David McWilliams RTE programme on inequality

[Brendan Burgess]

According to Cormac Staunton of TASC (The Taskforce for Social Change) in a report on Wealth distribution in Ireland

"Yet we know remarkably little about how this wealth is distributed."

There is no wealth survey for Ireland - just Household Surveys by the CSO. . Apparently, McWilliam got his data from the , which estimates it.





Clearly this shows a consistent pattern of the Irish rich getting richer and the Irish poor getting poorer.

Brendan

 

[Conan]

Surely the Credit Suisse report shows that the wealth of the top decile and percentile has actually remained flat since 2000. That's what the report states?
From a quick scan of the Top 300, it seems to me that at least 50% of the top 20 are not actually resident in Ireland. So is it correct to include the Mistry family (who live in Mumbai), the Westons, John Dorrance etc?

 

[Firefly]

Balderdash of a program. Totally devoid of proper economic analysis and almost of counter-opinion. If DMW opened his jacket, a string of knock-off watches would fall down at this stage.

The only part I agreed with was the equality of opportunity piece, but Fintan the Tool must have had today's rant in the IT prepared for this as well (Fintan, it's not perfect, but we have free education and pretty similar standards of education across our schools. Maybe, just maybe, parental responsibility might at least be a contributing factor?).

The chap from IBEC got it 100% correct for me re: taxation on multinationals - it's not the percentage they pay, but the amount. We're taking in 4BN per year for 4 million people. The muliti-nationals pay some of the better wage rates out there too which has a knock-on for PAYE, VAT and other taxes, never mind the spin-off jobs created. The last thing we want to do here is to kill the golden goose....otherwise, would the last multi-national to leave please turn out the lights?

As for taxing the rich - impossible unless you get EVERY country signed up - which makes it unbelievably attractive for the Lichtenstein's of this world to then not comply. I prefer the English approach - get more of the international rich investing here rather than chasing our own rich out the door.

Have to watch this again too....www.youtube.com/watch?v=661pi6K-8WQ

 

[Sarenco]

What a truly bizarre programme. Any number of unrelated, poorly articulated "facts" shunted together to demonstrate what exactly? It certainly didn't show a growing level of income or wealth inequality in Ireland if that was the intention.

 

[cremeegg]

Clearly this shows a consistent pattern of the Irish rich getting richer and the Irish poor getting poorer.

I'm missing something, I'm not sure weather it is the point being made or the joke.

The tables show that the top 10% owned 58% of the wealth in Ireland in 2000 and the top 10% (not necessarily the same people) also owned 58% of the wealth in 2014.

This gives the 14th most unequal wealth distribution of the 21 countries listed, in both 2000 and 2014. In other words 13 of the 21 countries listed have a greater concentration of wealth in the hands of the top 10% than Ireland.

 

[Brendan Burgess]

Clearly this shows a consistent pattern of the Irish rich getting richer and the Irish poor getting poorer.

Surely the Credit Suisse report shows that the wealth of the top decile and percentile has actually remained flat since 2000. That's what the report states?

I'm missing something, I'm not sure weather it is the point being made or the joke.

Sorry guys. I omitted the smiley. It is extraordinarily consistent. There is no evidence at all of the rich getting richer.

Brendan

 

[galway_blow_in]

most offensive thing i learned from the programmme was from that comer man from galway who bought a house for 900k which was originally valued at ten million and is now worth six million according to him

he claimed that his company began buying what they could as quick as they could after the bailout in late 2010 so as to head out the vulture funds which arrived the following year

this suggests the real firesale prices are made eighteen months before what is offically reported as the bottom by the likes of myhome or daft , it appears the reported lows of mid 2012 were only the lows in the market available to the rest of us , seems those big guns in the know had access to the prize assets a good while before that

its been my experience for a while in trying to buy commerical property that those who decide on the terms of a sale often have a preferred buyer , ive offered the asking price on commerical property in limerick , only for a deal to be impossible to put together , limerick is still where dublin was in around 2012

 

[Leper]

I had a conversation earlier with a teacher. He bought his house just before the recession and just to get on the then elusive property ladder. He still has his house out in a fairly remote village. He cannot sell his house as it is still worth way less than what he paid. He now cannot rent out his house because nobody wants to live in the relatively remote village where it was built. Although he has a good job, he is trapped. His hope has been removed and his rage is multiplying. He must pay his taxes and his earnings are easily reckonable. He cannot allay any tax against his huge loss while the the rich can. This is the scenario for many many people who now have no hope and can only look at the rich getting richer and of course rage sets in. David McWilliams programme just confirms that there is now less hope for many while others are swanning in easy acquired wealth. You do not have to be a trained economist to see this as all you need is some common sense.

I wish some of our well heeled "economists" on this forum would see common sense. The coping class has been screwed by the classes above and below them but they still continue to cope somehow. For how long more can this happen?

