Politics and Economic Policymaking

This field of study addresses issues such as the factors militating against the adoption of growth-enhancing policies, even when politicians themselves might favour them, and the various sources of political cover that might be available to help resist such pressures.  (Some of the bigger questions can be intuited from the way I’ve phrased these particular ones).  A former student of mine emailed me recently to say that she found these topics “ridiculously interesting; it’s almost like reading gossip”.  (Thank you, N!)  I haven’t yet begun to model these processes (spent the semester boning up on game theory with the intention of doing so) but some of my musings on the topic (in the context of the last 50 years of Irish economic history) are available in this recent paper.  I have discussed other examples of available political cover, such as the “golden straightjacket” of EU and WTO rules (to use Thomas Friedman’s phrase from The Lexus and The Olive Tree) , in other recent writings.

49 thoughts on “Politics and Economic Policymaking”

  1. @ Frank Barry,

    The only question that puzzles me, at all, about economic policy making and politics in recent years – It is basically the same question that keeps cropping up in my mind – whenever I deal with people day to day, is quite simple.

    I will outline the question in a moment. But I want to provide some context for this question of mine. I enjoyed a long and challenging experience in third level education, in the field of architecture and urban design. However, towards the end of it, my innovative and technological-oriented streak took over and I drifted away from questions to do with society, community building, sustainability and so on. I became interested in the ‘new’ workplace, the smart economy, productivity, communications and what not.

    It seemed to me that society was being put together in a different way. Communities were starting ‘to grow’ via means of technology. Incomes were generated in new and startling ways. Take the sale of ‘My Home.ie’ to the Irish Times as an instance. One of the books I came across in my travels was called Smart Mobs by Howard Rheingold, which looked at this increasing interaction of technology and society. I also looked at the places where technology and innovation seemed to thrive, places like Silicon Valley. I became very tied up in trying to understand the history of those places, how they happened. More importantly, how the world was changing and how Ireland stood in the middle of all of that.

    You could say, I had taken a distinct detour away from all of my colleagues from my youth, who in the Celtic Tiger years partook in the building of a nation, new urban development and workplaces etc through the country. I was fortunate enough to rub shoulders with some of my old colleagues when I returned to the construction industry during the past number of years.

    However, here is my question.

    As I began to read about the history of the new economy, the smart economy, the smart community or society – I kept on hearing about these wonderful economic thinkers – the Alan Greenspans, the Milton Friedmans, the Hayeks and so on. Naturally I took an interest in these men. I wondered how this recent adoption of technology (which wasn’t there when I was a kid in Ireland of the 1980s) grew from the economic model which prevailed for much of the last two decades.

    It was a natural kind of curiosity which lead me to investigation the writings of Greenspan, Friedman, Hayek and several others. I amassed a quite substantial pile of reading material. But as I tried to discuss these ideas and observations I had about the ‘new economy’ with old colleagues of mine from the architecture and urban design field, I began to notice something strange.

    Basically, it must have been my innocence. Apparently, I should have known better. I must not read material written by neo-Liberal economic thinkers. It is evil. It should be all burned.

    Or so I was informed by my learned colleagues who had all gone through the learning curve, to a much greater extent than myself, in understanding of society building, community building and sustainability.

    I still respect these views. But I often worry about the professionals who come at it from a strong social scientific point of view. I was merely coming from a techno-economic direction myself. I saw nothing wrong with approaching the works of neo-Liberal economic thinkers, with the expressed goal of seeing how that economics might interact with the development of new-age, smart economic development and success.

    I guess, I didn’t read Greenspan or Friedman books as a political manifesto. I read them instead as another route, into my understanding of the new landscape of smart and innovative development. I will of course, grant that my learned colleagues of the social sciences do see a much bigger picture – one that has to do with children, old people, families, communities.

    But I wonder is it necessary in every instance, to avoid an intellectual manuscript – by any author – simply because it represents a political framework or world view which does not agree with one’s own.

    I find it strange that colleagues of mine experienced in social architecture and social science develop their political outlook in advance, and go in search of their reading material to fit with that political outlook. I see a great danger in that. I hope, as best I can, to develop some political outlook or horizon for myself, after I have spent time with some reading material.

    It is a question about sequence. It may not be a terribly dramatic question. But it is one that always puzzles me about those who have developed their brains through the means of study of politics alot. I suggest that they live dangerously from time to time and read some of the devil’s work.

  2. Executive summary:

    When the Taoiseach Brian Cowen announced that Ireland was going to have a smart-er economy not so long ago, I don’t recall very many protests in the street. I can only surmise, that a smart-er economy is one that is agree-able to a broad cross section of the population.

    The simple fact is as follows. The smart economy, if one has to study it and learn about it – has developed in parallel with the neo-Liberal economy. In other words, in order to study the history of one or the other – one must develop a keen understanding of each, in other to extract the bits relevant to one or the other.

    In my view, several un-popular economic thinkers of the 20th century were key in the development of the smart economy. But also key in development of the neo-Liberal economy also. That is unfortunate. It simply means that one has to study a lot more material to understand things reasonably well.

    (Speaking from experience in this study)

  3. @Frank Barry
    “The Irish policymaking system is far too closed and insulated from critical debate to be able to produce consistently good decisions, and a further detrimental consequence of its closed and cartelised nature is the extent to
    which it facilitates regulatory capture. How can we move from the present cartelised ‘marketplace for ideas’ – where good ideas have only restricted opportunities to challenge bad ones – to a more open and competitive one? A first step would be to introduce a clearer line of demarcation between where expert policy advice ends and political decisions begin.
    Its absence facilitates an evasion of responsibility on all sides.”

    All of the faults identified by you have been laid bare in the blanket bank guarantee and NAMA debates. We have never found out where NAMA or the bank guarantee came from. Both were sold completely dishonestly. All the evidence and independent views were completely ignored. The relevant vested interests were universally delighted in each case. If they win then we lose – what’s good for the cronies is bad for the country and always has been.

