Let's scrap the car scrappage scheme

*This post was originally posted on my other blog pre budget

Would you consider the above car scrap? Do you think the Government should pay someone up to €3,000 to trade it in for a newer version? Fianna Fail TD Noel O"Flynn considers this idea "thinking outside the box when it comes to job creation". I call it a waste of taxpayers money at a time when we can ill afford it. The car pictured is a 1998 Alfa Romeo GTV which would be eligible for a car scrappage scheme because it is older than 10 years.

"Our industry is suffering really bad as a result of the recession, more job losses are inevitable unless the Government does something!"

What industry am I referring to? If you said that could be pretty much any industry in Ireland today, then you are correct. Everyone is suffering, they didn't call it the Great Depression for nothing! So can we really expect the Government to help all industries with subsidies to help prop up businesses? The obvious answer is no, thats ridiculous, how can the Government help everyone when the country's broke. The Government can't help all industries, but should it help some? I would say, possibly, if they are key to the future growth of the economy. For example I wouldn't complain if grants or subsidies were available for wind or wave energy companies, where there is a posibility we could become a market leader or at least reduce our nations dependency on importing fossil fuels (in 2008 Ireland spent 6 Billion on imported fossil fuels).

However I have a major problem with lobbying from a certain sector which will provide the country with no real benefit. I read this blog post and this today in favour of the car scrappage scheme and I had to respond. The car scrappage scheme worked in germany because they have a massive indigenous auto industry. Furthermore, Germans are patriotic and German car companies account for 60% of car sales in Germany, a further 7% in sales belong to Ford who have a major manufacturing presence in Germany. So 67% of any money the German Government spends on a car scrappage scheme is distributed around the economy, thereby creating an effective stimulus.

As we all know Ireland does not have a car industry so any money spent on such a scheme will as Colm McCarthy commented "effectively just be subsidizing imports". There will be a one off gain to car retailer and that is all. Fianna Fail TD Noel O'Flynn states that scheme will also make our roads safer and highlights ABS and power steering, failing to realise of course that any car on our roads already has to pass an NCT test every 3 years and be proved safe, on top of which the vast majority of cars that are 10 years old already have both ABS and power steering. In my opinion this is a ridiculous idea which should be given little credence.

Noel O Flynn

“I feel we need to start thinking outside the box when it comes to job creation. This is something with a proven track record. This is something which will put money in people’s pockets and back into the public coffers, surely no one can argue against this?”

how wrong you are Noel... (also "thinking outside the box", LMFAO)

PS. It will come as no surprise to readers that Noel is managing director of a company involved in motor trade http://www.noeloflynnltd.ie/

Open Letter to the Irish Government

My feelings towards The Irish Government are summed up succinctly in the following passage.

"It is high time for me to put an end to your sitting in this place, which you have dishonored by your contempt of all virtue, and defiled by your practice of every vice; ye are a factious crew, and enemies to all good government; ye are a pack of mercenary wretches, and would like Esau sell your country for a mess of pottage, and like Judas betray your God for a few pieces of money.

Is there a single virtue now remaining amongst you? Is there one vice you do not possess? Ye have no more religion than my horse; gold is your God; which of you have not barter'd your conscience for bribes? Is there a man amongst you that has the least care for the good of the Commonwealth?

Ye sordid prostitutes have you not defil'd this sacred place, and turn'd the Lord's temple into a den of thieves, by your immoral principles and wicked practices? Ye are grown intolerably odious to the whole nation; you were deputed here by the people to get grievances redress'd, are yourselves gone! So! Take away that shining bauble there, and lock up the doors. In the name of God, go!"

Oliver Cromwell MP's speech on the dissolution of the Long Parliament, given to the House of Commons, 20 April 1653

Feel free to add your name, don't have be an economist to sign this open letter to Gov!

George Lee Economics

George Lee left Fine Gael because they weren't listening to his policy ideas. His two key ones being abandoning the euro and returning to the punt and lowering our corporate tax rate. I do not wish to get in to the politics of his decision, but merely the ideas themselves.

Personally I find them incredibly flawed, and can see why they weren't adopted.

1. Lowering Ireland's Corporate Tax Rate

More ludicrous suggestion first..... we already have by far the lowest corporate tax rate in Europe. We already have a tax rate that is HALF OUR NEAREST COMPETITOR! (see graph below). A corporate tax rate of 12.5% is incredibly low, and is why it has been so successful in attracting foreign investment. I posted on this before when I highlighted how crucial this tax rate is in attracting investment. Foreign investment has stopped/slowed, but to suggest it is due to our corporate tax rate is absurd! There are many reasons multinationals are not locating here, such as the global recession, companies consolidating and cutting costs, our high cost base, and our economic uncertainty (reverting to the punt will clearly add to this) + many others. In fact if anything, the recent lack of investment makes it clear that we need to address our other issues and leave a policy that works alone. Lower it and they will come is not a solution when American multinationals are not experiencing growth, and they are the key our success as I stated before(Celtic Tiger - made in the USA) and Constantin Gurdgiev agrees with me.

*Click to Enlarge

2. Divorcing The Euro

Leaving the euro......at a lecture in UCC recently I questioned David McWilliams about this suggestion, which he champions. I asked David whether leaving the euro at a time when we are so heavily dependent on borrowing would be a good idea, my main point being that the interest rates on our debt would sky rocket over night, the only thing keeping Ireland afloat for the last 2 years has been the availability of relatively cheap debt through the ECB. Last March we were already paying far above German bonds for debt(and still are around 1% higher, which will probably rise this week when we issue more bonds) imagine this without the ECB and also possibly without Brian Lenihan as Finance Minister who markets place much faith in. We could be paying around 8% for debt on a long term basis (NAMA).

