Today’s Irish Times contains a column by Dan O’Brien, based on his new book, which makes some interesting claims about possible links between the Irish constitutional order and what Dan O’Brien characterises at a uniquely Irish pattern of economic performance: slump-slump-boom-slump.
It seems like a topic worth adding to the mix in this forum.
51 replies on “The benefits of constitutional change do not seem to have been considered at all”
Dan’s explanation is not convincing. It doesn’t answer the question of how an “inert” political system generated outsized economic growth followed by outsized econoimic reversals.
Is there not a much simpler and more convincing explanation for what happened to the Irish economy? We had a credit bubble, courtesy of low EMU interest rates, that is now reversing into a credit bust. The same thing happened / is happening to Spain, albeit with lower amplitude.
There is no question that we do have governance failings. But all developed countries can suffer from inertia and political gridlock.
Having worked as a special advisor in the Department of Justice, Equality and Law Reform, my opinion is that the Irish governmental system might actually be superior to the British one:
1. After the initial shambles of the Arms Trial, the Irish government’s reaction to the unfolding problems of Northern Ireland was more sure-footed, consistent and right than that of the British government.
2. Informants run by the Irish security services have not turned and agitated publicly against the government in the way that has occured with several agents run by the UK security services.
3. Unlike the Home Office, the Department of Justice has never been accused by its minister of being “not fit for purpose”.
He argues that Ireland should be like “other” democracies. But gives no concrete exaples of one that dodged the GFC, because there isn’t one!
Australia looks like a special case but it will slow very badly. China and India are applying technology and methods to socialist dominated systems that are clearly not market oriented.
Ireland is small in population terms and smaller in governing class terms than England. Networking and nepotism are strengths as well as weaknesses. Pretending that dynamism is awaiting the right key is typical pie in the sky. Everyone knows what6 the problems in “their” system are but they lose out if they publish them. Factional fighting is very deceptive and cliques rule in Ireland. As emigration is the escape valve, there is never any need to change the system. It survives. It slowly adapts. But it is always the same players, looking after their own. Cronies or partners. Take your pick. The interests that have power make alliances with others and the powerless suffer. But emigration often means improvement. So the suffering is usually of the depression/alcoholism kind. Those who migrate after all, have shown initiative. They either adapt or return to what they know. Even if it is worse as they have links in Ireland.
Occasional entrepreneurs will often find the market here too small.
And always there is the jealous neighbour which has had a strategic need to keep out invasion from the continent in all its wars with that continent. Ireland is too independent of England to be left alone. The need for interference has not diminished, despite prosperity and papal decline. Even the US had contingency plans for invasion via NI. The openness of Ireland can be a front, but the caution learned from history has not translated into effective economic policy yet. The UK has far more banking experience than Ireland. Law may have been sent to France to set it back via currency corruption.
The love affair with banking has been very sudden in Ireland. The easiest way to destroy someone is to give them what they wish for! Handing out money that has not been earned is a sure way to destroy a culture. Recovery is possible but with dissent fomenting, disruption can be almost guaranteed.
Dissolve the Dail and hold an election! The constitution has served us well and continues to do so!
I think that there is considerable merit in what Dan O’Brien is saying and I have argued here before that debate on how policy is made is at least as important as debate on specific economic presriptions.
Dans first point about the electoral system is of importance to the extent that it contributes to the clientelist culture and nature of Irish politics that goes far beyond the normal issue of interest group intermediation in pluralist democracies.
His point about the separation of executive and legislative power is well made and is a view that I am finding more and more worthy of serious consideration.
Judicial activism is an interesting discussion point. Its role at EU level would concern me a lot more I would have to say! All in all I would be encouraged to read his book and welcome any public debate on how to improve our democratic design and policy making capacity.
The book may explain it but I found the following unconvincing and partly sef-contradictory:
“Since the 1960s, Irish judges have become much more active in questioning laws, and they have not always exercised their powers wisely, as judgments on issues from Ireland’s involvement in the EU, to nursing home charges, to statutory rape laws attest.
Checks on the power of the executive and legislature are vital to protect liberty, but the rise of judicial activism has knocked the balance of powers out of kilter.”
1. If inertia rules everywhere, and is bad, judicial activism may be a good thing. This was reckoned to be so by many people in regard to the issues of contraception and abortion.
2. Like all human beings, Dan O’Brien included, judges do sometimes err. His reference to statutory rape is not uncontroversial; the references to involvement in the EU and nursing home charges imply opinions that are IMHO erroneous in a major way.
3. Those of us who observe the Supreme Court keenly would find it difficult to agree that the balance-of-powers is out of kilter. Some of my colleagues would go further and suggest that at least one judge has reacted too far to the judicial activism trend.
Vision is a funny thing. Your eyes are merely lenses – the interpretation is done by your brain cells. Mind you, your vision is dependent upon the nature of the optical apparatus your wearing.
Political change would probably be desirable. After all we now live in a completely different age to that in which our political system formed. The STPV electoral system is useful, but again,I think a solid argument could be adduced to change it. We’ll see.
@Pat D. Several times you’ve mentioned emigration. I’m unclear from your comments why you are bringing it up, except to refer to how we, sort of fixed, our previous bouts of economic depression. My opinion on emigration is – its not a runner this time. The young generation has nowhere to go that is in any better shape than IRL. Perhaps others will dispute this with me, but if the do, they had better produce the data which shows that their English speaking locations have the potential to ‘grow’ – which they manifestly do not. Both the US and UK are in far worse straits than we are. We are just being backstopped by the ECB – for the moment.
You know that our Permagrowth economies are able to ‘grow’ linearly because of fossil fuel energy and credit creation. Credit creation begets debt – and this Frankenstein monster grows exponentially! The predicament that we are in is that it is physically and mathematically impossible to ‘grow’ economies based on finite resources at an exponential rate. Impossible!!! So something has to snap – and it has. If we want to extract ourselves from this mess we have to do one of the following (and damn the consequences!).
1: Inflate at 23% pa for 6 years – will kill most debt
or
2: Default ALL debts, state, corporate and private – but no return to past
or
3: Some combo of 1 + 2 – has political and social potential
There IS no other way out of this mess. Now if any one thinks my proposals are looney, fair enough. But you sure as hell had better explain how you intend to cancel or postpone the 2nd Law of Thermodynamics and the mathematical law of exponentials!
B Peter
On the electoral system point, I am unconvinced that systems determine political priorities so much. The next general election will, I believe, show just how dynamic Irish politics are, in appropriate circumstances, and this will not be for the first time.
That said, my mind is not closed to a change, as long as it is not to a list system or to the ridiculous British FPTP way.
On constitutional change, Dan O’Brien is, as usual, in line with the meritocratic consensus which is destroying democratic politics in Europe. Meritocracy is marginally better than autocracy but is inferior to democracy. (This is, of course, arguable – but not among those who profess to be democrats). Churchill lamented that enthusiasm for democracy did not tend to outlast the first encounter with the ordinary voter, but was also forced to the conclusion that it was the best arrangement, when one considered the alternatives.
I welcome Dan O’Brien’s raising the issue of how we govern ourselves in his thought-provoking piece.
I do not agree with all his proposals. It seems that he wants to remove checks and balances on how power is exercised in this democracy. If I have understood him correctly, he would do this with the sole aim of improving management of the economy.
He writes that “Four aspects of the Constitution are near-unique or very unusual. Together they create a chronic anti-change bias.”
I agree entirely with him on the separation of the executive from the legislature as a means of overcoming the inertia that can make life uncomfortable (to put it mildly) for so many here. In fact two friends and I proposed just such a measure in response to the 1980s crisis http://193.120.95.144/politics/design-for-democracy.pdf.
Other writings in the same vein are here
http://irishpoliticalreform.wordpress.com/resources/donal-obrolchain-paper/
We maintained then, as does Dan O’Brien now, that our government system displays a lack of capacity for action or implementation. However, we did not advocate changing the electoral system or curbing the power of judges. Nor would I do so now.
