The Gazette 1967/71

curious misconceptions, he said, about profits. Paid-out profits of companies and corporations in Ireland (inclu ding semi-State corporations like the E.S.B.) were 2s. in the £ of the national income ; the I2th round, especi ally if one allowed for its probable overflow into pensions, farm incomes and the rest, looked like costing more like 45. in the £. Quoting Mr. Michael Mullen, of the Irish Transport and General Workers' Union, as reported in the press recently saying the time had come for the I2th round to be paid out out of profits, Professor Fogarty said to get anything like the figure Mr. Mullen was looking for, one would have to throw in reinvested profits—which was the same thing as eating seed corn—and to take over a large slice of the so-called " profits " of farmers, shop keepers and professional men which were in fact these people's wages. He doubted if this was what Mr. Mullen meant. On the subject of profits which, he said, were there even if not as much as some people thought, Professor Fogarty spoke of the purposes profits served, not only as a reward for shareholders but above all as a source of new capital for the future, and said there was reason to think profits in Irish firms were too low rather than too high ; one had to look at the question of profits politically, in the sense of industrial relations politics rather than of party lines. AGREED PRINCIPLES OTHER INCOMES " It was politically out of the question to control other forms of income, especially pay, unless there was a control of dividends ; this, he said, must be a control which affected and was seen to affect individual dividends just as specifically as pay controls were seen to affect indivi dual's pay. He E!SO said that farm incomes had risen fast in recent years and that there could be some savings on them ; the problem, for farmers today was to keep with the rise in other incomes ; if other incomes did not rise, farm incomes would not need to follow them. He was, he said, less satisfied about shopkeepers and some independent professions. The Government had good reascn, he said, for its recent decision to call on the Fair Trrde Commission to look into fees of professional men such as house agents. Professor Fogarty said shopkeepers' margins and independent professional men's fees amounted to little over is. in the £ of the national income ; what happened to them was unlikely to have more than a marginal effect on prices as a whole. This, he said, left pay (not only wages), and this was by far the biggest item in income, expenditure and the cost of production ; it accounted for around three-fifths of all personal incomes. A rise in pay fed through fast and directly and with massive effect into costs and prices. Pay in Ireland, as in Britain, he said, and in other countries for which there were statistics, did tend to race ahead independently, autonomously and, come what may, he did not expect that to be a popular thing to say to a trade union audience but pay was the spearhead and leading cause of rising nrices ; they would never see an end to rising prices and high mortgage rates or a proper rate of growth in employ- merit and an end to emigration until pay increases were stabilised at a level consistent with steady instead of rising orices. Stating how important it would be to get ag-eement between unions employers and the Government about the principles a pay and dividend policy and saying 145

a point where it would be necessary to choke off the rush of foreign firms and export orders, probably valuing up the Irish £ ; the Irish tourist going abroad would find his £i was worth perhaps 303. in Britain and $3.50 or $4—instead of $2.40—in America. He referred to rising interest rates, particularly in regard to mortgages, some of which had been raised recently to 9%> and he suggested that everyone would be happier if by stopping rising prices, mortgage rates could be cut down to 3% or 4%. Referring to export-import gap, he said this had widened dangerously. In 1967 there had been an import surplus of £i5m. ; in 1970 there looked like being a deficit of £7Om. or more ; the country's foreign exchange reserves at the end of 1969 were something over £29om. Allowing tint some cash had to be left in the current account for current business, he said a deficit of this size could be met out of reserves only for a year or two. FOREIGN LENDER Beyond that—three unattractive possibilities presented themselves, the country could borrow more abroad and mortgage the country still deeper to the foreign lender ; it could devalue the Irish £ which would have a devast ating effect, not only on the cost of living, but on the cost of production ; or it could have another burst of stop-go, shut-down growth, raise unemployment and emigration, spread poverty and so squeeze prices and cut the demand for imports. " You paid vour money," said Professor Fogarty, " and you took your choice. Once we let ourselves get into a position where these were the alternatives, we were anyway bound to lose." Speaking in more detail on the cause of rising prices and what could be done, he said people often saw prices as somehow galloping away by themselves for the hell of it by the sinister capitalist. In general, this did not happen. Prices only went up when they were pushed ; the question was where did the push come from and how much could be done to control it. One push came from the rising cost of imports—but there wss not much we could do about that ; another push came from public expenditure ; rising taxation accounted for getting on for half of the rising prices in i968-: 69, but when looked around at the desperate need for public expenditure in Ireland, at the low level of pensions and family allowances, at the need for more housing and better health services, at the shortage of money for university development or for a proper pro gramme of overseas aid, it was obvious that it would be sheer sccial irresponsibility to talk of cutting the total of Government spending and taxation ; every penny of public expenditure that could be got was needed. PUBLIC EXPENDITURE Professor Fogarty said that in face of present needs of public expenditure in Ireland, the man who dodged his taxes was an enemy of the people. He might be a fanner or professional man who took his receipts in £10 notes and forgot to declare to the revenue ; he might be a wage earner who demanded a wage increase when the Government put up turnover tax or the tax on cigarettes and drink. He put the two, he said, in the same bracket. The professional man who swindled the poor and needy by dodging his income tax had at least usually the decency not to bo"st of what he was doing. Yet another push towards higher prices, he said, came or could come from profit margins. There were some