Bordering on ridiculous: striking, shopping and the absence of alternatives

Two hollow themes from Irish political dialogue have collided – the ‘patriotism’ of shopping in the South and the anti-public servant mood. The result? An even more pointless ‘debate’ about nothing
An unusual news story hit the headlines on Tuesday, one that is unverifiable by any means: public sector employees were selfishly destroying the economy.

Tuesday November 24 was a ‘national day of action’ for members of public sector unions. Understandably this issue was the news story of the day, dominating the airwaves as commentators and the public lined-up to debate whether or not strikes were appropriate during a recession. This in itself is a fairly empty dialogue but things took a turn for the surreal when the media started spreading the notion that the striking workers were in fact all in Newry shopping rather than manning the picket lines.

The story started with claims of six kilometre traffic tailbacks south of Newry. This in itself may have been true: Newry has always been a popular destination for Southern shoppers and roads leading to Newry from the South are always congested anyway, due to the ongoing construction of the motorway. Alas, common sense did not prevail. Immediately the story spread that the tailback was the result of striking public servants skipping the protests and heading off to gorge themselves using their inflated wages. A simpler explanation might be that entire families had travelled to Newry, and having been forced to take the day off work to mind their kids, decided to make practical use of the time by shopping for Christmas.

Worse was to come, however. Moral opprobrium was quickly loaded on the striking shoppers for taking their money out of the ‘country’. The partitionist mentality on display in this claim is bad enough, but it also indicates a staggering level of economic illiteracy. The hollowness of Ireland’s politics is laid bare by the fact that this nonsense passes for debate.

An economy driven by consumption, such as Irish politicians would have us create, is not an economy that can be relied upon. Consumption has its role to play in economic affairs – products have to be bought, of course – but the real, structural questions in any economy surround the area of production. The consumer economy that developed after the collapse of industry (or, in Ireland’s case, the non-emergence of industry in the first place) was always non-productive and cultural critiques of it amount to little more than a kind of warmed-over liberal Puritanism, the logical consequence of which would be an assault on people’s living standards.

Ireland’s elite was been discovered to have been wearing the emperor’s new clothes at least two years ago but the acknowledgement of this fact has not transformed into any alternative, even in a notional or intellectual sense. The policies of the immediate future will not mark a break from those of the past but instead amount to putting industry, both native and international, on life support.

Happily for the government, desperation dovetails with a consumption-driven view of economics promoted by industry that has been in retreat from capital investment for over twenty years and an invigorated environmental movement which views consumption as a secular sin. Both the pro- and anti-consumption narratives on display today are misplaced attempts to politicise the unpolitical and they contribute to the masking of the government’s political bankruptcy.

It is a sad inditement of the Irish opposition that it has completely failed to develop an alternative strategy. The reemergence of tired old Keynesian economics has been hailed as and end to ‘casino capitalism’, thus not only misidentifying the nature of Irish political economy (which is far closer to coroporatism than free-market capitalism) but also reducing the likelihood of investment in productive new technologies as the nation’s hopes remain pinned on the failed ‘stagflatory’ policies of the past. In calling for personal restraint and local consumption politicians may be throwing out the bathwater – but they’re definitely throwing the baby out too.


Notes: I don’t know what Slugger’s policy on cross-posting is, but this article originated on forth. I called Mick to seek permission but couldn’t get through. If I have broken a key Slugger rule, mea culpa.

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  • Mack

    A simpler

    Come off it 😉

    explanation might be that entire families had travelled to Newry, and having been forced to take the day off work to mind their kids, decided to make practical use of the time by shopping for Christmas.

    Is there actually any evidence for this? Many of my collegues have school age children, none of them take the day off work. Most private sector workers get around 22 holidays a year. Why would they waste one on taking a day off?

    An economy driven by consumption, such as Irish politicians would have us create, is not an economy that can be relied upon

    Most of the debate from outside the Unions has been focused on restore competitiveness not restoring domestic demand. The credit bubble is over, the consumption it fueled is dead. I see little appetite for reigniting that particular fire outside of the Trade Unions.