My second point to @davidmcw was that considering the failings of the Central Bank and the Financial Regulator in the last 10 years. Was it wise to place our faith in their hands with a LOT more responsibility. For the last 10 years they only had to regulate, and they failed miserably I can't imagine what they'd be like setting policy.

An argument can be made for never joining the euro. Our two biggest trading partners are the UK and the US, but I don' think any serious weight can be given to suggestions of leaving the Euro at this perilous time. He admitted I had a fair point and did not have a counter argument.

Ire - Land

Ire–noun

intense anger; wrath.

Daily I wake up and ask why did our dreams turn to ashes?

Newspapers dominated by economy only when it burns and crashes

Not to mention these fools nominated telling us we're cashless!

Enough, when will Anglo scandal lead to jail time ye bastards?

To say nothing of the thief who dodged primetime, Fitzpatrick

Vent through letter pages, grief, think I'm in 2nd of 5 stages

ANGER

They say we are where we are, an inquiry will look bad

Overheard at the Dáil bar; "don't blame Bertie, he was a good lad"

Another generation, where Irish sister and brother doomed to emigration

Job prospects look bleak, and the crowd that cost us have some cheek

Was all due to Lehmans collapse; the layman's terms they spit out as facts

LOST

Power corrupts, being in power with Fianna Fail, corrupts absolutely

A Summary of Ireland in 2010 (Political Parties)

We have a government of two parties with very differing views on a wide spectrum of topics, held together only by the common fear of the electorate. The Green party knew when they went into coalition with Fianna Fail that Fianna Fail would call the shots on most of the legislative agenda but that they would have the opportunity to slip in some Green policies along the way. Safe in the knowledge that if Fianna Fail ever embarked on a program that was antithesis to their morals they could always threaten to walk away. However the Greens are now in a position that if they walk away, the party and the green movement will be crushed so they have to swallow their pride and their lofty principles and pass legislation such as NAMA, and defend behaviour such as Willie O'Dea's.

"Power corrupts, being in power with Fianna Fail, corrupts absolutely"

We have a Taoiseach who was finance minister during the years that lead to our economic crisis. We have an ex Taoiseach who resigned in disgrace, benefiting from a tax loophole he has no right to and in the process telling us all how great he is while wringing more money from the people he has doomed, while simultaneously claiming that none of this was his fault, and insinuating that if he was still in charge everything would be OK. We have the majority opposition leader who is seen as the main obstacle to his party's success in any possible election. Who has also called for a general election so many times that it's beginning to lose all meaning; we get it Enda, you don't think Fianna Fail have a mandate. There's also the point that rather than providing Ireland with a new strategy, Fine Gael's message to the electorate seems to be, "we're not Fianna Fail". Then we have a Labour party under Eamon Gilmore which has surged in the polls. Gilmore is a good leader and speaker, however Labour are doing well in the polls because they are not addressing the major problems this country faces. They are in essence telling their base (public service workers) that if they were in power they wouldn't cut their salary, without coming up with any plausible way to pay for this expense, and that's even ignoring the fact that it is evident that our current expenditure on the public sector is UNSUSTAINABLE.

Freedom Wasted

The title of this blog may seem extreme, but it is not without purpose.

Henry David Thoreau once said "How many a man has dated a new era in his life from the reading of a book!"


and I wholeheartedly agree. Having read Obama and Mandela and read about Collins and De Valera I cannot help but think that we are wasting our freedom.

To win that freedom our ancestors put up with hundreds of years of oppression, many of them sacrificing their lives so that their children would grow up in a country where they could decide their own destiny. Our nation overcame the most powerful empire for hundreds of years. The British empire that stretched around the globe, was defeated close to home by the resilience and determination of the Irish people. Our ancestors have shown through their actions that they believed in the motto "Live free or die"

But what have we done with that freedom? Our last 2 Taoiseach's have resigned from office in disgrace. We have state agencies spending taxpayers money at will to provide them with an extravagant lifestyle. We have a banking system which has failed due to the greed and recklessness of a few, and we have a system that allows these crimes to go unpunished.

The problems we face today are small in comparison to those faced by Wolfe Tone, Michael Collins and Nelson Mandela. They are so small that if I was to sit at a table with those esteemed gentlemen I would be embarrassed to bring them up. They are problems that can, must and shall be overcome, because if this Republic was to last a thousand years they would still say that this was our weakest hour.

I have just finished listening to Eamon De Valera's response to Winston Churchill in 1945. For anyone who's never heard it or hasn't heard it in a while I would strongly recommend taking the time.

Why Start This Blog?

18 months ago I had only just registered to vote and had cast my first vote in favour of the first Lisbon treaty referendum in Ireland. I voted based on the merits of the treaty and with no political motives. At that time I felt that all politicians were the same and politics was not relevant to me. However throughout the last 18 months, it has been almost impossible for anyone in Ireland not to become politicised, because we have been brought to the edge of economic ruin due to poor governance, government and governors. In the mean time in the United States we have seen the emergence of a new type of political leader, Barack Obama. A politician who was not chosen for his position because of who he was, but in spite of who he was. A man who inspired his people to believe that their country can do better, must do better and will do better. He has also inspired me to become engaged in the political process because as Plato said

"One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors"