Thank goodness for independent central banks

Angela Merkel has just given us a compelling reason to be grateful for central bank independence.

Update: Wolfgang Münchau is pessimistic about future ECB independence here.

Deadweight Loss and “Job Creation” Plans

There is a widespread consensus among opposition politicians, unions and business lobby groups such as ISME that the government needs to launch a “jobs plan” to reduce unemployment.  One such proposal is Fine Gael’s plan to give those firms hiring unemployed workers either a €6000 subsidy over two years or a waiver on employer PRSI. (Labour have a more restrictive version which only applies to recruiting people unemployed more than six months.) Another proposal is ISME’s call for “an employment subvention fund to protect existing jobs.”

At a time of rapidly rising unemployment, I’m sure these seem like tremendous proposals to the public and the government is being widely criticised for its failure to adopt “innovative” proposals like these. To my mind, however, it would be a mistake to adopt proposals of this type.  Let me explain why.

Irish Economy Notes: New Series

In order to provide a home for some longer posts and associated papers by contributors, there is now a new numbered series Irish Economy Notes which can be found here (and via the blogroll on the right panel of this site).  The first batch includes contributions by Greg Connor, Colm McCarthy and myself.

The knowledge economy

The news today that the proportion of Leaving Cert students taking honours maths and physics has declined confirms what third level teachers already know: mathematical literacy is poor in Ireland. There are obvious implications for the credibility of the government’s knowledge economy ‘strategy’, but since the government has little credibility anyway that is not of any great importance. The problem of low mathematical standards is, however, an important one for the economy. It is a problem for which there are no quick fixes, but which could be solved given time, willingness to change, and attention to detail. Which makes it a nice metaphor for the Irish economy more generally.