    Here is another thought. Seán Ó Riain wrote the following in a comment on this post:
    http://www.irisheconomy.ie/index.php/2009/12/02/ireland-after-nama-new-blog/

    “My colleague Rob Kitchin at NUIM tells me that according to the 2006 Census almost 217,000 houses and flats/apartments were lying vacant across Ireland. This figure relates to 174,935 houses and 41,598 flats or apartments.

    Incidentally, in the 2006 census there were 1,469,521 private households in Ireland.

    From eyeballing the maps the vacancy rate appears significantly higher in the post-2006 properties. So I would say that there are significantly more than 217,000. And presumably fewer households than in 2006.”

    60,000 people do the leaving cert every year. How on earth did we end up with 217,000 empties. Surely the housing market would have ground to a halt long before this level was reached? That’s one dwelling for every 23 people in the country – more than three for every leaving cert student. If the market didn’t function then it was rigged.

    Most likely banks were told to wear the green (FF) jersey by continuing to fund construction and by not calling in loans made to developers for completed projects. Bankers/Developers knew that they would never find a better partner than FF and tried to hold the line until the 2007 election was in the bag. Unfortunately the credit crunch intervened. If it hadn’t they would have gone on building houses right up until the 2007 election and for the shortest decent interval thereafter.

    If the credit crunch had hit later we would have started the crisis with much more than 217,000 empty dwellings. With emigration would we now be looking at 300,000 empties – that’s one for every fifteen people, five for each leaving cert graduate! The collapse of the bubble and a devastating recession were inevitable. Was a NAMA like initiative to bail out the Golden Circle inevitable too? Will the Bacon proposals to remove “excess” hotel rooms by all possible means be duplicated with houses? Has that been the plan all along, perhaps since long before the election? The golden circle would keep building houses then say, whoops, way too many, let’s get our government partners to buy them and knock them all down so we can start again?

    With Lisbon out of the way and a dreadful NAMA in prospect we need a change of government now. The consequences of leaving these property maniacs in office will be disastrous. No to NAMA, their Frankenstein creation.

  4. Economists, particularly free market proponents like Friedman, have a bad press. This leads to political difficulty for pro-growth economic policy. For many people, a silver lining of the current recession is that it has finally revealed right wing, capitalist, ‘greed is good’ thinking as the evil it is, and now we can return to socialist policies.
    I think this bad reputation is unwarranted – there are few things that bring more joy to an economist than fixing a Pareto inefficient situation, or in other words, increasing the welfare of some while making no one else worst off. In contrast, groups from other parts of the spectrum such as trade unions tend to be the dictionary definition of selfish. However, as long as the average person associates ‘economist’ with ‘greedy banker’, the reputation will persist.

  5. “Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders…..
    As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise….
    elite business interests….played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them…..

    Regulators, legislators, and academics almost all assumed that the managers of these banks knew what they were doing. In retrospect, they didn’t….
    money was used to recapitalize banks, buying shares in them on terms that were grossly favorable to the banks themselves. As the crisis has deepened and financial institutions have needed more help, the government has gotten more and more creative in figuring out ways to provide banks with subsidies that are too complex for the general public to understand….
    Even leaving aside fairness to taxpayers, the government’s velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change…
    In some ways, of course, the government has already taken control of the banking system. It has essentially guaranteed the liabilities of the biggest banks, and it is their only plausible source of capital
    today…
    while the replacement of the bank executives who got us into this crisis would be just and sensible, ultimately, the swapping-out of one set of powerful managers for another would change only the names of the oligarchs…
    Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear.”
    http://www.theatlantic.com/doc/200905/imf-advice/4

  6. @ B OH
    Rein it in, your killing threads with XXXXL postings

    Back to the original post

    David Brooks in the NY Times just awarded his annual Sidney awards- for the best magazine essays of the year.

    One went to:

    ” Jim Manzi’s essay, “Keeping America’s Edge,” in National Affairs, explores two giant problems. First, widening inequality; second, economic stagnation, the fear that without rapid innovation, the U.S. will fall behind China and other rising powers.

    Manzi investigates a dilemma. Most efforts to expand the welfare state to tackle inequality will slow innovation. Efforts to free up enterprise, meanwhile, will only exacerbate inequality because the already educated will benefit most from information economy growth.”

    Link:
    http://www.nationalaffairs.com/publications/detail/keeping-americas-edge

    Havent got to it yet, but it got a Sydney!

    Al

  7. @Frank Barry

    Speaking of policies with no economic or social justification being chosen because they benefit powerful interest groups:

    http://www.tascnet.ie/showPage.php?ID=3055&PHPSESSID=440895983a8debb9550fb68acb1cfda8

    “Budget 2010: saving to Exchequer from SW cuts around the same as spend on tax breaks for landlords

    TASC points out that:

    •Tax breaks cost the State an estimated €7.4 billion in 2009 – well above the EU average
    •In 2007, the State spent €877 million on tax breaks for landlords (interest on borrowings offset against rental income)
    •Tax breaks for landlords cannot be justified either on economic efficiency grounds (since Ireland has a surplus of empty housing units, and the rental sector is not a job-creating sector) or on equality grounds (since they disproportionately benefit higher earners).

    TASC Head of Policy Sinead Pentony said:

    “Last week, the Government made a deliberate choice to target the burden of this year’s €4 billion ‘adjustment’ on the most vulnerable: social welfare recipients, low-paid public servants and those dependent on public services.

    “By contrast, wealthier sections of our society can continue benefiting from dozens of tax breaks, none of which have been subjected to an economic efficiency or equality audit”.

    “Budgetary policy is about choices. And the choices made in Budget 2010 will increase inequality and postpone our economic recovery”, Ms. Pentony concluded.”

    With this government there are always alternatives.

  8. @ John Cowan,

    Good points.

    The thing that always interests me is as follows. You can have the right instructions, the right idea, the right tools – but you can employ those in the wrong sequence and make a very bad mess. I have seen in time, after time, after time.