    The reemergence of tired old Keynesian economics has been hailed as and end to ‘casino capitalism’, thus not only misidentifying the nature of Irish political economy (which is far closer to coroporatism than free-market capitalism) but also reducing the likelihood of investment in productive new technologies

    Despite disagreeing with most of what you wrote before this – nail, hammer, head..

  • Mack

    We spent / will spend around €72bn Euro in 2009.

    At the same time capital investment fell 35% – this was the largest portion of the fall in GDP / GNP.

    The government will cut the capital investment program by €1.3bn. Given this is the smallest component subject to an adjustment – it is bearing the brunt of the cuts.

    Capital Investment in Ireland is the one area of spending that offers a strong positive multiplier (perhaps as great as 1:2.5).

    We do not need to borrow more, given what happened with Dubai, that may get much harder to do. We need to target spending better.

  • Jason Walsh

    “Is there actually any evidence for this?”

    As much as there is for the other theory. The point is, both are an irrelevant distraction.

  • Mack

    Jason –

    As much as there is for the other theory

    Surely not? We know roughly 250,000 extra public servants were off that day, we know shops were thronged in Newry, Dundrum – that the publicans did a bumper trade.

    How many extra private sector workers took the day off?

  • Jason Walsh

    Correlation is not causation. More to the point, though, it doesn’t matter. The people are free agents and can do as they please and the economy won’t be fixed by shopping.

  • Dave

    “Moral opprobrium was quickly loaded on the striking shoppers for taking their money out of the ‘country’. The partitionist mentality on display in this claim is bad enough, but it also indicates a staggering level of economic illiteracy. The hollowness of Ireland’s politics is laid bare by the fact that this nonsense passes for debate.”

    Declaring it so doesn’t make it so. Assuming that folks would have indirectly ‘imported’ the same food if they purchased it in Ireland rather than crossing the border into the United Kingdom (and that isn’t true since it doesn’t allow for a higher proportion of nationally-produced produce in Irish stores or allow for the extra spend on alcohol that is above domestic consumption), it ignores that 60% of the total spend is not on the food itself but on the cost of distribution, VAT, employment, rent, profits, etc. That 60% benefits the British economy and is lost to the Irish economy, so for every billion that goes to the UK, 600 million is lost to Ireland. In reality, the money that is pumped into the economy of Northern Ireland via their multiple retailers is in London banks within 24 hours, so it is not a case of benefiting Northern Ireland but rather benefiting the United Kingdom. The profits that these retailers make are paid to Her Majesty’s exchequer along with the VAT, so all the economy of NI gets out of it is a few thousand low-paid jobs at checkout counters and a lot of Irish carbon vehicular emissions.

    This is the muppets who legitimised partition now acting to promote the British economy at the direct expense of the Irish economy like good servants of Her Majesty’s government.

  • Jason Walsh

    Dave, none of what you write is untrue, but it doesn’t matter a fig because, first of all, telling people to shop in the South is not a serious economic strategy (and if it is, we’re in worse shape than imaginable). Secondly, it’s nothing new. People always shopped in the North in huge numbers, especially for high-value items.

    Politicising shopping, as the government has, is the last refuge of the scoundrel.

  • DR

    Will let you away with posting it on here this time Jason, so long as you dont post “meanwhile over at Forth I have said…” and just post a link, dont like that large font you use on Forth anyways.
    Maybe you are Mack could answer a question for me, whats the chances of the duty on Diesel increasing in the budget next week? its about the only thing stil lcheaper in the south.

  • Mack

    Correlation is not causation

    No, but it in this is case it is a necessary condition for such. We can show the necessary condition for the primary hypothesis is in place, but not your alternative.

    Certainly I agree that they are free agents and the economy won’t be fixed by shopping.

    But, public sector workers are paid from revenues generated in Ireland. To the extent that they spend that money outside the state – either on luxuries or in terms of generating savings on essentials – then that reduces the deflationary impact of salary reductions (the state can effectively confiscate the savings made by such expeditionary shopping trips by cutting salaries).

