Thanks to George Lee for passing on this material: A set of parliamentary answers to enquiries about the economics qualifications of civil servants in various Irish government departments.
These answers confirm that there is almost no PhD-level training in economics in the Irish Civil Service: There are two economists in the Department of Finance with doctorates and that may be about the limit of it (many of the other departments don’t seem to keep precise records about these things.) In any case, whatever the true number is, it’s very low.
Let me start with the obvious observation that an academic economist would make. The absence of a reasonable number of well-trained economists is very unfortunate and it is legitimate to ask both whether this absence has played some role in the poor economic policies of the past and whether addressing this absence should be on the government’s agenda.
I suspect that most people from outside Ireland who come across these figures would have a similar reaction. This being Ireland, however, one must be extremely careful—in fact, one must be essentially apologetic—if one wishes to make these points. There are two main reasons for this.
The first reason this position provokes such, em, ire in Ireland is that inverted academic snobbery is very influential in this country. Academics who suggest there may be a need for increased technical expertise in economics are suspected of looking to feather their own caps, get their nose in some trough or some other such analogy for selfish or self-promoting behaviour.
Indeed, some would go further than this—suggesting that giving people extra exposure to the dreaded “ivory tower” somehow rots their brains and renders them useless as “practical economists”. Trust me, in other countries, Brian Lenihan’s “national mediocrity” swipe at academic economists (“lots of scared academics secretly support me …”) would have been seen as extremely strange but in Ireland it was pretty standard fare.
In truth, there is no great benefit to individual Irish academics from the Irish civil service recruiting PhD graduates. Most Irish people that get PhDs in economics have traditionally obtained these qualifications abroad and this is a pattern that will most likely continue. And I can assure people that we have no performance-related pay clauses linking salaries to the number of PhD graduates we produce.
No, the reason we tend to recommend recruiting PhD-trained economists is that lots of important economic policy questions are, like, difficult. It’s easy to jump to incorrect conclusions unless one has a good training in various statistical methods and an understanding of useful theories to help interpret the relevant patterns. (For instance, newspaper columnists who regularly cite the Laffer curve as a basic tenet of economics are promoting a “finding” that is rejected under almost all conditions in empirical studies.)
When it comes to practical economics, analysis of data is key. However, the application of statistical methods to economic data—econometrics—is something that undergraduate economic students learn very little of. MA students get a bit more grounding, usually undertaking their first substantive piece of econometric work under the supervision of an academic.
I don’t wish to undermine the value of an MA in economics—it teaches many useful skills and can be a launching pad for lots of different careers, including professional economist. However, in 2010, it is generally accepted across the world that PhD-level training (giving students an additional few years to hone their econometric and other skills) is the standard that organisations such as governments and think-tanks require of someone looking to fill a professional economist position.
The second reason the observation about PhD economists goes down so badly in some quarters is that this is just scratching the surface of a far greater issue in relation to the Irish civil service, namely its dedication to the “generalist” idea of the civil servant. According to this viewpoint, government officials should move around from department to department, gradually accruing different skills and that this prepares them better to be “well rounded” civil servants. This tends to rule out the idea of both being a civil servant and also having a career path dedicated to a specialist career such as being an economist. Recruitment policies that largely rule out hiring from outside for middle-ranking positions also act to keep those with specialist skills on the outside.
I’m sure the generalists have a point in relation to civil servants working in standard public administration roles. However, I would also guess that the public would be better served if the existing system worked in combination with a more flexible system aimed at getting specialists into the civil service and offering them career paths that involved building on the skills they spent years acquiring.
Finally, before people write in to say that lots of other countries are suffering fiscal and banking crises despite their civil services being stuffed with economists, I would be the first to admit the economists have a limited understanding of lots of important issues—that’s why we still do research, because there’s still so much left to understand better. So more and better-trained economists are not a panacea. I’m only arguing against the position that less and worse-trained economists is the way to go.
If you still don’t think this stuff isn’t controversial, wait for the comments.
101 replies on “Economics Expertise in the Irish Government”
What about all the economists with Ph.D.s currently working in ESRI and in the Central Bank? Surely their advice is available to the government? Aren’t they engaged full time in analysing data? Why do we need more of them, at taxpayer expense, in the Civil Service proper? What would they do differently from that which the economists with Ph.D.s currently working in ESRI and the Central bank do?
But, if it is seen as an advantage to have economists with Ph.D.s working in the Civil Service proper, then perhaps reduce the number working in the Central Bank, or move them over to the Department of Finance? I really don’t know what all those economists are needed for in the Central Bank, now that we are in the Eurozone. They seem to spend most of their time producing economic forecasts (their latest was published today). That might be a valid use of taxpayer money if their forecasts were superior to those of independent forecasters. But, they are not. They are generally much less accurate than those produced by the private banks and the stockbroker firms. Even worse, the ultimate humiliation, the Central Bank’s forecasts in the past year (for GDP, inflation, unemployment, net migration, budget deficit) have been much less accurate than those that I made and posted here, and mine came free.