    This is why the neo-Liberal labelling of it as a doctrine bothers me. I am worried that in order to fully appreciate the workings of the modern ‘knowledge’ or ‘smart’ economy, one may have to wade through much modern economic doctrine to boot. One may have to smoke, even if one doesn’t enhale.

    I would never try to push neo-Liberal doctrine or any other on a person. But I am excessively curious to know (as the XXXXL piece of text above demonstrated) how academics who study and wish to learn about a knowledge economy intend to cope, if they have all of these pre-judgements in their minds to begin with.

    I am concerned that the best academic in the world could try to write political/economic policy for a knowledge economy, and be completely useless because they pre-choose the parts of history that they like, or don’t like. In order to pull this knowledge economy thing apart, to reverse-engineer it, or whatever is the right phrase, you need someone ruthlessly investigative.

  9. John Cowan
    One of the missions of this blog may be to address the obfuscation of eceonomic thinking that is promoted by those who promoted the sub-prime disaster in the USA. Greenspan showed that he wanted the low rates and that asset prices were not relevant to his job. I suggest he knew very well what was going on. The dismantling of all the FDR inspired statutory checks on Ponzi banking was a deliberate series of acts, but shielded in economic rhetoric.

  10. Growth is not in the short term future, hence we have policies that target the poorer members of society.

    This is because there is no likelihood that there will be a voter backlash. That these policies may be antigrowth does demonstrate something. Arrogance. Provided there are enough handouts given to the press they will print whatever the government says. Advertizing revenue is important and can be directed elsewhere.

    No one is poor any more, let them eat brioche? I suspect the unions may decide that lying down with dogs has reached its limit. The government will continue it to spread blame for all that is going to happen. Quangoes exist so that union leaders and public servants can be rewarded and controlled. Any more Phil Flynns?

    Income inequality is known to increase as a depression nears and through the early years. After that the wealthy resort to living off their capital and income levels drop a bit.

  11. @Frank Barry,

    The final sentence in your paper – “The ‘marketplace for public-policy ideas’ must become a more open and competitive one if policies are to be adequately scrutinised and decision-making improved.” – sums it all up. But what is to be done? It is clearly not sufficient to rely on the fortuitous coincidence of Sean Lemass’s political nous and drive and TK Whitaker’s clear-sightedness, or of Desmond O’Malley’s tenacity and Sean Barrett’s intellectual clarity, or of Ray MacSharry’s focus and Alan Dukes’s statesman-like support.

    On an earlier thread relating to Morgan Kelly’s IT op-ed piece yesterday, Brian Lucey despaired of seeing meaningful governance change: “unless the system crashes, visibly, painfully and for all, we are unlikely to see meaningful change.” Karl Whelan’s latest post highlights the numb-skulledness of a Government, constitutionally embedded in power, that is committted to revive the technically insolvent covered banks at the expense of the economy and, possibly, at great risk to its capability to borrow.

    The answer lies solely in the political sphere – and let us hope that members of the political classes who have a role in policy formulation are paying some attention. Governments set the parameters – either explicitly or implicitly. At all times some individuals and businesses will be greedy, reckless and stupid, but the “rules of game” should be such to minimise the detrimental impact of their behaviour on the public interest. If the rules of the game encourage and incentivise all participants to be greedy, reckless and stupid it is not primarily their fault; it lies with those who set the rules of the game.

    I understand that Fine Gael is developing a policy paper on the “new politics”. Unfortunately they have preempted the scope of the debate that may ensue by pre-announcing policy decisions on abolishing the Senate and reducing the number of TDs – and linking these announcements to the political virility of the leader.

    What we require is a forum (similar to the “New Ireland” forum of the ’80s) to address democratic governance and the forumaltion and implementation of public policy. And we need to enhance the representation and power of the citizen as a consumer; for far too long public policy has been dominated by producer and other vested interests.

  12. As a final thought..lest I be accused of characterising Ireland as a uniquely dysfunctional polity – though, Lord knows, there is more than enough evidence in both the temporal and spiritual spheres. The “newer” EU domocracies – Portugal, Spain and Greece – have many similar problems. Italy is a chapter all to itself. The Scandinavian members have experienced traumas in the last 20 years. The new members in central and eastern Europe struggle with a disjunction between the commitments made to secure EU membership and popular acceptance of the implications of these commitments. And many politicians in the founding members abdicate responsibility by advocating EU federalism.

    We are not alone, but the solution is in our hands alone.

  13. @Frank

    During the early 90’s (pre-Maastricht treaty) I befriended a thoughtful Italian economist. He explained that the Italians were very enthusiastic about EU integration since they looked to the EU political system “to save them from themselves.” Due to the dire state of Italian politics (at least in the early 90s) this was a sensible view. But given how undemocratic and untrustworthy EU political institutions are, a member country must have a very badly performing national political system for wholesale capitulation to EU control to be an improvement. Despite its flaws, I do not think that the Irish polity is sufficiently maladapted for EU central control to be an improvement. Not sure if this is relevant to your argument!

  14. @ Paul Hunt,

    On an earlier thread relating to Morgan Kelly’s IT op-ed piece yesterday, Brian Lucey despaired of seeing meaningful governance change: “unless the system crashes, visibly, painfully and for all, we are unlikely to see meaningful change.”

    If you click on the date/time underneath ‘So-and-so’ say: you can copy the link from the address bar above, and use it to link directly to any specific post in any thread from anywhere in the IE blog site.

    A quite useful feature I only learned recently.

    Brian Lucey’s comment:

    http://www.irisheconomy.ie/index.php/2009/12/29/morgan-kelly-on-the-irish-economy/#comment-29751

  15. Paul Hunt:

    Can you envisage any useful version of ‘new politics’ which includes the Seanad? Surely Enda Kenny has pre-empted very little here. Ditto fewer TDs. Eamon Gilmore, by the way, has announced that he also favours scrapping the Seanad. Would you be happier if these two gents had avoided pre-emption by opting to ‘reform’ the Seanad, yet again?

