Dublin Opinion

Apologies for the shortness of this post but I just wanted to get this out in response to the latest truism that wage inflation undermined the Irish economy.

Basically, what we see in Ireland over thirty years is that the average industrial wage and inflation oscillate around each other quite closely. As inflation drops/rises, wages follow, and vice-versa.

I didn’t pick up on this at first. Really it was my friend Donal who pointed it out to me. We were driving down to pick up a bag of coal (it’s June and I’m buying coal. The heating in my new address works off a back boiler so I have to keep the fire going at night) and Donal said that whatever we may think of the pros and cons of Partnership, looking at wages and inflation, and the obvious tightness between them, there is little doubt that Partnership did its job.

Wages were restrained and kept broadly in line with inflation.

The current talk of wages as the elephant in the inflationary room seems a little odd when we add the year-by-year changes in house prices for the same period.

Irish house prices have crazier mood swings than Liza fucking Minnelli.

And here’s a graph detailing Ireland’s unemployment rate and inflation, from 1983 to 2006. The unemployment figures are available online for those years, but I’ll have to call into the National Library to get figures pre-1983, and I won’t be back up in Dublin until next week. So that’s why unemployment on the graph only starts with that year. [Inflation, or the Consumer Price Index, is available here.]

Low inflation, high unemployment. Keep that in mind when the economic experts start spouting that inflation must be kept low in order to build ‘competitiveness’ and ‘create jobs.’ Economies are a lot more complex than simply keeping an eye on fucking inflation.

Irish inflation dipped below 5% in 1985, and stayed below 5% for the next 15 years, 13 of which saw unemployment hover between 11 and 17%. Anyone who’s saying now that low inflation will save us was probably saying that ‘now is a good time to buy’ not so long ago. [Banks, by the way, love low inflation, as it benefits them. So. We get economists who work for banking institutions going on TV and radio telling us that we need to keep inflation low to keep the economy ‘competitive’, even though national economies don’t compete. It’s a ludicrous idea. ]

And when you hear someone say something like ‘we don’t want to go back to the high inflation and high unemployment of the 1980s’, please keep in mind that they are - and I think the technical phrase is this - ‘talking out of their arsehole.’

Anyways, here’s a couple of Irish economic experts from three years ago telling us why we should be ok at this moment. Soft landings and eternal growth and all that. They do love their predictions them financial experts, so they do.

I think these two fall under the category of ‘Some Economists’.

As in, ‘Some economists say that at the most [the average house price] will fall by another 10% before it reaches its real value…’ etc, etc, etc.

Enjoy.