Irish Corporate Tax Regime and Synthetic Indignation

Peer Steinbrück, Germany's Finance Minister

Luxembourg vetoed attempts on Tuesday to end its position as a low-tax haven for web retailers, blocking VAT reforms that were proposed by the German presidency of the European Union and supported by all other member states.

Jean-Claude Juncker, Luxembourg's Prime Minister and Finance Minister who is known as Mr. Euro because of his longtime chairmanship of the Eurogroup of Eurozone Finance Ministers, refused to give up a tax regime that has attracted companies including Skype, AOL, Apple and Ebay to the Grand Duchy, providing his government up to €300m ($406m, £204m) a year in revenues.

Luxembourg's 15 per cent VAT rate is the lowest in the EU

"I can't agree here today," Juncker said despite criticism from other EU member states, which are losing jobs and tax revenues because of the shift offshore of the booming e-commerce sector.
Peer Steinbrück, Germany's Finance Minister, secured agreement on other aspects of a package of VAT reforms and believes Juncker will lift his veto by the end of the year.

At Tuesday's meeting Peer Steinbrück accused Ireland of subsidising its public services with EU funding while engaging in unfair tax competition.

In a strong public attack on Irish corporate tax policy, Steinbrück said States such as Ireland risked jeopardising the EU idea if they continued in this manner. "It is unfair to reduce tax rates and get money from the EU to finance public spending.

"Ireland is offering tax rates [ that are] very advantageous and organising this tax competition," Steinbrück said at the meeting of EU finance ministers. "Some countries are concerned about using certain techniques to fund their public finance requirement in the hope that if they do not have sufficient income it will be compensated by EU funds," he said

The German criticism followed a discussion on a proposal to harmonise the EU corporate tax base ( as distinct from tax rates).

The Irish Government fears that harmonising the base will inevitably lead to a harmonisation of the corporate tax rate.

Jamie Smyth of the Irish Times says that Steinbrück cited the tax reliefs available in the "Dublin Docklands" - commonly known as the International Financial Services Centre - as an example of using low tax rates to attract industry and engage in tax dumping. He also cited tax relief schemes in the Netherlands as examples of unfair tax competition that were undermining co-operation in the EU.

"There is a clear interest in Europe in certain countries to make their tax attractive to influence where they [ multinationals] locate and it is not a diplomatic disgrace to say it," added Steinbrück, who also said that young people in Germany were asking him to ask these questions of other EU states.

Steinbrück also said Ireland had nothing to fear from the corporate tax base harmonisation proposal.

Ireland's corporation tax rate is 12.5%. Rates are above 20% in most EU countries.

Irish business employers' group IBEC strongly criticised Steinbrück's comments, calling them "disgraceful, and unbecoming of a president in office of the Ecofin council".

Unbecoming indeed!

This could surely be termed synthetic indignation.

We have been very lucky that the funding members of the European Union, principally Germany gave us about €36 billion in aid with few strings attached.

We were simply lucky that they were stupid.

The IBEC gun-for-hire would surely be as indignant if the boot was on the other foot!

Company Taxation/Common Consolidated Corporate Tax Base: European Commission presents progress report before finalising its proposal due in 2008

John Waters as Rip Van Winkle

Either the people or the media should resign, John Waters, who makes a handy living from his weekly column in the Irish Times, wrote last Monday.

It's not clear if Waters himself considered resigning but like most in the money economy, he may need to fumble in a greasy till and take the shilling, however tainted it may be to him.

Waters wrote: The easier solution is for the media, with the exception of Eoghan Harris and myself, to stand down en masse, it having been established that, once again, ideological agendas, wishful thinking and spite have prevented them doing their jobs. If there is a better reason for resigning, I cannot think of it.

Once again it has been made clear that the Irish media are covering a different country, a country of some leftist or pseudo-ethical ideal which the Irish people stubbornly decline to give birth to.

To understand what was going to happen in this election you had only to stand back and ask: is the Opposition convincing enough to remove a Government which has presided over the most prosperous period in Irish history and seemed not to have blown it?

You had merely to understand how people felt about where we stood, as opposed to what they claimed to think or what they ought to be thinking.

It may well take ten years when the construction sector returns to a level similar to other advanced countries and the foreign firm dominant export sector shows that it has overcome an uncompetitive induced decline, to really test Waters' caveat: and seemed not to have blown it.

We will then know whether it has mattered that no significant reforms have been put in place to prepare for less comfortable economic times.

Remember the factoid - 92% of Irish exports were made by foreign owned firms in 2006.

It's also well to remember when the vast growth in China and India is promoted as an excellent opportunity, most of our exports there, are not by Irish firms and marketing decisions on what is exported there, are not made in Ireland.

Waters concluded his column: For decades, Irish newspapers, including this one, have engaged in stern lecturing of the Irish people on account of their primitive cultures and lack of moral fibre, and the Irish people have repeatedly given them the two fingers.

Now, perhaps, the media might condescend to look at what the Irish people are saying about themselves, and what this means. They might also reflect on the notion that, without roots in society, no value system has any value.

Politics is what is, not what journalists want.

Expecting to dance to the tune Arise and follow Charlie, John Waters as Rip Van Winkle, wakes up to an Ireland where divorce is legalised, homosexuality decriminalised and the cap is no longer doffed to the high and mighty in Church and State. God forbid, the media at last even dares cast a cold eye on the machinations of politicians.

In a seminar titled Society? Church? It's a question of Education, Waters said: And this, it seems to me, is at the core of the problem that we face now in this society. That we have created this idea in Irish society, that because we’re on the run, as I was at the age of twenty, twenty one, from the alleged or believed assertive authoritarianism of the Catholic Church, that we could run for miles and be free, without consequences.

And that somehow it didn’t matter that we could create a society without the core represented by Catholicism up to that point and that it wouldn’t be missed, that somehow, organically in the society, there would come a new flowering of belief and that people would either believe in the Buddha or believe in Allah or whatever and that the rest of us would simply sit around tolerating them And it seems to me, now, that this a completely unsustainable idea.

It was exactly the attitude of the cure being worse than the disease, that has destroyed the moral authority of the Catholic Church for some Irish people in recent decades.

The old world of spurious certainty, was to shield the hypocrisies in what was a republic of fear for anyone who did not kowtow to the status quo. Some people lived happy lives but it was woe betide for anyone else.

Waters' comment - Irish people have repeatedly given them the two fingers - reeks of arrogance and is simply wrong.

The people he excludes may well be in a minority but they are still Irish people.

It is minorities that usually sow the seeds of change that is often eventually embraced by its once fiercest critics.

Change inevitably brings with it some negative factors but the alternative cannot be a committee of do-gooders who would try to impose a social order.

Life today in Ireland is a better place than the organised hypocrisy of the past and despite the hand-wringing of people like John Waters, a pertinent fact that is worth considering is that while for example sexual mores have changed, the biggest difference between today and the past is not the extent of sex but that modern sex is mostly consensual.

At the seminar referred to above, Waters said: We have a society now in which suicide levels are among the highest in the world - again the lack of meaning - but how deep does this meaning go?

Does he really, really know what our suicide levels were, back in the good old days of authority and fear?

The people have spoken and made Jackie Healy-Rae kingmaker again?

The people have spoken as the old cliché goes and Ireland may have Jackie Healy-Rae as kingmaker again - a grassroots politician of tremendous charisma and brilliance - from his humble beginnings to his business and political success - his is a story full of craic, humour and colour, according to his own website.

Irish Times columnist Fintan O'Toole said on RTE Radio on the day of the General Election count that the Alternative Fine Gael/Labour Party coalition deserved to loose the election because of the strategy of focusing on the standard of public services rather than the economy.

We're all good hurlers on the ditch but I doubt if it would have mattered.

The simple fact about arguments on how unbalanced the economy is with an over-reliance on construction and the impact of falling competitiveness on exports, is that they have a minority audience.

At a time when many people have yet to be convinced that the free lunch has not been invented, with a housing market correction in its early stage and SSIAs having matured, it's more comfortable to believe that we have found the philosopher's stone that would transmute our current good times, built on foreign direct investment, European Union transfers (we are still net beneficiaries from the EU budget) and a property boom, into a permanent prosperity.