    The Seanad costs €25m. per annum directly, plus hidden costs in the form of civil service and ministerial time. So far as I can recall, this is the first time a government-in-waiting has committed to serious surgery on the architecture of the 1937 constitution. During the Spring, I discussed the option of a unicameral parliament with about a dozen experienced politicians, including retired front-benchers, from all major parties, off the record. Only one was pro-Seanad – revising chamber etc. The rest thought it a waste of money and political energy. None had voiced these views in public, interestingly, but a few have since.

    The Seanad issue is a pretty good litmus test for detecting seriousness of purpose about institutional reform.

  16. @Colm McCarthy,

    I take your point, but my focus (in line with Frank’s paper) is on policy formulation, scrutiny, amendment, implementation, review and accountability. It’s about the application of relevant expertise, the separation of the executive and the legislature, the empowering and resourcing of parliament to hold the executive to account and the introduction of effective checks and balances.

    I agree that the Seanad, as currently constituted, contributes little in this respect. On a simple economic cost-benefit analysis it fails dismally. But, for example, the Seanad could be recast as a legislation scrutinising body with members elected on a list basis from, say, the existing Euro constituencies and with a basic candidacy-qualifying requirement that, in addition to any political experience, they possessed specific professional/technical expertise. They would be equipped to scrutinise and amend legislation initially which would then be passed to the Dail, but the Dail would retain absolute authority to amend and enact legislation.

    It will take a generation to alter the composition of the Dail from the preponderance of teachers, farmers, publicans, local professionals etc. And these continuously are whom the electorate has chosen to represent it.

    We need to start with a broad canvas and I believe there is a role for relevant university departments (economics, politics, public policy) with the various policy research bodies, collectively, to begin work on an institutional blueprint for democratic governance and public policy design. Obviously it would require input from the political classes, but it would benefit from the objective academic independent inquiry in the public interest that would lift it above factional interests.

  17. @Paul Hunt
    World class transparency might well be the key stone of the new order. It is essential. It would also have to be continuously improved so we don’t get stuck with the same unchanged level of transparency for the next 100 years.

    No Irish institution is ever drastically reformed so I am afraid the senate – being such a total failure – will have to be eliminated. We are in a crisis and we can’t afford this €25 Million scheme for training future TDs and supporting the income of failed TDs.

    Finally, we need an Institute for Stating the Bloody Obvious (ISBO). This institute would be an early warning system for the economic tsunamis FF unleash on us. We must now accept that every quarter century they will try to destroy us. We need an impartial, apolitical expert body, whose funding is completely ouside the control of our government.

    This body’s primary purpose would be to publicly warn, repeatedly and in the strongest possible terms, when the ship of state is being steered directly toward icebergs. These warnings would be known as ISBOs. Naughty, reckless politicians like Charlie McCreevy and Brian Cowen would have been festooned with ISBOs.

    The Institute could also produce impartial reports on the economy/society, especially of the sort that no one in the establishment or the social partnership wants.

  18. Paul Hunt:

    So it’s Seanad reform then! I agree with all you say about improving parliament, but reform is more likely if the political structure could be de-cluttered.

    Try this thought-experiment: assume a functioning lower house. In what circumstances would you add a second chamber, given that there is no disposessed aristocracy to conciliate, nor any need for a Bundesrat to represent constituent states. ‘Revising chamber…’ does’nt work, since we assume the lower house functions.

    Only a few small, non-federal, non-aristocracy-inheriting, countries bother with second chambers. Ever wondered why?

  19. @ Paul Hunt,

    Funny, I heard Pat Honohan in an interview lately when questioned about the option of university professors becoming advisers to state departments such as finance – Pat didn’t really have an interest in exploring that avenue – from his own point of view at least.

    I have no doubt that Karl Whelan would feel right at home sitting in the Seanad Eireann. Or meeting with a government department, or whatever it took.

    Therefore, it must depend on the individual. I have raised this point before – each economist expert has to find their own medium. The Dail chamber might be the ideal medium for many experts in which to express themselves. For others like a certain Green party member you became a star on YouTube, the Dail chamber proved quite a challenge.

    Elizabeth Warren has managed to employ YouTube as a medium and it certainly fits her style and approach. Colm McCarthy handles the TV medium quite well – I don’t even know why. The difficulty for some people with the TV medium is one can seem a little bit too twich-y, hyper-active or something. The TV screen exaggerates the slightly tendencies in that direction and does pick up on facial expression as much as what people say.

    ‘Lie to Me’ is an excellent TV series worth a look, starring Tim Roth.

    David McWilliams absolutely ‘rocks’ when it comes to radio. That voice combined with that brain is an awesome combination. I feel that is his medium, although he tries to extend this talent to documentary series, books, blogs, newspapers and live events such as Farmleigh.

    George Lee really did nail things, with his documentary series about the Berlin wall. I don’t know if anyone could have carried that act in quite the same way.

    My own brief experience on national radio – heck, I almost caved in. It looks easy. It is not.

    But to relate this back to Ed Walsh, the Seanad, the political apparatus and so forth – George Lee is quite a good example, of what it takes to kind of ‘slide’ an expert into a seat in the Dail, under the radar so to speak. Granted that George has amassed sufficient credibility over a long period of time and effort. And his decision to run for election came like a bolt from the blue.

    But look at the Green party also. Where did it come from? What I think when I read Ed Walsh’s call for more ‘listed members’. I think the Green party members are really kind of ‘listed members’, in a very Irish, hybrid, water-ed down kind of way. A lot of them are councillors, but a lot are passionated and articulate on a specific issue.

    What we are talking about I guess, is encouraging more expertise, across the board into the political system. A process which you can see tiny evidence of in George Lee’s election, in the Green party’s collation membership. But the constitution is preventing us from getting to the real McCoy. What we are only seeing as yet, is mere shadows of what might be, dancing on the walls.

