This thread is about social welfate. Cutting social welfare does not mean total expenditure has to be cut and so does not mean that money is taken out of the economy. It could simply mean that the money saved is spent in a more productive way or left in workers pockets.
“If you cannot sell your skills at that level you will go out of business.” Yes, that’s exactly what I’m saying.Let's set a baseline here.
If you forego ten years or more of gainful employment by remaining in education and training to become a competent professional you will expect to sell your skills at a premium, both to recoup your losses and as recompense for the higher duty of care you bear.
Is sort of like manufacturers margins.
Without profits you cannot pay for innovation and research and development, your brand loses place in the market and eventually fails.
Its like profit as a reward for enterprise.
Neither are guaranteed, but its certainly not élitist to expect them
Said premium for professional services is reasonable.
If the market no longer supports that price, you will be reduced to selling your skills at a level at which your business breaks even.
If you cannot sell your skills at that level you will go out of business.
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No, “the lowest price person's skills are worth what that person is willing to perform them at” is not correct. That’s the lowest price at which a seller will enter the market. The value is set by the buyer. If there is a shortage of supply then prices will increase ‘till it is viable for a seller to operate in the market.Now let's look at the condition you set.
"A persons skills are worth only what someone is willing to pay for them."
The lowest price person's skills are worth what that person is willing to perform them at. The lowest sustainable price is the break even point of the person's business. Recently we have seen many firms eating into their cash reserves to engage in below cost selling of skills and services. This is unsustainable and will result in those businesses failing.
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If people are willing to pay for them then they are have a value’ i.e. if there is a demand then there is a value. No demand, no value."If nobody wants to pay for them then they are worth zip."
My experience is that people still want to pay for them, therefore they are not "worth zip".
It is my experience that people who are not professionally qualified or competent to act as a professional begrudge the premium professionals charge, because they assume they are operating at a level, when they are not.
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If the state can gain a value by engaging a professional in the area in which they are qualified then they should pay them the market rate for those services. If they have no need for those services then they should not employ them. The market sets the rate, not the cost base of the supplier. The suppliers cost base sets the price point at which suppliers will enter the market. This in turn effects supply which in turn effects price but it’s not a direct link.Let me put the boot on the other foot.
Should a professional work as a sweeper for their dole money Purple, or should their skills be put to good use by the state?
It is a very short sighted administration that would not avail of the latter.
If the professional is then operating at a level which demanded you used your skills and experience, do you think it appropriate that he/she should do so for the minimum wage?
The fact is they cannot supply their services at the minimum wage
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Again, if there is a demand for the services then the seller can charge what the market will stand. If there’s nobody willing to purchase their services then their services have no market value,A fair days pay for a fair days work is not élitist
If you bring considerably more to the table than someone with no third level qualifications you would expect to see your abilities used wouldn't you?
And if that was the case you'd expect more than the basic dole payment.
But in fact you will NEED this just to provide the service.
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I agree. This influences the price point at which sellers will enter the market.Since you would be operating at a certain level, you would be expected to maintain your appearance and you might have to use a car to attend some meetings.
Your expenses immediately rise above the level sustainable by dole payments.
And if you are offering professional skillsets, you will need to keep current which requires attending seminars and continuous study - not cheap, even to travel to them.
Finally if you are acting in that professional capacity you may be required to pay professional indemnity insurance - another expense.
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The reward you can expect for your skills is set by the market.If the state to pick up the tab for all of this at cost - not run through your firm - it would place your "take home" well above the dole payments.
If the state decides there was no use for you, well, you'd either have to leave or commit suicide. The rise in suicides in the State is being kept out of the news.
I suppose when you are told you are being élitist for expecting reasonable reward for your skills, suicide seems the least painful option.
Allow me to bring a bit of balance and reality to the situation.
ONQ.
Actually it does because any savings go to reducing the deficit and paying back debt. It doesn't to other areas of the economy and it doesn't go back to taxpayers in the form of lower taxes. It is a deflationary action. That doesn't mean it is a bad thing but it will have economic consequences on domestic demand just like if you decided to cut everyone's wages by 10%.
Who said anything about paying back the debt at a more accelerated rate?
What you are saying is that paying back our debt at a more accelerated rate is deflationary NOT that cutting public expenditure is delfationary.
Has nothing to do with a paying back at a faster pace. Cutting public expenditure is deflationary unless the money is given back through tax cuts or spent in other parts of the economy. That's not what will happen. It will simply reduce the amount we need to borrow.
Borrowing is also deflationary as it costs money - you have to pay interest annually and in most cases refund the capital within a specific timeframe. If you borrow you have to cut public expenditure as some of your tax take will be used up in interest repayments. So borrowing cannot be held up as an alternative to cutting public expenditure.
cutting social welfare won't lead to money being taken out of the economy
Who cares?
