Sunday, February 20, 2011

Sunday Afternoon Links

Content goes here.

- Aside from the occasional attempt by the likes of Jim Flaherty to pretend that Ireland's disaster could never have happened to a country which so zealously bought into the free-market religion, few seem to be foolish enough to put forward the Irish experience as a model to follow for the moment. But in tracing Ireland's decline, Bruce Campbell points out that its boom wasn't anywhere near what it was hyped to be either:
Foreign direct investment—led by the computer and pharmaceutical sectors--poured in. It became the preferred location of (mainly US) multinational corporations seeking to keep their profits out of reach of their home country tax authorities. (Google, for example, is reported to have saved $3.1 billion over the last three years by setting up shop in Ireland). Ireland became the largest jurisdiction outside the US for declared pretax profits by American firms. The transfer of profits out of Ireland accounts for 20% of Irish GDP.

While indigenous Irish industry expanded, it never lived up to expectations. The hallmark characteristics of an enclave economy—weak linkages to the domestic economy, benefits accruing to a narrow segment of society—were clearly in evidence. Industry remained dominated by a relatively small group of multinationals. Data from the Irish Development Agency, show that while the foreign and domestic sectors each employed about 150,000. The foreign-owned sector accounted for over 80% total output.

While it created a lot of employment—much of it in the form of low wage service jobs—the Irish boom accentuated income and wealth inequality. Rather than apportioning gains to strengthen the welfare state to be more in line with European norms, the Irish model gave precedence to the interests of foreign capital and to a small domestic elite that had successfully ridden the Irish prosperity wave.
Income and capital gains tax cuts left the government coffers with a narrower tax base much more vulnerable to collapse of the construction and real estate sectors.

When the global crisis hit, the bubble burst: foreign finance dried up, exports tanked, construction came to a halt and property values plunged, exposing the toxic debt at the heart of the Irish banks. Ireland’s budget surplus and low public debt turned bad with lightening (sic) speed.
- Hugh Segal nicely points out how his own party's prison growth strategy makes absolutely no sense as a destination for public money:
At a time of government restraint, prisoners are, in a word, expensive. With all costs factored in, Canadians spend more than $147,000 per prisoner in federal custody each year.

By contrast, it would take between $12,000 and $20,000 annually to bring a person in Canada above the poverty line. Even at the high end of the GAI scale, this represents savings to taxpayers of $127,000 per federal prisoner each year. Those are figures that should be of interest to any federal or provincial finance minister — of any party background.
- But as Haroon Siddiqui notes, we're the ones left paying the price for the Cons putting Stephen Harper's political games ahead of even a minimal level of engagement with reality.

- And finally, Greg asks:
Liberals, is there no Conservative trick they won't fall for?
Only if you count the ones they're in on to begin with. This has been another version of simple answers to simple questions.

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