  20. @Paul Hunt
    I think your idea of a forum is excellent. Ideally a repentant government would have set it up in the wake of the calamity they caused. Seeing as they are not in the least repentant they haven’t and they probably won’t. The Irish establishment and the vested interests know that if they wait it out the outrage will die down. They have been getting away with making the minimum of changes for almost 90 years. They are not going to make radical changes now – they’re 88 years old and it shows! I hope the opposition do propose an administrative revolution but with the best will in the world they will struggle to get it through. That’s where the forum would prove vital. It would prepare the ground. Otherwise reform will be stalled in an administrative quagmire.

    What is needed is a root and branch review of how the country works.
    When the work is done the oppositon need to lay out a timetable for implementation and then stick to it. People of all political parties will then have to back the reforms if they are to succeed.

    These are dark times and for politicians and civil servants crisis management is the priority. Someone needs to think longer-term. We need a positive vision of the kind of state we should have given our resources, a blueprint for a successful society. By our 90th anniversary in 2012 the country should at least know what it needs to do.

  21. Brian Lucey:

    To clarify: If one object of a ‘new politics’ is a functioning lower house, then let’s assume this object has been achieved. Now go ahead and tell me why a second chamber should be part of the new architecture.

  22. @Colm McCarthy:
    “Can you envisage any useful version of ‘new politics’ which includes the Seanad? Surely Enda Kenny has pre-empted very little here. Ditto fewer TDs.”

    […]

    “Try this thought-experiment: assume a functioning lower house. In what circumstances would you add a second chamber, given that there is no disposessed aristocracy to conciliate, nor any need for a Bundesrat to represent constituent states. ‘Revising chamber…’ does’nt work, since we assume the lower house functions.”

    Surely, in assuming a functioning lower house, you have gone too far into the realm of fantasy. Why not start with something more realistic?

    1. Most TDs seem to want to function as Santa Clauses-cum-county councillors acting on behalf of their constituents. For many of them, there is little evidence that they are capable of doing anything more, like dealing with policy. So let us therefore leave the lower house in charge of street lights and Old IRA pensions and headage payments and so on. Which will allow us to …

    2. … abolish all the local authorities and …

    3. … make the upper house the main locus of the legislative function. But it is probably too large, so to save money we should …

    4. … abolish all except the university senators, who would act as the Official Opposition, and the Taoiseach’s nominees, who would form the government. We might later consider expanding the number of university seats to cater for the newer universities, but we don’t want to be too radical.

    bjg

  23. @ColmMc
    Cant, I have no clue what in that case a second house would do. No need for it. Not sure that it does much now, when the lower house is grossly dysfunctional, which says it all.

  24. Ah, Irisheconomy.ie becomes the Federalist papers…or at least takes a stab in the right direction!

    @ E65bn


    Finally, we need an Institute for Stating the Bloody Obvious (ISBO). This institute would be an early warning system for the economic tsunamis FF unleash on us. We must now accept that every quarter century they will try to destroy us. We need an impartial, apolitical expert body, whose funding is completely ouside the control of our government.

    This body’s primary purpose would be to publicly warn, repeatedly and in the strongest possible terms, when the ship of state is being steered directly toward icebergs. These warnings would be known as ISBOs. Naughty, reckless politicians like Charlie McCreevy and Brian Cowen would have been festooned with ISBOs.

    The Institute could also produce impartial reports on the economy/society, especially of the sort that no one in the establishment or the social partnership wants.”

    Where do I sign up?

    @Brian O’Hanlon
    Nice to see the New Ireland Forum being cited as a model. I’m all for this thinking.

  25. @ All,

    I recently sat at one of the Lisbon Treaty debates at UCD. Pat Fox was there, De Rossa, one of Ganley’s men, a UCD european studies lecturer or two and that really loud girl who left the green party.

    But little old councillor Richard Boyd Barrett from DLR coco was the most impressive that evening I thought. I later had an opportunity to ‘tour’ the DLR coco offices and meet the head person in the council, a Ms. Baker I think. We explained to someone like myself, who doesn’t understand politics that well that a councillor is a part time occupation. I stood in the council chamber and say Mr. Barrett’s name.

    I mentioned to Ms. Baker that I think Mr. Barrett has learned a lot of skills of public speaking and debate in that small chamber in DunLaoghaire. It is a useful training ground for aspiring young men of politics to learn their trade. I think she agreed and noted that a lot of learning can be done at a local level.

    I just thought I would mention this in passing for those of you, like me, not very keenly aware of how the democratic system is set up in Ireland. The Lisbon Treaty debates were quite interesting, in that they brought together council level representatives, European level, university staff who are experts and a wide variety of folk together to discuss something.

    As I have said before, there were marked differences between the Lisbon Treaty process through the democratic system, and that NAMA went through. You simply didn’t see the same range of people involved with the process for NAMA. I noted this evening on the BBC episode of The Love of Money where John McCain convened a sort of spur of the moment meeting regarding TARP in the USA.

    Paulson went ballistic I think, because it amounted to another long delaying process, which achieved little. Gordon Brown flew to the US also to understand how they had defined the financial problem, and came away with the sense, the US didn’t know exactly what they were doing.

  26. The funniest bit of all in the UCD debate was when one of the students interupted the UCD lecturer in European studies to ask a question. She informed the student, she would take his question if he could tell her the date of the battle of Agincourt.

    No such luck and the student had to sit himself back down.

  27. The Oireachtas is the parliament of a failed state that that has presided over the wrecking of the lives of tens of thousands of its citizens.

    That may seem extreme, but try to think of up to 10 of the 216 members in this grim year, who have credibly addressed the economic issues of our times.

    The part-time parliament, which is shuttered for about 275 days each year, true to Victorian era tradition, adjourned for the summer holidays last July with the announcement of some of the outlines for the bad bank NAMA. In the succeeding weeks, despite the economic emergency, there was hardly a political voice to be heard.

