveness (National)

[Oppenheimer]

Being able to sell something for more than the cost it took you to make it and having it remain sold. Right now the "for more" piece in Ireland is less than it is elsewhere so it is more attractive for businesses to go to those places.

[pjoz]

I had a quick look, thanks. Krugman's blog also has a recent mention of what he sees as the fallacy of competitive devaluation: Competitive Deflation - Paul Krugman Blog - NYTimes.com

would you now look more favourably on the assertion wage rates have little signifant impact on competitiveness?

[Libero]

would you now look more favourably on the assertion wage rates have little signifant impact on competitiveness?

I think Krugman's main point - in the context of those links - is not that labour costs are generally an insignificant factor in determining international competitiveness, but that where competing countries all set about lowering wage rates, none of them gains in competitiveness versus the others.

My take on that observation is that, even if it accurately describes what's happening in some of Europe ("the race to the bottom"/"the fight for exports"), the alternative to running to stand still is that you don't run and instead get left behind, losing competitiveness.

Anyhow, much of Ireland's current wage deflation is driven by real market pressures on businesses, rather than some central policy to drive down wages. So even if one accepts Krugman's hypothesis, I don't think it's open to Ireland to group together with competitor countries and somehow agree not to compete on wages in particular and exports in general.

[pjoz]

I think you have missed the main point,that being concerns about competitiveness are almost completely unfounded.

"The idea that a country's economic fortunes are largely determined by its success on world markets is a hypothesis, not a necessary truth; and as a practical, empirical matter, that hypothesis is flatly wrong. That is, it is simply not the case that the world's leading nations are to any important degree in economic competition with each other, or that any of their major economic problems can be attributed to failures to compete on world markets."

"Thinking in terms of competitiveness leads, directly and indirectly, to bad economic policies on a wide range of issues,domestic and foreign, whether it be in health care or trade."

[pjoz]

In summation national competitiveness in FF speak equals

Making Irish businesses competitive so they can compete against businesses in other countries and ultimately bring and keep wealth and jobs here in Ireland.

Competitive is keeping costs low and revenue high so businesses don't go bust and jobs aren't lost. It's quite simple really

Competiveness in FF speak is cutting wages both public & private by about 30% to make us more attractive to FDI.

Ireland shows no interest in being autarkic , thus we want "stuff" from the outside

The ways to get this stuff are money

The ways to get money are
1) Export goods/services at a profit
2) A special case of 1 above: attract foreign companies to set up here

In both cases this requires us to compete globally , indeed Ireland is referred to as a hyper-open economy

The simple metric of such competition is unit cost of product. So say a cap in Poland making 20 widgets a day for a salary of €50 is less competitive than a chap in Ireland making 40 widgets a day for a salary of €90.

There are also stickier human capital factors - such as the existing skill pool of the labour force. Some people (mistakenly) believe education is the primary human capital factor... it ain't , experience is. So for example we've tens of thousands of people employed in back-middle office funds administration jobs in Dublin. They earn a salary above the median (thus cause net cash flow into the country) - and Dublin's pool of experience means it is far more attractive than say Paris or Warsaw.[COLOR="Silver"] (and of course natural capital (geography , natural resources) plays a part)[/COLOR]

Over the past number of years endogenous costs have gotten too high and these are having knock on effects. The two internal drivers of the costs going too high were
1) PS Pay bubble
2) Construction bubble

As result all other costs were inflated to artificial height. The bubbles are burst(ing) so we need an orderly wage contraction, pretty much across the board.

(I'm not a FFer btw)

cYp

To FF, competitiveness means lowering the AIW to a level acceptable to attaract FDI while keeping the salaries of governemnt and senior civil servants amongst the highest in the world and using a huge portion of taxes from the workers to keep vested interests well remunerated with State contracts, outsourcing gigs and jobs for the boys.

Their plan got a little skewed in recent years as they were bribed to implement policies that drove house prices up and now they are feeling the pain from their stupidity

"National competitiveness is a broad concept that encompasses a diverse range of factors and policy inputs including education and training, entrepreneurship and innovation, Ireland’s economic and technological infrastructure and the taxation and regulatory framework."

Our Work - The National Competitiveness Council (NCC)

Being able to sell something for more than the cost it took you to make it and having it remain sold. Right now the "for more" piece in Ireland is less than it is elsewhere so it is more attractive for businesses to go to those places.

[I'mVeryGladYouAskedMeThat]

One of Fianna Fail's greatest buzz words. For the economically illiterate of us out here coud Fianna Fail please define what it is they mean by the term?

Follow my lead and you too can have a salary like mine, Barrack!

[pjoz]

FAO cYp
The simple metric of such competition is unit cost of product. So say a cap in Poland making 20 widgets a day for a salary of €50 is less competitive than a chap in Ireland making 40 widgets a day for a salary of €90.

I firmly believe in using simple scenarios to explain economic matters.In using your scenario I fully expect these questions wont cause you to much trouble, unless of course your just spoofing on economic issues.

1. What markets are we competing in?
2.If in an attempt to further increase Irish competitiveness we decide to slash wages 20% - 30% how many widgets a day will now be produced?
3.What allowance have you made for potentially adverse exchange rate movements if we are competing outside eurozone?

[owedtojoy]

Competitiveness means developers are giving FF a lot of money to run run the country on their behalf. AKA "Patriotism" "Nationalism" "Sovereignty" when the words come out of the mouths of a Fianna Fail minister.

When developers have no money to give to FF, that is what FF call a "National Crisis", and we need all of above buzz-words so that developers can find money to give to FF once again.

Simple.

[pjoz]

FAO cYp
The simple metric of such competition is unit cost of product. So say a cap in Poland making 20 widgets a day for a salary of €50 is less competitive than a chap in Ireland making 40 widgets a day for a salary of €90.

I firmly believe in using simple scenarios to explain economic matters.In using your scenario I fully expect these questions wont cause you to much trouble, unless of course your just spoofing on economic issues.

1. What markets are we competing in?
2.If in an attempt to further increase Irish competitiveness we decide to slash wages 20% - 30% how many widgets a day will now be produced?
3.What allowance have you made for potentially adverse exchange rate movements if we are competing outside eurozone?

[beamish2010]

That's right the talk being more competitive is just another FF codeword
for cutting back on public services and shafting the working classes while
bailing out their rich banker buddies who caused the economic crisis in the
first place.