 

[Brendan Burgess]

Hi Leper

None of that is really very relevant. Your friend bought a house in a remote village. That was always going to be risky. Who is he annoyed at? Himself? He could well be annoyed at David McWilliams for strongly advocating the bank guarantee where he and tax payers have bailed out wealthy depositors and bondholders. But he should be primarily annoyed at himself.

can only look at the rich getting richer and of course rage sets in. David McWilliams programme just confirms that there is now less hope for many while others are swanning in easy acquired wealth.

Did you look at the figures in the above tables? There is simply no evidence that the rich are getting richer. This is a slogan which has become an urban myth.

After calling for a guarantee, McWilliams called for Ireland to default on its national debt. He called for us to leave the Euro. He predicted that the mortgage crisis and, what he called the "tracker mortgage timebomb" would lead to civil unrest and massive defaults. While he was forecasting doom and creating a general loss off hope among the Irish , some Irish and international investors risked their money to buy assets in Ireland. Now that their judgement has been proven to be correct, he is complaining that they are getting richer. It's not common sense - it's nonsense.

But even if the rich are getting richer and even if that is unfair, McWilliams offered no solution to it. If you think that the people who invested during the crisis should be pulled back in now, you do that through increases in Capital Acquisition Tax and Capital Gains Tax and you introduce a Wealth Tax. An increase in Corporation Tax on these evil multinationals would have no effect on the distribution of wealth.

 

[Duke of Marmalade]

Boss agree with you entirely, the program was an outrage. It is the sheer cynicism which gets me. For example, Prof McWilliams knows full well that there is an entirely innocent reason why he paid more tax than BoA in a year when the latter made losses and yet he has no qualms with letting that soundbyte survive editing.
Just a couple of other comments. Asset distribution is driven by age more than anything else and this is entirely in keeping with the human condition even in a totally equal world. Thus the bottom 10% own practically zero net assets. This group of asset paupers will include a large number of young professionals who have a successful career ahead of them.
That top 300 was interesting. Only a handful were inherited wealth, the majority seemed self made. It seems to me we all had equal opportunity to be in that top 300 unless the Prof is claiming that it is unfair that I can't sing like Bono.

 

[T McGibney]

He cannot allay any tax against his huge loss while the the rich can.

I don't get this point. No matter how rich you are, you're not subject to Capital Gains Tax on any increase in the value of your home. The corollary of this is that you can't claim a Capital Gains Tax or other tax deduction on any decrease in its value either.

McWilliams et al are using half-truths to sow unwarranted public resentment and anger, for their own ends.

 

[Sarenco]

Asset distribution is driven by age more than anything else and this is entirely in keeping with the human condition even in a totally equal world. Thus the bottom 10% own practically zero net assets. This group of asset paupers will include a large number of young professionals who have a successful career ahead of them.

That really is a key point.

To take one example, a Garda can retire after 30 years service with pension entitlements with an actuarial value in excess of €1million. By that stage, a Garda may well have a mortgage-free house (or at least substantial property equity) and other savings that could easily translate to a net worth in excess of €1.5million. In contrast, a newly qualified actuary will typically have a minimal (or even negative) net worth, although you might reasonably expect an actuary to have higher career earnings than a Garda.

So the newly qualified actuary may well be in the bottom 5% of the wealth distribution range, whereas a retired Garda may well be in the top 5%.

 

[galway_blow_in]

Hi Leper

None of that is really very relevant. Your friend bought a house in a remote village. That was always going to be risky. Who is he annoyed at? Himself? He could well be annoyed at David McWilliams for strongly advocating the bank guarantee where he and tax payers have bailed out wealthy depositors and bondholders. But he should be primarily annoyed at himself.



Did you look at the figures in the above tables? There is simply no evidence that the rich are getting richer. This is a slogan which has become an urban myth.

After calling for a guarantee, McWilliams called for Ireland to default on its national debt. He called for us to leave the Euro. He predicted that the mortgage crisis and, what he called the "tracker mortgage timebomb" would lead to civil unrest and massive defaults. While he was forecasting doom and creating a general loss off hope among the Irish , some Irish and international investors risked their money to buy assets in Ireland. Now that their judgement has been proven to be correct, he is complaining that they are getting richer. It's not common sense - it's nonsense.

But even if the rich are getting richer and even if that is unfair, McWilliams offered no solution to it. If you think that the people who invested during the crisis should be pulled back in now, you do that through increases in Capital Acquisition Tax and Capital Gains Tax and you introduce a Wealth Tax. An increase in Corporation Tax on these evil multinationals would have no effect on the distribution of wealth.

agree with most of what you say ( property in rural villages is never going to become very valuable and its foolish to think otherwise ) but i think mc williams made fair points about how NAMA sold off quality assets at much too low prices to foreign funds , that man from glenamaddy galway ( who started as a plasterer and with his brother developed a property empire in the uk and germany ) more or less confirmed that discounts way beyond 60% ( reported as the maximum dip int the market from peak to trough ) were to be had

it does appear a section of the property market was reserved for very high NET worth individuals following the crash

 

[Leo]

From what I've seen of the Comer brothers, you really have to admire what they've built up from very humble beginnings. The stories of the sheer volume of work they got through working their way up on building sites, regularly working into the small hours of the morning just to get up and repeat day after day.