As cormac Lucey points out, Dan O’Brien fails to note that the changes in economic policy from protectionism to a more open economy has continued from the 1950s to the present day – under precisely the same four aspects to which he ascribes failure ie the voting system, the judiciary, referenda to change the constitution and no separation of powers between the executive and the legislature.
The “uniquely Irish pattern of economic performance: slump-slump-boom-slump” is no reason to suggest the curtailment of checks-and-balances on the way that the executive and legislative sides of government use their powers or fail to use them.
Note that these powers are derived from us, citizens in a republic with a written constitution. We transfer these powers to government through the ballot box, in elections and referenda. IMO, we need more means of limiting the scope for excess (either action or inertia) by the governing and state classes.
He points out that the “the political class has been unwilling to push reform.” I am sure that he is aware that there have been two attempts to change the electoral system in the last 50 years. At least two constitutional review groups have been set up in the same period. Perhaps the book has more detail on reforms than he outlines in his ITimes article.
I suggest that that the governing class has made many changes over recent years – all of which have led to a centralisation of power, often in the name of effectiveness/getting things done.
In practice, many of these are limitations on the means available to us to control and check governmental power. Examples are
• The removal of rates from domestic residences and agricultural land, thereby moving power from local authorities to central government;
• The increasing cost and restrictions for making submissions on planning applications, some of which lack merit;
• The uncalled for restrictions on and increased costs of using Freedom of Information(FoI)
(@Vincent Byrne – we could learn more about how policy is made, with a far-reaching FoI, coupled with separation of powers!);
• Limitation on questions to the executive in the Dáil and local councils.
In short, the powers-that-be have been trying to limit our scope for controlling their excesses and for even finding out about them, as we have seen in Tribunals and other enquiries done on a non-statutory basis eg. Miriam Hederman O’Brien’s enquiry into Hepatits C infection of women, the Abbeylara enquiry started by a Dáil committee.
Dan O’Brien refers to UK practice. Any UK government that gains a majority in the Commons can do virtually what it likes. UK governments gain power using an electoral system that fails to represent fairly voters’ wider preferences.
IMO, the UK system relies on a view that grants liberties to subjects, not rights to citizens. there is an opinion that in drawing up our written Constitution’s articles on government, de Valera did little more that codify the then UK practice.
It is not clear whether Dan favours direct elections to the both the executive and legislature (as in the US) , which I do.
From this article, you would assume that nothing has changed in Irish government and public administration. The introduction of County Management (initially in response to corruption) was a radical departure from what this state inherited from Brittain. It is based on a separation of powers. Unfortunately it was not developed and lost momentum, with the introduction of pwer of arbitrary interference (Section 4) and the loss of direct income for local government.
Unlike Dan O’Brien, I am in favour of introducing more radical measures into our Constitution, eg. full freedom of information (as in Sweden), citizens initiative (as in Switzerland). These measures, along with our system of proportional representation based on transferable votes in multi-seat , are needed as countervailing forces to the power/inertia of the executive and the legislature.
Commenting on the 200th anniversary of the US constitution in 1987, the Economist observed that “When (Britons) look across the Atlantic at the fun and games this summer, many Britons will no doubt turn up their noses in well-bred disdain. They could reflect a little on Philadelphia. For if there was an American miracle there, it was that those 55 men saw that government, however democratic, must have the scope for excess denied to it. And if there is a sad British oddity, it is that so many men in the seventeenth and eighteenth century knew that very well, and that so few do now.”
Perhaps Dan O’Brien’s book has more detail on how other democracies limit the scope for excess by the governing and state classes, in addition to how they manage their economies If so, I look forward to reading it.
The characterisation of Ireland’s economic performance as ‘slump-slump-boom-slump’ is ridiculous. It totally flies in the face of all economic statistics. This is the sort of gibberish that only economists, in particular Irish economists, can come up with. By using the word ‘slump’ 3 times and the word ‘boom’ once, O’Brien is trying to give the impression that slumps in Ireland are more numerous and more prolonged than booms. How absurd! One might as well characterise Manchester United’s performance in recent decades as ‘defeat-defeat-victory-defeat’. Since O’Brien apppears to have very little knowledge of Ireland’s actual economic performance in recent times, let me enlighten him.
(a) In the half-century since 1958, the Irish economy has grown faster than the EU15, UK or US economies in roughly 80% of the years in question.
(b) In that same half-century there have been 2 recessions in Ireland (1983/84 and 2008/09). In most EU countries and in the US there have 4 or 5 recessions in that time (1974/75, 1982/83, 1991/92, 2002/03 and 2008/09). Ireland was one of the few developed countries to avoid the recessions in the mid 70s, early 90s, and early 2000s).
(c) Cumulative economic growth in Ireland in that half-century was by far the highest in the developed world, averaging almost 5% annually since 1958, compared with just over 2% in the EU15, UK and US.
(d) In that half-century there were two prolonged periods when the Irish economy grew much faster than the EU15, UK and US economies almost every year (1959 to 1982 and 1987 to 2007) and two short periods when the Irish economy grew less fast than the EU15, UK and US economies (1983 to 1986 and 2008 to 2009/2010). Cumulatively, the amount of ground lost by the Irish economy during the two short periods of being outperformed by the EU15, UK and US economies was tiny (a few percent) compared with the amoung of ground gained during the two long periods of outperforming the EU15, UK and US economies (over a hundred percent).
(e) The great majority of economic forecasts now predict a return to the Irish economy growing much faster than the EU15, UK and US economies by 2011 at the latest and continuing to grow much faster for at least a decade (for example: ESRI predict over 5% annual growth from 2011 on, much greater than is forecast for the EU15, UK and US economies). My own opinion is that this might be pessimistic and that the Irish economy has allready returned to its normal state of growing faster than the EU15 and UK economies – in the first two quarters of 2009, the Irish economy did grow faster (i.e. smaller negative growth) than the EU15 and UK economies and would seem to have a very good chance of repeating this in the third quarter.
(f) The extent to which the Irish economy has lost ground to the EU15, UK and US economies, during the current short period (2008 to 2009/2010) of being outperformed by those economies, has been greatly exaggerated. In early 2009, it was being forecast that the Irish economy would contract by 15% between 2007 and 2010, while the EU15 and UK economies would contract by 2% over that period. But, the most recent forecasts predict an 8% to10% contraction in Ireland and a 4% to 5% contraction in the EU15 and UK economies (and the gap is being whittled down with every new forecast).
Economist Intelligence Unit editor says Small Country should be more like the United Kingdom. Apart from the separation of powers recommendation, it’s almost as if we were reading an Economist editorial/”reportage”.
He is right about:
– Multi-seat constituencies making TDs supremely local in focus
and short-term in thinking.
– These TDs then becoming ministers who are supremely local in focus and short-term in thinking.
– Ministers have little expertise and often even less interest in their ministries, partly because of the above.
– Irish politicians are deeply conservative, poor managers, unconcerned about policy and delivery, disjointed, cliqueish.
-our political parties are employment agencies for people who took different sides in a civil war 90 years ago (see deep conservatism above).
– The public service is deeply conservative, poorly managed, unconcerned about policy and delivery, disjointed, cliqueish.
– When the public service do make changes they usually bungle them. They were however until recently very honest at all levels. That seems to be changing. In the past our services might have been 60% of what the Scandinavians managed, bur we much were poorer. Now we are as wealthy but our services are only 70%.
– they got lucky with low corporate taxes. If other people start copying them they will take decades to find an adequate replacement.
– actually that is harsh, the IDA did very well.
– our police force is heavily politicised with the result that political & other corruption is never investigated until journalists or accidents expose it.
– Our legal system then ensures there are no consequences for the accused.
– our media are entirely absorbed with political flim flam and disinterested in complicated things like NAMA, a straightforward €20 Bn wealth transfer to bank shareholders, bondholders and developers.
But
– otherwise the constitution is fine
– otherwise the judiciary is fine, but membership is biased towards private schools, as lawyers generally are.
A few simple changes would make huge differences.
I think I can safely predict that the Senate will not be abolished while we have multi-seat constituencies. They result in a huge turnover of deputies WITHIN parties e.g., Donie Cassidy and Mary O’Rourke’s Dail and Seanad swops. There are many other examples.
