With all the talk of the down turn in construction and the havoc that has raised it is one of the safest industries in the country. The next phase of the global economic evolution is off-shoring and a rate we have yet to see.  Ireland can no longer compete with the likes of China for manufacturing. Even the fact that we have the much praised 12.5% corporation will not save Irish jobs. They will move to the likes of China. Everyone knows this is happening. This is nothing new and nothing that has not already been talked about. But what is not mentioned much that the communications revolution that has given rise to the likes of this blog is changing the world.

There is generally two types of manufactured goods. The ones that can be shipped and those that can not be. A house cannot be shipped. Others like a computer can be shipped around the world all it needs is a box. Whether it is made in Limerick or Vietnam a box is a box, a postman is a postman to the end receiver of the product. Now this is generally peoples idea of manufacturing being off-shored. But think about it not every manufactured product comes in a box. Many come or can come virtually.

I am currently typing this in the UK. I could be typing this in Ballyporeen or I could be typing this in Shanghai. To you the read it does not make much difference. I could be writing this in a newspaper (All be it with one with poor standards to give me a column but lets just pretend) anywhere in the world and the reader would know no different. So why does this person need to be in the country? You get your accounts done by your accountant, do you need to meet them face to face? You get your house drawn by a professional do you need to see them face to face? We are already seeing with call centers the fact that where the other person on the end of the line is does not matter. What matters is do they do the job. And as we can see with call centers they do. 

Unions battling to stop companies moving are fighting a battle they can’t win. Neither will introducing protectionism into the market stop it. As Mr Universe said in the excellent Serenity. “You can’t stop the signal”. Services delivered over the net or phone can never be stopped without a toltalitarian model of phone monitoring. 

One thing that is not mentioned often about outsourcing is that it has limited gains. If companies move to cheaper places like China. Not only will they dent the economies that they leave thus denting their market but they also add to the economies that they move too. Recently it was announced that China’s competitiveness had fallen this was mainly due to double digit rise in Labour costs. With rising wages comes rising standards of living. Countries like China eventually will not be the sweat shops of the world. As they will be in the same position as we are in at the same standard. Thus the reason for moving from Ireland to China is gone. Then the companies can move on to Africa. But the same thing happens again. The countries prosper and eventually there is no more cheap labour in the world to move too. So the countries will eventually find a place to settle. But with the rise of standards of living also comes the desire for stuff. Ipods, TV, Prada, etc. Creating a greater consumer drive for products and services leading to more jobs worldwide.

With the rise of the economies in these countries so to will the level of education in these countries. Thus they will be able to compete with Ireland for the high level jobs.

In Offshoring The Next Industrial Revolution by Alan S. Blinder in Foreign Affairs said that “just as with the first two industrial revolutions, massive offshoring will not lead to massive unemployment. In fact, the world gained enormously from the first two industrial revolutions, and it is likely to do so from the third so long as it makes the necessary economic and social adjustments.”

Now his answer was that we need to focus on personnel service industries. Where face to face interaction is needed such as taxi drivers and doctors. But what I disagree with there is the fact that face to face services will only keep money in the economy. If people buy their stuff outside the country then money is leaving the economy. If there is no services that bring in an equal amount money then we will have a massive balance of payments deficit. 

So what we need to do is innovate to create the initial patented idea’s and products in Ireland so that the financial benefit comes to Ireland. Where as there is only some many accounts that one can file. There is no limit to good ideas. Every good idea is of value. 

By building our economy on a layer of innovation with roots made up of face to face industries such as what Alan S. Blinder suggests then maybe we will come out of the global shake-up ok.  But all this talk of innovation creation is just talk. Saying how innovation will occur is hard. True education has a major roll in the creation of innovation but some places do it better then others. Silicon Valley does it better then the North West states home of the Ivy league schools. So it is not mearly having top universities? What is it then?

That is the million dollar question. 

Paddy Power offering on next election being in what year.

2008 28-1

2009 8-1

2010 7-2

2011 6-4

2012 evens

I am not a betting man but some very good value bets there.

The local elections will be around May next year. But to be able to vote you need to be on the register of elections for 2009. Which is to be published in February. However the Draft electoral register is coming up in November. So make sure you are on the register.

And then you can’t complain that you get told in time to register to vote. Because I told ya See this is when rock the vote should be in operation.