    Worse – though spending their money up north impacts jobs at home. It brings into stark relief the contrast between workers who earn more on average, with better conditions, striking and most of the rest of the population struggling to hold onto their jobs. Not only, through their behaviour do they not appreciate their privileged position, they then when the spotlight is on them, so their disrepect for Irish retail workers and their Irish suppliers..

  • Mack

    Sorry typos –

    It gets worse though, spending their money up north impacts jobs at home.

    It brings into stark relief the contrast between workers who earn more on average, with better conditions, and have safe jobs striking and most of the rest of the population struggling to hold onto their jobs.

    Not only that, through their behaviour they show they do not appreciate their privileged position. When the spotlight is on them, they show their disrepect for Irish retail workers and their Irish suppliers by going on shopping trips outside the state.

  • Mike

    “Moral opprobrium was quickly loaded on the striking shoppers for taking their money out of the ‘country’. The partitionist mentality on display in this claim is bad enough”

    Why? Why is that “bad”?

    The Republic of Ireland is a sovereign state; Northern Ireland is a seperate entity and is part of the United Kingdom.

    Why is “partitionist” a dirty word – used as if, by attaching it to something as an adjective, you have shown that that something is wrong and should be stopped? Why should commentators in the Republic of Ireland be nationalist, or moderate their langauge or comments to fit with nationalist shibboleths?

  • Mack

    DR – In my opinion none.

    That report by Colm McCarthy explains why –

    There are in any event severe constraints on the
    freedom of manoeuvre of government in tax policy, defined by the tax policies of
    neighbouring, and even of more distant, jurisdictions. Most indirect taxes do not
    display sizeable ‘headroom’ against the UK rates, and direct taxes on earned income
    have already been increased significantly

    Common sense after last years VAT rise debacle..

  • Little Boy Keynes

    Yours is a rather partisan post. Most GDP is derived from consumption. That is what people do. They like plastic bags full of stuff.

    Keeping shoppers at home makes economic sense. They try it in England, to shop local.

    Public sector employees are over paid and under worked. Trade unions in Telecom, Aer Lingus etc were given free shares, instead of the door.
    The nurses should be taken head on, baton charged, gassed, their pensions confiscated and their jobs given to Pinay workers. Over paid and over fed to look at them. Give them a bit of 1913 or the NUM to test their fair weather mettle.

    Keynesian economics: This died during the 1970’s oil embargo and will never remerge. Westerners, including the pampered Irish, want their cake and to eat it too.

    India, Vietnam and China: people work, something Western unions object to.

  • kensei

    We’ll skip lightly over the fact that no one seems to knwo what they are about when referring to “Keynesian economics” but anyway, Mack:

    Not only that, through their behaviour they show they do not appreciate their privileged position. When the spotlight is on them, they show their disrepect for Irish retail workers and their Irish suppliers by going on shopping trips outside the state.

    In which case, put massive tariffs on cross border shopping and stick up custom posts. No? Bad idea? Then not sure you have a case.

  • Mack

    Bad idea Kensei, they are free to do what they like.

    Don’t confuse disappointment with a particular behaviour with a desire to restrict the freedom of others to participate in it. I shop in the north myself.

    It’s an issue of perception, and that was absolutely the wrong day to make that shopping trip. Jason thinks it (the percpetion / reaction) is no big deal, that’s fair enough, but I, along with many others disagree.

  • Mack

    Or to put it another way – Irish firms have to be able to compete against global competitors. Southern retailers have to become competitive with retailers in Newry. Unfortunately that has meant job losses at retailers and suppliers in the south. The Public Sector are insulated from this process, full-time workers there are not facing the chop. And they’re better paid to begin with. Given that, it was a insensitive to do it on a day when the spotlight was on them. That’s why there was a reaction.

  • Mr Brightside

    Was recession after 9/11 not prevented by Bush and Blair’s exhortation to “Go Shopping”

  • Jason Walsh

    “Will let you away with posting it on here this time Jason, so long as you dont post “meanwhile over at Forth I have said…”

    Ha! Don’t intend to. Am just short of material this week. The Murphy Report demands a response but it’ll take me a while to get through it. Hence cross-post.