Perhaps we should have an immediate move to unelected ministers and abolishing multi-seat PR for a list system/primaries.
We can actually have ministers from the seanad as things stand.
Then we can bring in foreign managers to reform the public service, and keep bringing them in, and a foreign lead and majority foreign membership commission to continuously update it.
If we can’t do that then our public service should adopt a Japanese approach: exactly copy the most successful public service in the world and keep copying them.
That might be the best idea for constitutional reform too.
I am delighted that this debate has taken off and I think Dan O’Brien has done the state some service in this regard. For a long time now it has been apparent, that our economic woes are deeply rooted within the political system. The document at the heart of the system is our constitution and it has become all to apparent that this document needs to be re-written. It has not delivered responsible, effective government and it never will. It is a document that has become even more flawed with the passing of time.
We have just spent a number of decades floundering around as a people without having any clear ideas as to where we want to go as a people. We have been led to believe that the economy was the country and that the people of the country were there to simply service the needs of the economy.
This “thinking” has led us to where we are now, a people floundering around in a failed economy. You cannot build an economy in a perfunctory manner ignoring the underlying basic needs of society. The glue that holds society together is work and a belief in a better future. Exclude people from work, deprive them of their right to a better future, make them unequal citizens and you have sewn the seeds of societal discord which is what we are reaping right now on the streets of Dublin. This discord, the tip of which is only visible, will not heal itself until we get the political reform the country is crying out for. We don’t need a change of government we need a change of politics we need a visionary to step out of the shadows to offer the people of this county hope! Economics, to me is jobs, opportunities, growth but most importantly it must encompass the type of society we want to build for ourselves.
To achieve this we need change starting with rewriting this constitution. It is not just 4 points we need a new constitution. We also need a new political system, force, call it what you like which should not be afraid to reverse the economic mistakes being made right now. Mistakes that will have this country floundering around for the next 20 years with 40% youth unemployment and social upheaval.
Personally, I would not like to see unelected ministers. It is all very well to have an expert at the top, but this is a corporatist view of how government should be run. We’ve seen the same effort in quangos and it doesn’t appear to work.
What should we expect from a minister:
– an understanding of the political process
– an understanding of the electorate, in its many manifestations
– an ability to understand and manage a brief
But it is the relevant department that makes policy, the minister just makes choices based on what he thinks the electorate will swallow.
What we need are more effective departments, more cooperation between departments, but fewer responsibilities that overlap (particularly between departments and quangos). Central government should be central, not diffused over a wide-range of budget holding and decision making bodies. The civil service needs to be beefed up. The terms and conditions of employment need to be adjusted so it is possible to hire in talent at a high level without ending up with permanent costs (e.g. pension contributions for hired in talent should be defined contribution).
This is not to say that there isn’t a problem with the general level of talent in the Dail. Incoherent, irrational, non-entities most of them. Lifers of a party system that rewards local cronyism. One solution would be to have a much smaller number of national deputies – say eighty, elected on a single (national) ballot with twenty up for re-election each year. Local government would need to be consolidate and beefed up to fill the gap left, but that should be welcomed too.
On judges, while they have paid too much attention to the letter of badly drafted laws and not enough to the spirit in which the law was intended, it is within the power of the legislature to amend the constitution to make loopholes self closing. A simple amendment prioritising the spirit over the letter and permitting the supreme court to redraft a law to close loopholes would serve this purpose. Perhaps then we would also get a clear statement on what particular pieces of legislation are intended to achieve… in point of fact, the courts have done much to protect the citizens from an over-reaching state in recent times and juducual activism in a scenario where the minister of finance has taken over the running of the country is to be welcomed.
Is John the Optimist correct in saying that, prior to the current crisis, we only experienced one recession in the past fifty years.
And that recession was limited to 1983/84?
Dan O’Brien has highlighted a fundamental issue – the political capacity to take hard decisions – but his analysis is weak. Perhaps his Anglophilia is inevitable from his EIU perspective but making the benchmark of Irish development a sweeping generalisation about Ireland v. Britain post-1922 undermines his whole argument. Let’s set our sights higher.
The case against PR STV is not clearcut and has been rejected twice in referendums. Marsh has a detailed account here:
http://books.google.com/books?client=safari&as_brr=3&id=dCZURN65CYMC&dq=marsh+irish+political&q=stv+#v=snippet&q=stv&f=false
O’Brien’s swipe at the judiciary is particularly unpersuasive. Logically, he should have welcomed judicial activism as an antidote to politicial inertia. Perhaps it is his Anglo-centric perspective that creates his difficulty with the notion of a judiciary which can strike down legislation.
He mentions only three examples of judicial activism: Ireland’s involvement in the EU, to nursing home charges, to statutory rape laws attest. The latter two are prime examples of judicial action overcoming political inertia.
@yoganmahew
IMO, Social Partnership as practised here over the past 10 years is as close as makes no difference to “a corporatist view of how government should be run.” NAMA strikes me as a continuation of that mode of governing
“But it is the relevant department that makes policy, the minister just makes choices based on what he thinks the electorate will swallow. “
If this is so, then let us see, as a matter of routine, which options the Department develops and considers, the basis for each option and the expected outcomes. Then we will be in a much better position to judge how good Ministers are at picking options.
Senior civil servants has acted completely against this way of doing things by
1. getting restrictions on Freedom of Information(FoI) passed into law,
2. limiting the reach of FoI (eg. CIE and its subsidiaries are exempt – Why?)
3. refusing to follow through on the OECD Public Sector Reform view that FoI should be extended.
Bad management, corruption, abuse of position and inefficiency need secrecy,as we have learned from journalistic investigations, tribunals and Dáil inquiries. This is also true of the private sector, as we have seen from the measures taken by Anglo-Irish staff to “massage” the balance sheet.
“On judges, while they have paid too much attention to the letter of badly drafted laws and not enough to the spirit in which the law was intended,”
To take a recent example, judges should apply a lower drink driving limit just because saving lives was intended? Should the Revenue Commissioners can take what they think is appropriate, because the Minister’s speech said something which was not carried though to the actual word of legislation. This view of how judges should act is a recipe for arbitrary government and a road to despotism.
I want to live in a state governed by laws, including a written constitution.
“it is within the power of the legislature to amend the constitution to make loopholes self closing.”
Correct me if I am wrong, but I understood that amending the existing constitution required a referendum. Perhaps you could point out which articles allow this form of changing the constitution?
@JohntheOptimist
Well, im glad that you cleared up that in fact we have done great, are doing great, and will do great. Phew, for a while there I thought we were in a recession, and that the bursting of the bubble combined with the slow and hesitant moving towards dealing with the fiscal crisis was in danger of inflicting damage on us.
Tell me —-your not Marc Coleman are you 🙂
@Donal
Corporatism – I agree with you, that’s why I said the current quango obsessio demonstrates the corporatist failure.
Civil service – I also agree with you there. Greater transparency and accountability (not to mention public debate on the options before they are selected rather than on the one option that is selected) in policy would be welcome.
Judges – each piece of legislation would have a statement of intent in it. It would be within the power of judges to see if the loophole found in the piece of legislation contravenes the spirit in which the law was intended. This is not about judges deciding on limits, just that loopholes in the legislation that are used to avoid those limits could be closed.
The revenue commissioners already have this power to judge tax avoidance schemes…
On self-amending legislation, my apologies, that is a typo, I mean to say “legislation” and not “constitution”. The particular legislation could always go back to the Dail for clearance to prevent abuse of judicial activism in this regard. The point is to make legislation tight, so that the intent of the Dail (the will of the people 😕 ) is interpreted and interpretable clearly in the judicial branch.
@ Donal
But how many times have we already amended the constitution and it is still like a leaky strainer. If it could be fixed by amending we would not have the problems we have. Look at NAMA, 54 billion being borrowed by the tax payer and pumped into insolvent banks and the legislative initiative that is the NAMA bill is not even considered a “Money Bill” .
