Tuesday, 16 February 2010

Something wrong

Want a little insight into one of the problems with the Irish economy? A problem that not only isn't even acknowledged or commented upon anywhere, but something that government and public opinion would like to see exacerbated. That's right, make it worse.

Exhibit #1 - the [income] tax distribution:

Irish income tax revenues are raised from such a concentrated proportion of the population. This is perceived locally as "good" because "they" are "rich". The political momentum is for more of the same. Ireland leaves France in the shade for its distorted tax burden and narrow base.

Exhibit #2 - the welfare benefit replacement ratio:

Go on to welfare and you can replace 70% of your income from going to work [note that by income this means average earnings, not some measure of basic or subsistance income]. Why bother work if you dont have an immediate prospect of being int he top half of earners in the country? And and the risl of being lambasted as some Neocon Nazi, I might suggest there is a strong correlation between those people who might, how shall I put it, be less endowed with self motivation, gumption and stoic character that is generally required of people everywhere to start at the very bottom if necessary in order to work your way to a better situtation.

I might provide some more charts in a later post to show how this adversely affects peoples choices and brings poor outcomes. Just a note here. Earnings are falling, benefit rates are not. This replacement ratio is rising.

This adds up to a lot of disincentive to either:

  • take personal control over your welfare
  • aim to succeed

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