The gap between our annual income and annual expenditure is €20 billion. This needs to be reduced to zero. Whether it's deflationary or not doesn't matter an iota.
Our expenditure is approximately €50 billion per annum. €20 billion goes on social welfare, €20 billion goes on salaries and €10 billion goes on the rest.
Make 50,000 public servants redundant for starters and pay them statutory redundancy. Assume their average annual service to be 10 years (which would be high) and the average cost of the employees to be €50,000 per annum. For a once off cost of approximately €630 million (i.e. €600 x 2 x 10 x 50,000) we'd make a recurring annual saving of approximately €2.5 billion (i.e. €50,000 x 50,000). The tax loss and dole cost for those who didn't find alternative employment would obviously have to be factored in.
Next cut all public sector salaries by 20%. That should yield an annual saving of €3.5 billion (i.e. €17.5 billion x 20%) and the tax loss would obviously have to be factored in.
Next cut all social welfare payments by 20%. There's an immediate saving of €4 billion per annum.
Bang...half of the deficit wiped out with a few strokes of a pen.
Next hit every property commercial or otherwise for €1,000 property tax. That raises €4 billion per annum. Only €6 billion to go!
Next raise inheritance tax rates from 25% to 50% and drop the parent to child thresholds to €200,000. This should raise approximately €1 billion per annum and can't be put off (unlike capital gains tax).
€5 billion to go...any ideas?
Wow. Problems solved. Amazing how these simple steps escaped the attention of the Department of Finance and all those other economists. As you say it is only the stroke of a pen. You should write to the IMF/EU and the ECB with your guide to instant economic recovery. They will feel really stupid for not suggesting it first.
Out of interest, what do see happening GDP after these simple steps? Presume you have looked at it.
Increased tax receipts due to a growing economy will also do the trick.The current deficit MUST be eliminated.
Increased tax receipts due to a growing economy will also do the trick.
It's a balancing act between the two.
Yep...absolutely.
My issue is with the navel gazing over a property tax that will raise €75 million per annum when we've an annual hole of 267 times that.
I think it is becoming futile to point this out to ONQ. This has been highlighted at least 4 times now, but somehow he refuses to acknowledge it. I don't have any other explanation.No, this is not true. Cutting expenditure means you dont have to raise as much tax money, thus you are leaving more money in the economy. Cutting expenditure will only take money out of the economy if the Government is planning to stash the money saved - which is not proposed or suggested.
This thread is about social welfate. Cutting social welfare does not mean total expenditure has to be cut and so does not mean that money is taken out of the economy. It could simply mean that the money saved is spent in a more productive way or left in workers pockets.
But the deflationary effect is offset by the lack of deflationary effect of having to tax to repay increased debt. Basically it reduces the interest bill, which reduces the amount government has to ultimately take out of the economy. This means that it more than balances out, as less money has to be taken out of the economy in the future.Has nothing to do with a paying back at a faster pace. Cutting public expenditure is deflationary unless the money is given back through tax cuts or spent in other parts of the economy. That's not what will happen. It will simply reduce the amount we need to borrow.
I think this should technically put an end to the argument over spending cuts, but it doesn't seem to resonate with politicians at all who believe we can grow out of this mess. Too many people still believe that Ireland has an income problem and not a spending problem. Bringing the budget in line with what is actually taken in would bring us back to 2004 level of spending. That is not as terrible a prospect as some politicians and commentators would have us believe.The gap between our annual income and annual expenditure is €20 billion. This needs to be reduced to zero. Whether it's deflationary or not doesn't matter an iota.
But the deflationary effect is offset by the lack of deflationary effect of having to tax to repay increased debt. Basically it reduces the interest bill, which reduces the amount government has to ultimately take out of the economy. This means that it more than balances out, as less money has to be taken out of the economy in the future.
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Have you done the maths on this? Take €20 billion out of the economy today so we don't have to borrow any money to run the Country and see what happens. For the deficit to be wiped out, GDP would have to remain the same. Does anyone really believe that the economy wouldn't shrink with €20 billion taken out in go? The economy will shrink, therefore we have a deficit again. Suddenly you are in a spiral.
The deficit has to be cut but it has to be cut realistically in a way that doesn't send the economy over a cliff. There is room to be more aggressive than what we are the moment but we can't cut multiples of what we are cutting while still expecting the economy to grow or remain stable.
Excellent piece in the Indo but it will be dismissed by the reality deniers here with an ideological bias that insists that black is white and everything in the Indo is rubbish.
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