@Cathal
One thing our policy makers need to do is to plan for the unexpected, which we should expect. Oil crises, oil price spikes, gulf wars, bursting bubbles and/or international recessions – these thing happen every few years. In fact, seeing as crises often involve oil or more broadly energy perhaps that is one area to expect trouble. The collapse in the housing market coinciding with an international recession is really not that shocking. We knew the housing market was a bubble and we knew international growth would not go on uninterrupted forever.
The shocking thing is that our government was shocked and then paralysed for so long.
@ Cathal,
Thanks for posting this up. I hadn’t noticed Dan O’Brien’s article in the paper or indeed, I didn’t know of his book. I enjoy reading Dan’s articles though when I come across them.
I will return to read it and the comments above with interest when I get a chance again.
@Eammon20Bn
You’re right, they should be. The next thing they can unexpectedly expect is oil spiking again and interest rates going up and really putting the squeeze on many thousands of ‘recently’ unemployed with mortgages as their redundancy payment and savings run out.
Anything else that comes along (and they will) are just “unknown, unknowns” to me at the moment.
I don’t reckon there’s any contingency left in the pot in Ireland. One more bad thing happens (or probably a small combination of bad things) and the roof comes down. It will be like watching the GDR 20 years ago. History always seems to repeat itself somewhere.
@Robert
The recent referendum on Lisbon was the 28th Act to amend the Constitution.
I favour changing the Constitution to bring in more checks-and-balances on how power is obtained, used, controlled and lost. In 1996, I made a submission (under the title Some Notes on Our Way of Governing Ourselves) to the All-Party Oireachtas Committee on the Constitution proposing specific wordings for a number of items including
1) separating the executive from the legislature
2) Freedom of Information (along Swedish lines)
3) a citizens’ initiative (along Swiss lines).
There is no doubt that the management of the state’s finances leaves a lot to be desired. I am convinced that much could be done without any Constitutional change, unlike separating the executive from the legislature. Apart from NAMA, the fact that An Bord Snip had to be constituted twice within 30 years is a clear indication that nothing was learnt from the 1980s public finance crisis.
I am not sure of the extent to which it is either necessary or useful to specify, in the Constitution, how improvements can be made to managing the State’s finances. It could be a distraction from measures that can be brought in now.
However, if you feel that ordinary measures (eg. budgeting within all state bodies, accrual accounting) would not suffice to improve financial management, perhaps you would propose a wording (not sure that the founders and promoters of this forum would welcome such threads here!!!) for constitutional articles on Money Bills. Note that the 1996 Constitutional Review Group chaired by T. K. Whitaker did not suggest any changes to the articles on Money bills), if my memory is correct. I have been unable to find an on-line version of that report.
@Cathal,
Planning for the unexpected….As part of that 1996 submission, I did quote Ivor Kenny’s 1983 question “How do we construct a state that provides it people with the power of adapting to the changes that constantly descend upon it?”
Perhaps Dan O’Brien’s book (which I have not yet got) has more material to address lacuna that the late Prof John Kelly (a constitutional lawyer, FG TD and Minister of State) noted in 1986
“The proudly national and innovative spirit seems to have left all parties entirely. The freedom which was supposed to let us do things for ourselves in our own way, has been used in recent years to copy, timidly and belatedly, British patterns in nearly everything…..Ireland’s political and official rules have largely behaved like a crew of maintenance engineers, just keeping a lot of old British structures and plant ticking over…”
Plus ça change, plus c’est la même chose !
A couple of people have alluded to this without actually stating it, but it should be pointed out that the “uniquely Irish pattern of economic performance: slump-slump-boom-slump” is not a pattern at all – it’s a sequence. Even slump-boom-slump-boom would be a pattern, but even that’s tenuous.
This isn’t being pedantic: the word “pattern” implies that it is recurring and predictable, which it isn’t, and that the changes he proposes are designed to break the pattern, which is also unconvincing for reasons pointed out by others.
It’s rare for nations to accept unpalatable truths that contradict common myths and in his book, Dan O’Brien says that despite the enormous changes in recent decades, it’s difficult to avoid the conclusion that the Irish mindset is introverted and hostile to new ideas.
This of course is contrary to what the IDA is promoting.
He cites pan-European Eurostat and Eurobarometer surveys including a 2008 survey, which showed that only 17% of Irish households used the web to access newspapers and magazines – – just above Bulgaria and Romania.
He says the hostility to new ideas and the inward looking mindset, is reflected in low levels of innovation coupled with a lack of export success.
@ Michael Hennigan,
If you study the life of some of the most prolific innovators in history – Steve Jobs comes to mind as one example – many of them were experts at insulting people and pissing off a lot of people. I was reminded a lot of this, when I read the newspapers last week all about David McWilliams. Somehow this spirit of innovation and new thinking tends to go hand in hand with an ability to rub people the wrong way.
That is not to say that all innovators get it right all of the time. On the contrary, Steve Jobs managed to waste most of his fortune and then got other people such as Ross Perot to throw more good money after bad in an attempt to prove a point, that couldn’t work. I am also reminded of guys such as Howard Hughes. I was watching a movie called ‘The Tucker’ about some car, which was the first to have safety belts installed amongst other things. Only 50 were ever produced and they contained an engine for a helicopter that was given to the car builder by Howard Hughes, when the Detroit companies ganged together and would not supply a basic engine for the Tucker vehicle. It is a good movie, worth checking out some time.
THe point being, that with innovation it often requires you to put someone’s nose out of joint, in order to go where you want to go. My experience on this small island, is that being innovative and wanting to try out new stuff, is an instant recipe for moving yourself out to the margins. It is much more lucrative to stay in the fold, even if the ideas are no where good enough to make an impact. You still get lots of nice salaries and expenses etc from those at the top.
Having said that, I do know an awful lot of great people working in semi-state and state bureaucracies, who are cutting edge in terms of their ideas and ambitions. So nothing is ever as cut and dried as I tried to present above.
I wish now, I had more time to read and consider all of this blog entry more, some of the contributions above look really interesting.
All the best. B.
One of the most intriguing real Irish innovators I ever met, was a guy called Gordon Clarke, who wrote the first computer program in Ireland for the sugar company in Thurles, to cut out a lot of administrative work, which had previously been done by rooms full of short term hired staff.
Clarke spent a good part of his life at Aer Lingus, where computers were central to the birth of a new national airline. I have met some of other characters also, who worked with Clarke at the time. But Clarke admitted to me, his life had been of mixed success overall. The thing with computer programmers – they vary enormously in talent. One guy could produce 10x the amount of work as another guy. But if you have to project manage anything in software you have to factor this in, and work with what you have got. Even if it is sometimes very lop-sided in terms of talent distribution amongst the human resources you have got.
Clarke was one of those 10x productivity kinds of guys. Steve Jobs was very lucky to link up with a guy called Steve Wozniak who was a natural computer programmer, and many times more brilliant than Jobs was. But on the other hand, perhaps Wozniak was lucky to end up teaming with Jobs. Funny these things eh?
B.
@ Michael Hennigan,
You mention the IDA above. I was very glad to hear Tom Garvin in person give a talk about his latest book on Lemass lately. I understand that Lemass initially was against the IDA concept fielded by Fine Gael, because Lemass reckoned it might compete with his own department. But then later, Lemass realised the IDA was a good concept and supported it. I am sure that Garvin has much more to say about this in the book.
Imo, Vincent Byrne’s point that “debate on how policy is made is at least as important as debate on specific economic presriptions” is key to the relevance of this post and debate on this site.
We have a situation where the contours of the Government’s fiscal policy (to be enacted next month) are being determined behind closed doors in negotiations with the “social partners”. Until this “democratic deficit” is tackled, I fear that Dan O’Brien’s interesting proposals are largely irrelevant.
@Brian
And for those who can’t wait to find out more about Gordon Clarke:
http://www.irishtimes.com/newspaper/finance/2009/0501/1224245754141.html
Note: the software system that Aerlingus bought for its IBM 360s (IPARS) is still in use today at airlines around the world…
(Sorry for going wildly off-topic)
@Lefournier
Lefournier says:
“Is John the Optimist correct in saying that, prior to the current crisis, we only experienced one recession in the past fifty years.
