Exploring Ritchie\’s logic

This is an amusing piece from our favourite retired accountant.

But this artificiality will not be the end of the problem. Copying the culture and failed policies of the Republic will be the biggest disaster for Northern Ireland. As the Republic has now resoundingly proven, building an economy on the basis of corporate tax rate competition does not work. That policy has virtually bankrupted the Republic. Why on earth would anyone want to replicate it?

Note the logic. Ireland had/has low corporate tax rates. Ireland had/has an economic collapse. Therefore Ireland\’s economic collapse came as a result of low corporate tax rates.

It\’s that last sentence there which is suspect. Suspect as in \”batshit crazy\”.

Ireland\’s problems came from being in the euro, meaning interest rates entirely inappropriate for a real estate bubble.

But of course for Ritchie the idea that the State doesn\’t take a substantial portion of economic activity is the cause of all troubles.

6 thoughts on “Exploring Ritchie\’s logic”

  1. Ireland has gone from about 60% of UK GNP in 1989 when they started cutting CT to 140% a few years ago & is now down to over 130%. And that depends on us borrowing 12.5% of GNP & them not. Would that Britain were suffering from such failed policies.

    Ireland’s minor problem is that they are constrained by the Euro while our £ floats. Their major & largely unnoted problem is their shortage of electricity capacity. They produce 1kwh for every $7.75 of GNP, the highest in the developed world. The world average is $3.90, China roars ahead at $2.45 & Britain is 4th at $6.14.

  2. @Neil: don’t make economy size % comparisons at short-term market exchange rates, they make you look silly. A 20% fall in the EUR/GBP rate tomorrow would make the Irish as poor as us again according to your measure, despite having no immediate effect (and a positive medium-term effect) on the Irish economy. PPP is the only sensible way to do the comparison.

    You’re right about electricity, though. And the electricity they produce is primarily made from oil, which is particularly insane (and the main reason why it’s so expensive). It makes the UK’s policy of gas generation seem positively future-proof by comparison…

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