So, if it is desirable to re-distribute economists with Ph.D.s between the various bodies responsible for formulating economic policy, all well and good. But, I see no reason for increasing the total number of them paid for by the taxpayer.
@Jto
I’ve lost count of the amount of times I’ve told you that, no, most economists do not spend most of their time doing forecasts. And I’ve outlined lots of other things that economists do. Clearly a pointless effort — you’re only interested in forecasts, so as far as your concerned there’s only forecasting.
So whatever the previous count was, say n, then this is the n+1-th time. But I’m not going to waste my time any more explaining it to you.
Reading through the replies by the various ministries I was struck by the following: Batt O Keefe mentions one of his staff as having “the UCD PhD in Sociology and Economics”. To my knowledge such a degree does not and never has existed. Nor does the so called IPA-UCD Master of Economic Science (Policy Analysis). There is a postgrad diploma in Policy Analaysis which is apparently accredited by the (now non-existent) NUI, though I have never heard of it, nor have I ever been asked to look at the programme to ensure that it is up to scratch (presuming that it what is involved in accrediting).
Finally John Gormley mentions that there are economists working in Climate Change and Housing in his Department, yet he does not know, nor does his HR staff have any way of finding out, how many of his staff possess any postgrad degrees in economics (the minimum qualification one would need to call oneself an economist).
So we have one Minister who makes a claim which he absolutely no way of verifying and another who claims to have staff who possess degrees which do not actually exist.
You couldn’t make it up really, could you?
Karl,
I will throw another slant on this, if I may.
Professions.
I have been listening to the story breaking on the radio today about the 1.0 million euro spent by University of Limerick to build a home for the head of the university, designed by Grafton architects. Grafton architects are an award winning design firm, they have won global awards for their work. However, I often wonder why in Ireland we do not provide better scholarship for some in the professions – such as architecture – to go and get their head around economics.
I don’t mean many, I only mean some people in each of the professions who have a basic insight and grasp of economics.
It seems to me, it is unfortunate that some of our star players in the Irish professions are lacking some bit of common sense, when it comes to budgets, business models and costing. In addition to some professionals who would obtain advanced education in economics, I would also suggest that some basic upgrade training module be offered to work-men and women in the professions in economics. Something in the form of a certificate of training or something. I am sure this would be of enormous benefit.
The masters in business administration has obviously taken off well as a concept in Ireland in recent years. I do know some engineers who have taken the MBA route and I do applaude it. But taking my example of architecture and design, it is one area where I would appreciate an informed debate on the economic principles of what we are doing.
Taking the home for the principle at UL as a typical example. But it could be much broader than that also.
The trouble with building professionals, is there are 2 no. economic type specialities – surveyors and real estate valuers/townplanners. This means that the architects have traditionally become lazy, and not bothered to worry about economics. But after this Celtic Tiger bust, I think that is a shame, as construction and planning is so contained within the economic environment.
I understand that some Ireland planners in Ireland may have started with a basic degree in economics. If one were to do a study of the planning officials employed in Ireland, one would probably find some economics graduates there.
Like I said, I would like to see professions like architecture and engineering taking responsibility for themselves, and providing sponsorship for this advanced training. In that way, a group of talented designers such as Grafton architects, might employ a econo-architect, who might be able to hold an intelligent conversation with an econo-planner.
Refer to Pat McArdle’s article in today’s Irish Times for instance.
http://www.irishtimes.com/newspaper/finance/2010/0129/1224263349511.html
The fact that Ireland cannot count the number of un-occupied dwellings in the country. This is after architects, planners, surveyors, valuers and lots of local authorities, have had resources thrown at them for the past decade. We still have not got a ‘housing policy’.
Something that is key, if we are to point our world class resources such as Grafton architects in the right direction. How do we lever their talent for our benefit, instead of getting wound up in a mess always?
But it is other stuff too, energy plans by county by county, etc, etc. Rather than energy & waste management companies having to go through the formal planning process. Talk to Eddie O’Connor, or Jim Barry of Airtricity/NTR for instance – a company which was born completely out of the difficulty of doing business in Ireland – not the ease of it.
BOH
The numbers are not surprising but good to see one’s suspicions confirmed I suppose. Those who doubt the value of well trained economists might like to ask themselves why does every other government in developed- and many developing- countries choose to hire significant numbers of well trained economists? Are they all so dumb: they just haven’t worked out the Irish solution?
Aside from in-house economists, you will find that most governments have extensive interaction with academic economists through a variety of fora, some more formal than others. That does not happen much here. So for example, policy on education (which we are constantly reminded is an “investment”) is made largely without reference to the enormous economics literature on the subject. The same is true of local government finance and many other areas I am sure.
Alternatively the “expertise” utilised is, to be polite, fairly thin. I can think of several recent cases where government commissions’ resident economist had no proven expertise in the area. One can only guess as to to the reasons for their appointment.