And that recession was limited to 1983/84?”
Actually, I was wrong. I spent most of yesterday checking the figures on the CSO and OECD websites. I do apologise for misleading eveyone. I was correct in stating that, prior to the current recession, there was only one recession in the past fifty years, But, I was wrong in stating that it was limited to 1983/84. Actually, it was limited to 1983, when GDP fell by 0.7%.
GDP grew by 3.2% in 1984, which was quite healthy. GDP growth was low but positive in 1985 and 1986. The CSO and OECD websites only give figures back to 1970, so I can state definitely that, prior to the current recession, there was only one year (1983) of negative GDP growth in Ireland since 1970. However, as I was around at the time. I’m pretty certain from memory that there were no years of negative GDP growth between 1958 and 1970.
What is illuminating is to compare annual GDP growth in Ireland with that in the OECD as a whole since 1970. Then, we can see how ridiculous is Dan O’Brien’s thesis. I have compiled the following table from the CSO and OECD websites. It gives annual GDP growth in Ireland and the OECD as a whole each year since 1970. Those years in which GDP growth in Ireland was less than that in the OECD as a whole are marked with a double asterisk (**). I’ve done that because there are so few of them they might be missed.
1971 Ireland +4.6% , OECD +3.7%
1972 Ireland +6.9% , OECD +5.5%
1973 Ireland +5.6% , OECD +6.4% (**)
1974 Ireland +2.6% , OECD +1.2%
1975 Ireland +1.4% , OECD +0.4%
1976 Ireland +3.3% , OECD +4.9% (**)
1977 Ireland +6.3% , OECD +3.7%
1978 Ireland +7.2% , OECD +4.5%
1979 Ireland +4.2% , OECD +3.8%
1980 Ireland +2.9% , OECD +1.3%
1981 Ireland +2.5% , OECD +2.0%
1982 Ireland +1.5% , OECD +0.0%
1983 Ireland -0.7% , OECD +2.7% (**)
1984 Ireland +3.2% , OECD +4.6% (**)
1985 Ireland +1.9% , OECD +3.7% (**)
1986 Ireland +0.4% , OECD +3.0% (**)
1987 Ireland +3.6% , OECD +3.4%
1988 Ireland +3.0% , OECD +4.5% (**)
1989 Ireland +5.6% , OECD +3.8%
1990 Ireland +7.7% , OECD +3.0%
1991 Ireland +1.6% , OECD +1.4%
1992 Ireland +3.6% , OECD +2.2%
1993 Ireland +2.3% , OECD +1.5%
1994 Ireland +5.9% , OECD +3.2%
1995 Ireland +9.6% , OECD +2.5%
1996 Ireland +8.1% , OECD +3.1%
1997 Ireland +11.5% , OECD +3.6%
1998 Ireland +8.4% , OECD +2.7%
1999 Ireland +10.8% , OECD +3.5%
2000 Ireland +9.4% , OECD +4.2%
2001 Ireland +5.7% , OECD +1.3%
2002 Ireland +6.5% , OECD +1.7%
2003 Ireland +4.4% , OECD +2.2%
2004 Ireland +4.6% , OECD +3.2%
2005 Ireland +6.2% , OECD +2.7%
2006 Ireland +5.4% , OECD +3.1%
2007 Ireland +6.0% , OECD +2.7%
2008 Ireland -3.0% , OECD +0.6% (**)
So, in the 38 years between 1970 and 2008, the Irish economy grew by less than the OECD as a whole in only 8 of them (73, 76, 83, 84, 85, 86, 88, 08). Dan O’Brien’s thesis that Ireland’s economic performance can be characterised as ‘slump-slump-boom-slump’ is clearly absurd. Its a piece of idiocy invented to sell a book.
To further illustrate this, I have counted the numbers of years of booms and slumps in each EU15 country and the US since 1970. I define a ‘boom year’ as one in which GDP growth was more than 4% and a ‘slump year’ as one in which GDP growth was negative. Again, the results are illuminating and blow Dan O’Brien’s thesis even further apart.
number of ‘boom years’ for each country since 1970 (GDP growth > 4%):
Ireland: 22 boom years (71, 72, 73, 77, 78, 79, 89, 90, 94, 95, 96, 97, 98, 99, 00, 01, 02, 03, 04, 05, 06, 07)
Luxembourg: 20 boom years (72, 73, 74, 78, 84, 86, 88, 89, 90, 91, 93, 97, 98, 99, 00, 02, 04. 05, 06, 07)
Portugal: 15 boom years (71, 72, 73, 76, 77, 79, 80, 86, 87, 88, 89, 91, 95, 97, 98)
Greece: 13 boom years (71, 72, 73, 75, 76, 78, 88, 00, 01, 03, 04, 06, 07)
U. States: 13 boom years (72, 73, 76, 77, 78, 83, 84, 88, 94, 97, 98, 99, 00)
Spain: 12 boom years (71, 72, 73, 74, 87, 88, 89, 90, 98, 99, 00, 06)
Finland: 11 boom years (72, 73, 79, 80, 88, 89, 97, 98, 00, 06, 07)
Netherlands: 8 boom years (71, 73, 74, 76, 89, 90, 97, 99)
Austria: 7 boom years (71, 72, 73, 76, 77, 79, 90)
France: 7 boom years (71, 72, 73, 74, 76, 88, 89)
Belgium: 6 boom years (72, 73, 74, 76, 80, 88)
Denmark: 6 boom years (72, 76, 84, 85, 86, 94)
Germany: 6 boom years (72, 73, 76, 79, 90, 91)
Italy: 5 boom years (73, 74, 76, 79, 88)
U. Kingdom: 5 boom years (73, 86, 87, 88, 94)
Sweden: 3 boom years (84, 99, 00)
number of ‘slump years’ for each country since 1970 (GDP growth 4%) corresponds to a goal scored. A ‘slump year’ (GDP growth < 0%) corresponds to a goal conceded. The scores for each country are then as follows:
Ireland: 22 booms – 3 slumps (difference of +19)
Luxembourg: 20 booms -3 slumps (difference of +17)
Portugal: 15 booms – 6 slumps (difference of +9)
Spain: 12 booms – 3 slumps (difference of +9)
Finland: 11 booms – 4 slumps (difference of +7)
Greece: 13 booms – 6 slumps (difference of +7)
U. States: 13 booms – 6 slumps (difference of +7)
Netherlands: 8 booms – 3 slumps (difference of +5)
France: 7 booms – 3 slumps (difference of +4)
Austria: 7 booms – 4 slumps (difference of +3)
Belgium: 6 booms – 4 slumps (difference of +2)
Germany: 6 booms – 5 slumps (difference of +1)
Italy: 5 booms – 5 slumps (difference of +0)
U. Kingdom: 5 booms – 6 slumps (difference of -1)
Denmark: 6 booms – 8 slumps (difference of -2)
Sweden: 3 booms – 7 slumps (difference of -4)
So much for Ireland’s economy being ‘slump-slump-boom-slump’, as Dan O’Brien claims. In some countries, there have actually been more ‘slump years’ than ‘boom years’ since 1970. In Ireland, however, the figures are just 3 ‘slump years’ and 22 ‘boom years’ since 1970. Based on this, the countries needing constitutional reform most are those with ridiculous and antiquated monarchical systems, rather than Ireland with its republican Constitution. In particular, given that Dan O’Brien works for a U. Kingdom publication, its a bit rich that he castigates Ireland’s Constitution on the grounds that it has a tendency to produce economic slumps, when, as the above table shows, the U. Kingdom has had more ‘slump years’ than
‘boom years’ since 1970, while in Ireland the latter outnumber the former by 22 to 3.
