Uncompetitiveness - Fact or Fiction?

Food for thought from “John” on irisheconomy.ie

irisheconomy.ie/index.php/20 … /#comments

In the multinational where I work, Irish employees are 20% cheaper (that’s after all wages, rent, electricity, etc and before any corporation tax fiddling).

I don’t doubt domestic demand is collapsing faster than anything given that it was fueled primarily by the credit/property bubble. That doesn’t mean there isn’t a problem with other sectors of the economy.

The reality is we can’t restimulate domestic demand, we need new foreign investment and exports.

Too true. The only problem is that this bit of the economy shrank in relative terms during the boom. How much does our export competitiveness depend on our tax regime?

What if that’s what everyone is doing?
irisheconomy.ie/index.php/20 … he-demand/

It is which is why we have to do it faster.

We have a small economy which should give us certain advantages like being able to move quickly to lower costs. The other economies are spending desperately to try and prop up their domestic demand, something we don’t have to do.

Remember we’re not just a little bit more expensive than the average, we’re **the most **expensive in a number of key areas like energy. Also look at the sillyness to do with rents in Dublin city. There’s no way we can get out of this mess without addressing these issues.

If you are just looking at falling consumption, you also have to look at where the consumption demand came from. Did it come from earnings or debt? My view is that a significant proportion of it came from debt. That being the case, what is the sustainable level of consumption demand? And what is the best way to get that demand working at a normal level? Why, reduce costs - increase the turnover of goods - increase the velocity of money again. No?

In addition, you have to look at how much of consumption was related to the property bubble - tiles, bathrooms, white goods, furniture, DIY stores, builders merchants, lighting, soft furnishings, etc. Again, you have to ask how much of this is sustainable at a ‘normal’ level.

It is clear to me that commercial retail space is vastly over-supplied, even with more shops at lower rents.

Finally, exports have been declining not just relative to the rest of the bubble economy, but in real terms. Exports in absolute terms have not grown since 2002. So it is not true to say that the export economy has been doing well. It hasn’t.

(Having said all that, I don’t see a desire to return to the days of bling spending, even at a lower level. In my view, the lower amount of waste going to landfill is an excellent indicator of how much of what was bought was junk - whether food junk or tat).

Competing for what, exactly? Germany probably has the most competitive position of any exporter in the EU. And they’ve lost over 10% of their orders.

But sure Ireland is different: if we sack all our public sector workers, all the companies in the world will be queueing around the block to buy stuff from us, global recession be damned!

Perhaps the makeup of our exports is relatively recession proof? I think roughly half our exports are made up of Pharma and Food Stuffs.

If you want English speaking software engineers located in the EU we should be the port of call. If you want CPUs and mainboards fabricated that should be us. It may surprise you to know that “exports” covers a wide array of products and services, Germany excels in a certain type but it’s not our thing.

Congratulations you’ve defeated a position proposed by nobody anywhere ever.

Looks like Pharma & Chemicals are pretty much the only reason our export numbers haven’t collapse.

finfacts.ie/irishfinancenews … 6562.shtml

OT but, I got the vibe John = BostonorBerlin…

The appropriate policy response is not just dependent on the cause of the unemployment, it’s also dependent what is a feasible policy. Borrowing amounts sufficient to keep domestic demand anywhere near recent levels is not a feasible policy.

Why is everything that Cowen&co is doing in terms of Economic policy driving Ireland deeper into recession.Why are they kicking the Economy when its down ?