The bottom line is this:if you don’t have your own economists, you cannot hope to interpret the evidence that exists on policy. Therefore your policy cannot be based on evidence. What then is it to be based on?
David, I know the person referred to & its a reasonable – perhaps slightly inaccurate- description: the person’s supervisors were in the 2 fields so I wouldn’t bash the minister about that. BTW the NUI is not dead yet (just comatose).
I am not sure what the IPA do but I don’t think they have the expertise to teach economics at level that we would regard as satisfactory. That said, what are we in the universities doing about it? UCD had a masters in public policy in the 90s which died after a year or two. To some extent, we have to put up or shut up.
@Karl Whelan
I never said that economists spend most or all of their time producing forecasts. But, obviously, a significant proportion of their time is spent so doing. However, my main point was that, whatever it is that economists do, there are plenty of them doing it in ESRI and the Central Bank and the value of what they do is available to the Government without any need to hire any more at taxpayer expense to do the same in the Civil Service proper.
I think it is a bit rich that economists, who are forever calling for cuts in the numbers of doctors, nurses, teachers, gardai, bus drivers, train drivers, etc etc, possibly with some justification, should be calling for an increase in public sector employment for only one category of employee. And that category is, surprise, surprise, economists.
@ John the Sunny-Dispositioned Optimist
It takes a particular slant to see the main point of my post as being asking for more economists. I viewed it as largely being about having better-trained economists.
But, still, at least we can say this economist got one forecast right: I correctly forecasted that the post would be attacked as being part of a self-serving campaign.
We could ask just what a cadre of PhD-trained economists inside the echo chamber might add.
Kevin and Karl are quite right that advanced training in statistics, modelling, and econometrics would add greatly to the quality and quantity of reporting to the government, but unless some of these economists also have a public reporting function as well-as a check to improper government policy-then their recommendations, like those of the smart generalist civil servants working there already, will get ignored when inconvenient, and so these PhDs will add, essentially, nothing.
@Karl Whelan
Congratulations on the excellence of your forecast.
But, a thought has occurred to me?
Is not the Department’s hiring of Alan Ahearne the sort of thing you have in mind? I’m sure ‘PhD’ are but a few of the letters he has after his name.
If so, all one can say is that the response on this site to the advice he has been giving the Department is somewhat less than enthusiastic.
John the optimist might better be called john-hasn’t-got-a-clue-about- economics. A good reason to stay anonymous I suppose.
Forecasting is a very small part of economics so most economists spend no time at all doing it. For start its a macro phenomenon and has no relevance to all the micro issues that we face in education, tax design, environment, labour markets, inequality,health, industrial policy, competition, crime etc etc. But even within macro’ I am guessing that it is not what it is mainly about.
@JtO
I would strongly recommend investigating what professional economists actually do. A minority are involved in the kind of economics you are exposed to (newspapers, tv, etc). Many are researching fields that you probably have never heard of, only because they don’t involve things like unemployment, inflation and your favourite… forecasting. So when I read you make a statement like ‘economists, who are forever calling for cuts’ I can’t help but think of some poor behavioural/health/experimental/trade/family/legal/development/historical/environmental/agricultural/mineral economist thinking ‘funny, I don’t remember calling for that…’
If you would like to learn what economists actually do, I recommend reading Diane Coyle’s ‘The Soulful Science’. But then it might spoil all the fun you having.
“HE GREAT Credit Crisis has cast into doubt much of what we thought we knew about economics…
we must understand how it was that the vast majority of the economics profession remained so blissfully silent and indeed unaware of the risk of financial disaster.”- Barry Eichengreen. National Interest on line, April 30, 09.
Perhaps having less economists in government lessened the damage.
Karl: “However, the application of statistical methods to economic data—econometrics—is something that undergraduate economic students learn very little of.”
There is a chance that some of the lack of econometric expertise could be accounted for by the turgid, mind-to-porridge nature of econometrics.
It really is the most dismal recess of the dismal science.*
Perhaps a thesis in ‘making econometrics interesting’ would be a good place to start – tackle the underlying problem.
*Would be expressed thus: n=i-r-d-b
where n = excitement level of subject
i = initial interest in subject
r = regression analysis
d = data sets
b = the behavioural guy in the corner telling you you’re wasting your time.
I dont know if I’m the behavioural guy referred to in Lorcan’s post but I teach both behavioural and econometrics in UCD. I do believe Economics would be more relevant in Ireland if some of the behavioiural lilterature made its way into the status quo. But I also believe that the main strength Economics adds to policy is a coherent framework for quantifying and testing. So I dont see behavioural econ as being a minus, merely a reality check. In terms of your equation Lorcan, if you think analysis, data and testing behavioural assumptions are all negatives, you probably started out in the wrong field in the first place.
JohntheOptimist is drawing some fire (some of it deserved) but in general he has a good point. Hiring trained economists per se is only valuable if there is a demand for what they do. At present, supply is low but demand is probably lower.