Finally on the economic statistics front, the following table shows how the above combinations of ‘boom years’ and ‘slump years’ translates into cumulative economic growth. The table gives the percentage changes in GDP in each country between 1970 and 2008:
Ireland: +474.0%
Luxembourg: +358.9%
Spain: +220.6%
U. States: +214.1%
Portugal: +213.6%
OECD: +197.8%
Finland: +194.4%
Greece: +187.9%
Netherlands: +170.1%
Austria: +168.4%
France: +152.7%
U. Kingdom: +144.8%
Belgium: +143.6%
Italy: +131.1%
Germany: +127.3%
Sweden: +122.6%
Denmark: +118.9%
The figures speak for themselves. Over a long period, and not just a short priod in the late 90s as some claim, economic growth in Ireland has been far superior to that of any other developed country.
The matter of a country’s Constitution goes beyond economics. It impinges on both political and social stability. The 1937 Constitution has made Ireland one of the most politically and socially stable countries in the world. In relation to political stability, it may be noted that during the Constitution’s lifetime, fascist, racist, marxist, sectarian parties have made no inroads at all in Ireland. There has been nothing like the success of the racist BNP in Britain, Vlaams Blok in Belgium and the Freedom Party in the Netherlands. Government in Ireland has always been led by one of two sensible moderate centre-right parties. There has been no lurch from extreme left-wing to extreme right-wing policies as a result of changes in government. Governments have usually lasted the full terms as this one most likely will (the only exception being in the period 1981/82). In relation to social stability, Ireland retains one of the highest rates of church-going and one of the lowest rates of divorce in the developed world. And the Constitution has spared Ireland the horror of on-demand abortion, which has destroyed the demographics of most European countries.
So, if economists are going to argue that all this should be thrown away and the Constitution vandalised, on the grounds that somehow or other it is resulting in chronically inferior economic performance to that of other countries, which seems to be the gist of Dan O’Brien’s argument and that of some posters here, then the least we should expect is that they actually supply some economic statistics to support their case. They have clearly failed to do so. And, the statistics I gave above clearly demolish any such argument.
I don’t know if it was because my last post was too long and the system couldn’t handle it, or whether my computer did something wrong, but the middle part of my last post got horribly mangled, to the point where its close to nonsensical. For any one interested in reading it right through (and I’m not vain enough to imagine there will be many), I’m posting the middle part again (from the line starting: “To further illustrate this,…” to the line starting: “Finally on the economic statistics front,…” If the moderators feel like merging the two to make it more sensible, be my guest.
continues from here:
To further illustrate this, I have counted the numbers of years of booms and slumps in each EU15 country and the US since 1970. I define a ‘boom year’ as one in which GDP growth was more than 4% and a ‘slump year’ as one in which GDP growth was negative. Again, the results are illuminating and blow Dan O’Brien’s thesis even further apart.
number of ‘boom years’ for each country since 1970 (GDP growth > 4%):
Ireland: 22 boom years (71, 72, 73, 77, 78, 79, 89, 90, 94, 95, 96, 97, 98, 99, 00, 01, 02, 03, 04, 05, 06, 07)
Luxembourg: 20 boom years (72, 73, 74, 78, 84, 86, 88, 89, 90, 91, 93, 97, 98, 99, 00, 02, 04. 05, 06, 07)
Portugal: 15 boom years (71, 72, 73, 76, 77, 79, 80, 86, 87, 88, 89, 91, 95, 97, 98)
Greece: 13 boom years (71, 72, 73, 75, 76, 78, 88, 00, 01, 03, 04, 06, 07)
U. States: 13 boom years (72, 73, 76, 77, 78, 83, 84, 88, 94, 97, 98, 99, 00)
Spain: 12 boom years (71, 72, 73, 74, 87, 88, 89, 90, 98, 99, 00, 06)
Finland: 11 boom years (72, 73, 79, 80, 88, 89, 97, 98, 00, 06, 07)
Netherlands: 8 boom years (71, 73, 74, 76, 89, 90, 97, 99)
Austria: 7 boom years (71, 72, 73, 76, 77, 79, 90)
France: 7 boom years (71, 72, 73, 74, 76, 88, 89)
Belgium: 6 boom years (72, 73, 74, 76, 80, 88)
Denmark: 6 boom years (72, 76, 84, 85, 86, 94)
Germany: 6 boom years (72, 73, 76, 79, 90, 91)
Italy: 5 boom years (73, 74, 76, 79, 88)
U. Kingdom: 5 boom years (73, 86, 87, 88, 94)
Sweden: 3 boom years (84, 99, 00)
number of ‘slump years’ for each country since 1970 (GDP growth 4%) corresponds to a goal scored. A ‘slump year’ (GDP growth < 0%) corresponds to a goal conceded. The scores for each country are then as follows:
Ireland: 22 booms – 3 slumps (difference of +19)
Luxembourg: 20 booms -3 slumps (difference of +17)
Portugal: 15 booms – 6 slumps (difference of +9)
Spain: 12 booms – 3 slumps (difference of +9)
Finland: 11 booms – 4 slumps (difference of +7)
Greece: 13 booms – 6 slumps (difference of +7)
U. States: 13 booms – 6 slumps (difference of +7)
Netherlands: 8 booms – 3 slumps (difference of +5)
France: 7 booms – 3 slumps (difference of +4)
Austria: 7 booms – 4 slumps (difference of +3)
Belgium: 6 booms – 4 slumps (difference of +2)
Germany: 6 booms – 5 slumps (difference of +1)
Italy: 5 booms – 5 slumps (difference of +0)
U. Kingdom: 5 booms – 6 slumps (difference of -1)
Denmark: 6 booms – 8 slumps (difference of -2)
Sweden: 3 booms – 7 slumps (difference of -4)
So much for Ireland’s economy being ‘slump-slump-boom-slump’, as Dan O’Brien claims. In some countries, there have actually been more ‘slump years’ than ‘boom years’ since 1970. In Ireland, however, the figures are just 3 ‘slump years’ and 22 ‘boom years’ since 1970. Based on this, the countries needing constitutional reform most are those with ridiculous and antiquated monarchical systems, rather than Ireland with its republican Constitution. In particular, given that Dan O’Brien works for a U. Kingdom publication, its a bit rich that he castigates Ireland’s Constitution on the grounds that it has a tendency to produce economic slumps, when, as the above table shows, the U. Kingdom has had more ‘slump years’ than
‘boom years’ since 1970, while in Ireland the latter outnumber the former by 22 to 3.
Finally on the economic statistics front, …………
Nope. Its done it again. No idea why. Maybe a problem with my computer? If not, maybe the moderators can help and can see that the middle part of what I actually sent is considerably different to what’s appearing? A big chunk is missing and its a bit mangled up.
@John
Are those ‘real’ (inflation-adjusted) GDP numbers or nominal ones?
@JohnTheOptimist
John,
You’re a good man with the figures but for example, between in the ten years from 1951 to 1961, the economy only contracted in 2 years but by 1961, the population had fallen to its lowest in 120 years.
GNP fell 1.3% in 1982 and 1.9% in 1993.
See Table Page 22:
http://www.finance.gov.ie/documents/publications/other/BES2008.pdf
So is a period of low growth, high emigration and pervasive fear of uenmployment, not a slump?
@JohnTheOptimist,
I think we get the message. However, for those of us who’ve known Ireland since the 50s, the digested read “slump-slump-boom-slump” that Cathal attributes to Dan O’Brien resonates strongly. Perhaps, if you’d devoted a portion of your data search to comparing Ireland with other similar-sized European economies and looked at GDP(or GNP?) per capita in a common currency unit, unemployment rates and net migration you might have discerned the outlines of an economic history that many of us would recognise. And there is a fine line between stability and insular stagnation.
@yoganmahew
All the figures are for ‘real’ (inflation-adjusted) GDP. The Irish ones are from the CSO website.
@Michael Hennigan
What exactly is the relevance of economic growth rates in the 1950s? How far back do you want to go? This is 2009. As I’ve pointed out on a number of occasions, Ireland’s growth rate since 1958 has been well above that in the EU15, UK and US in roughly 4 out of every 5 years. Is half a century of growing faster than other countries not sufficient to establish the case? What’s more, ESRI are forecasting that the same trend will continue in the next decade. So, by 2020, if ESRI are correct, we’ll have had 62 years of growing faster than other countries.
