Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

I wish to make several points. My first point relates to an issue raised by Deputy Spring and leads towards a suggestion on something the Irish Fiscal Advisory Council could examine, but I do not know whether it will take me up on it. We spoke about Keynes earlier, and a name rarely mentioned but which should be mentioned more in my opinion is Marx. Marx made the point that along with the boom-slump cycle, the longer-term problem of capitalism is that the rate of return on investment on aggregate across the economy tends to decline, and when this happens pressure is brought to increase or maintain profit levels by driving down wages and extending working hours, and speculation begins so money begins to rush around places where people think they can make a higher return. This relates to Deputy Spring's point on huge amounts of money sloshing around in the global economy in relatively few hands, lurching from place to place looking for a higher rate of return. Generally, because of declining rates of profits in real industry and enterprise, people are risk averse to investing in the real economy. Why take the risk of setting up an industry when one could make a quick return on buying cheap property in Dublin and jacking up rents knowing there is huge demand for property? This is exactly what is happening. To my mind there is over-financialisation of the global economy and the Irish economy.

Something which I believe is an extension of this, and which has come sharply into focus recently as it has been highlighted by Mr. Piketty, is growing inequality. An important point to make is that inequality becomes a drag on growth. Growing inequality begins to undermine the dynamism of an economy. Much money is concentrated in few hands, which are risk averse and afraid of real investment. This inequality and the lack of demand produced among ordinary people who do not have any money to spend becomes at a certain point a significant drag on economic growth. This is the space we are in and Mr. Piketty is absolutely right to identify it. Should the Irish Fiscal Advisory Council examine inequality as a macroeconomic question and how it is a structural danger to the economy? As politicians we are very concerned about the human impacts of inequality, but inequality is actually a serious drag on growth.