David McWilliams RTE programme on inequality

Brendan Burgess

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McWilliams is doing a programme tomorrow at 21.35 pm.

The recession has been tough for everyone. Or was it? A small minority of people with cash, with assets, with influence have done immeasurably better out of the recession and it really bugs us. You've got the hyper-rich and the rest of us - and the gap in between is growing.

David will suggest a radical solution at addressing this that does not require new taxes but addresses the imbalance and will incentivise people and give them a greater stake in our economy.
 
It's not looking good if his recent article in the Indo, is a taste of the programme.

"In Ireland, for example, the top 100 individuals in the ‘Sunday Independent’ 2014 rich list saw their wealth increase by €12bn in one year.

This was twice as much as the increase in the entire Irish GDP in the same period, implying that 100 people did considerably better than the other 4.8 million of us. We are not talking about "the 1pc"; we are talking about only 0.02pc of the population."


Séamus Coffey deals with this nonsense here:


Why is the €12.6 billion estimated wealth increase a useless number. Well, 75 per cent of it is due to the top two on the list.

During 2014 the net worth of Irish-resident households rose by around €80 billion. This is made up of:

  • Increase in value of financial assets: +21.9 billion
  • Decrease in amount of financial liabilities: –€9.8 billion
  • Increase in value of housing assets: +€50 billion
If any comparison is to be made with the €12 billion increase in the wealth of the “Irish” Rich List it is to the €80 billion increase in the net worth of Irish-resident households.

 
Utter claptrap.

The same list that has no factual basis whatsoever, and that imports people into Ireland at will just to include them on the list.
 
It is outrageous that RTE allows someone to present a programme like that without any serious economist questioning it.

His complete apples and oranges comparison of GDP growth with the growth in wealth as explained by Séamus Coffey.

Tom Lyons said that many of the 300 super rich have got debt write downs to increase their wealth. I doubt if any wealthy solvent borrower got a debt write down. Maybe an occasional person has recovered from insolvency. But that is why we have insolvency laws.

McWilliams completely ignored his own role in advising Brian Lenihan to guarantee the depositors and bondholders in Anglo and Irish Nationwide. We did not bail out the banks. We bailed out their depositors and bondholders and McWilliams was a cheerleader for that.

"The value of shares in the top companies in Ireland grew by 500% from 2008 to 2015". 2008 was the bottom of the market. These are all publicly quoted companies. Anyone was free to buy those shares. They are not restricted to the rich or the super-rich.

"We have tax policies which encourage the wealthy go grow more wealthy". Which policies are these?

"NAMA was a firesale of assets". Actually NAMA was the exact opposite. If those property development loans had not gone into NAMA, the banks would have all been foreclosing on them a lot quicker.

He interviewed Kevin Nowlan of Hibernian REIT as an example of how the super-rich bought up property cheaply. Again, Hibernian REIT is a publicly quoted company, and anyone who thought property was undervalued could have bought the shares.

The nonsense from Mark Blyth that both he and McWilliams paid more tax than Bank of America. I don't know Bank of America's situation, but I presume it's like the Irish tax system. You pay taxes on your profits. If you make huge losses, you set those losses against your taxes.

"We tax incomes e.g. people's salaries but we don't tax capital e.g. corporation tax." Corporation Tax is a tax on profits i.e. income, not a tax on capital i.e. wealth.

I agree that we should cooperate with all other countries internationally to properly tax multinationals. But I fully understand that this will lead to a huge loss of jobs and tax to Ireland, as we will no longer be attractive to these companies. McWilliams seemed to think that we could get more tax by simply raising corporation tax rates. We would lose huge amounts of tax and income and jobs by doing so.
 
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From the promo for the show:

David will suggest a radical solution at addressing this that does not require new taxes but addresses the imbalance and will incentivise people and give them a greater stake in our economy.

I missed that bit. He bemoaned the wealth inequality in Ireland, but he didn't come up with any solutions, other than taxing US multinationals which, other than making us all poorer, would not affect the 5% who own such a high proportion of our assets.

We have the most progressive income tax system
We have among the highest social welfare rates in Europe
We have high spending on health, even though it's inefficiently spent

We should raise the level of CAT to the same as income tax, but why did he not suggest that?
We should raise the level of CGT to the same as income tax, but again he didn't suggest that.

He suggested no taxes at all which would hit the wealthiest 5%, except in so far that some of them have shares in the US multinationals operating here.
 
I didn't notice the source of his statistics on who owns the wealth in Ireland.

Does anyone know of any research on that and how it has changed?

A lot of the super wealthy property developers and business people have gone bankrupt - would that not have reduced wealth inequality?

The top 10% might own a bigger share of the wealth than they did 10 years ago, but I suspect that they are different people today from those of 10 years ago. It might be worth getting out the Rich List from 2005 and seeing where they are now.