@Calan
Arguments from authority are probably amongst the least admirable of debating techniques. While there is merit to be drawn from the original authors quote, it broad sweeping statements once again dilute the potency of its potential message. It’s akin to saying ‘Science’ was to blame for the invention of the A-bomb, which I’m sure you will agree is something of a ham-fisted statement.
The great credit crisis has cast into doubt much of what we understood about economics. But lets look at that for a moment. Charlie Fell published a piece in today’s Irish Times which discusses Andy Haldane’s analysis of the recent turmoil. It is a good article and I encourage anyone to read it.
http://www.irishtimes.com/newspaper/finance/2010/0129/1224263355696.html
“Haldane noted that the financial system had become progressively more complex, but increasingly less diverse, in recent years – a situation that signalled heightened system fragility and reduced resilience to random shocks.”
I am always partial to the systems approach to solving problems myself. I do believe the connections are the most important things sometimes. I do feel that economist student would benefit from a couple of classes in chaos theory, system dynamics, systems engineering and what not. But that is my intellectual snobbery I suppose.
Here are a couple of points I would like to tack onto what Charlie Fell talked about today in the newspaper article.
Media
I spoke recently about two books, The Control Revolution: How the Internet is Putting Individuals in Charge and Changing the World We Know, by Andrew L. Shapiro. And Yochai Benkler’s The Wealth of Networks. The useful-ness of those two texts is as follows. For a greater part of the 20th century, capital as we know it, had a home to go. Look at the media industries, radio, television, newspapers, telephones etc all required huge central broadcasting or control facilities.
You could not have these media without large capital investments. Much of the 20th century saw large amounts of capital chasing these technological developments, ending with the dot.com bubble collapse at the end of the century.
The trouble with the Internet, which capital-ists all-of-a-sudden discovered to their collective horror, it doesn’t lend itself so well to central-ised investment of capital like the previous technologies did. In other words, there is less use for capital in concentrated chunks. It tends to get used better in more distributed fashion.
Energy
Nowadays, if you listen to someone like K.R. Sridhar they argue that a revision to commonly perceived economics is needed in the 21st century. Because the amount of resources (energy included) available to serve the demand(s) of capital on this globe is reversed. There are less resources available than capital.
Globalism
If you read someone like Alan Greenspan, you will learn that following the collapse of communism in the eastern block, and subsequent opening up of China, the amount of new capital entering the global system, far exceeded the global plan for its investment.
You can somewhat tie this point about globalism back into the ‘media’ point above. As Bill Gates once pointed out, sure the dot.com phase was a bubble, but look at all of the telecommunications infrastructure that it has rolled out. That in turn opened up countries like China and India to further claim their place in the global system, and increase the amount of wealth generated from those regions. Again, capital which the global system had no plan to deal with.
Conclusion
We can see from all of the above, that increasing amounts of capital were present and un-tended largely. All of that capital was swelling as the year(s) went by and had less places to invest itself, less places to run to. That is a starkly different picture to much of the 20th century, where a small amount of capital could command vast amounts of influence and resources.
Property of course was one of the few last remaining places where capital could be invested. My theory is that capital rushed from its traditional homes, where it was no longer required, and ended up shoving its way into property and assets related or backed by property. Of course, there was absolutely no plan there – just look at Liam Carroll and Bernard McNamara who have combined debt of €4.5 billion between them.
If one listens to the discussion on radio today – it is hard to know if the trade unions in Ireland are saying (A) Lower the price of wages, Ireland will regain competitive-ness and home prices will decrease, (B) Home prices need to return to realistic levels and wages in turn can decrease, or (C) somewhere in between the two parameters.
The essential point is, in a first-world, developed economy such as Ireland we cannot even measure the number of un-occupied dwellings we have in the state. Out of a dwelling stock of less than 1.5 million, we are un-sure if there is closer to half a million un-occupied or only 30 thousand as Tom Parlon would inform us. I suggest each parish in Ireland knocks on doors and phones their number into the Joe Duffy show – it might work.
Anyhow, all I want to do here is to highlight this collosal problem and collosal void in our economic sophistication in Ireland. Into that void has stepped a man called Peter Bacon, namely with 2 no. sets of reports, spaced roughly 10 years apart.
The first was the Bacon report(s) on housing at the end of the 1990s. The second report was to do with NAMA. My post above, in relation to the construction professionals might set up some background, in terms of describing the void I refer to. Where major amounts of capital available for investment in anything in Ireland are constantly being sucked up, for a purpose which could be quite basic and straight forward – the need to house people, process(es) and thing(s).
But in fairness we seem to make a meal of it. In the meantime, the capital and human resources that is available on tap in Ireland (like our water etc) is not being exploited for purposes of innovation and economic development. We are entering into a period in global history, where a lot of economic rules are being turned on their heads. But we are still only at the stage, ten years after Bacon(s) initial economic reports, where we are knocking on doors to figure out our 1.4 million housing stock usage.