    BTW, font should be, in order of preference, Helvetica, Arial, Geneva.

  • Jud

    Folks,

    I’m totally on side with the idea that there is a need to move to a production based economy (or at least a better balance between production and consumption), but what proposals are out there for the forms this production would take?

    It’s a problem most Western democracies seem to share, and I can’t help feeling things have moved too far towards a model where the East produces and the West consumes (with a weird arrangement where the East will lend money to the West to keep things going).

    Any suggestions for realistic, profitable growth spurring industries?

    – Nuclear power plants. Energy self sufficiency and the ability to sell power to the British when their grid hits the wall? Probably out of scope based on start up costs
    – High efficiency incineration. Again the opportunities generating power and selling capacity are obvious

  • Henry94

    Many of my collegues have school age children, none of them take the day off work. Most private sector workers get around 22 holidays a year. Why would they waste one on taking a day off?

    That is correct. There is no evidence to suggest that there was any uptick in private sector workers taking the day off.

    It is of course absurd to suggest that there is any moral or legal basis for asking people not to shop outside the state be in on Amazon or in Newry.

    But it was a PR disaster for the strikers. Their supporters are asking for proof that the were responsible for the tailbacks at the border but there are not in a court of law. This is about public opinion and the “fact” that they went shopping is now part of the political reality along with their big wages and many sick days.

    If Brian Lenihan was going to hit them for 10% he could now probably get away with more. So the strike failed as it deserved to. For the private sector workers the impact of a PS strike is a minor child care headache balanced by easier traffic.

  • lula

    “A simpler explanation might be that entire families had travelled to Newry, and having been forced to take the day off work to mind their kids…”

    ROFLMAO!!

    I think you a little behind the times, Jason. Institutional reform is a needed, but promised in the programme for government, and the “smart economy” is the flavour of the month among government circles these days, not a “consumer economics” (sure it was the 1980’s that that phrase was last de rigueur?).

    In any case, high thoughts like these are only half the solution. The crisis, and so the solution, is grounded in far more practical things as well: mortgages for houses not worth half their price, enumeration for civil servants in excess of twice their market value (when accounting for perks as well), public and private credit fiascos. Generally a mad cap attitude towards money from top to bottom and left to right across the land.

    I agree that “patriot” economics are no such thing – I’m an Irish nationalist, the traders of Newry are my compatriots as much as the traders of New Ross are – but unsightly things like cutting the public-sector pay bill to size (it could be halved and still be well remunerated) are still the nuts and bolts of economics.

    If they have little little depth to argument it is because there is so little to be discussed.

  • John East Belfast

    Dave

    You are ignoring

    There is no VAT on food in the UK so VAT is not going to UK Exchequer for food bought by Irish shoppers in Newry

    How much of the consumable products are bought from Irish food processors (north and south)- ie a lot of the money stays in Ireland

    And any jobs in NI are helpful and more than would have been got if people chose not to shop in Newry

    As you point out a lot of the goods bought would be imported to Ireland anyway and hence where they are bought has no major impact on Irish Exchequer receipts apart from VAT on non food items and the income taxes on any jobs that may be lost in retailers that are making reduced sales – although has that rally happened to any great extent ?

    However overall I believe the negative impact on the ROI Economy is way over played and on balance i think it is actually helpful.

    It enables people to make their reduced budget go further and provides the necessary competition to drive prices in he ROI down much quicker than they would have otherwise done so. It also drives down commercial property rents.

    Basically NI is a safety valve for the ROI at the minute which will quicken correction to an over inflated economy that has been living beyond its sustainable means.

  • Will read through comments and reply later. In the meantime:

    “Basically NI is a safety valve for the ROI at the minute which will quicken correction to an over inflated economy”

    Agreed.

  • bk

    report from Irish Times

    Southern Public sector workers are interviewed in the Quays Car park on the day of Action

    “The prison officer from the midlands getting out of his blue BMW didn’t want to give his name. But a “stand” had to be taken. “It’s like my wife says – if you take a lollipop off a child and the child doesn’t bitch, the child will never see another sweet.”

