There can be no real dialogue while outrages against fairness an equity persist

IT is hard to see the wood for the trees given the deluge of claims, arguments and of course statistics being bandied about by all sides in the ongoing economic debate.

There are many firmly-held takes on the same inescapable reality which is our economic crisis.

Some of these have roamed very far from simple logic at this stage, which is not too surprising as the argument gets further and further stretched and strained. We have heard the construction industry claim house values have now reached the bottom.

The claim is supported by the argument that the replacement value of a house is now equal or more than what can be realised in the market. That no one is arguing back directly with this crazy hypothesis shows just how far from rhyme and reason the argument has strayed. The fact is that value of any product is not vested in the cost of producing it, but in the demand that the market has for it. What applies to outdated high-cost clothing, or last year’s most coveted gizmo, applies to houses. If that means it takes a 70% or 80% cut to start the clearance of the oversupply then unfortunately that is what it takes.

You cannot sell something today at what you reckon it will be worth in a year or two or ten. Holding back won’t get rid of the stockpile.

Another fact is that the asking price for houses in the Irish market is still two to three times the cost of homes in France – to take one appropriate benchmark.

Is it not reasonable to argue that if we start to free the property logjam with an initial fire sale, then values will soon climb in an ordered way to levels that will be more satisfactory for the construction industry in the long run as the problem of over-supply is eliminated. It would also set house prices at a realistic ratio to earnings – something that went out of the window during the years of fiscal recklessness when the banks of this country were run like casinos.

The trade unions are making claims which are similar in terms of demanding arbitrary “fair and just”’ wages for their members.

Again, the value of someone’s work, like the value of the goods they produce, is very much dictated by market demand.

It must also be set against the rates of pay in neighbouring, competing economies. If our workforce is earning more than their counterparts abroad, then this is the only benchmark that matters now.

It is of course understandable that people are fiercely opposing cuts given the personal indebtedness which has resulted from our over-borrowed and over-mortgaged culture, a culture for which banks and regulators and government are largely responsible. It is totally understandable too that this anger is further fuelled by the lack of even-handedness in the application of these cuts.

The Government is showing something almost beyond hubris in maintaining section 23 schemes with 90% tax rebate for investors. Developers are still advertising them in the property pages.

Our top public broadcasters who, after accepting heroic pay cuts of up to 40% in the past year, are still paid more than the Taoiseach of the country (who still earns more than every other EU prime minister) and three times more than what President Obama earns.

While the hard-pressed wage earner is being asked for more and more, they continue, by way of the levy known as the TV licence, to pay Pat Kenny and Marian Finucane between two and three times what the president of the US is paid. Apart from the fiscal craziness here, it raises the question of the ability of broadcasters to serve the public interest when they are so much part of the underlying problem of the country. Of course the lack of reality is taken to the level of total and abject absurdity by Bertie Ahern who continues to opine that he left the economy in a strong and prosperous state.

In his toadying to vested interests representing 20% of the country’s population, the so-called social partners, he abdicated government responsiblity for political populism and left the country as stable as a ticking time bomb. The Government, while belatedly making some serious efforts to address the issues, is nevertheless still blind to the fact that there can be no serious dialogue with the people while such outrages against equity and fairness persist.

Margaret Hickey

Castleowen

Blarney

Co Cork