The biggest problem I find, is that Peter Bacon was a consultant to the government. We have no one at all, in the thick of it, save for Alan Ahearne.
BOH.
The answers to the PQ’s illuminate one important issue: Ministers and their department heads do not know or keep accurate records of staff professional qualifications – and some are worse than others.
@Liam, I didn’t specifically have you in mind when I posted, but by replying to my message you have ex-post facto made yourself the guy I had in mind.
Contrary to the impression I created with my (light-hearted) dig at econometrics, I am shamed to admit that I do enjoy analysing data, etc.
But I am also aware that most other people find econometrics something to be endured rather than enjoyed while on the way to their economics qualification.
After all, (as a friend recently told me) economics is just informed opinions, you can use maths, or theory or both to inform your opinions. But you’ll still be ignored just as hard.
What I am saying is:
A x B = C
where,
A = excess of capital in global system chasing after a home, where it can be utilised in substantial chunks. I.e. billions of euro rather than millions.
B = the slant-ed, or lop-sided nature of Irish economics, where more human and capital resources go towards property than anything else, result-ing in the outcome that Ireland’s problems relating to ‘A’ above, are worse than anywhere else in Europe, or the world.
C = the ‘mess’. Hopefully, the soon to be, banking inquiry in Ireland will look at ‘C’ in terms of both ‘A’ and ‘B’.
I feel my own experience is relevant here. I finished an Economics BA last year in Ireland and I am now pursuing an MSc in London. I had intended on applying to the Irish civil service; I figured by skills might be wanted and useful. However, it became clear to me last year that economists are apparently not demanded in the Irish CS.
As a result, I’m applying to the Government Economic Service here in the UK. As an economics grad, it’s kinda striking how different the UK approach appears…
I am surprised how many economists there are in the Department of Finance:
“There are currently 57 officers who hold degrees in Economics and related disciplines, 44 who hold a Masters graduate qualification in Economics and related disciplines, and 2 officers who hold a PhD. Some officers will, of course, be included in more than 1 of these categories.
My Department has a longstanding policy of recruiting economists. Individuals with skills and qualifications in economics are employed at almost all levels in the Department. The Deputy will be interested to know that, of the last 7 appointments at Assistant Secretary level in the Department, 5 had Masters qualifications in economics or related disciplines, while 2 had primary degrees in economics or related disciplines.”
It is noted that there are not that many doctorates. Perhaps this has to do with the recruitment and advancement systems within the Civil Service. It is a pity that there is not more cross-pollination of DoF experienced economists in other Departments.
It is also interesting that there are no proper HR records. The fact that most of the dapartments have no properly collated records of the qualifications of the staff at their disposalmeans that it is beyond doubt that the Departments cannot check or show that the skills people have acquired are being properly deployed. Whilst one would be happy to see more economists with doctorates in the service, we would get no benefit from such economists if their abilities were not properly deployed and honed.
What guarantee to a doctorate holding economist is there that he/she will be able to deepen their knowledge, ability and skills if they join the Civil Service? In this regard we might need to look at the support for economists in the Civil Service who would be willing to pursue doctorates.
On the plus side it is good to see that practically all of the departments have been pursuing a policy for some time of giving staff members the opportunity to complete the masters in economics at the IPA. This shows that the Government and the Covil Service has recognised the huge relevance of economics to all departments and functions.
Apologies, link should have been http://www.ges.gov.uk/
@ Karl
Government, good, bad and downright evil has been practised for thousands of years.
Economics may be a method to maintain honesty over resource allocation, presenting either/or scenarios rather than the political class promising this AND this AND this too!
I’d settle for honesty, truth to power and some leaking to the media if necessary!
I would be curious to know how existing staff DOF staff could be trained, without taking time off, or how economists could be brought in and maintain skills in both DOF and economics.
At certain levels Govt must be the death of alot of talent invested in developing coherent plans only for politicans to shiv on them.
Al
Zhou says:
“What guarantee to a doctorate holding economist is there that he/she will be able to deepen their knowledge, ability and skills if they join the Civil Service? In this regard we might need to look at the support for economists in the Civil Service who would be willing to pursue doctorates.”
Indeed. The OPW is another such example of that. Related to the news today of the 1.0 million home for the president of University of Limerick, was the story about Farmleigh home, which cost 50 or 60 million euro to renovate, after paying many more millions for the property.
It is unfortunate again, that a professional who works in the Office of Public Works (OPW) has no choice but to engage in such reckless kind of spending. If one works in the public sector in Ireland, either of the following things happen:
(A) You are given pennies to account for.
(B) You are given millions to squander on something which has no useful function to begin or end with. (Such as Farmleigh)
You are not given the opportunity, which is often afforded to people who work in the private sector, to work in the happy medium area between the above two parameters. I.e. Where would can work against a reasonable budget, to create value in real practical terms.
No disrespect to the IPA but the universities are where the expertise is in economics.