    Graham, a striking Dublin City Council worker from the inner city, was in Newry with his wife and mother.

    “I hate shopping,” he said with conviction, “but it’s better to be getting bargains here than being on the picket line in Dublin.”

    A Co Louth teacher agreed, saying that if she was going to lose a day’s pay at least she would recoup some of her losses through the Newry bargains. ”

    grrrrrr……….

  • “I think you a little behind the times, Jason. Institutional reform is a needed, but promised in the programme for government, and the “smart economy” is the flavour of the month among government circles these days, not a “consumer economics” (sure it was the 1980’s that that phrase was last de rigueur?).”

    The smart economy is a chimera. It’s just another buzz phrase that has no real meaning. Proposals for a “smart electricity grid”, for example, amount to increasing inefficiency by decentralising production to the home where the technologies used to generate are necessarily inefficient as well as external control of people’s electricity consumption by an outside body through reducing the power available to them. Crazy.

    It also includes “traffic flow” – why? And quite apart from that, on a local level the state is causing more congestion than anyone though the introduction of endless traffic “calming” hazards and dubious phasing patterns on traffic lights with the explicit intention of slowing people down – in other words, wasting their time.

    We’re going to make Ireland a “centre for digital content storage”? Uh huh. That requires a big shed and fibre optic link. Not very exciting – and not likely to generate significant revenue (except for copyright lawyers).

    Even if any of these things were super-fantastic-amazing, Ireland has no particular advantage over anywhere else.

    Whatever is flavour of the month in government circles, the reality is that the economy is built on consumption. The dependence on financial services and on credit-fuelled consumption results from a inability to get to grips with the core mass of production that drives economies forward.

    Depending on how you calculate, Germany and the US are the world’s top two exporters by value. Germany has a lot of high-value items (cars etc.) but it also still engages in mass production of the kind of things we now automatically assume come from china: pens, tape, chemicals etc.

    Undoubtedly, though, China has been the engine of the world in the last few decades.

    “If they have little little depth to argument it is because there is so little to be discussed.”

    Agreed – on all sides.

    “I’m totally on side with the idea that there is a need to move to a production based economy (or at least a better balance between production and consumption), but what proposals are out there for the forms this production would take?”

    The million dollar question…

    Tentatively I would suggest that instead of propping-up the banks (including Ponzi schemes like Anglo) the government, if it has decided it needs to prop-up business, could instead spend its money on:

    – infrastructure development such as high-speed rail
    – supporting the development of high-tech manufacturing in new industries

    This is not enough, of course, and is still too vague. Anyone else have any ideas?

    As I wrote before: The Construction Industry Federation (CIF) is suggesting the state must invest heavily in the development of infrastructure. This is a purely self-serving suggestion on the part of the CIF which is desperately trying to keep the industry from collapsing entirely. Nonetheless, that does not make it a bad idea. Despite the National Development Plan, Ireland is still lacking in vital communications infrastructure. New road and high-speed rail would do the country no harm whatsoever. Likewise, Ireland’s telecommunications sector needs to be pushed to speed-up development and energy production is a viable sector for real capital investment.

    Now that private finance initiatives (PFI) and public-private partnerships (PPP) are dead in the water as a result of credit freezing the state will be forced to return to making long term investments at least in its own infrastructure in the form of government offices and public buildings. This alone, though, will not be nearly enough.

    Those countries that have supposedly exited the recession are in fact enjoying a short-term boost driven by consumption: stimulus has had an effect but it is principally resulting in restocking of consumer goods. Welcome as this is, it is no indication of future economic growth and if misread as genuine growth will lead to a greater fall.

    Were the state to involve itself in supporting genuinely productive, value-creating activity this would represent a real sea change. Innovation and development must be at the forefront of any economic policy which can be said to seriously tackle Ireland’s current difficulties.

    By the way, none of the above is intended as a defence of the Irish public sector. I have no firm opinion on the issue other than that it is pleasing to see people rejecting austerity economics. On the other hand, it would be more useful if this rejection was coming from people engaged in productive labour.