Writing off a generation? – Blanchflower

Snippets of Blanchflower’s newsnight interview are available below. He is quite adamant that omitting graduate unemployment from the policy response is a big mistake. He is talking about the UK but it may not have escaped the notice of readers of the blog finishing exams that things are tight here also.


I posted previously on his paper with Bell which offers some solutions to young unemployment.

12 replies on “Writing off a generation? – Blanchflower”

Gerard O’Neill suggests one method of alleviating graduate unemployment in his post below. Various forms of internship programmes (not restricted to the private sector) should be considered. I think Gerard’s suggestion does not fully deal with displacement risks nor the risk that the successful candidates would be the ones who would have got jobs anyway. It is worth debating.


One thing that makes it a difficult topic for academic economics is that there is not a well developed literature that could map easily on to mass graduate unemployment in a country like Ireland. The literature on overeducation and overskilling to my mind does not teach us much about short-term recession recovery.

One thing that upcoming graduates should consider doing is voting. Participation rates among 18-24 olds are so low that a rational politician looking for reelection should focus more on the older groups.

Blanchflower was treated very poorly by the BoE. Despite clearly seeing the problems way ahead of the rest of them, he seemed to be sidelined for his dissent from the concensus. More forethright policy makers like him are needed in future.

Voter participation rates among the 18-24 age groups.
It will be interesting to see the influence here, if any, of the Obama campaign techniques here eg. Facebook, YouTube, Twitter and other such innovations. Fianna Fail has already hired one US firm that worked on precisely this aspect of Obama’s campaign.

I would not expect any impact until there is a general election, but who knows? Something for the academic political scientists to get stuck into, as they love parsing elections!

re. older voters.
So Fianna Fail were right to select the 70-year old as a candidate in the Dublin Central by-election? I will not be surprised if he is elected, thus ending the 27 year period since a Government last won a by-election.
Check the constituency profile here


You have been arguing both passionately and knowledgeably about the disastrous long term impact of failing another generation of young Irish people and about the need for concerted and extensive policy action. Though many of the threads on this blog focus on the banking crisis and the Government’s fiscal crisis, I don’t think I’m alone in recognising the over-arching importance of the case you are making.

The paper by Blanchflower and Bell should be required reading for all policy-makers. Not all of their ten policy proposals may be appropriate in all countires, but they provide a comprehensive menu for policy. Again, I don’t think I’m alone in advocating the requirement for a Keynesian-style stimulus investing in both human and physical capital. This may have been acknoweldged by many in passing, but the crushing constraints of the bank sector debacle and the Government’s fiscal position seem to have squashed the ability of many economists to think outside of the box.

The biggest obstacle seems to be the financing of a stimulus in a manner that will not prejudice the State’s already shaky finances even further. I have previously argued for the privatisation of the remaining semi-states and the recycling of these proceeds through the NPRF to leverage the financing of forward-looking infrastructure investment. It is now time to take the argument a step further.

Alan Ahearne’s recent defence of NAMA contained the following (already picked up by other readers):

“Decisions about which development projects are viable and which are not should be made in the taxpayers’ interest, not in the interests of developers and bankers. After all, additional funds will be required to bring viable development projects to completion. Troubled developers should not be allowed to use taxpayers’ funds to gamble for resurrection.”

Given Alan’s current position it is probably fair to assume that he is not speaking entirely in a personal capacity. I think we can safely assume that public utterances on such an important and sensitive matter have been scrutinised prior to release from both a political and policy perspective. This for me signals a major shift in policy thinking on the enjoyment of the rights of private property. It is, however, entirely consistent with the relevant provisions in the Constitution:

“Article 43

1. 1° The State acknowledges that man, in virtue of his rational being, has the natural right, antecedent to positive law, to the private ownership of external goods.

2° The State accordingly guarantees to pass no law attempting to abolish the right of private ownership or the general right to transfer, bequeath, and inherit property.

2. 1° The State recognises, however, that the exercise of the rights mentioned in the foregoing provisions of this Article ought, in civil society, to be regulated by the principles of social justice.

2° The State, accordingly, may as occasion requires delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good.”

It is almost certain that the President will refer the future NAMA Bill to the Supreme Court as it will, inevitably, infringe the rights to the enjoyment of private property, but I expect the legislation will be couched to appeal to the “principles of social justice” and the “exigencies of the common good” in a way that will satisfy the Court.

In the context of the recent report of the Commission inquiring into child abuse, there is no an opportunity to take a further step. Given the systematic abuse of the most vulnerable members of successive generations of young people, the Catholic Church has lost any entitlement to the ownership of the property that supports its ability to control the provision of education and health services. The State, through subvention and capital grants, has funded the expansion and development of these properties, but they remain in private ownership. It is now time for the State to seize these assets pursuing “the principles of social justice” and in the “common good” and to take them on to the Government’s balance sheet. These additional assets may be used to leverage the financing of new investment in human and physical capital.