They were shrewd, and held their ground when much of the rest of the country were leveraging themselves way beyond their capacity thinking we had the first bubble ever that wouldn't burst. Once it inevitably did burst, they had the capital available to invest in properties with potential, but particularly those like Kilternan that still required the kind of investment to finish that no bank was prepared to back.

They don't seem like the politically connected moguls the popular media like to typically portray as the beneficiaries of NAMA deals. But then, as a nation we seem to like to think there's some big conspiracy behind success stories like this, we don't like hearing it's down to hard work and intelligence.

 

[44brendan]

how NAMA sold off quality assets at much too low prices to foreign funds , that man from glenamaddy galway ( who started as a plasterer and with his brother developed a property empire in the uk and germany ) more or less confirmed that discounts way beyond 60%

This type of allegation is without foundation and extremely annoying to those of us involved in managing an asset portfolio. In terms of the timing of asset sales the market back in 2010 - 2013 was at best volatile and at worst still in the process of bottoming out. many knowledgeable commentators were still forecasting further falls in property prices and there were very few buyers with available funds for the larger properties that needed to be sold. Yes, with the benefit of hindsight some of those properties should have been withheld from the market, but as a decision maker you are not in a position to take the risk of further drops in value on a signification portion of of your portfolio. Fair dues to the Comer brothers and others who had the funds available to take a punt in buying properties at a time when others had neither the risk appetite nor the funds to invest.
Perception and reality are somewhat at odds here as while it would appear on the face of it that NAMA and banks sold off properties at a fraction of their value, it is unlikely that this involved "sweetheart deals" in general (not saying that there weren't any!). Most of these deals would have been available to the rest of us had we the funds to avail of them.

 

[Protocol]

Seamus Coffey has a blogpost on wealth by age:

http://economic-incentives.blogspot.ie/2015/09/age-and-distribution-of-wealth.html

 

[Protocol]

Note that the CSO has published one survey of wealth, called the HFC Household Finance and Consumption Survey.

See here:

[broken link removed]

http://www.cso.ie/en/media/csoie/releasespublications/documents/socialconditions/2013/hfcs2013.pdf

 

[Brendan Burgess]

i think mc williams made fair points about how NAMA sold off quality assets at much too low prices

McWilliams said that NAMA had sold off stuff at fire sale prices. If NAMA had not been set up, the banks would have appointed receivers and those properties would have been dumped on the market much earlier and with no co-ordination. NAMA was able to feed the property onto the market in an orderly fashion.

It was also able to finance the completion of some of the projects, which the banks probably would not have done.

In a massive market drop and market recovery, someone has to start selling properties at low prices to get action going in the market.

A completely baseless and ignorant criticism from McWilliams.

Brendan

 

[Brendan Burgess]

Seamus Coffey has a blogpost on wealth by age:

http://economic-incentives.blogspot.ie/2015/09/age-and-distribution-of-wealth.html

A great piece:

The median wealth for the over 65 households is €202,400. The middle household in the under 35 age bracket has 50 times less wealth than the middle household in the over 65 households. Do we want to make this gap smaller? If we want to do that how do we achieve it? Take wealth from the nearly retired and give it to the newly qualified? Would it not be better if this gap was even greater?

To assess the level of inequality in wealth distribution, we would need to know the wealth distribution by age group. In other words, "the bottom 10% of people aged 65+ own 2% of the wealth of that age group, and the top 10% own 50% of the wealth of that age group"

McWilliams asked what did people think would be a fair distribution. If I had been asked that question, I would not have thought to factor in this age issue.

 

[galway_blow_in]

From what I've seen of the Comer brothers, you really have to admire what they've built up from very humble beginnings. The stories of the sheer volume of work they got through working their way up on building sites, regularly working into the small hours of the morning just to get up and repeat day after day.

They were shrewd, and held their ground when much of the rest of the country were leveraging themselves way beyond their capacity thinking we had the first bubble ever that wouldn't burst. Once it inevitably did burst, they had the capital available to invest in properties with potential, but particularly those like Kilternan that still required the kind of investment to finish that no bank was prepared to back.

They don't seem like the politically connected moguls the popular media like to typically portray as the beneficiaries of NAMA deals. But then, as a nation we seem to like to think there's some big conspiracy behind success stories like this, we don't like hearing it's down to hard work and intelligence.

was not my intention to slight the comer brothers at all , the big pile he got for 900 k looked like it was more of a grand home than somewhere the vast majority of people would like to invest in , he did however say that they started buying around the time the IMF arrived , looking at data from myhome etc , we are led to believe the bottom was sometime around the middle of 2012 , comer implied that the big money was in swooping on assets at least a year earlier than this , i took this to mean he was talking about stuff which was,nt on the open market