I strongly suspect that ‘…and related disciplines’ includes Business Studies/MBA type qualifications, which are something entirely different. So I guess these numbers overstate the true Economics skill base.
To my mind, the importance of having Economists in situ in govt. departments is not that they would do lots of analysis themselves – though that would be nice – it’s that there might be some chance that the Civil Service would recognise that an issue facing a department was an economic one, or at least had an economic aspect, and would know what questions to ask and roughly what kind of methodology would be appropriate to address it. So often, you hear issues being discussed that scream out to an economist as economic issues, but the discussion is framed without any economic content whatsoever.
p.s. most economists never ever do forecasts. They’re just not that interesting….. (I think I’ll duck now).
@ Aedin Doris,
I was surprised this week, while listening to someone in government on radio who rambled on about families and their well being in 2010. I wasn’t very impressed by what they had to say. If they had an economist available to them, the economist might have pointed towards the work of Elizabeth Warren for instance, and her take on the problems facing families in this era.
The point that Zhou makes above is very valid though. It turns Karl Whelan’s original point on its head sort of. Why would highly qualified economists want to work for the public service? It reminds me a bit of that movie Fracture starring Anthony Hopkins who attempts to commit the perfect murder. The advice of one of the judges, a soon-to-be father in law of the ‘hero’ character, was being a low-paid public servant is good sometimes – you get to put a stake in the heart of a real villian.
I guess, in the case of Alan Greenspan, the villian in question was inflation to do with labour. But as William Greider, the journalist and author pointed out, Greenspan is like the one-eyed Fed chairman. He can see inflation in labour coming a mile away, but is blind when it comes to inflation with regard to capital.
(I wanted to work Greider’s observations about inflation of capital and labour into my waffle above on capital etc somehow, but I will leave it for another day)
Anyhow, Zhou’s point on economists not having an incentive to work in the civil service is a valid point. We hear a lot about benchmarking, but I guess benchmarking is a shallow concept devised by trade unions down through the years. The ideal benchmarking of all, is the kind whereby the doctrate in economists can deepen their knowledge, ability and skills if they join the Civil Service.
That is, work with budgets which are a real challenge. Work with budgets that are neither too exorbitant as to be ridiculous, nor too small as to be pathetic. One needs to provide economists in the civil service with challenges which are bench-mark-ed against real world situations. In that way, the economist working in the civil service can deepen their knowledge, ability and skills, put a stake into a vampire and achieve countless other wonderful tasks, while working at a modest pay grade.
Or simply put, if the civil service ran it’s shop more efficiently and with real economy, one would witness a virtuous cycle being created, whereby the best of talent would suddenly be attracted, rather than repelled, by the prospect of working for the civil service.
That is to say, no one in their right mind would want to work as an economist at a state agency such as Fas. Not alone would one learn bad habits, but worse, having lied down with dogs, one would become a shackled dog also, tied to that particular post. In that sense, Tanaiste Ms. Coughlan etc have done no useful service to the civil service.
I agree with Karl’s original point about the obsession with “generalist”. When I worked in Telecoms the drivers of the business were lawyers, since deregulation/regulation are the main forces driving the business models. While the EU and the telecoms companies employed big shot lawyers, the government was clearly lacking legal regulatory expertise who could make LONG TERM policy. Instead they were hiring on a project by project basis legal firms with the relevant experience. Ok, they did each project properly, but no one was looking at the big picture and driving it forward in the interests of the state ie taxpayer in the long term. One of the main factors hindering recruitment in recent times is that appalling decentralisation scheme. The department of communciations isn’t able to hire anyone unless they agree to work in Cavan – any lawyer who is experienced in international telecoms regulation is not going to Cavan. So its all piecemeal outsourced choppy policy. There are consultants consulting other consultants, but a shortage of experts who have long term policy as their job description. So it’s not that economists per se are being picked on, but specialists are being shunned all over the CS.
@ Sarah Carey,
What I wrote above earlier:
“But it is other stuff too, energy plans by county by county, etc, etc. Rather than energy & waste management companies having to go through the formal planning process. Talk to Eddie O’Connor, or Jim Barry of Airtricity/NTR for instance – a company which was born completely out of the difficulty of doing business in Ireland – not the ease of it.”
The guys in Airtricity/NTR can tell you about the sequence in which we try to do things in Ireland. For instance, we establish an office of the energy regulator, prior to putting into place any policy document with regards to energy planning for the country.
As for these consultant reports that fly around the place, in government so often, isn’t it funny though, we cannot decide how many un-occupied dwelling units are in the country. No matter how good Dr. Peter Bacon is at doing consultation reports, one has to wonder how much of the ‘crystal ball’ is involved, when we don’t even have numbers.
As Frances Ruane observed not so long ago, the Irish government announced they would double the number of Phd graduates from Ireland’s colleges, without actually knowing what number of Phd candidates or graduates we have running the the system. Furthermore, having introduced that program to increase Phd graduates in Ireland, five years later on, that kind of a program becomes orphaned and simply floats around there, as a generic policy objective, but with no service-ing or attempt to acquire data to even measure its progress.