With no fundamental reform having been put in place to better position our economy against some negative trends, there is little chance of that now happening in the coming five years.

With tax revenues falling, the Minister for Finance will struggle to reduce public expectations but putting that genie back in the bottle will take backbone rather than political skill.

There are no plans to tackle ramshackle planning, governance issues including accountability, public service and falling competitiveness.

Paring public spending with the European Central Bank rate at 4.25% and the SSIA spending stimulus gone, and the housing correction underway, will impact many sectors of the economy.

The Paris-based OECD will put forward proposals on reform of the Irish public service by the end of this year but there will be no appetite to take on the trade unions. An addition of 77,000 staff since 1997 and sham benchmarking have widened the gulf in benefits available to the majority of workers in the private sector who don't even have a basic occupational pension.

We may well have a world class knowledge economy by 2013 by investing €3.8 billion in Research & Development, but I doubt it. It is of course worthwhile to deepen our research competence but any return will be long-term.

Fianna Fáil presented a plan to add 250,000 jobs to the economy over the next five years, and as previously detailed, it contains a number of worthwhile measures but none that will have more than a marginal impact over the next five years.

In the vital exportable/tradable goods and services sector of our economy, we will continue to delude ourselves by failing to separate the performance statistics of Irish-owned firms from the dominant foreign-owned sector. We can of course believe our own propaganda about a knowledge economy but when only €4.2 million in venture capital was invested in young innovative firms in Ireland in Q1 2007, there is a warning on our own capacity. Besides, isn't their a pertinent message from the glacial speed of the rollout of broadband?

At least former Progressive Democrat voters reacted to the big gulf between rhetoric and performance.

The PDs obsession with income tax cuts (the overall tax burden hadn't changed in a decade), while having no reform agenda, cost it dearly.

They became deluded by their own propaganda.

The notion that some people have that the PDs were responsible for the emergence of the Celtic Tiger era is absurd.

Promoting trends that were underway in other countries was positive but not the key catalyst.

A zero tax rate on corporate profits on exports was introduced as far back as 1956 by the Gov. of John A. Costello.

A key event in the attraction of foreign direct investment was US chipmaker Intel's decision in 1989 to locate a big plant here. That only happenned because of the existing multinational base an in turn encouraged other leaders of the US tech boom in the US to establish facilities here in the 1990's.

Income taxes were cut in response to the take-off in the export sector.

However, we are even more dependent on foreign direct investment now than we were in 1997 but as the native owned export sector struggles, there is pressure on many of the multinationals to move from Ireland because of the cost structure. Political propaganda does not always make credible history.


Comment: Does the glacial adoption of Broadband in Ireland tell us more about ourselves than we would care to know?

Feargal Quinn says Ireland now a “party society” – not a society of political parties – without a thought for what will happen when the tide goes out on our prosperity

Reclining Aircraft Seats

The Knee Defender™ is an American product that helps airline passengers protect themselves from reclining seats.

I have often wondered what some passengers would do in an emergency in response to the standard notice Life Vest Under Your Seat, on the back of aircraft seats.

Would the passenger search under the seat that he/she is sitting on or the one in front?

Recently, having pre-booked a seat in row 11 of an Aer Lingus A320 aircraft, I discovered following embarkation that it was the emergency exit row. Bizarrely, there was a notice on the rear of the seat on row 10 in front of me that had the notice: Emergency Exit - This Seat Does Not Recline.

I rarely recline the seat and the passenger in row ten began to recline her seat as I was reading a newspaper. It was of course the seat that carried the warning that the seat did not recline and as my seat didn't recline, I couldn't compensate for the loss of space as my own seatback did not recline.

I pushed my right knee against the seat in front but the passenger complained to the stewardess.

Estimates are that 75% of passenger-passenger altercations involve seat reclining – including a US incident in which a woman was hit in the head by a reclining seat and the subsequent fight between her and the recliner resulted in both women being arrested. And, a study commissioned by the British government (no reference) found that the space between rows typically provided in economy – the same as offered by most US airlines – does not meet significant health and safety concerns, including by failing to provide "enough space for taller passengers to adopt the ‘brace’ position" in case of an emergency landing".

As Jean Paul Sartre said: Hell is other people! Maybe a postscript should be added - supported by the airlines.

Irish General Election 2007: Monopolizing Credit

An Taoiseach Bertie Ahern canvassing in Dublin South Central

It's rare for politicians in power not to claim all the credit for good news, as if life just began on their entry to office, while responsibility for bad news is deflected elsewhere.

For example Michael McDowell claims to have invented the Celtic Tiger but there's no chance that he would accept that his comments on stamp duty reform last September had a scintilla of impact on the second hand housing market.

Business CEOs (hired hands as distinct from entrepreneurs) tend to be the same. It's rare to find people like US investor Warren Buffett who recently attributed a big jump in earnings to luck because of a benign hurricane season - rather than management brilliance.

There is however a danger in believing one's own propaganda.

Julius Caesar reputedly said that the General who rests on his laurels, is usually wearing them in the wrong place.

We see the results of the delusion of the PDs and FF as creators of an economy that is "the envy of the world" and the rest of the related blah-blah.

With that sense of smugness, why get too worked up about infrastructure and services?

Why worry about putting in place reforms in governance/public sector/planning/squeezing out of the productive sector through fueling property mania with loads of tax incentives that were not necessary and so on/ when the path to permanent prosperity has been found?

When did ministers have to come through Dublin Airport on a Sunday night after 11:00 pm like the common passengers - hundreds coralled into a narrow passageway leading to a makeshift passport control section - then to eventually get outside with a triple column queue for taxis extending beyond the Arrivals building?

Should they be really surprised that after 10 years, a grateful people who embarked at an efficiently run airport, are not willing to kiss the hemlines of their cloaks?

Low Corporation tax, which at a zero rate on exports was introduced in 1956 and the takeoff of the modern tech sector in the US, plus a semi-tax haven status for other income, rather than income taxes ensured that Ireland got 25% of greenfield US direct investment for a number of years in the 1990's with 1% of Europe's population.

William Prasifka, the chairman of the Competition Authority, said in 2006 that “in too many areas, Ireland has not willingly embraced competition. European Directives forced the introduction of minimum levels of competition in the telecommunications and energy sectors. In other areas, such as taxis and pharmacies, legal advice or court actions precipitated change.”

Businessman Feargal Quinn said said earlier this week, that it “simply beggars belief that a State that could develop such an enlightened attitude to scientific research should be the very same State which through inertia and ineptitude has allowed Ireland to languish year after year in the lower reaches of the international league of broadband penetration”.

The key really is that aspirations and allocating funding and cutting taxes, are the easy part.

The Department's of Micheál Martin and Dick Roche are still churning out press releases on funding allocations - but don't ask them about water or why venture capital in Irish innovation companies fell to €4.2 million in Q1 2007 - but we may have a world-class knowledge economy in 6 years.

And what have FF and the PDs to say about our 1920's system of governance where the buck stops nowhere?

The PD boast is that income taxes were reduced a property boom, while the overall tax burden remained unchanged and the state of Ireland would be far worse with FF in power alone, with builders calling the shots.

How hollow it will sound in times to come - we cut waiting lists in the last 2 years of the 10 year period because Micheál Martin had ended up in Rip Van Winkleland wading through the 145 reports he had commissioned as Minister for Health over 4 years

As to implementing significant public sector reform -- oh the OECD is going to tell us what has to be done later in the year!

Irish General Election 2007: Bertie Ahern and Jacques Chirac - Political Twins

Patrick Kielty interviews Taoiseach Bertie Ahern and British Prime Minister Tony Blair about the Northern Ireland peace process in the Terracota Room of No. 10 Downing Street on Tuesday, May 15, 2007, prior to Ahern's address to a joint session of the UK Parliament

In the 1992 US Presidential Election campaign, Republican Party strategists working for President George H. Bush, contacted the Conservative Party of then UK Prime Minister John Major to assist in digging up any potentially embarrassing material on Bill Clinton's period as a Rhodes Scholar at Oxford University, while the latter availed of a US Army Vietnam War draft deferment.

