‘The Rich are paying for the downturn?’ – WTF? August 25, 2010
Posted by WorldbyStorm in Economy, Irish Politics.trackback
…was my response to reading this piece here in the Irish Times .
Thankfully someone bothered to do some sums.
As Michael Taft notes, across job losses, income, financial wealth and the impact of levies the idea that the ‘rich are paying for the downturn’ is shown to be a risible proposition (none of which is to say that some on higher incomes aren’t in trouble).
Two things strike me about the original piece, firstly the headline isn’t borne out by any consideration of referenced data in the subsequent article, although one can bet that this is going to become a nice little trope iterated and reiterated time and again.
Secondly, ‘redistribution of wealth’ says the good Professor… but where precisely? He doesn’t say, perhaps because the answer might undermine the original proposition, at least in the sense that most of us would understand it.
As Michael says, this idea of the ‘rich paying for the downturn’is part and parcel of establishing a pre-Budget narrative that will have as its main focus an aversion to any measures that would affect those on higher incomes.
I notice there was no provision for comments under the piece on the IT site. Probably as well.
That’s quite a familiar trope here in Britain. Gideon “call me George” Osborne has been telling any journalist who’ll listen that his budget will hit the rich hardest.
This claim is flatly contradicted by a recent report by the Institute for Fiscal Studies: http://www.ifs.org.uk/publications/5245
Just another example of the so called Irish intelligentsia shamelessly aping whatever right wing wheeze is dreamed up on the mainland I think.
“Mainland”?
Tsk.
That’s what they say in Yorkshire and Lancashire.
Incidentally, his correct nickname is “Fat Little Fuck”.
I meant it from the point of view of our Irish intellectuals. Mind you I’m a bit distracted at the moment. I’ve just finished dictating the program for the Irish SP for the next four years via text message from a bunker somewhere in Leeds. Misunderstanding’s can easily arise when your writing in those circumstances.
I hear my SWP opposite number gets to do the same from Manchester, lucky bastard!
I cracked up when I read that… Kudos Neilcaff
although one can bet that this is going to become a nice little trope iterated and reiterated time and again.
I do hope so.
http://www.examiner.ie/archives/2010/0813/opinion/its-time-to-make-the-super-rich-pay-their-fair-share-127705.html
Paddy Healy
The above by my old friend and mentor when I first became a marxist. Not sure whether he is right but at least he has suggestions as to where the money is. Paddy is a significant union (TUI) kleader and is organising a fightback amongst TUists.
Hmph. The Irish Times gives John FitzGerald, of a D4 background and a worker in the ESRI, his “Professor” title, but John Bisset, who has what is called “a Dublin accent” (peculiar that that term is never used to mean a Foxrock one), and a worker in St Michael’s estate does not get his “Dr” title from them.
‘Activities enjoyed by the rich… such as greyhound racing’.
What??? Has Prof Fitzgerald (Dublin 4) ever dropped down to Shelbourne Park (Dublin 4)?
There should be a law prohibiting economists from pronouncing on matters of which they know nothing (except numbers on a balance sheet).
THE RICH have paid a far higher price than other groups in society as a result of the economic downturn, leading economist Prof John Fitzgerald has said.
Prof Fitzgerald, research professor at the Economic and Social Research Institute (ESRI), said research had shown that more had happened in the last two years to redistribute wealth than had occurred in the previous 25 years.
The headline is not borne by anything in the article, as you say, but if you look at the two quotes from Fitzy that open the piece,it’s not even the case that he is arguing what the headline suggests he is arguing: both the first two paragraphs may well be true without in anyway supporting the interpretation the IT offers.
Firstly he says ‘the rich have paid a far higher price than other groups in society’: not you will note than all other groups. This could mean simply because many of the richest people in our society were involved in toxic property loans, owned banks shares and so on, they stand to have lost more in actual money terms than the rest of us. Which may be all JF is saying.
The clear inference that the IT wants to draw, by linking that paragraph with the next is that the rich are worse off because there has been a greater redistribution of wealth over the last two years than in the previous 25, a redistribution effected through taxation etc. But this isn’t necessarily what he is saying. The rich may be worse off AND there may be a greater redistribution, but one may not – almost certainly is not – paying for the other. The greater redistribution is surely an effect of the fact that there are nearly 3 times as many people on the dole now compared to two years ago, and therefore more exchequer money is being spend in a redistributive manner than before- but not necessarily that the rich are paying for this disproportionately.
I’m sure, whatever Fitzgerald had to say, it was more than the few disjointed bites offered in the piece you cite: you say that ‘the professor doesn’t say’ but it would be more accurate to say that ‘Paul Cullen doesn’t quote him as saying’
And it is of course possible for ‘more to have happened to redistribute wealth’ over the past two years AND for there to be greater inequality now than two years ago.
that was my first response too, SoS. Great example of media spin.
The greater redistribution is surely an effect of the fact that there are nearly 3 times as many people on the dole now compared to two years ago, and therefore more exchequer money is being spend in a redistributive manner than before
But do unemployment benefits even count as redistribution in the strict sense?
When I was (briefly) on the dole, I preferred to think of it as the payout on an insurance policy that I had paid the premium for over many years.
And the way that premium is structured, the rich actually pay proportionately less (because PRSI is capped at 75k or thereabouts, unlike PAYE where the rich generally do pay more than the average, esp since since the levies and effective minimum tax rates were introduced).
So I would tend to see benefits paid for out of the social fund as a form of horizontal solidarity, as opposed to redistribution from the higher income deciles.
I see your point: when you collect UB -as it used to be – it represents the return on an investment by you past, employed, self as it were. This may be true in principle, and, in the days when PRS was collected as a stamp, it might even have been the case that money was collected and ringfenced for that specific purpose: I very much doubt if this is the case with PRSI now.
Even if it is though, I reckon the calculation Fitzgerald was making was a simple comparison of current income with current expenditure: calculating the personal tax take, and subtracting social payments and discovering that more was being taken from those in employment and a bit more from those earning more, and more was being given to those not in employment – because there are many more such- and therefore ‘redistribution’ on a greater scale was taking place.
Which is brilliant, because it surely suggests that if you go from being employed (and hence contributing to the state) to being unemployed (and hence receiving money therefrom) then you are actually better off as a result.