Since time immemorial, young people have grown up in the anticipation that they will live a life at least as comfortable as that of their parents – that the next generation will reap the benefits of social, economic and technological progress. This is at the foundation of the social contract between generations, not just in Ireland, but across Europe and around the world.
But, something has changed.
Next generation can expect to work harder for less.
Generation Y, the so-called millennials, born since 1980, may be the first generation for whom this dream turns out to be a mirage. Long-term demographic trends, coupled with the long-term slowdown in productivity growth in developed countries, mean that the social escalator of yesteryear has broken down.
But, the real tipping point came with, and since, the 2008 financial crisis. Youth unemployment soared across Europe. In Ireland, mass emigration made a comeback as many who graduated from school or college – or lost their jobs in construction-related trades – saw few prospects at home.
Rather than helping, public policy often makes things worse.
*** This article was first published on thejournal.ie on 30 September, 2017 ***
After months, if not years, of shadow boxing, the Fine Gael leadership race was less Game of Thrones, and more Mad Max. Two men entered, one man leads. Realistically, there was only ever going to be one winner.
In some ways, the new Age of Leo bears all the hallmarks of what came before. His swift and seemingly inevitable ascent to the throne was a decade-long masterclass in media management and the projection of a political image. Ever-ready with a pithy soundbite, if light on Ministerial accomplishment, it was a true triumph of style over substance.
That is not to say that the Taoiseach is devoid of substance. Far from it. In fact, recognising Paddy’s scepticism of ‘ologies and isms’, he has become adept at using the dog-whistle, where once he would have blown the fog-horn. Where once he whipped up a frenzy of opposition to the sale of methadone in his local chemist or openly invited immigrants to self-deport, his recent leadership campaign was aimed at ‘people who get up early in the morning’. He has learned over the years to cloak his hard-right instincts in language that is populist and palatable. This is Leonomics: Reaganomics with Irish characteristics.
Watching Ireland’s housing crisis unfold has been like watching a slow-motion car crash.
Surging numbers of rough sleepers around our cities were an early sign, shortly after the economic crisis struck. As job losses mounted, and wage cuts began to bite, more and more people struggled to pay their mortgage and keep a roof over their family’s heads.
Meanwhile, the shutdown in house-building was storing up problems for the future. Chronic shortages in housing supply have sent rents surpass their boom-time peaks, while house prices have increased by half since they bottomed out four years ago. Record numbers of families are forced to stay in hotels or in emergency accommodation. Some have had to resort to sleeping in their cars or putting themselves at the mercy of the local Garda station.
*** This article was first published on thejournal.ie on 29 June, 2017 ***
Yesterday, U.S. President Donald Trump made his ‘big announcement’ on tax cuts. Some Irish eyes aren’t smiling at the prospect of the headline-grabbing reduction in the corporation tax rate from 35% to 15% actually coming to pass. Essentially, though, this latest announcement amounts to little more than reheated campaign promises, washed down with Trump’s now-familiar saccharine bombast.
This was not a well-thought out exercise in policy innovation, but rather a cheap PR stunt designed to boost his flagging ratings and attract plaudits ahead of the media-constructed – but substantially meaningless – landmark of his Presidency’s first 100 days, which falls this Saturday.
*** This article was first published on thejournal.ie on 27 April, 2017 ***
OECD Corporation Tax Rates since 2000
Source: Tax Policy Reforms in the OECD 2016
The IMF recently published its updated outlook for the global economy. The good news is that recovery from the crisis seems to be finally picking up some momentum after a decade of sub-par growth. The bad news, as they see it, is that this momentum could be stopped in its tracks if the sword of Damocles that is the threat of protectionism – whether emanating from Trump’s White House, May’s Westminister or elsewhere – falls. This could throw the process of globalisation into reverse, they worry, and slow growth in the size of the economic pie.
Alongside their biannual economic forecasts, the IMF also publishes its latest thinking on various themes. In light of increased focus on the issue of inequality since the global financial crisis, to which the recent rise in political populism has been attributed, the IMF provides a timely chapter on “Understanding the downward trend in labour income shares”. It explores the reasons why the share of wages in GDP has declined markedly – in advanced, emerging and developing economies alike – in recent decades. Between the mid-1970s and its 2006 low, the labour share has declined from around 55% of GDP to around 50% in advanced economies, before recovering only slightly since the financial crisis, while income inequality has increased significantly over the same period.
As far back as 1516, Thomas More first suggested a guaranteed income as a way to reduce theft. In 1797, enlightenment thinker Thomas Paine proposed a set of radical reforms in his seminal pamphlet on Agrarian Justice.Among these proposals was the idea of a universal basic income that would be paid to everyone, unconditionally. In the intervening 220 years, polemicists and policymakers have toyed with the idea, without it ever really catching on.
What has changed?
First it was Brexit. Then it was Trump. Twice in recent months, we have awoken to news from across the water that shook us to our core. Something has gone ‘Br-ump’ in the night.
For Ireland, the biggest impact of Brexit and Trump’s ascendancy are likely to be economic. Even if recent decades have seen Ireland Inc. diversify its economic ties, the UK and US are still by far our most important trade and foreign direct investment partners. Directly or indirectly, hundreds of thousands of Irish jobs depend on these countries’ fortunes and policies. The temptation will be for Irish policymakers to adopt a reactive stance, but this needs to be complemented by a proactive and comprehensive approach.
As a tiny, very open economy, Ireland has surfed the wave of neoliberal globalisation more deftly than most, making the most of our geographic and cultural proximity to the US and the UK, in particular. For decades, for better or worse, we have been ‘all in’ on an economic strategy aimed at grabbing a slice of the global economic pie. As a result, there is perhaps no other country as uniquely exposed to the twin ‘Br-ump’ challenges.