Clinton was reported to have been annoyed about the incident and for a time, Major got a cold shoulder from the Clinton White House.

In the current Irish General Election campaign, the equivalent of a US campaign advertorial by Taoiseach Bertie Ahern's Fianna Fáil Party is being broadcast by RTE, the Irish State television service, which includes British Prime Minister Tony Blair, the former US President Bill Clinton and former US Senator George Mitchell, all praising Ahern's role in the Northern Ireland peace process.

According to Fianna Fáil, the international participants were advised that their contributions would be used in the campaign.

In March, Fianna Fáil criticised the German Chancellor Angela Merkel's endorsement of Enda Kenny, leader of the main Opposition Party Fine Gael. Merkel and Kenny are leaders of parties, in the same political grouping in the European Parliament.

The one former leader that FF should have recruited was ex-President Jacques Chirac of France who left office this morning. Chirac was a staunch defender of the CAP welfare system for farmers and his resistance to reform in this area surely benefited Ireland.

Chirac like Bertie Ahern have had successes in foreign affairs that are the main components of their legacies. Credit where it is due.

In domestic affairs, both promised much at the outset of their tenures but lacked courage to face down any significant vested interest. Sham benchmarking in Ireland and zero public sector reform has been matched in France by a political cowardice in addressing economic reform.

Vive le rosbif Bertie!



And some Fun : Bertie in the Dragons' Den

Irish Economists: The Optimists in Retreat

Dan McLaughlin with Health Minister Mary Harney T.D. at a Women In Banking and Finance (WIBF) Ireland forum.

Whether or not punditry is your cup of tea, it's hard to avoid it in today's world.

A number of qualities or maybe I should say characteristics are essential in the pundit and one of them is a brass neck. However, prognostications and forecasts are often forgotten by the audience as fast as they are made and besides it's difficult to rate the soothsayers because some excuse for being off target, is never too hard to find.

Dan McLaughlin, Chief Economist of the Bank of Ireland and Austin Hughes, Chief Economist of IIB Bank have been Ireland's most optimistic practioneers of the dismal science in recent years.

Last Friday, McLaughlin said in an address to the Irish Housebuilders' Association that it is not clear from some of the more bearish forecasts on the Irish economy whether the authors envisage a cyclical slowdown or a structural shift in Irish growth. The former would be relatively short lived as in time lower interest rates would eventually prompt a cyclical recovery, as in the 2001 – 2003 period.

A move to a lower potential growth rate would be more serious but it is not obvious why the potential growth of the Irish economy should fall from 5.5% - 6% to 3.5% - 4% in eighteen months as it would require a sharp fall in productivity or a substantial fall in labour force growth. Some even argue that the Irish potential growth rate is not currently in this 5.5% - 6% range, but if lower, unemployment would have surely fallen, when in fact it has been very stable over the last few years.

As the outlook for the Irish economy has dimmed somewhat because of a slowing in the very crucial construction sector, the Economic and Social Research Institute forecasts that economic growth in 2008 will slow to the lowest level since 1993 - the first year of the emergence of the Celtic Tiger.

In The Irish Times today, Michael Casey, former economist at the Central Bank asks: Are politicians chasing a poisoned chalice prize: electoral victory only to preside over an unavoidable recession?

Casey writes that: There are two historical reasons why such an economic slow-down seems probable. First, the Celtic Tiger and subsequent years constituted Ireland's "catch-up" period. There is, however, no evidence internationally that a country, having caught up on its peers, can then move ahead of them in a sustained way.

Theory would suggest that what is far more likely to happen is that the country would revert to the growth path of the peer countries - about 2 per cent in Ireland's case.

The second reason is that even if Ireland's potential growth rate is as high as 4-5 per cent, it must be remembered that this is basically a long-term average. Since we have been growing over the past 15 years by well in excess of this, it follows that the growth rate must fall for a considerable period to well below the average of 4-5 per cent.

Other less theoretical reasons for expecting a slow-down can be divided into two groups: those that were latent even in the boom years of the Celtic Tiger and those that emerged during the past five years.

In the earlier period, say the 1990s as a whole, it became apparent by looking behind the headline figures that there were serious problems beginning to emerge in relation to loss of competitiveness and unsustainable rises in property prices. Towards the end of that period, the rise in the value of the euro was singularly unhelpful to Irish exports to non-European countries.

The lack of preparedness of the public sector to cope with huge infrastructural demands, and the inevitable mistakes, levied serious costs on the economy.

Casey refers to a number of the often highlighted issues that have arisen in the economy, including a fall in productivity and says that the latter : is a worrying development, bad in itself and also because it casts doubt on the extent to which Ireland Inc has transformed itself into a knowledge economy.

It is hard to avoid the impression that the economy will run out of steam in a couple of years and there is little that any government will be able to do to offset it. We may get lucky again if foreign direct investment picks up but there is now much more competition for this sort of investment.

On the demand side we don't have control of interest rates or the exchange rate. We can't count on fiscal policy if only because of the apparent inability to estimate revenue. Social partnership will not provide any solutions and may become more fraught - recent pay claims by nurses and teachers do not bode well. And the stand-off regarding medical consultants' contracts is positively dangerous.

Celtic Tiger II: The Sequel

In February 2004, The Sunday Independent reported that Dan McLaughlin was the toast of the Society of Chartered Surveyors annual dinner at the Burlington Hotel: In a virtuoso performance, he declared that this country is currently enjoying an unprecedented "Golden Age of Construction" and - to thunderous applause - announced that "the Celtic Tiger is Back".

If the definition of an optimist is one who sees the bottle half full and a pessimist says it's half empty, the BofI economic guru left his audience of 1,300 property professionals in no doubt where he stands. "The economy in general has emerged from a period of sub-trend growth in remarkably rude health and is poised to enjoy a much more favourable global backdrop, which will propel Irish growth towards the potential of 6% over the next eighteen months," Dr McLaughlin opined.

And so it transpired!

However, during the Sequel, construction became even more dominant in the Irish economy than in the late 1990's when the total employed in the sector jumped from 126,100 in early 1998 to 281,000 in late 2006.

We have become even more dependent on foreign direct investment (FDI) today than we were a decade ago but having lost competitiveness, at a time when competition for mobile investment has increased.

Slogans about creating a knowledge economy when venture capital investment in Irish business continues at a pathetic level compared with investment in overseas commercial property, is hardly a harbinger of a sustainable future, when the equivalent of the oil wells - construction - run dry.

More background here.

Interpreting Data

It's interesting how the economists Dan McLaughlin and Austin Hughes were slow to adjust their forecasts for the European Central Bank key interest rate even though markets were pricing in much higher rates.

Most data sets can be viewed and interpreted from different angles but there is a need to look beyond construction even though demographic factors may sustain an above trend demand for some years to come.

We have been a one-trick pony and the problem is that it will take a long period to get other sectors back on track.

We should be looking beyond the short-term horizon and get real about the challenges.

Surprise as it may be to some, the free lunch has yet to be invented.

Ballsbridge Nimbies Hit the Jackpot from Lansdowne Stadium Development

An impression of the redeveloped Lansdowne Road Stadium. It will have the same capacity - 50,000 - as the existing facility. All residents are thought to have been born after 1876 when rugby football began to be played at Lansdowne Road.

The NIMBY (Not-In-My-Backyard) citizen is a very common feature these days and the problem with the inevitable objections and protests to every significant project is that it's very difficult to pluck the small number of genuine cases from the usual reaction that is motivated by self-interest.

Most of us simply want to have our cake and eat it.

Last month, Tánaiste (Deputy Prime Minister) Michael McDowell said that his Progressive Democrats party will not agree to participate in Government unless plans to build a waste incinerator in his constituency are scrapped. McDowell represents Dublin South-East, which includes the Lansdowne Road area.

The Minister for the Environment Dick Roche opposes the building of an incinerator in Wicklow, south of Dublin. When residents of North Dublin, objected to plans to build a prison in their area, McDowell told them where to get off.

