Letting the gini out of the bottle

by Maria on August 6, 2008

Interesting thought piece in today’s Irish Times; ‘what will life be like for the average Irish middle class family in 2050?’. It is inspired by JM Keynes’ 1930 ‘Economic Possibilities for our Grandchildren’.

It’s low on specifics but not remotely tech-evangelist, which makes a nice change. It’s clear we won’t all be driving around in space ships and commuting to and from Mars (energy and everything else being too dear). Interestingly, it predicts Ireland will be physically smaller because of climate change, and also more densely populated. One topic it doesn’t deal with is changes to income distribution.

I have a feeling that with higher prices and the predicted period of economic ‘adjustment’ we can look forward to, the gap between rich and poor Irish/Europeans may come to more closely resemble that in the US. (Bearing in mind that Ireland’s income distribution is probably somewhere between continental European and the US. But I’m not an economist and the writer, Stephen Kinsella, is. In any case, his policy prescriptions call for government actions to help the middle class that might mitigate overall income inequality:

“Well, first, they need to help me save. The more the middle class saves, long term, the more their children and their children’s children will benefit. Second, they need to make sure my children survive, by providing a health service which will make the chances of this more likely. Third, the Government must ensure the natural environment my grandchildren inhabit is as conducive to their happiness as possible, while allowing service sectoral growth and general economic development to maximise the economic possibilities for my grandchildren.”

(By the way, kudos to the Irish Times for finally pulling down the paywall.)



Stephen Kinsella 08.06.08 at 8:37 pm

Hi Maria,

I wrote the article, and the longer version of it is up at http://www.stephenkinsella.net.

You’re right about the lack of specifics though—the subtext of the piece is that all the bad news we’re experiencing in Ireland is a temporary phenomenon, and a bit of perspective might be nice. Keynes wrote ‘Economic Possibilities for Our Grandchildren’ in 1930, after real household income fell by 40%. In Ireland today if the same thing happened, the average Irish industrial worker’s income would drop from 35k a year to 21k.

Anyway, love the blog,



daddysteve 08.06.08 at 8:49 pm

Fiscal policy that would allow a savings account to earn decent interest? Where’s that been for the last two decades? Oh yeah, the Fed is good for the economy.


daddysteve 08.06.08 at 8:55 pm

Oops, you’re talking about the other side of the pond,not the U.S. Just substitute “financially irresponsible institution of your choice” in place of the Fed.


Maria 08.06.08 at 9:00 pm

Hi Stephen,

Many thanks for leaving a comment here. A longer perspective on the current doom and gloom fest in Ireland is very welcome.

Looking forward to reading the full version, Maria


Stephen Kinsella 08.06.08 at 9:00 pm

@ Daddysteve, we’ve got the Irish government, so we’re covered!


matt 08.06.08 at 9:11 pm

At first glance I thought this was a post about letting the gin out of the bottle. That sounds like a great idea to me about now, so long as it made it to a glass on the way out.


novakant 08.06.08 at 11:52 pm

Saving is good – or is it?

Countries like the US or the UK (couldn’t find data on Ireland, but I think it’s similar), where many people don’t even think about saving, but are mortgaged to the hilt and seem to have no problem shuffling their debts from one credit card to another, seem to be much more dynamic economically, than countries like France or Germany where people traditionally tend to save more and are reluctant to spend money they don’t have, but the economy is generally lagging. That at least has been my layman’s impression and it seems to be somewhat backed up by the data – household savings rate in 2005:

US -0.3%
UK 0.0%
Germany 10.7%
France 11.5%

Are people in France and Germany saving too much, thus suffocating their economy? Or are people in the US/UK (and Ireland) building a house of cards that will be, or is already, crashing down on them?


bdbd 08.07.08 at 3:11 am

Modern Mechanix, 1968, on how the world will be in 2008



Thers 08.07.08 at 6:11 am

The Irish Times took down the paywall? Had no idea. I now might start remembering that it exists!


Gareth Wilson 08.07.08 at 11:00 am

Sometimes a little tech-evangelism is appropriate. For example, the article implies that in 2050 Irish people will still get frail in old age and won’t want to continue working full-time. That’s presumably what the savings are for. But after 42 years of progress in medicine, is that completely certain?


Barry 08.07.08 at 12:00 pm

Yes. Perhaps a few years later than now, look at the progress of the past 42 years. So far, magical potions of youth seem to be keeping 20 years in the future.

Of course, what’s happening now is not ‘frail elderly unable to work’, but ’40 or over; no good job for you’. The average 50-year old person can work, just not perhaps at an 8 hour Wal-Mart shift of standing as a greeter, punctuated with ‘breaks’ involving rounding up shopping carts.


Dave 08.07.08 at 2:31 pm

@10: what will happen [barring miracles] is that for some rich people the effects of advanced old age will be further mitigated by enormously expensive drugs and wonder-surgeries, while for the rest of us they won’t. Meanwhile, OTOH, medicine will continue to get better at making people not die quite so soon. Therefore, the danger will remain that, like some horrible Greek myth, we will just get older and older, weaker and weaker, and yet, hoorah! not actually dead [just might as well be… Not least since we won’t have been in a position to actually earn an income for 30, 40, 50 years…] How soon before people have to start worrying about being a burden to their great-great-grandchildren?

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