Marshall McLuhan has a very interesting interesting theory about the American Civil war. He reckons that the southern part of the United States are a musical and artistic culture. While the northern part of the United States has a culture of measurement. These two traditions can be juxtaposed down through history. You can find a rare recording of Marshall McLuhan at this blog entry here:
http://starlarvae.blogspot.com/2008/10/rare-mcluhan-audio.html
(Note that McLuhan mentions the Irish being of a non-measurement oriented culture)
BOH.
@All
A few points:
There will be a gadarene rush of well connected consultants in HRMS (human resource management systems) to the relevant Gov. Departments promising to ‘fix’ the state of the HR databases in Irish civil service. The Irish civil service already has a PMDS (performance management/measurement & development system) in place. Basically, what used to be called personnel records ………. rem that PPARS in the Health Service …….. and some Depts are so much better than others …
Cucullus non facit monachum – The cowl does not make the monk. Qualifications, in whatever, are merely that – and of little use (other than hopefully intrinsic to the person who gained them) unless productively applied when usefully employed somewhere. If PMDS in civil service focuses more on qualifications ……. then those who learn-on-job through experience may be demotivated – The Credentialled Society or something similar ……….. Irish Ed is front-end loaded [points, instrumental,leaving cert; class based] ………. and mature Ed only emerging in recent years. Seniority, time-serving, political bickering are endemic in Internal Labour Markets – and Irish civil servive is one BIG internal labour market. Opening higher grades to external competition would assist here …… yes I know it is now open etc …… [I won’t mention the competition for top job in AIB – one internal and 4 external – who got the job?] I can think of a few reputable labour market economists [ESRI, FAS (yes – lets not tar all with the sins of the flighty faders), ICTU, …..] around who could address this stuff …….. Radical change has no history in this area in the Irish context ………… that I’m aware of …..
IMHO – the levels of interaction between genuine research academics, in whatever discipline you name, and senior civil servants is abysmal, let me repeat that ABYSMAL …………. the potential flows of knowing [in both directions] are hardly touched on ……….. and others here are better able to comment on whether such ‘civic service’ by those academics who do is considered in third level career structures ……….. or in the civil service …….. considering the thundering silence from the vast majority of Irish academics in recent times [present company, TASC, and a few others excepted] I would say hardly ……… up-shut, level boats, and heads down rules the roost …………
Finally – as Upton Sinclair put it: ‘ It is difficult to get a man [or woman] to understand something when his[her] salary depends upon his not understanding it. ‘ …… Now there is an interesting hypothesis to test in the recent Irish context ………. any takers?
…. and we are back to the influence of political power ……… about which econometrics can say nothing, but perhaps institutional and behavioral economics might say something ——- if we had more than a handful of them on the island. We need ‘better economics’ ………
A fairly provocative thread this one – Good ol George – where is he registering for his PhD? Does he have one? How many in the senate or Dail have any qualification whatsoever in anything ….be neat to know … C’mon George – address the question (-;
Thanks for that David, some interesting points there.
BOH.
@David O’Donnell
George Lee doesn’t have a doctorate but he did get a masters from LSE as far as I know. He was also considered one of Ireland’s leading young economists, once upon a time: http://www.tara.tcd.ie/handle/2262/2839
I’ve been otherwise engaged tonight and it seems like this post attracted a lot of interest. Some of the issues raised I’d prefer to address by writing some new posts. However, I would like to respond to JTO’s comment:
“Is not the Department’s hiring of Alan Ahearne the sort of thing you have in mind? I’m sure ‘PhD’ are but a few of the letters he has after his name.
If so, all one can say is that the response on this site to the advice he has been giving the Department is somewhat less than enthusiastic.”
My response is as follows: The department’s hiring of AA is exactly the kind of thing I have in mind. Indeed, I have in mind DoF hiring fifteen people like him with a formal organisational structure reporting to the Minister of Finance. And I’d be happy to put AA in charge of such a unit because he is someone that I have great faith in.
JTO may imagine that because I might disagree with what AA has said on some issues that this invalidates my opinion on the usefulness of PhD economists. I think that this is just another example of JTO’s usual way of being negative and mean about every issue he comments on.
Economists seldom eat other economists. Until they do, they will appear a luxury that we can never afford. Prove yourselves as useful for once? Do not attack me, I merely bear the message! A cousin of mine invested her time getting a degree in economics, from what was UCD, but it did not damage her career. In Europe not Ireland. Of course.
You still have the academic, ie sadly naive and verging on ridiculous, view of life. Ireland is rigidly controlled by certain forces that you dare not mention …. You say nothing of the power structure of this country. Why not? It knows economics for what it is: a stalking horse for those who set up the LSE. Another fact you fail to mention. Teach us the history of economics? Why then we might accurately judge! Can’t have that. WE can’t handle the truth? Or is it you cannot handle that you all play games while others suffer loss of services and income cuts? Governing is a serious business with tragic consequences when the idiots involved think they know what they are doing.