Residents in Ballsbridge in South Dublin where some of the highest priced houses in Ireland are located, have made the biggest gains from the runaway house price inflation in the past decade. Even the most innocuous dwelling would command a huge Celtic Tiger premium.

In 2004, the Irish Government announced that it would provide up to €191m in public funds for the redevelopment of the Stadium at Lansdowne Road, Ballsbridge, which is owned by the Irish Rugby Football Union (IRFU). Rugby football has been played at Lansdowne Road, since December 1876

In March, it was reported that the IRFU had bought two houses on Lansdowne Road owned by objectors to the planned 50,000-seater stadium. The sales were estimated to have raised between €5 million to €7 million for each property.

On Tuesday this week, it was reported that the final barriers to the redevelopment of Lansdowne Road had been cleared following the settlement of a dispute with local residents and councillors.

One dispute centred on a half-acre strip of council land along the banks of the River Dodder that the developers want to use as part of the project. Under an agreed deal, the developers have agreed to pay €120,000 each to 14 local families and €32,500 each to another eight.

A further €500,000 is being provided as a general fund for other affected households, while the developers have also agreed to fund improvements works along the River Dodder and to pay €100,000-a-year for the upkeep of the area.

It pays to live in a wealthy area!

It's not clear how much of the compensation will come from public funds. However, as with farmers who depend on public subsidies for most of their income and then become multimillionaires when they sell land for development, it's likely a win-win situation as the location in Ballsbridge is still a trump card, whether adjacent to the Stadium or not.

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Nimby Syndrome in Mayo as CAP cheques are put in post for Rossport Gas Protesters

Peace in Ireland: The Value of Compromise and Michael Collins

The new First Minister of Northern Ireland Ian Paisley spoke today of the value of compromise on a day that was marked by the re-establishment of the Northern Ireland government with participation of all the principal shades of Orange and Green.

Taoiseach Bertie Ahern said in Belfast: As we step from this place of history, we must be resolved that this should be the last generation on these islands to feel the anger and pain of old quarrels. We know the unique and delicate balance that binds this process together. Our task is to protect and nurture what has now been achieved.

Eighty-six years ago, on 22 June 1921, when he opened Stormont, King George V said: “I appeal to all Irishmen to pause, to stretch out the hand of forbearance and conciliation, to forgive and forget and to join in making for the land which they love a new era of peace, contentment and goodwill”.

It has taken a long-long time.

The Irish revolutionary Michael Collins knew the value of compromise and negotiated with British Prime Minister Lloyd George while the leader of the first Irish government Eamon De Valera, sat in Dublin keeping his options open.

What was agreed in the Treaty of December 1921, was not what was expected by those who believed that the then British Empire would accept military defeat and the mass migration of Protestants to the mainland.

In 1921, control of the White House and Congress in Washington D.C. had passed from the pro-Irish Democrats to the Republicans. Besides, the rallying cry of "burn everything British but their coal," hardly made economic sense.

At the end of the decade, the worst Depression since the dawn of the industrial revolution began.

In August 1922, Michael Collins (1890-1922) was shot dead in his native West Cork by the dreamers, some of whom got involved when the war with the British was over.

Collins had singular courage in fighting war and then agreeing a peace. Such leadership is indeed rare.

Irish General Election 2007: Progressive Democrats on Road to Irrelevance?

Michael McDowell in 2002 - The big stunt in this year's General Election, may well doom the Progressive Democrats as a credible political force.

On Monday Green Party Deputy Leader John Gormley accused Michael McDowell, leader of the Progressive Democrats of being a liar because of the latter's claims that the Green Party wished to raise the corporation tax rate from its current level of 12.5%

Apart from some children and the naive, the notion of "honest politics" is an oxymoron to the rest of the population.

For most of last week, the position of Michael McDowell on Taoiseach Bertie Ahern's method of buying a house as Minister for Finance and later Taoiseach, involving cash sums amounting to £177,000 - - savings of £50,000 that were kept in a safe plus the proceeds of whip-around from "friends" and big sums for refurbishment from the landlord of the 4-year old house - - Michael McDowell said he would not turn the election campaign into a mini tribunal on the Taoiseach's finances when the Mahon inquiry had decided that it would be unfair to conduct hearings ahead of the 24th of May (General Election day).

McDowell said he was satisfied that the Irish people had been governed well in the last five years and the real question was would that continue after an election that was not about what happened in Manchester in the 90s.

So McDowell had dismissed the central issue of Ahern's house purchase but by Friday evening journalists were being briefed that the PDs were going to collapse the Government.

McDowell had received information from a Sunday Independent journalist on a suspected lodgement of $45,000. It wasn't a smoking gun but another detail in the convoluted financial affairs of the Taoiseach.

The man who had climbed a pole in South Dublin in 2002 to warn of the risk of one-party Government was reacting to the doorstep backlash that the PDs' had been Fianna Fáil's compliant poodle.

He needed a stunt to give his party an aura of relevance but has ended up imperilling its own very existence as a credible political force.

McDowell has been asked why he had not spoken to Ahern and now has to await to give judgement on the latter's finances while having surrendered the opportunity of garnering Fianna Fáil's key transferable votes.

Jimmy Carter had shown in the US as President, that the brightest boy in the class is not necessarily material for political leadership.

Shameless political opportunism with scant evidence of principle, has simply rebounded on McDowell.

McDowell had promised an Ethics Bill following the first disclosures about Ahern's finances in October 2006. The Bill never became law, as was expected when it was published and it provided for a big jump in the value of gifts that politicians could receive without declaring.

Former PD leader Mary Harney

The sad reality is that the PDs long ago junked radical policies and their impact in Government has been very limited.

How different would a one-party FF administration have been?

In the past decade, there has been no significant reform and as recently as last January, the OECD was asked to put forward proposals on public sector reform.

Mary Harney is being presented as the Joan of Arc who will save the health service but there are no plans to change the 1920's governance system which is one where there is limited accountability and the buck stops nowhere.

During the ten years of the planning corruption tribunal, what proposals have the PDs made to change the system that continues to underpin corruption?

The economy is even more dependent on US investment than it was in 1997.

Promoting some tax reductions (the overall tax burden is almost unchanged since 1995) is easy but there is nothing else.

Since McDowell took over, the party has even become more a branch of FF and simply in all the significant areas of failure over the past ten years, has nothing new to offer.

Today, the Progressive Democrats' party is a far cry from its early years even though its claim to have been responsible for the emergence of the Celtic Tiger period, is certainly hyperbole.

It still talks the talk of radicalism but the results tell the true story.

McDowell and his party, the Progressive Democrats, make the bold claim that it's "credited with major responsibility for Ireland's economic boom by pioneering tax reform, deregulation and competition to end mass unemployment and emigration." Michael McDowell, PD Leader and Minister for Justice has in the past stated that the party has a choice of being 'radical or redundant' and has said: "We saw the possibility of a different way for Ireland – where radical tax reform, pro-enterprise policies, competition and deregulation, coupled with social partnership, could lead the country away from disaster to become a model of growth and employment generation.'"

Read about the emergence of the Celtic Tiger here - a process that had its genesis as far back as 1956!

In 1985, Fianna Fáil leader Charles Haughey created the Progressive Democrats by expelling his chief rival in the party Desmond O'Malley.

O'Malley had challenged Haughey for the leadership of Fianna Fáil on two occasions. He didn't put forward a separate policy platform providing for a radical change in economic policy or any proposals to end the endemic corruption in both planning and other areas of Irish life. Prior to the creation of the Progressive Democrats, Michael McDowell, was building a career in law and like many Fine Gael lawyers before him, his ambition was to become a member of Dáil Éireann, while maintaining a lucrative law practice.

Before Haughey prompted the creation of the Progressive Democrats, it was the current EU Internal Market Commissioner Charlie McCreevy who as a Fianna Fáil T.D., led the charge of economic mismanagement against Haughey.

When O'Malley was expelled by Fianna Fáil, he had two choices in remaining in politics: run as an independent or establish a new party.

When O'Malley had first challenged Haughey in the early 1980's, both British Prime Minister Margaret Thatcher and her policies were deeply unpopular in her own country. O'Malley wouldn't have seen much political mileage in promoting such policies in Ireland. However, by 1985, the tide had turned for Mrs. Thatcher. Her political soulmate Ronald Reagan was in the first year of his second term and in the Soviet Union, the reformer Mikhail Gorbachev had come to power. With Ireland in the economic doldrums, there was a growing section of the Irish electorate who saw remedies for the then Irish economic malaise, in the experiments that were underway overseas.

So McDowell's claim that he and his party invented the Celtic Tiger, is nonsense. He and his colleagues jumped on a bandwagon and soon abandoning its goal of "breaking the mould of Irish politics," the Progressive Democrats became a mini-catch all party.

Four years after its creation, the Progressive Democrats entered into a Government with Charles Haughey and there wasn't a word raised from the new "radical" party about the systemic corruption in Irish society.

In 2002, the former President of the Irish Farmers Association Tom Parlon, was recruited by the party in return for a position as a junior minister. It was another nail in its coffin as a party that promoted radical reform. It took ten years in office, to pass a Pharmacy Bill, a complete overhaul of regulation of pharmacy for the first time in 130 years. The PDs had two pharmacists in its parliamentary party who knew what was required to end the anti-competitive closed shop.

Like so much else, it didn't matter.

Tom Parlon State Socialism and the Property Bonanza for Farmers

Spanish Property Boom Loses Fizzle

Hugh Pavletich co-author of the annual International Demographia Report on Housing Affordability, has referred to recent concerns about the ending of the 15-year long Spanish property boom.

With a population of 40.3 million Spain put in 800,000 residential units during 2006 - a build rate of nearly 20 per 1000 population per annum.

If Australia built at the same rate - it would have put in 400,000 units (actual 145,000 - build rate 7 per 1000) whilst New Zealand would have put in 80,000 (actual 25,000 - build rate 6 per 1000).

Spain - like Ireland (92, 000 units during 2006 - build rate 23 per 1000) has been playing "catch up".

Hugh Pavletich says that the two examples of Spain and Ireland illustrate how sufficient supply is the only way to subdue prices. Compare this to the United Kingdom with a population of 60 million only putting in place 195,000 new residential units (appalling build rate of 3.25 per 1000). For a 100 year life of residential units a "floor" replacement build rate of 3.57 units per 1000 population annually is required.

It could be that the British planners are in the process of transferring the British population to Spain and elsewhere. Are we seeing the start of The Great British Migration, due to the "British housing famine"?

The Economist magazine says that helped by low interest rates since it joined the euro in 1999, Spain has been erecting houses at an astonishing rate. Last year it built 800,000, reckoned to be more than France, Germany and Italy combined. Economists in Madrid forecast that the house-building boom will keep slowing until the new-build rate more closely matches the rate of new household formation, around half a million a year. House-price rises are already slowing, albeit not brutally.

They peaked at about 18% a year in late 2003, and are now running around 7%, with some expecting them to slow further. Around the outskirts of Madrid there are new property developments where work appears to have stalled.

The Bank of Spain has said in recent years that house prices were 35% overvalued.

Irish owners of an estimated 75,000 Spanish properties have reason to be concerned as selling second-hand holiday properties in Spain is far from easy, even during the boom times.

Irish Hospital Consultants, Mickey Mouse Pay and Europe's Highest Paid Health Minister!

The usual line taken in the media by representatives of powerful professional groups such as teachers and medical consultants is to try and downplay the main issue - more money - by spinning the yarn that it's the interests of children and patients that are the primary motivator.

One medical consultant left the cat out of the bag when he termed a salary of €205,000 pus a bonus of €40,000 for a 39-hour week as 'mickey mouse'. It must be hard for an individual like that to understand or care to understand, what life is like for a patient on the average annual industrial wage of €32,000.

The gilded trade unionists in the Irish Hospital Consultants Association, crowed in relation to the Government's decision to advertise for consultants who would have to work solely in the public hospital service rather than continue on a gravy train of juggling work in both private and public hospitals:

"We are about to be assailed by spin doctors from the HSE and the Department of Health on why we need to urgently employ medical doctors even if they are of less qualification than the best candidates available within and outside this jurisdiction. The Minister and HSE have got their answer from the junior doctors of today who are the consultants of tomorrow. Several groups of Specialist Registrars who are qualified to apply for consultant posts have taken the long view and decided not to apply for the controversial positions."

How wise that these mighty people would take the long view without any intimidation?

Indeed and how similar to the partyspeak that was common in the once Communist Empire in Eastern Europe and the Soviet Union!

It takes spinners to recognise ones and as militant trade unionists, they used an old trick - anyone who would dare apply for an advertised post would be blackballed and given the Captain Boycott treatment.

Meanwhile Health Minister Mary Harney, was welcomed to the conference of the Psychiatric Nurses Association in Ballybofey, County Donegal, as Europe's highest paid Health Minister.

Liam McNamara Chairman of the PNA said that Harney and other politicians have got the biggest increases from the public sector pay bonanza - 30% more than other public staff.

Since 1997, Ministers, TDs and Senators have seen their pay rise by 119% - double the average industrial wage rise of 60%.

Overpaid Legislators: 30% Special Pay Awards including Sham Benchmarking and Pay up 119% since 1997 - Average Weekly Industrial Earnings up 60%

Ireland has 166 members (TDs) in the lower parliament chamber Dáil Éireann who represent some 4.2 million people. With one TD for every 25,000 persons, the people are over-represented in parliament, and their representatives are, by international comparison, overpaid as national legislators.

However, following the latest census of population, Ireland may even get more.Joseph O'Malley, Political Correspondent of the Sunday Independent recently wrote that Ireland has far more TDs than Britain has MPs: four times as many in proportional terms.

The TD in Leinster House is now better paid than his or her counterpart at Westminster. The TD also enjoys superior pension benefits, and for a much lower pension contribution: 6 per cent of a TD's salary, while the MP pays 10 per cent.

O'Malley says that for the TD, the transformation from being underpaid to being overpaid represents a remarkable turnaround in a short time. The TDs, however, are not complaining.

Within a decade, few sectors of society have done better in pay terms than the political class at Leinster House.In 1997, the Westminster member was paid a quarter more than the TD, who then earned €44,067. Nine years later the TD/MP pay gap has not just been closed, it has been reversed.

Today, the Dáil deputy earns €96,650 and the MP earns 11 per cent less, at €87,132.

O'Malley writes: Few can seriously dispute that the TD has less onerous national responsibilities than his British counterpart. The Dail sits less often than the Commons, and parliamentary life is much less demanding in Leinster House than at Westminster.

Never mind that Britain's population is 15 times larger. And its economy is 11 times the size of the Irish economy. The TD represents fewer people in a much smaller country. Nevertheless, Dail deputies are now paid more than MPs to do a less challenging job.

The key to the current high salary status of TDs has been the conjunction of some remarkable series of developments on the pay front. First, in 1999 the Buckley pay review awarded TDs a special pay increase of some 18 per cent. Buckley also recommended that Dáil deputies' pay should be linked to that of a principal officer in the civil service. Second, in 2002 the benchmarking review recommended a 12 per cent pay rise for principal officers.

And because TDs were linked to principal officers, they also benefited from that award. Since 1997, the 30 per cent from the special pay awards, when added to the normal partnership pay rises, has meant that the pay of Dail deputies has more than doubled. It is up 119 per cent, or twice as rapidly as the average industrial wage.

Stephen Collins in The Irish Times reported last July that politicians received their fourth pay rise in a year at the beginning of June, bringing the basic salary of a TD to €96,560 before special allowances and expenses are taken into account.

For the Taoiseach and his Ministers, it was the sixth pay rise over the past 12 months. Mr Ahern's salary is now €258,730 a year, including his TD's salary, while the Tánaiste earns €222,256 and other members of the Cabinet get €204,020.

Each Government minister has got 2 benchmarking awards, even though everyone knows that the system has been an absolute scam.

A comparable country to Ireland, such as New Zealand, which is similar in population size (4.1m) and economic scale and performance to Ireland, manages with 121 MPs, one chamber, and no upper house.