    When the parliament is shuttered, the usual routine for ministers, is to have an anonymous spokesperson respond to media inquiries.

    Ministers pay attention to RTÉ and are usually facilitated by it. However, it’s strength is in post-hoc analysis as ministers choose the outlets that suit them to address contemporary issues and interviewers are rarely prepared with a forensic armoury of pertinent facts. Ireland will have really changed when Prime Time Investigates its own organisation, without a risk to careers.

    In the ultra-conservative system, the benefit of abolition of the Seanad, with the confirmation by the people, would be the psychological impact of declaring open season on sacred cows and vested interests.

    However, supporters of reform should do the donkey work now, including analysis of the impact across the Constitution. Otherwise in power, the vested interests would wear down resolve as a new government would be dealing with a multiplicity of pressing issues.

    Regarding Frank’s paper, the taxi drivers as a group, were weak compared with say farmers, hospital consultants and ESB workers.

    There was some compensation but it hardly compared with the lavish EU deal for beet farmers and sugar plant owners.

    Twelve years of the Flood/Mahon tribunal and land rezoning remains a sacred cow.

    Collective power in either numbers or wealth is what counts for politicians.

    Why are the majority of private sector workers without an occupational pension?

    The people with a grip of the public megaphone – – politicians, trade union leaders, academics, wealthy journalists and broadcasters – – are usually the ones who are well provided for in pensions, high salaries or both. The issue of pensions coverage would not be expected to register with most of them.

    Back to my opening point, doesn’t the fact that the Minister for Foreign Affairs is also a teacher at Presentation College, Cork – – 20 years after last teaching there – – or that a so-called “independent” TD, can trouser over €200,000 tax free in public funds during a parliamentary term, with no questions asked, in addition to the lavish system for all Oireachtas members, speak volumes for the type of system that is tolerated?

  28. @Colm McCarthy,

    I’m not sure this Seanad-fixation is either useful or healthy. I simply responded to your query about any possible useful role for the Seanad in a “new politics”. You were probably being rhetorical and neither expected nor wished me to respond. Now you see a nail sticking up and the hammer is out…

    I understand your points about cost, utility (or lack of it), litmus tests and de-cluttering, but I believe there needs to be a much broader understanding of the objectives of institutional reform and wider and deeper thinking and debate about possible options. I have an instinctive aversion to piecemeal reform in the absence of this effort. And my focus is very much on this effort and the role I believe the academic institutions and public policy research bodies should be playing in the public interest.

    Politics, like journalism, is a trade, not a profession. Politicians are like bacteria in one’s gut; generally not very attractive, but serving a useful purpose. But at the same time politics is, perhaps, the highest calling. People entrust their public respresentatives with the authority to make the laws and rules that govern the economy and society.

    However, that does not mean that politicians are best-skilled at identifying the nature of the institutions and procedures that should govern their activities. At all times an in all places politicians will seek to evade scrutiny, accountability and the demands of transparency and freedom of information. And no politician exercising power (nor one anticipating securing office at the next time of asking) will freely advance proposals that will restrain, check, scrutinise or otherwise moderate the exercise of that power. Yes, ultimately, they will have to decide on these arrangements and to seek the people’s consent, but the fox is never the best designer of the chicken-coop.

    This is why and where I see the need for independent, objective, evidence-based research and analysis in the public interest – and a process for engaging the wider public to determine arrangements that should govern politicians. There seems to be a general consensus that institutional refrom is required and there have been some interesting and useful academic papers, but we need more, much more, than this.

  29. @ Paul Hunt,

    I have an instinctive aversion to piecemeal reform in the absence of this effort. And my focus is very much on this effort and the role I believe the academic institutions and public policy research bodies should be playing in the public interest.”

    What you have described above Paul, is actually one of the best templates I have ever seen for a good foundation in the country of Ireland, for research and development in technology and scientific innovation.

    (It may or may not apply to political systems. I am unsure. I lack sufficient awareness of how political systems work)

    What you describe above is more or less what the United States had in the post war years in the that very area. Sure the ARPA funding of projects was linked to the Pentagon, and as such a military spend. But in reality, the money spent then, became the foundation for much of the technological lead that the United States enjoys today.

    There was much talk early in the year, via Craig Barrett’s comments and so forth, about this minimum 3.0% of GDP spent on R&D.

    The key with technology is exactly as you have described – there is no point in inventing ‘improvements’ to existing technological infrastructures to produce marginal gains. If one is going to do it, do it sufficiently bold and ambitious to warrant investment in the first place.

    For instance, the initial technology rolled out in the United States for what later became the Internet was positively leaps and bounds ahead of what the commercial vendors would even attempt back in those days. In that sense, the government funded research filled a gap in research focus of that day. Without it, the United States technology today could be pretty much behind competitors.

    In the days after Berlin wall collapse, 1989, the United States spends more on overseas expansion activities, than everything it spends on domestic state spending combined. There is a huge shift in the United State’s focus – and hence results, which may benefit them in the future.

  30. “If one is going to do it, do it sufficiently bold and ambitious to warrant investment in the first place.”

    The corollary to this being, in order to accentuate the effects of ‘boldness’ and ‘ambitious-ness’, a small country like Ireland should choose a few specific beach heads on which to land its R&D spearheads forces. Dispersion of pressure across too wide a front simply waters it down too far.

    Excellent book reference: Geoffrey Moore, Crossing the Chasm.

  31. I will leave a couple of references here for people to have.

    It is obvious there is popular support today for looking to government for solutions, for answers, for a way forward. What we shouldn’t forget, is that following the FDR policies of the depression years, the war time policies of Maynard Keynes, the emergence of McNamara, conflict in south east Asia and so forth – in the late 1960s a counter movement started which be to push pressure against these large government led ‘solutions’ which had proved so successful in the depression and war times.

    Fred Turner, a professor at Stanford University recently published a book From Counter Culture to Cyber Culture, all about the whole earth movement in the 1960s, 70s and 80s.

