The Central Bank published an interesting Economic letter in the past week written by former Governor, Patrick Honahan. It's very short but is very easy to read and serves as a useful illustration of something that we all knew already. The letter can be viewed here.
He looks at the distortions the multinationals have on GDP/GNI and HDI and argues that we really rank somewhere between 8th and 12th for prosperity in the EU and 21st internationally. I'm a little surprised that the ranking could be as low as 12th in the EU but the logic seems sound enough.
From the preamble:
The well-known distortions affecting Ireland’s GDP complicate international comparisons. Ireland is a prosperous country, but per capita GDP data mislead by placing it second only to Luxembourg in the EU. Other measures, such as the Human Development Index, are also marred. Modified data provide an indication of the extent of the re-ranking that it is warranted.
Great link, thanks.The Central Bank published an interesting Economic letter in the past week written by former Governor, Patrick Honahan. It's very short but is very easy to read and serves as a useful illustration of something that we all knew already. The letter can be viewed here.
He looks at the distortions the multinationals have on GDP/GNI and HDI and argues that we really rank somewhere between 8th and 12th for prosperity in the EU and 21st internationally. I'm a little surprised that the ranking could be as low as 12th in the EU but the logic seems sound enough.
From the preamble:
The well-known distortions affecting Ireland’s GDP complicate international comparisons. Ireland is a prosperous country, but per capita GDP data mislead by placing it second only to Luxembourg in the EU. Other measures, such as the Human Development Index, are also marred. Modified data provide an indication of the extent of the re-ranking that it is warranted.
You would never think Ireland is that wealthy when living outside dublin with hardly any services. Do all the usa businesses here distort it a tad?
I wonder would Krugman have used a similarly racist term to describe the economics in an African country?A good explanation of the term leprechaun economics above coined by Paul krugmann economist to describe whats going on in irish economy. The big distortion between GDP and GNP caused by the gravitational fields of the giant multinationals on our relatively small economy otherwise. The international attention and ridicule provoked the CSO to invent this new statistic GNI *.
A good explanation of the term leprechaun economics above coined by Paul krugmann economist to describe whats going on in irish economy. The big distortion between GDP and GNP caused by the gravitational fields of the giant multinationals on our relatively small economy otherwise. The international attention and ridicule provoked the CSO to invent this new statistic GNI *.
I wonder would he have used the N word to describe the Nigerian economy?God, that doesn't read very well!
I wonder would he have used the N word to describe the Nigerian economy?
Maybe we should accuse him of cultural appropriation and cancel him!I don't think it's the same thing, and it's definitely not on the same level of offence. I think it's more about drawing a parallel between what he sees as the mythical nature of Irish GDP and the mythical nature of leprechauns, which are associated with Irish folklore abroad, and particularly by Americans (some of whom believe they are real!!).
I agree. There is some "old money" in this country but very little though older people who bought property before the last bubble and those with pre-95 State pensions hold most of the real wealth. The ability of young people to accumulate wealth is severely curtailed by high accommodation costs and high taxes, coupled with the almost complete lack of taxation on wealth, in particular property wealth. That is where the focus of the Government's longer term financial planning should be. I think most people with young families would be happy to pay for GP visits if their mortgage or rent was halved.We just need to be realistic about the "actual " irish economy and not get offended by what is said internationally. Sometimes we delude ourselves especially those that work in the government bubbles. We might have rich country cash flows but we are certainly far from Switzerland or Luxembourg in being a rich country.
coupled with the almost complete lack of taxation on wealth, in particular property wealth.
About 80% of wealth in Ireland is in pensions and the primary residence. Capital that is subject to capital gains tax accounts for about 10% of total wealth and that is concentrated amongst the top 10% of the wealthy. Most people accumulate wealth in pensions and their home. That is real tangible wealth and frees up income to provide a comfortable and prosperous lifestyle.This is not true. There is CGT of 33% on capital gains. There has been no indexation since 2003, so even if your portfolio grows by inflation of 2% a year you will pay CGT on disposal. In effect it's a tax of about 0.6% a year on wealth.
There is also LPT on property of 0.18% a year. This is not high, but I wouldn't call it an "almost complete lack".
Then they are not Irish Billionaires for the purposes of this conversation.Most Irish billionaires are non-resident, which I doubt is an accident
To me he's in the McWilliams Stable of economists; very interesting to listen to with simple solutions to complex problems but not great with facts or reality.
Yasser Arafat, Ang Sung Su Chi, António Egas Moniz (the man who devised the lobotomy), Henry Kissinger and Fritz Haber, the man who developed Chlorine Gas for use in the First World War, received Nobel Peace Prizes.In fairness to Krugman, he's won a nobel prize for his work in Economics, specifically in relation to Trade. He's among the living economists with most citations in economic textbooks and journals. He has more to him than simple solutions and is a completely different league to McWilliams.
Krugman may be an expert on international trade but his knowledge of the Irish economy is lacking. He was in the "There will be massive defaults" cohort. He also didn't realise that Irish mortgages were not guaranteed by the State. Kind of a big blooper in my view.To suggest he's not great with the facts or reality of international trade is pretty silly.
So......wealthy people have their wealth taxed, right?Capital that is subject to capital gains tax accounts for about 10% of total wealth and that is concentrated amongst the top 10% of the wealthy.
To suggest he's not great with the facts or reality of international trade is pretty silly.
No, 80% of wealth is not taxes. The proportion of wealth that the top 10% hold in capital assets excluding their home and their pension is taxed at 33% if they sell it. I do agree that the removal of indexation is a big hit.So......wealthy people have their wealth taxed, right?
Lpt tax level is a joke here. Level is very low compared to PayeThis is not true. There is CGT of 33% on capital gains. There has been no indexation since 2003, so even if your portfolio grows by inflation of 2% a year you will pay CGT on disposal. In effect it's a tax of about 0.6% a year on wealth.
There is also LPT on property of 0.18% a year. This is not high, but I wouldn't call it an "almost complete lack".
Most Irish billionaires are non-resident, which I doubt is an accident
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