Using this additional finance to invest in the training and education of young people now might be seen as some restitution for the abuse of vulnerable young people in previous generations.

The problem with a special “scheme” for graduates, is that it may help the families of the well heeled while tens of thousands of others are ignored.

Just think of low-income multimillionaire farmers’ children on third level grants as one example!

The Insiders would likely do well, as always.

A UK report last month suggested privately educated people took the lion’s share of jobs in some professions, despite accounting for only 7% of the population. Three-quarters of judges, 70% of finance directors and 45% of top civil servants went to independent schools, for example.


Ditto in Crony Ireland!

Given the drunken frolics of Galway Rag Week, there still seems to be plenty spare cash in the third level sector.

Besides, there is a huge public subsidy already being provided for research positions through the “world-class knowledge economy” programme.

Many of the unemployed from the construction sector could not even produce a Word document CV and there are also other categories of unemployed who need retraining.

Internship seems like a good idea but the people in local authorities would tell you that the management scam of providing relatives who are students with summer “work,” creates more hassle than output.

I understand why this is an important everyday issue for academics and the striking thing about unemployment is that it’s generally such a remote issue for those who are in secure employment.

There are no easy answers but at least for young people who are not part of a household where a parent is unemployed, there isn’t the fear of losing a house or trying to explain to children why a leader like Brian Cowen can have the gall to claim credit for dousing the fire that he and Cabinet colleagues left start and rage out of control.

Fearghal Quinn argues also for internship programmes – he makes a strong case and he is hardly someone without real world business experience. Again, like Gerard, he doesn’t address the displacement issue well enough. If these things are to happen then both cost and displacement need to be addressed.


– Paul: the property issue should be kept separate from this. Some of the things you are talking about there would require a massively more expansive debate than a proposal to bring in some active labour market policies.

– Michael: There are about 3,000 research jobs in the universities so this is not really relevant to the mass graduate unemployment issue though colleges should be awarding internships. You rightly point out that there is potential for cronyism in how any state sponsored work programme would be implemented. Lets keep this in the debate. You also rightly point out the need for training for people in construction and without being flippant, expanding programmes to train people is certainly one way some graduates could ride this out. You lose me a little with your final few paragraphs. You should stick to the point.


I take your point, but I see investment in human and physical capital as two sides of the same coin. I also recognise that you and your colleagues who have expertise in this area are best placed to identify relevant ALMPs – it’s not my territory. However, effective ALMPs will cost, resources are very scarce and my focus is on generating ideas to help finance this effort.

Nor do I think we should be afraid of an expansive debate. Many of the vested interests that profited during the long build-up to this combination of crises – and in many ways contributed to them – are tottering. We need to think about dealing with them so that they become part of the solution – rather than remaining as part of the problem. We should bear in mind the injunction of Pres. Obama’s Chief of Staff, Rahm Emanuel: “Never let a crisis go to waste”.

Paul – there are good reasons to keep these issues separate and bundling in seizure of church assets with training programmes doesnt make sense conceptually or practically.

Intern programmes are normally (using USA for example) unpaid or very low paid, I can tell you as an employer in Ireland I’d happily take on an intern, maybe two, but find me a post grad who is willing to serve time on minimal wages or none at all in return for real world experience? I don’t see that happening.

It wouldn’t be that I don’t acknowledge the high level of education an intern has but they totally lack utility (at least starting off) and teaching them anything takes away time from the task at hand.

There is nothing to stop companies from running intern programmes but I don’t think the students themselves would really take them up.

Karl – that’s your personal experience. My own experience is that internships in academic and research contexts have enormous benefits to the interns and to the institutions.

I have been flooded with applications to do internships here and we were able to off a small number of very lowly paid temporary places and since then people have been emailing practically daily looking to work for free. When you see people who have come top of their year every year in competitive courses not being able to get anything at all and starting to want to work for free (and still not being able to get anything) there is something seriously wrong. Previous posters seem to revel in the fact that some of the guys will have to learn humility and some others seem to think it fitting retribution for the mean drinking patterns of undergraduates in general. My own view is that these guys are being squeezed out of the market by pay levels in public sectors and certain uncontested aspects of the private sector. Seeing us cling to the death to many people who have long past their productive contribution but still get paid well into six figures at the expense of a new generation of bright and motivated people is bad economics and will have a hugely damaging effect on the spirit and morale of the country. There needs to be a nominal pay cut and we need to start hiring again.

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