    Bill Moyers interviewed Richard Bookhiser on his show I noticed.

    http://video.pbs.org/video/1314336960/

    Bookhiser looked at that late 1960s period in the interview, and looked at what happened. I just thought this point might be pertinent to this blog entry by Frank Barry. To remember, that having established the influence of large government intervention post-FDR, that the population in the United States finally reached a stage where they felt this trend needed to be corrected.

    An interesting paper I have linked before here at IE, by Hirst Rittel is his paper from the early 1970s, Dilemmas in a General Theory of Planning. A paper which examined the decreasing effective-ness of large public programs to solve what he termed increasingly ‘wicked’ problems. I.e. Problems which are increasingly difficult to define.

    Indeed, the purpose of Gordon Brown’s trip to the US in ’08 was to understand how the United States had ‘defined’ the problem at that time.

  32. @ Brian O’Hanlon
    Sorry about the earlier mixup between you and Paul Hunt. Counter-Culture to Cyberculture is indeed an excellent book – I gave copies to a few people this Christmas – but I fail to see its direct relationship to this discussion. I also think that the description you give of the origins and aims of the counter culture doesn’t tally with what is described in the book, but that’s a separate conversation.

    @Paul Hunt
    New Ireland forum all the way. I mentioned the positive telling that one of the organizers, philosopher Richard Kearney, gives of it in his On Stories book, which is well worth reading.

  33. @ Mick Costigan,

    The link up with this discussion is basically as follows. At the moment, no matter whether you watch US television and news, English, or Irish media – everyone is talking about the 1930s depression. Everyone is talking about the wonderful, energetic and leading roles played by politicians, by government – in developing programs for employment, programs to resolve banking, programs to produce energy and electricity, provide infrastructure and so forth.

    It seems as though ‘big government’ which had its heyday in the years of the great worldwide depression of the 1930s is back in fashion. Sure it took different forms on the different continents, and everyone got together in the 1940s to hammer it out big time.

    But the point is, by the 1960s that reliance on large government dominance of everything had waned. People didn’t want to buy into that in the same way as the generation who experienced the depression first hand did. The 1960s generation weren’t willing to trust the large central establishment as much as earlier generations did.

    What I am saying is that we are back into a time, when government seems to be calling the shots again. The period of free spirit individual-ism, which marked so much of the 1960s and later the ‘off-the-grid’ independent spirit of the environmental movement – and I guess it expressed itself in the idea of the CEO-class, the one person superstar chief executive – that period is over.

    It is like Paul Krugman said, Return to Depression Economics.

  34. What we have basically witnessed first hand in countries such as Ireland, and in other countries, is the outside limit to which you can take the philosophy, each and every individual for themselves. If they can get away with it, then by definition, it must be justified.

    I simply don’t think that will ‘fly’ like it did in the recent past. Nobody going forward will wish to ‘celebrate’ the individual from themself, to the same extent as they did over the past two decades.

  35. So it is only logical to see issues coming up, which rather than look at how the individual can be more dynamic, more powerful and more successful – which has been the focus for a long time now – what we see instead is a re-focus back to the group.

    How does the group work efficiently? What is the organisation of the group which stands to be most productive, and give back best value for money?

    Those kinds of questions weren’t really fashionable in the past number of years. Except for people like Howard Rheingold, as an instance, who might be looking at cooperation, at Smart Mobs and what have you.

    It is merely interesting that we are talking about the organisation of the chambers of the Oireachtas. It has nothing to do with bubble-mania, as in dot.com bubble mania, everyone is a mini stock-broker, or housing bubble mania, everyone is their own property tycoon.

    One of the strongest critics of new age, new era, new technology etc was Nicholas G. Carr. He asked the simple question, just because modern technology is ‘client-server’ in its architecture, lots of tiny dispersed nodes – lots of tiny dispersed businesses – doesn’t mean that technology should influence business organisation and management. Business management theory was fool of studies of organisation which tried to imitate the dispersed nature of information technology.

  36. Richard Sennett, the sociologist of course being the ultimate source of ideas for Nicholas G. Carr. Sennett looked at the disintegration of large formal organised units of capitalism, such as companies, in his several excellent books.

  37. @Mick Costigan,

    Thank you. I used the New Ireland Forum simply as an example because I believe there is a need to create an on-going process to address institutional reform. One-off papers/events/policy announcements are unlikely to generate sufficient traction. The media, in general, appears to have the attention span of a gnat. The current Government, not surprisingly, has absolutely no interest in exploring this agenda. A number of contributions are being made by those who should have some influence and should attract some attention, but the lack of any co-ordinated effort mean they are merely transient blips on the radar.

    I sense that Ireland is at a tipping point with regard to the requirement for institutional reform. I view Colm McCarthy’s insistent calls for a banking inquiry as a means to forestall a significant risk of ungovernability. But the requirement for institutional reform goes much wider and deeper.

    The institutional arrangements established in 1937 coped effectively with the major departure in economic policy from the late ’50s and continued to do so through the OPEC oil price increases and accompanying stagflation of the ’70s as the fiscal demand management policy consensus imploded (which never deserved to be labelled Keynesian). The wheels started to come off in 1977 when Martin O’Donoghue persuaded Jack Lynch and George Colley to “spend their way out of a recovery”. The programme of fiscal stabilisation initiated in the late ’80s (sandwiched between devaluations in ’86 and ’93) did a superb technical job on the Irish economic vehicle that allowed it to roar into the fast lane as the Celtic Tiger, but the necessary examination of the underlying institutional reasons for the previous economic debacle was either ignored or submerged by a (fairly brutal) personalisation of politics.

    This failure to address the underlying dysfuctionality of the process of democratic governance and institutionalised economic illiteracy has brought us to the current pass. Unfortunately, it appears that many of the academics and public intellectuals whom one would expect to have the skills, knowledge and experience – and the public standing – to address these issues in a concerted manner view Ireland’s spectacular fall from economic grace as an opportunity to publish academic papers that will have minimal public impact.