Re the 1950s, which seem to obsess you. In that decade, economic growth in Ireland was indeed lower than in most of Europe. The main reason was that most of Europe was flattened in World War 2 – houses, infrastructure and industrial capacity destroyed on a scale never before seen. So, naturally there was a reconstruction boom when peace was established. I’m sure that, if the RAF could be persuaded to bomb half the houses and offices, all the roads, railway lines, airports and bridges, and most of the industrial capacity in Ireland to rubble over the next year or two, it would be followed by the mother of all reconstruction booms in the next decade. But, I hesitate to say this, in case Tom Parlon thinks its a good idea.
@Paul Hunt
I did compare GDP growth rates between Ireland and other similar-sized European economies (as well as larger ones) in my post. Unfortunately, as I mentioned in my subsequent posts, my main post got mangled up and part is missing (the problem appears to be at my end – I’m on a different and much older computer to normal today – apologies for that). But, if we are talking about GNP per capita, Ireland is 4th highest in the EU even in this recession in common currency units (it was 3rd highest before the recesion). Only Luxembourg, Netherlands and Austria rank higher in GNP per capita even in this recession. If the ESRI forecasts for growth from 2011 on prove accurate, Ireland should overtake the latter two early in the next decade.
Re net migration. I don’t have the exact figure, but I’d estimate that since the census in 1961 there has been net immigration into Ireland of around 300k, totally reversing the trend of massive net emigration inherited from the days when Ireland was part of the U. Kingdom. Perhaps Michael Hennigan can supply the exact figure. As I say, its just a rough estimate off the top of my head but, I think there was net emigration of about 150k in the 60s, net immigration of about 100k in the 70s, net emigration of about 200k in the 80s, and net immigration of about 550k since 1991. No similar reversal occurred in our fellow subject country, Scotland, which is one of the reasons the population of the Republic alone is now getting close to that in Scotland while, back in the 1950s, it was little more than half.
@JohnTheOptimist,
One can only admire your tenacity and diligence. I don’t think anyone on this blog is denying that Ireland won’t experience the sunlit uplands again – in some shape or form. I sense that much of the focus is on the economic policy decisions that will achieve this outcome as quickly and efficiently as possible. I think the focus on this thread is on identifying what changes might need to be made to ensure that any future fall from grace will be less severe and that the extent of any fall will be much less the result of self-inflicted wounds than is the case in this instance.
@Paul
I think Dan O’Brien may have gotten our pattern wrong.
How about:
Recovery, Boom, Int. Recession, Bubble starts, Bubble wild, Crash
mid60s early70s 74/75 78/79 80/81 82-87
mid90s late90s 2002 03/04 05/06 07-
Perhaps the problem is the politicians can’t face the slumps and rig the economy to delay them.
From 82 to 96 was fourteen years before normalcy.
Hopefully we get the deficit under control quicker this time.
From 08 to 2013 would be five years to normalcy.
Success?
Better than 2018 or 2022 anyway.
@Eamonn20Bn,
Agreed. We had “Economic Development” in 1958, attributed to T K Whittaker and Sean Lemass, that lifted Ireland out of the ’50s gloom and the combination of Ray MacSharry’s drive (drawing on the first Bord Snip) and Alan Dukes’s political self-sacrifice in the late ’80s. The key issue here is how do we reform the process of democratic governance to ensure that we minimise the impact of economic downturns, that we don’t implement policies that make them more severe when they occur and that we are not reliant on entirely fortuitous alignments of civil service and political leadership to get on the recovery path.
I fear there is limited recognition of, and zero political willingness to implement, the reforms that are required to speed the process of recovery and to avoid a repeat performance in the future.
@JohnTheOptimist,
The Irish economy underperformed relative to what would have been expected on the basis of general Western European performance over most of the last half century. We failed to see any convergence on EU15 living standards until the late 1980s. One expects rich states like the US, the UK and the EU15 to grow more slowly than poorer ones with similar characteristics of relevance. This is standard growth theory…
@Frank Barry
“The Irish economy underperformed relative to what would have been expected.”
This is economist-speak. As I showed in my tables, the Irish economy has grown at twice the average OECD rate since 1970. It has grown at four times the rate of the Danish economy since 1970. It has grown at twice the rate of the Greek, Portugese and Spanish economies since 1970, even though these countries were poorer than Ireland in 1970 and therefore, according to the “relative to what would have been expected” theory, should have grown faster than Ireland. Ireland has continued to grow much faster than those countries which it overtook in the past decade. For example, Italy. GNP per capita in Ireland only overtook that in Italy around 2000. Based on the “relative to what would have been expected” theory, Ireland’s and Italy’s growth rates should then have converged. They didn’t. Ireland has continued to grow at four times Italy’s rate since 2000. And, as a result, GNP per capita in Ireland is now nearly 25% higher than in Italy. The figures I gave only went back to 1970, as that’s all the CSO and OECD databases give. But, between 1958 and 1970, Ireland’s GDP also grew faster than the OECD average, although the gap was not as large as post-1970. As if that weren’t enough, ESRI are predicting that GDP in Ireland will grow at around 5% annually from 2011 to 2020, which, if it proves accurate, will certainly be at least twice the average OECD rate. Thus, by 2020, it is very likely that Ireland will have gone through a period of 62 years, in which its economic growth rate grew much faster than the OECD average almost continuously, apart from the relatively short periods 1982 to 1986 and 2007 to 2009. In short, Dan O’Brien doesn’t know what he is talking about. But, he has a book to flog.
While on the subject, it now looks increasingly likely that the recession in Ireland ended in Q3, unlike in the U. Kingdom. It is of course never possible to be certain about these things in advance, but CSO figures out today show seasonally-adjusted manufacturing output up 4% in Q3 compared with Q2. Seasonally-adjusted retail sales are also up 3% to 4% in Q3 compared with Q2. This is the first quarter since 2007 that both these rose. While they don’t guarantee that GDP grew in Q3, they certainly mean that its more likely it did than it did not. Plus, the number on the Live Register has stated to fall, which would tend to confirm that GDP grew in Q3.
@Frank Barry
“The Irish economy underperformed relative to what would have been expected on the basis of general Western European performance over most of the last half century.”
Sorry to trouble you again.
But, just so we could put some meat on this statement, would it be possible for you to:
(a) Specify which years in the last half century, “the Irish economy underperformed
relative to Western Europe”.
(b) Give the growth rates for Ireland and Western Europe in those years.
Then, we can see whether or not your use of the phrase “over most of the last half century” is justified.
@JohnTheOptimist,
I’ll leave Frank Barry to respond if he so chooses, but, for me, the thrust of this thread is focused on the reforms of structure and process required to improve the design, scrutiny and implementation of public policy, in particular, economic policy, and to ensure accountability on policy implementation. You may believe, and you are perfectly free to do so, that everything in Ireland is for the best of all possible worlds, but, by any objective criterion, it is difficult to conclude that the process of economic policy design, implementation and regulation in the last decade has advanced the interests of Irish citizens.
Ireland is not unique in this, but most other developed economies (with the possible exception of Spain) have suffered from the financial contagion arising from inadequate policy control and regulation of the financial sector. While many other countries have intervened to ameliorate the impact of the global downturn and timid steps are being taken globally to ensure more effective policy control and regulation of the financial sector, Ireland is struggling to contain a rapidly deteriorating fiscal situation and to shore up the entire domestic banking system. The global financial and economic crisis simply revealed the unsustainability of both which had remained largely hidden by a false boom fostered by wrong-headed economic and regulatory policy. We are fooling ourselves if we fail to address the root causes of this dual unsustainability.
Irrespective of the merits (or failings) of Dan O’Brien’s book, this is a debate we simply cannot afford not to have.
@Paul Hunt
I have no quarrel with people here discussing “reforms of structure and process required to improve the design, scrutiny and implementation of public policy, in particular, economic policy, and to ensure accountability on policy implementation” all they want. For those who are so high-minded that they take an active part in such a discussion, good luck and all credit to them. I hope their efforts bear fruit.