Indeed in 1999, in a non-binding referendum, the New Zealand people voted to reduce the number of MPs to 99: some 84 per cent voted in favour. Even more remarkable: the Kiwi MP is paid just €56,730, under two thirds the Irish rate.

Joseph O'Malley in The Sunday Independent, says that a contribution of only 6 per cent of salary entitles TDs to a full pension after just 20 years, based on half their final salary, and with a lump sum payment of one and a half times that salary.

But what the TD pays for his pension bears no relation to the real economic cost of providing his retirement benefits. The taxpayer pays that extra, unquantified, cost.

In a damning indictment of the current wide gap between many of the governed and their legislators, O'Malley writes: Many private sector companies are closing their defined benefit (final salary) schemes to new entrants, while others raise contributions to close the funding deficit, which the law passed by the Oireachtas requires.

Remarkably, however, little echo of this great debate on pensions can be heard in the national parliament.To cap it all, part-time local councillors are seeking public occupational pensions even though most private sector workers beyond the foreign-owned sector and large Irish-owned companies, such as banks and public companies, have none!!

The Sunday Independent has reported that thirteen Government ministers have benefited from tax breaks, averaging almost €5,000 each on second homes in the capital, just weeks after the Taoiseach's brother Noel Ahern, said property speculators should be "taxed out of existence".

The break designed exclusively for members of the Government, allows ministers to claim relief on second homes and for overnight accommodation in Dublin. Latest figures reveal that 13 ministers availed of the perk, claiming €63,477 between them.

So when Mary Harney lectures the nurses on pay, her credibility is at issue given the she is among the small elite in the public service who have got the biggest pay increases.

The Politics of Irish Jobs Announcements

Micheál Martin TD, Minister for Enterprise, Trade & Employment

Irish enterprise agencies are required to inform ministerial office staff at the Department of Enterprise, Trade and Employment on any development where either the senior minister or two junior ministers can claim credit for via a press release.

Jobs announcements are the manna to spin the yarn while there is no monthly ministerial claim for credit in respect of redundancy data.

In recent weeks, in advance of the general election and with a raft of unwelcome plant closure announcements, the sparse weekly jobs announcements have usually been preceded by a leak.

So news jobs have been unofficially announced in the weekend newspapers and then, in succeeding days, there is the ministerial imprimatur on the number of "high calibre " jobs that will be created and lots of blah-blah.

Last week, there was an announcement from Minister for Enterprise, Trade and Employment Micheál Martin TD that US firm Paragon Global Resources is to locate its international headquarters in Blanchardstown, Co. Dublin, with the support of IDA Ireland. The total investment will be €3.7 million over five years and will create up to 100 new "high level positions."

Today Monday, Martin announced that DeCare Systems Ireland Limited, a unit of a US firm, is to "undertake a strategic expansion of its business at the University Technology Centre, Cork". With the support of IDA Ireland, the expansion will create 100 new high level positions over five years, Martin said.

Apart from the apparent coincidence of the same number of jobs over the same time period, to have a time period of five years for creating jobs, is ridiculous. So it is an aspiration.

The five-year time period appears to be politically motivated to boost the number of jobs in an announcement.

McDowell, Ethics Bill, Planning Tribunal and Continuing Corruption

Last October, within a month of becoming leader of the Progressive Democrats and Tánaiste, Michael McDowell promised an Ethics Bill in the aftermath of the revelations that the Taoiseach Bertie Ahern had received cash payments from various individuals to alleviate the requirements of a post-marital break-up settlement, six years after a formal separation.

Bertie Ahern agreed with McDowell's proposals to ban private gifts for politicians, as a face-saver for the latter who had a choice of supporting Ahern's ethics standards of the early 1990's or sit on the Opposition benches.

On Wednesday this week, legislation requiring politicians to seek advance approval for substantial gifts from friends, also included a provision that provides for tripling the amount of money they can receive without having to declare the contribution.

Under the Ethics in Public Office (Amendment) Bill, Irish politicians must not accept more than €2,000 from friends for personal reasons unless they get approval from the Standards in Public Office Commission. But gifts or donations under €2,000 would not have to be declared, more than three times the current threshold of €650.

Political analysts say that the Bill has little chance of becoming law before the Dáil is dissolved for the general election.

In a radio interview, McDowell said that when for example he received hospitality from the organisers of the Ryder Cup last September, he shouldn't have had to declare such benefits.

The Ryder Cup example is a very pertinent one as the brown envelopes that former Government Press Secretary Frank Dunlop and more recently, bagman for builders, seeking to buy off local politicians, told the Planning Corruption Tribunal that has been sitting for almost 10 years, the typical rezoning vote purchase cost about IR£2,000.

Not only has ZERO been done about the corrupt land rezoning system that spawned the planning corruption, Michael McDowell's PD colleague Tom Parlon views any change in the system that makes multi-millionaires of farmers near Irish towns, "to the left of Stalin." Farmers like Parlon getting most of their income from European taxpayers, are not socialists either!

So NOTHING has been done to change the corrupt rezoning system and anyone who believes that corruption has ended, is a fool.

The contemporary Frank Dunlop in the guise of bagman, has dispensed with the brown envelope and has a much wider range of bribes/inducements under the umbrella of "corporate entertainment."

The Irish Independent reported in September 2006, that Menolly Homes, which paid former Fianna Fail TD Liam Lawlor £40,000 to get a better postal address for its homes, had offered a clutch of South Dublin councillors expensive gifts of Ryder Cup tickets and corporate hospitality.

The Financial Times reported earlier in 2006, before the 2006 World Cup that City investment banks in London, flushed with record earnings were snapping up most of the corporate hospitality packages available to British companies.

The London banks had already secured about 20,000 tickets, more than 70 per cent of the corporate packages being sold in the UK.

The FT said that Champagne and fine-dining packages ranged from €900 (£618) for a single match to as much as €300,000 for a luxury corporate box holding 10 people.

In Germany, 80 per cent of the total of 350,000 corporate tickets were available for local companies and the biggest bank Deutsche Bank headed the buyers' list. Seven-game packages priced at €15,000, which would allow a punter to follow England all the way to the final, have already been sold out.

So McDowell brings in an Ethics Bill that is unlikely to be passed while he and is colleagues have sat idly by for a decade and our rezoning system remains a golden tabernacle of vested interests and another Irish solution for an Irish problem.

In his radio interview on Thursday, McDowell suggested that when a minister gets a crate of wine from a chamber of commerce, he or she should not be required to refuse it.

The biggest loophole is in self-valuing the gift.

Some recipients like Michael McDowell, may know the value of a crate of Château Petrus - others would genuinely not!

Surely McDowell knows that more often than not, a "gift" is a legally-wrapped bribe?

It's also indeed indicative of how much the Progressive Democrats' leadership has surrendered to maintain the spoils of office, that the man who opposed single party Government, has made a proposal that even a Fianna Fáil minister with the thickest brass neck, would unlikely do.

Global corruption rampant; Corporate entertainment the new bribery in Developed World

Climate Change Impacts Respect no Borders

Visiting Chinese Premier Wen Jiabao (L front) shakes hands with the Republic of Korea President Roh Moo-hyun during their meeting in Seoul, capital of the Republic of Korea, April 10, 2007. (Xinhua Photo/Rao Aimin)

This is the time of year when the winds from the Gobi desert in Mongolia and Northern China sweeps yellow sands across to the Korean Peninsula.

The annual April storms keep children indoors, ground aircraft and create problems for precision industries such as semiconductors.

The Financial Times reports today that after a mild winter that deposited little snow in the Mongolian deserts, experts, including the Korea Meteorological Administration, believe 2007 could be the worst on record.

In the 1980s South Korea suffered severe yellow dust storms on about four days a year but that increased to an average of eight days a year in the 1990s and has reached more than 12 days a year this decade, according to the environment ministry, reflecting global warming.

The sand from the Gobi desert is becoming ever drier. Diminishing snowfalls mean the sand is not bound together as closely as in previous years.

The sand, which carries high levels of iron and manganese, picks up dioxins and heavy metals such as copper, cadmium and lead as it travels across the polluted industrial areas of northern China.

The Korea Environment Institute estimates as many as 165 South Koreans, mainly elderly people and those with respiratory problems, die each year and almost 2m more suffer from eye and breathing problems as a result of the sand.