Here is some of the information which shows how meaningless a lot of it is.

https://en.wikinews.org/wiki/Annual_rich_list_shows_Ireland_now_has_six_billionaires
  1. Hilary Weston and family; €7.286bn - Retailing
  2. Sir Tony O'Reilly; €1.897bn - Food, media and inheritance
  3. John Dorrance; €1.857bn - Inheritance
  4. Dermot Desmond; €1.239bn - Finance
  5. Sean Quinn; €1.157bn - Quarries, hotels, insurance and industry
  6. Tony Ryan; €1.114bn - Airline
In 2015, Hilary Weston is worth "only" €8.8 billion - not much of an increase in 10 years. Our richest man is Mr Mistry who is worth €14.5 billion. He wasn't even on the list 10 years ago. I presume that he has become a resident in the last 10 years.

We could improve equality by expelling anyone worth over, say, €100m?

Brendan
 
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The programme just reiterated the well-known maxim, “have it and you’ll get it”!

If I have sufficient resources, I can hoover up properties for recession prices and can afford to sit on them until they recover most or all of their value.

If I bought at the right time and held them for at least 7 years, I would not incur CGT on disposals.

If I enhanced the properties so that they sold for 50 times what I paid for them, I would still not incur a CGT liability.

If I don’t have resources, for instance I lose my job, my one property could be repossessed and the bank will chase me to the grave for the shortfall.

The less wealthy suffered disproportionately, as we have daily proof through posters on AAM.

There is nothing new under the sun.
 
We need more television programmes like this. I learn more from listening to David McWilliams than to hardened "serious (whatever that means)" economists trying to exact money from people who have nothing and withdrawing any hope they have. Where were our "serious" economists when Ireland Ltd was going down the tubes? The programme was populist, but true. Well done McWilliams.
 
Watched this last night terrible program , what's his point? Rich get rich by taking chances and risks. I mean the stockmarket is there for everyone to invest in its not only for rich people . He just picks 2008- now to show how stocks have risen , most people be very lucky to buy at the very bottom , I'm sure most rich people where invested long before 2008 and where just recovering losses.

It's all common sense risk reward stuff , he's making out like rich people had a huge advantage and everyone got in at the bottom of the market and sold for X times they bought for , i'm sure a lot of rich people bought stocks property etc all the way down as they dropped by smaller %'s and haven't made a killing , is he interviewing them ?

Anyone who takes a chance in stockmarket / property etc and is buying when its doom and gloom and everyone is selling deserves the reward they make in my opinion.
 
Why did guys contribute to this? They just looked sinister.

As for McWilliams' nonsense re tax on multinationals...incredible.

He thinks that the 12.5% applies to revenue!
 
Let's assume for the sake of argument that his fundamental points are correct
1) Ireland has a very unequal distribution of wealth.
2) This is very unfair

Where was his solution?

I don't think that he even mentioned the expression "Wealth Tax".

His solution was to tax multinationals. Let's further assume that they simply pay up and it has no impact on their investments in Ireland. How would that affect the distribution of wealth in Ireland? I can't see that it would at all.

I very much doubt that much of the wealth in Ireland is in the form of shares in US multinationals.

Brendan
 
I like Sophrosynes eminently obvious views.

I considered the programme to be too light on hard facts to merit serious consideration.

Surely the one thing that could (level) things a bit is a proper application of a (windfall) tax, on a lot of non -earned income?.
It seems that those lucky enough to have loose funds can hoover up (value) without adding real worth to Ireland.

Fella,
I think the stock market is for the richer in society. The bookies are for the rest !and there are no tax covers for bookie losses!
I agree those that take risks deserve some reward, but it appears they are feeding off the (little) people who bailed them and banks out ,yet it is the (little) people who subsidised the Risk who get no reward ?
 
Gerry Canning said:
I agree those that take risks deserve some reward, but it appears they are feeding off the (little) people who bailed them and banks out ,yet it is the (little) people who subsidised the Risk who get no reward ?
Click to expand...

Yes, we bailed out the depositors in the banks. There was a guarantee of €20k in place which would have covered most people. It was a crazy transfer of wealth from borrowers and taxpayers generally to those lucky enough to have over €20k on deposit.

Brendan
 
One of his big "proofs" of inequality was showing how much wealth the Top 20% and the Top 5% owned. But no source was quoted (as far as I could see). Clearly some of our former "wealthy" are now bankrupt/as good as ( Sean Quinn, Tony O'Reilly). But many of the wealthiest are actually not really resident in Ireland (e.g. the Westons, John Dorrance, Mr. Mistry , John Grayken etc). So is it correct to include them in any comparison?
I often hear some on the "looney left" quoting that Ireland has 30,000 millionaires and when pressed for a source they often quote a Bank of Ireland study from 2006. Many of those are considerably less wealthy now than in 2006 (Quinn, O'Reilly and the myriad of individuals who have sought bankruptcy in England, Wales etc).
We again saw in the Claire Byrne show the likes of Paul Murphy drone on about how "banks were bailed out" without acknowledging that in effect it was depositors who were bailed out. It would have been interesting to see how many of those protesting about "bank bailouts" would have reacted had their Current and Deposit Accounts been shut down?
Overall I found the program simplistic and more of a self-promotion exercise than contributing anything enlightening. Was Williams only solution to inequality to raise Corporation Tax? Quoting the 500% growth in the share price of the major multinationals with operations in Ireland, what relevance was that???
In terms of economic analysis it would not have been out of place in the Sun or Daily Mail.
 

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