My post was not aimed at these noble people. It was aimed at refuting a claim by one particular economist, Dan O’Brien, who has just published a book. It was the argument presented in that book that was the trigger for this thread, so I feel perfectly justified in commenting on it. In the book, he makes the claim that Ireland is a chronically underperforming country economically and that this is due to corruption and inertia. He implies (in his ‘slump-slump-growth-slump’ characterisation of the Irish economy) that periods of economic growth in Ireland are rare and that prolonged economic slumps are more the norm. And he contrasts this with other European countries where he claims that the reverse applies. He gives no evidence to back up these claims. Despite that omission, if his claims are left unchallenged, they will almost certainly damage Ireland’s economic reputation.
In my posts above, I have comprehensively demolished Dan O’Brien’s claims. I have given a mass of economic statistics to show that they are unfounded. Neither Dan O’Brien nor anyone else has refuted my statistics or given any statistics of their own to back them up.
If Dan O’Brien is reading this thread (and let’s face it, he probably is), I challenge him to back up his claim of chronic economic underperformance in Ireland with the same level of detailed statistics that I have give above.
@JohnTheOptimist,
It is regrettable that your dogged refusal to accept the economic reality of the ’50s and the ’80s, the unsustainability of the recent “boom” and the nature of the likely extended recovery combined with your (slightly mocking?) attribution of “nobility” to those seeking to debate the underlying causes is dominating this thread and, possibly, deterring useful engagement.
@Paul Hunt
What’s deterring engagement is the inability of supporters of Dan O’Brien’s thesis to supply any statistics in support of it. I suspect that includes Dan himself. If you are reading this, Dan, come on, don’t be shy. If you can supply any statistics to support your thesis, let’s be having them. Silence will speak volumes.
The fact that people may wish to engage in discourse about possible improvements to the processes by which government policy is formulated and implemented doesn’t give them the right to rewrite the economic history of the country. We’ve had enough revisionism in regard to the political history of the country. We don’t need it in regard to the economic history of the country. Such revisionists have no right to rewrite a half-century of some of highest economic growth the world has ever seen as a half-century of chronic failure, which is essentially what Dan O’Brien is doing.
Re Paul’s specific points:
The ’50s’ was over half a century ago – its of no relevance today. How far back do you want to go? The 1840s perhaps? The Cromwell era? I’d say that the Irish economy performed pretty poorly in both those periods. The modern Irish economy began in 1958, with the move to free trade. Prior to 1958, I’d agree that economic growth in Ireland was nothing to write home about. But, then, unlike many of the European countries Dan O’Brien admires so much, Ireland didn’t have colonies in Africa, Asia and Latin America to loot and exploit. Its only with the end of colonialism in the late 1950s, that Ireland has been on a level playing field with the former colonial countries in Europe. Its the post-1958 modern outward-looking Irish economy that we need to assess. I’m saying that economy has an outstanding record for growth, and no one has been able to contradict that.
The ’80s’ was actually 1982 to 1986. As the table I gave earlier showed, growth in Ireland was above the OECD average both in the periods 1980-1982 and 1986-1990. Between 1986 and 1990, economic growth in Ireland averaged 5% annually. So, when we talk about the ’80s’, let’s have a bit of precision.
There is another aspect to all this. Failure to recognise the long-standing and deep-rooted nature of high economic growth in Ireland is leading to incredibly bad economic forecasting during the current downturn. That ought to be a matter of concern, although it doesn’t seem to be. At the start of this year, it was being widely predicted that GDP in Ireland would fall by 12% between 2008 and 2010, compared with 2% in the EU, and that GDP would not begin to grow again until early 2011, some 18 months later than in the rest of the EU. It is now increasingly clear that these forecasts were wildly over-pessimistic. The fall in GDP between 2008 and 2010 will now probably be less than half that predicted, will probably only be very slightly lower than the EU average, and GDP probably started to grow again as early as 2009 Q3. I confidently predict that, by the time GDP figures for 2010 are published (in March 2011), Irish economists will be seen to have broken the world record for inaccurate forecasting. I’d attribute part of the blame to inadequate understanding of the country’s economic performance over the past half-century.
@JohnTheOptimist,
I see that you are unpersuadable, so there is little point attempting to engage. In signing off, just two observations: (1) economic growth that is fuelled by continued fiscal deficit financing of current expenditure and an increasing debt/GDP ratio is unsustainable (this is what characterised most of the ’80s and is what we are facing now) and (2) it is rare on this blog to have the opportunity to debate the root causes of these policy failures and to consider appropriate remedies. It is a cliche that those who refuse to learn from history are doomed to repeat it, but the desire to extend fiscal deficit financing has eerie echoes of the GUBU decade from 1977 to ’87.
@JohnTheOptimist
Sometimes, there is a reality on the ground that should have some relevance and I’m not referring to trying to measure happiness.
When BoI was producing wealth reports putting the Japanese as No. 1 in the world and Ireland No. 2, something seemed askew compared with other countries.
Japan had 35% of its population working as temps on less than the Irish minimum wage and companies such as Toyota were paying salary increases that would hardly buy a few cups of Starbucks’ coffee in a month.
As it was heading for a debt/GDP ratio of over 200%, it was mainly
funding it domestically but domestic savings were also falling signalling future problems.
In Ireland at the time, the hospital trolley index was getting a lot of air time.
Yesterday, Norway reported that its wealth fund was worth $455bn at the end of Sept.
Last weekend, on a flight to Kuala Lumpur, a Norwegian was grumbling to me about how parsimonious Norway’s politicians are.
The comparable population to Ireland’s did not go crazy after striking oil.
We may be nominally as rich as Norway but the difference between our debt and their surplus is just $600bn.
Given the overwhelming dominance of US firms in the Irish economy and the channeling of profits made elsewhere via Ireland, caution is required in comparative analysis of GDP data.
@Paul Hunt
Please don’t sign off on my account.
In fairness to you and whatever proposals you wish to put forward and discuss with others for better governance in Ireland, I shall refrain from further posting on this thread. I have made my point. I challenged Dan O’Brien’s thesis and no one has come forward to refute my figures, not even Dan himself. I therefore consider that argument closed. So, I will not be posting on this thread again, although I will read your proposals with interest. Its all yours.
@Donal O’Brolchain
Thanks for the excellent links you gave on constitutional reform. I’d be strongly in agreement with your ideas, particularly on separation of the legislative and executive powers of government and having a citizens’ initiative mechanism in our constitution. Unfortunately I can’t envisage our political class ever introducing such reforms. About the only way I could see such changes being made is if a political party was temporarily formed whose only purpose was to run the required constitutional referenda and then immediately resign. It would require 166 independent and well known public figures to run in a Dáil election, with the public needing to be able to trust that they’d immediately dissolve the Dáil after holding the promised referenda. A very tall order but about the only way this might ever come about. Cannot ever see an Oireachtas committee proposing such reforms.
@JohnTheOptimist
Thank you for highlighting important statistics which I think might reframe this debate. The question should not be “Is our economy doomed to slump?”. Rather, we should consider why have Irish people suffered such economic hardship even while the economy was growing.
In the 1980s, the answer was obvious: the failure to control public expenditure and to capture available revenues led to an ever-increasing share of our wealth was going to service our debt burden. This lead to a vicious cycle of increased taxation rates and foreign borrowings which was only broken in by draconian measures in 1987/88.
Dan O’Brien’s thesis could be recast as follows:
The benefits of a recovery will not flow to the Irish people if our current system of governance fails to act so as to avoid a repetition of the vicious cycle of taxation and borrowings.
I disagree with O’Brien’s analysis – and Gerard Hogan has an excellent rebuttal in today’s IT – but this is a valid subject for debate.
@JohnTheOptimist,
Sorry for coming back to you so late on your request for data. I’ve only dipped into this entry again now. To see Ireland’s underperformance from 1950 to 1988 see Figure 1 in the paper below, which is taken from the most comprehensive account of the period: Ó Gráda and O’Rourke (1996).
http://www.tcd.ie/business/staff/fbarry/papers/BCraftsIBR.pdf