Last year 4,373 schools closed for at least one day, while 164 flights were cancelled and many more aircraft were forced to change flight paths.

The Samsung Economic Research Institute estimates the economic damage from yellow dust at $5.5bn annually.

The FT says that Hynix and Samsung Electronics, both big computer chip makers, have increased the time employees spend in "air showers" on the way into their high-technology plants. Carmakers are forced to change the air filters in their spray-painting factories more often.

Still, for some businesses the seasonal storms also represent an opportunity: LG and Samsung have both produced new air-purifiers with enhanced dust removal mechanisms.

Meanwhile, supermarkets report mask sales have doubled or tripled from last year and restaurants are even selling more samgyopsal, a fatty pork dish said to be good at cleaning out dust from the inside when consumed.

Government officials from China, Korea, and Japan, which suffers to a lesser degree, have been meeting to help Mongolia plant more trees to create a green belt across the Gobi desert, and are giving $1.2m to Korean environmental groups to promote forestation. But it will be a slow process.

Irish Road Safety and John Waters' Metaphysical Ramblings

BBC's Top Gear programme is a popular programme because of its focus on high-speed cars. Presenter Richard Hammond has returned to the programme after a serious crash last September in a jet-powered car while filming for the programme. Hammond had been in a dragster-style car capable of reaching speeds of about 300mph at Elvington airfield near York.

A noticeable difference between my school days and today is that on a weekday afternoon, it is rare these days in Dublin, to find people staggering blind drunk out of pubs and proceeding to drive a vehicle. In contrast, it was far from rare in Bandon, West Cork. Twenty miles west, Dunmanway had a reputation for the amount of gargle available at funerals and the bottles of poitín or whiskey would be passed around in the graveyard.

While the amount of driving while being blind drunk, has fallen significantly in recent decades, most Irish teens regard the consumption of a lot of alcohol as an essential part of socialising.

Young men and not so young men are smitten by fast cars as the popularity of the BBC programme can testify to. Presenter Jeremy Clarkson's sidekick Richard Hammond, having recovered from a high-speed test car accident last year, is back on the testosterone-fuelled programme.

So for young Irish male drivers, the combination of drink and fast cars is a powerful cocktail.

An example of poor attention to public safety - Dubliners are very familiar with cracked pavements that can go unrepaired for months or years. There are also plenty other examples of the lackadaisical attitude to public safety. Dublin City Council has a marked car space directly in front of the south exit of the Merrion Inn pub on Merrion Road above. Motorists swinging left into the petrol filling station, sometimes without significantly reducing speed, put pedestrians at risk. Think of the risk on a dark wet night, with pedestrians exiting the pub and a moving car with limited or no visibility on its left, just about to cut across the footpath.

Irish Times columnist John Waters looks at the world through a more opaque prism.

This is part of what John Waters presented to readers in today's issue:

...a comparison between our out-of-control male driver and the suicide bomber in some Muslim cultures. The context is different, but they seem both to be expressions of a perversion, a short-circuiting of meaning.

Ideally, a child needs to grow up in a coherent tradition which, while transmitting its own principles with love and conviction, is open enough to enable the testing of its value system against others. The element in Islamic cultures provoking the emergence of the fundamentalist extremist appears to be the rigidity of the tradition and its poor adaptability to different forms of reality.

When Islamic culture is transplanted into a secularised, hyper-liberal environment, a host of complexes are created in the minds of some youngsters, who react by plunging deep into the tradition. Our culture is, in a sense, the opposite.

Having recently emerged from rigid tradition into a virtual free-for-all, we have replaced our prior insistence on the conveyance of a singular notion of meaning with a pick-and-mix culture in which the child is left struggling to comprehend reality. This, for the reasons already stated, affects males more than females.

The signals picked up by the young man tell him that he may find his meaning and identity as an entrepreneur, a sportsman or a plumber. But, because he is primed with questions that go far deeper than business, sport or plumbing, this provokes in him an extreme reaction not dissimilar in psychological terms to the reaction of the young Muslim man who, unable to reconcile the eternal culture with what he has been taught, dives backwards for reassurance into the deepest, darkest parts of the tradition.

The young Irishman, lacking this option, plunges forward in a hedonistic rush, and, because he finds himself on quicksand, speeds up to stay above ground. The two are equally out of control, but seek different ways to answer back.

One straps himself around with explosives and walks into a city. The other, perhaps less consciously, gets behind a steering wheel, puts the pedal to the metal and explodes onto a country road.

- isn't life complicated enough without having to jump on a pop-psychology bandwagon?

The recent change in the attitude of the Government to road safety issues will take a long time to have an impact.

The obsession of each new generation with drink will not change in just a decade or two. In addition, in our system of governance, where there is little public accountability, the evidence is everywhere of a lackadaisical attitude to public safety as exemplified by the Merrion Road case cited above.

Power, Money and the link with Behavioural Inhibition

A Ferrari Enzo

The focus on the pay bonanza earned by new Ford Motor Co. CEO Alan Mulally for four months on the job in 2006, has again raised the issue of when enough is enough when it comes to hired-hands hoovering up for themselves and their families, as much as they can lay their hands on.

Mulally earned $28.2 million from Sept 1st, 2006 after joining from Boeing Co. to restore profit. Mulally's total compensation in 2005 at Boeing, his last full year with that company, was $9.96 million, including $7.58 million in long-term incentive pay. Ford had a $12.7 billion loss for 2006.

At a certain point, as money keeps piling in, the super-rich can lose track of how much they actually have (SEE: Who cleans up at Goldman Sachs?) but lots of money confers power and status.

In the age of globalisation, where superearners take the lion's share, while the earnings of many workers in the Developed World are under threat from free trade, there are serious long-term implications.

Lots of money also makes people behave like idiots!

The experience of US comedian Eddie Griffin in writing off film producer Daniel Sadek's $1.5 million Ferrari Enzo, after piloting the hyper exotic car into concrete retaining wall, a year after Swedish videogame tycoon Stefan Eriksson smashed his Enzo — one of only 400 ever made — into a telephone pole, had prompted Sadek to say: “Eddie came out of the crash OK”, and that “A lot of worse things are happening in the world.”

Richard Conniff, author of The Natural History of the Rich: A Field Guide, writes in the New York Times: So what exactly constitutes a bad day in this rarefied little world? Did the casino owner Steve Wynn cross the mark when he put his elbow through a Picasso he was about to sell for $139 million? Did Mel (“I Own Malibu”) Gibson sense bad-day emanations when he started on a bigoted tirade while seated drunk in the back of a sheriff’s car? And if dumb stuff like this comes so easy to these people, how is it that they’re the ones with all the money?

Conniff refers to an experiment lead by Professor Dacher Keltner, a psychologist at University of California - Berkeley, who says that power and status imbue almost every facet of social interaction, from linguistic convention to the economy of emotional expression. Keltner also says that elevated social status leads to disinhibited social behaviour.

Mugshot of actor Mel Gibson - - A report on Gibson's behaviour following his arrest for drunk driving in July 2006, said that once inside the Sheriff's car, a source directly connected with the case said that Gibson began banging himself against the seat. The report says Gibson told the deputy, "You mother f****r. I'm going to f*** you." The report also says "Gibson almost continually [sic] threatened me saying he 'owns Malibu' and will spend all of his money to 'get even' with me." The report says Gibson then launched into a barrage of anti-Semitic statements: "F*****g Jews... The Jews are responsible for all the wars in the world." Gibson then asked the deputy, "Are you a Jew?"

Researchers led by Keltner took groups of three ordinary volunteers and randomly put one of them in charge. Each trio had a half-hour to work through a boring social survey. Then a researcher came in and left a plateful of precisely five cookies. Care to guess which volunteer typically grabbed an extra cookie? The volunteer who had randomly been assigned the power role was also more likely to eat it with his mouth open, spew crumbs on partners and get cookie detritus on his face and on the table.

It reminded the researchers of powerful people they had known in real life. One of them, for instance, had attended meetings with a magazine mogul who ate raw onions and slugged vodka from the bottle, but failed to share these amuse-bouches with his guests. Another had been through an oral exam for his doctorate at which one faculty member not only picked his ear wax, but held it up to dandle lovingly in the light.