The term save your bacon was first recorded in 1654. What the origin of the phrase is unclear. Maybe bacon was expensive back then and to save it, was to save something precious. To a politician nothing is more precious then their seat. It is their job, their symbol their power it makes them what they are. Of late we have seen a few politicians grabbing life jackets from the S.S Fianna Fail Green promising to jump ship if the over 70s thing went true the likes of Matty McGrath. While some minor figures The young Healy Rae,  Thomas Welby (PD Galway Councillor) have jumped ship and a big figure in Finian McGrath.

Now they say that this is because they were principled about the issue. But in reality they think that the ship is going down. So far the Greens have been very stable. Rowing in behind the FF tiller. (I know i started with a bacon metaphor I should have bacon puns. Suggestions welcome.)  Considering the humming and hawing the PD’s did over Bertie Gate their response has been remarkably loyal. However how much can they let this go? With these measures Labour must be eating into their ABC demographic. While the other independents are still supportive their is only so far pork barrel politics can get you. This budget is turning into poison chalice and will go down in the annals beside VAT on childern shoes.

The desire to stay loyal to the party is strong but the desire to save your own bacon is greater. How long this government can stay afloat is questionable. If we have an election in 6 months I would not be surprised. Certainly with the Bacon saving I think I am not the only one. 

The question is where do these people go? The civil war ties are possibly too great to allow a mass jump of FF to FG. Can anyone think of someone looking to form a party??????

One of the biggest stories about the state of the Irish Economy came out on Friday to little notice. 

THE IRISH Financial Services Regulatory Authority has instructed accountants PricewaterhouseCoopers (PwC) to assess the extent to which the banks are delaying the collection of interest payments on loans to builders and property developers.

If banks are not collecting interest on loans it is pretty clear that with the current state of finance they consider that there is no money to collect. If a company can not pay its interest it will probably go bust dumping a massive bad debt on to the banks balance sheet (and the tax payers laps).

Keep your eyes open for that report in the next few weeks.  Also from the article

AIB said at the bank’s half-year results presentation, also in July, that it was “rolling up” interest for some property developers as there was no activity in the property market and no cash being generated to repay interest.

The bank said it was adopting “a very supportive approach

Emmm

Fianna Fail have in their defence against  James Reilly Fine Gael’s spokesman on health attacks on the medical card for pensioners debacle. Have mentioned that James Reilly was head of the IMO when Fianna Fail negotiated the deal with them which was very generous (Or so Fianna Fail say). This seems to be trying to discredit  James Reilly by making himself out to be a greedy doctor. Now this might be true but it is hardly relevant. As head of the IMO his duty was to get the best deal for his members. If he did not it would show a large disregard for his responsibilities and would say more about his inability to be a minister in waiting then being a greedy doctor. Fianna Fail signed up for the deal in the end, they decided what he offered was good enough to accept. So really it is not relevant at all to this discussion.

A few Fianna Failers are against the removal of automatic intitlement of medical cards to pensioners. Will update the list during the day. If you hear anyone else let me know. The government majority is 5. ( Correct me if I am wrong? )

Jim McDaid (On Newstalk)

Matty McGrath (On Newstalk suggested a few cent tax on txt messages instead)

Jim McDaid is on Newstalk going against the current Medical Card Fiasco seemingly putting the blame squarly at the PD’s or should I say Mary Harney.  Saying that Mary has taken it the wrong direction. He also seemed to indicate that he will vote against the bill.  This is again Fianna Fail playing its own opposition and will probably succeed in bringing this bill down. Although Jim McDaid is a bit of a lose cannon so you don’t know what he is at.  While Eamon Gilmore’s tack is

The Leader of the Labour Party, Eamon Gilmore TD, has written to Professor Brendan Drumm challenging the legal authority of the HSE to require persons over 70 to return means test forms for medical cards in advance of the enactment of appropriate legislation by the Oireachtas.

I wonder if this will be stopped by Fianna Fail backbenchers giving them a bit of a leg up. While this also caused all the other measures in the budget to be ignored. Is the opposition going to be out foxed?

So basically the question is, Is this Vat on Childern shoes? Or clever politics? I think it is more the former but never rule out the later.

Update : Matty McGrath FF Tipp South out against it.

From IMF 

I am sure many aspects of the budget will be discussed by bloggers in the next few days. And indeed the papers are full of it. But One thing that I want to have a look at is the increase in University Registration Charges to €1,500. When are we going to stop the pretence that we have a free third level education system? We have a subsides one. By calling it a registration fee we are just deluding our selves (maybe what FF want us to do) that it is free. Its not the government just subsides about 66% of the cost. 

Whether that is good or not is of course another story.