    @Brian O’H

    What give with this avalanche of posts that is pushing us way off-piste? The moderators – in so far as they have retained any interest – will need to send out St. Bernards to find us:-)

  38. @ Paul Hunt,

    I know yeah. There is a body of knowledge and research out there though, which cannot be ignored. I am not sure it is a body of knowledge and research that many economists in Ireland might be familiar with. But it is a body of knowledge and research which I think could un-lock some new angles, some new ways to look at things: Most importantly, in regards to Ireland and how it fits into a much, much, much larger picture of how the global trends are moving today.

    We have a tendency in Ireland to be inward focus-ing and therefore not benefit to the fullest from a lot of research and thought happening outside these shores.

  39. @Brian,

    Perhaps, but I don’t think there is a lack of openness to new and innovative ideas and practices in other countries. We have no shortage of agencies and bodies in the institutional arena whose establishment has been informed by some examination and interpretation of “international best practice”. The problem is that these institutions and arrangements have been bolted on to seriously dyfunctional institutional and governance arrangements. This we have to solve for ourselves. For example, we have the full paraphernalia of “independent”” regulation in a number of sectors, but it is merely a facade as it remains, in essence, an instrument of government policy. Indeed, following an external assessment by the EIU, the Government intends to reduce whatever “independence” the regulators currently have.

    That is why my focus is on democratic governance and the design and scrutiny of public policy. It should not be a daunting task as we are standing on the shoulders of giants – the US Founding Fathers – and there have been some interesting developments of parliamentary democracy in the smaller established democracies in the last few decades. (The British system is only marginally less dysfunctional than Ireland’s, but the imminence of a general election is diverting the demand, and concealing the requirement, for meaningful reform.)

    Get this right – and only we can do it – and all manner of things are possible.

  40. @ Paul Hunt,

    I completely agree. For instance, I noted a diary entry on Dublin Institute of Technology’s web site not a long time ago, they had invited Annalee Saxenian (a lady whose research is familiar to Mick Costigan) to contribute to a seminar in Dublin city.

    Similarly, I had often criticised Dublin City Council for not consulting with specialists from abroad such as DEGW. But then I picked up some flyer or something for a conference organised by Dublin City Council, which included speakers from DEGW who are involved with work at DCC.

    So there are very good ties between Ireland and international best practice, for sure. Many of those ties I am not even aware of. To their credit, Dublin Docklands authority engaged in some very genuine and fruitful collaboration with landscape architects – who honestly do represent best international practice. One of my favourite hobbies is slate-ing DDDA every chance I get.

    But then again I am familiar with committments made by DDDA, firm legal committments, to provide roads and basic infrastructure, as conditions hammered out by their own planning permissions, which DDDA seem to fail, time and time again to deliver. There is no requirement for ‘international best practice’ to build a bit of road. We have that expertise at home.

    But they, the DDDA seem to fail to do it.

    Often this notion of the ‘ransom strip’ which NAMA is so intent on preventing, was a staple tactic of DDDA in the docklands area, which they used to block development happening. Whenever DDDA purchased any piece of land, you could be guaranteed it would stall development. DDDA spent all of their capital buying pieces of land banks for this purpose alone. It cost them dearly to buy a place at the negotiations table.

    On the other hand, worthwhile projects which had reached completion, they didn’t have the capital left over to provide a few basic road connections. So the developments were unable to attract rents and therefore assisted developers getting into difficulties.

    The funny thing is then, to put the tin hat on it, the DDDA does somehow, magically find the financial resources to complete its own ‘pet’ projects. The CHQ shopping centre being the most galling example of all. Completely useless as a retail project, but designed according to the highest of conservation and architectural detailing standards of our time.

    A pity the whole project was a complete waste of taxpayer’s money. There is something sad about a zombie project, a ghost town or an un-finished concrete structure rising into the sky. But few people ask the question of what it cost to build a totally useless (and completed) shopping complex at Customs House Quay. I am reminded of what project manager Fred Brooks once said:

    The amateur gets the overall concept right, but they don’t have the technical experience to work out the details. The professional gets the details correct, but gets the whole concept wrong.

  41. I have sat at public lectures offered by the Dublin Docklands authority to explain how they were working with the private sector, to entice the private sector to do the ‘right thing’ and give back to the community.

    The funniest thing is, having brought in the experts who offered the ‘best international practice’ in terms of advice and design services – the Dublin Docklands Authority on two major occasions at least, proceeded to contradict its own legally binding masterplan, and null-ify major capital investments by the private sector.

    All in the cause of this supposed ‘white knight’ fantasy to give something back to the community. I heard with astonishment at lectures given by the DDDA how they were negotiate-ing with stakeholders at Northwall Quay and Ringsend. On behalf of the community.

    In fairness to the DDDA, I think they model they used to obtain best return and best value was appropriate in an instance such as the Dublin Airport Authority. The difference being, the Dublin Airport Authority already owned their land and had no strict legal masterplan to stick to.

    Both DAA and DDDA are fully state owned, but non-state funded entreprises. The difference being also, the DAA gains rental income from its terminals and from airport charges. In other words, DAA should and could ‘negotiate’ with stakeholders such as RyanAir, AerLingus and so forth to obtain a good deal. (DAA also had the good sense to employ services of Turner and Townsend program managers, who also did terminals at Heathrow airport, again best internal practice)

    It is unfortunate and inappropriate that DDDA adopted the same business model as DAA. Because DDDA doesn’t have a continuous and sustainable income stream like DAA enjoys. Indeed, Turner and Townsend main priority in DAA’s capital investment program, was to program construction work dates sos that DAA’s continuous project investment stream would be able to release funding at ‘major milestones’ so that construction could be bought at the lowest possible price.

    Now that is about as generous as I can be to DDDA without insulting them all, as is my normal knee-jerk reaction.

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