Conniff says that as stupid behaviours go, none of this is in a class with slamming somebody else’s Ferrari into a concrete wall. But science advances by tiny steps.

The researchers went on to theorize that getting power causes people to focus so keenly on the potential rewards, like money, sex, public acclaim or an extra chocolate-chip cookie — not necessarily in that order, or frankly, any order at all, but preferably all at once — that they become oblivious to the people around them.

Indeed, the people around them may abet this process, since they are often subordinates intent on keeping the boss happy. So for the boss, it starts to look like a world in which the traffic lights are always green (and damn the pedestrians).

Professor Keltner and his fellow researchers describe it as an instance of “approach/inhibition theory” in action: As power increases, it fires up the behavioral approach system and shuts down behavioural inhibition.

And thus the Fast Forward Personality is born and put on the path to the concrete barrier.

The corollary is that as the rich and powerful increasingly focus on potential rewards, powerless types notice the likely costs and become more inhibited.

The bottom line for Conniff is: Without power, people tend to play it safe. Given power, even you and I, would soon end up living large and acting like idiots.

Power, Approach, and Inhibition

This article examines how power influences behaviour. Elevated power is associated with increased rewards and freedom and thereby activates approach-related tendencies. Reduced power is associated with increased threat, punishment, and social constraint and thereby activates inhibition-related tendencies.

Irish Nurses: Politicians don Hairshirt late in day having been huge gainers from Public Sector Pay Bonanza

The Irish nurses in public hospitals have begun industrial action to press home their claims for a reduction in their working week from 39 hours to 35 hours and a special pay increase of 10%.

Some other groups in the health service have better terms than them and why wouldn't they try to get a piece of the free lunch like so many others, including politicians?

During the dot-com period of temporary insanity, teachers and other public servants bought into the self-serving delusion that stories on the small number in the private sector like Fran Rooney who hit the jackpot with the Baltimore Technologies floatation, were representative of private sector workers, rolling in manna from heaven, while the brethren in the public sector had to survive on thin gruel.

Taoiseach Bertie Ahern is not one for sailing against the wind and he agreed to the demands of public sector trade unions to set up a "benchmarking" body that was tasked with making comparisons between similar grades in the public and private sectors.

In the nod and wink world of Irish politics, the conclusions were agreed before the body was established and such minor issues as the gold plated pensions that were available to Bertie Ahern and others on the public payroll, compared with the zero coverage available to a large number of private sector workers, was conveniently ignored.

Before the benchmarking body was due to report, Senator Joe O'Toole who was then the general secretary of the Irish National Teachers Organisation, left the cat out of the bag when he said that benchmarking was like turning up at an ATM to withdraw cash. The use of the word "benchmarking" was a sham.

In December 2000, a Public Service Benchmarking Body, established under the Programme for Prosperity and Fairness (PPF), was asked to undertake "a fundamental examination of the pay of public service employees vis-a-vis the private sector." Former Davy Stockbrokers' economist Jim O'Leary was a member of the body for a period but he resigned before it reported.

In 2004, O'Leary who had joined the Department of Economics at Maynooth University, published with two of his colleagues, the results of six months' rigorous and painstaking research into public-private sector pay differentials in Ireland - Public-Private Wage Differentials in Ireland, G.Boyle, R.McElligott and J.O'Leary, ESRI Quarterly Economic Commentary, Summer 2004.

O'Leary and his colleagues wanted to discover whether similar people in similar employment circumstances were better or worse off working in the public than in the private sector. In order to do this, they had to control for attributes like age, experience, gender and education, and also for job characteristics like occupation, type of contract and size of establishment.

As the CSO (Irish Central Statistics Office) data does not permit this kind of analysis, the dataset that they had to use, is one based on a large-scale survey conducted by the Economic and Social Research Institute (ESRI) and used for much of its research into poverty and inequality.

The core finding was that on average, public servants earned 13 per cent more than their private sector counterparts on a like-for-like basis in 2001.

The researchers also discovered that the size of this margin (the public sector premium) in 2001 was not significantly different from what it had been in 1994, suggesting that pay increases in the public sector had kept pace with the private sector throughout the Celtic Tiger period.

Another discovery was that the margin by which public service workers outearned their private sector counterparts tended to be significantly larger at the bottom of the income distribution than at the top.

A particularly striking finding was that the estimate of the public sector premium for Ireland was more than twice as large as the available estimates for other countries.

The Public Sector Benchmarking Body recommended pay increases which averaged 9 per cent across the grades examined and cost €1.2 billion a year. Government Departments introduced aspirational targets for staff that would make a laughing stock of a manager in the private sector, who emulated the farcical exercise.

O'Leary says that the Public Sector Benchmarking Body never published its research results and at no stage in its 278-page report did it explicitly state or opine that public sector pay had fallen behind that in the private sector.

Ministers, other politicians and all living former employees of the Irish public service received special payments. Bertie Ahern, Michael McDowell and the rest of the Cabinet got double benchmarking payments.

The gravy train didn't stop there.

Politicians' Pay

Total increases taken by Ministers and TDs since 1997, have jumped 119 per cent, or twice as rapidly as the average industrial wage.

In 1997, the Westminster member was paid a quarter more than the TD, who then earned €44,067. Nine years later the TD/MP pay gap has not just been closed, it has been reversed. Today, the Dáil deputy earns €96,650 and the MP earns 11 per cent less, at €87,132.

Joseph O'Malley of the Sunday Independent wrote in 2006: Few can seriously dispute that the TD has less onerous national responsibilities than his British counterpart. The Dail sits less often than the Commons, and parliamentary life is much less demanding in Leinster House than at Westminster. Never mind that Britain's population is 15 times larger. And its economy is 11 times the size of the Irish economy. The TD represents fewer people in a much smaller country. Nevertheless, Dail deputies are now paid more than MPs to do a less challenging job.

The key to the current high salary status of TDs has been the conjunction of some remarkable series of developments on the pay front.

First, in 1999 the Buckley pay review awarded TDs a special pay increase of some 18 per cent. Buckley also recommended that Dáil deputies' pay should be linked to that of a principal officer in the civil service. Second, in 2002 the benchmarking review recommended a 12 per cent pay rise for principal officers.

And because TDs were linked to principal officers, they also benefited from that award. Since 1997, the 30 per cent from the special pay awards, when added to the normal partnership pay rises, has meant that the pay of Dail deputies has more than doubled.

It is up 119 per cent, or twice as rapidly as the average industrial wage.

Irish Public Sector Pay

Pay - Irish Public Service 2001-2006: Salaries up 59%; Payroll up 18% - 38,000 additional workers and Pensions up 81.3%: Average industrial wage rise in the period was 19%:

Irish public service salaries rose by 59% in the period 2001-2006 and the payroll expanded by 38,000 extra staff.

Increases in public sector over the period due to general rounds total €2,479m (or 24.3%), “special” pay increases (primarily Benchmarking) total €1,328m (or 13%), and other factors (such as extra numbers) total €2,193m (or 21.6%).

Stripping out the additional staff, the average increase was 38%.

The increase in the average industrial wage for a male worker in the period 2001-2005, was 19%.

- most private sector workers on the industrial wage do not have an occupational pension. So the disparity in gains is greater than the 100% difference in the period 2001-2006.

The Exchequer’s annual wages and pensions bill increased sharply from €10.2 billion in 2001 to €16.2bn last year, with what has been termed "benchmarking" accounting for up to €1.32bn of the rise.

Conclusion

Minister for Health Mary Harney is now telling the nurses that the country cannot afford a big pay increase or a reduction in hours worked.

It's a bit late in the day to don the hairshirt when Mary Harney and other politicians were happy to nod through sham benchmarking and other huge increases for themselves, as if they had somehow found the philosopher's stone that would transmute the good times of the Celtic Tiger property boom, into a permanent prosperity.

As to a postscript on sham benchmarking, with its joke targets, last January, the Taoiseach asked the OECD to put forward proposals on public sector reform - six months after the general election!