You make no case that more economists would have averted the situation we are now in. Knowing what you have brought down on your head, Karl you are brave to the point of reckless!
Forecasting is the ability to see and inform about the %#$^&&$ iceberg! Analyzing econometrics is rearranging cloth and timber seating units on the wooden floor. The iceberg was visible since 1999!!! Please explain why so few were able to see the danger and do so little about it?! And why you are so smug that economists have no interest in forecasting. Strength in that area might attract more attention from employers…… even in the public sector!
@Karl,
So formalise, regularise, and expand the ‘AA’ model of seconding senior academics into the DoF for 2-3 years or the life of a government? I think that’s a great idea. We can only speculate as to the actual role played by senior academics in policy circles, but its clear from AA and Patrick Honohan’s appointments that the powers that be are beginning to move in the direction of a more economically literate set of advisors and officials, albeit in an ad-hoc way. I wonder though, if the DoF had seconded Messrs Whelan, Ahearne, and Kelly into the DoF in 2003 or so, would that have attenuated the effects of the crisis?
1. It would likely be best to have economists in one central unit with some link to a formal external committee of economic experts like the German body, to try and avoid what Stephen Kinsella correctly fears.
This type of reform should be part of a system where countercyclical fiscal rules are enshrined in law and where an external independent body would have a monitoring role.
There’s your chance George, to be a politician who makes a difference!
2. As for what Karl calls “inverted snobbery”, an element of that is inevitable. However, the other side of that coin is the ubiquitous use of the honourific “Dr.” by PhDs outside of academia.
Is this a relic of the age of elitism or when an individual insists on its use, a reflection of pomposity?
@Karl Whelan
JTO may imagine that because I might disagree with what AA has said on some issues that this invalidates my opinion on the usefulness of PhD economists. I think that this is just another example of JTO’s usual way of being negative and mean about every issue he comments on.
Negative and mean? Really?
I would have thought that I was the exact opposite of negative. I am far more often accused of looking at things through rose-tinted spectacles and being excessively optimistic. Look at my posts in the past couple of days on other threads where I have highlighted (a) the collapse in the (relative) poverty rate in Ireland in recent years and (b) the fact that a respected international survey published this week found that Ireland was the only one of the countries surveyed that now had no cities with ‘severly unaffordable housing’. You yourself referred to me in your 7.16pm post as ‘Sunny-Dispositioned’.
My problem with hiring lots of economists in the Civil Service is as follows.
By all means hire specialists in statistics who can inform politicians what is going on. If some of these are economists with a great grasp of economic statistics and theory, all well and good. I have no objection to hiring such people for the Civil Service (although I did raise the point as to whether or not it would just be duplicating what the Central Bank did). However, in Ireland a lot of economists seem to be political animals over and above whatever talents they have as technical experts or (social) scientists. Just after Christmas, one prominent economist on this site said that he wanted the economy to crash because that would advance his political agenda. More generally, most economists on this site and in the media seem to have a great admiration for the Nordic economic model and want Ireland to go down the same route, which would involve a massive increase in taxation from about 35% of GDP to 55% of GDP. They are entitled to their opinion, of course. But, the point is that its a political opinion and not a scientific opinion. And, I’d object to paying taxes to hire lots of such people to influence government policy in that direction.
So John the Optimist objects to hiring economists for fear they will push Ireland down the road to Nordic socialism?
I’m getting dizzy and I didn’t drink that much last night. We obviously live in different worlds, possibly parallel universes.
“Just after Christmas, one prominent economist on this site said that he wanted the economy to crash because that would advance his political agenda.”
Glad you think Im prominent John! From the side, im quite prominent, but head on, fairly svelte, I like to think…..
Oh, and it wasnt a political agenda….its more a personal opinion on the nature of change in political processes.
“y to crash because that would advance his political agenda. More generally, most economists on this site and in the media seem to have a great admiration for the Nordic economic model and want Ireland to go down the same route, which would involve a massive increase in taxation from about 35% of GDP to 55% of GDP.”
Really? Id say the exact opposite PollyJohnna…..Name one who is pro that and I suspect you can get at least three or four agin it. As for media influence, probably the economist most on the media across all areas is constantin gurdgiev, hardly an admirer of nordic socialisim.
What about all the economists with Ph.D.s currently working in ESRI and in the Central Bank? Surely their advice is available to the government?
JTO, excellent point – and the response to it above seems to be unreasonable. I’m reminded of the heads of the Irish Civil Service for some reason (cuts for thee but not for me!).
@Brian Lucey
http://www.irisheconomy.ie/index.php/2010/01/28/social-cohesion-and-reform/
As for your reasons for wanting the economy to crash, I’d say that these are somewhat secondary to the fact that you wish it to crash, which very admirably you don’t deny. You’d be a good example of why I’d be wary about paying extra taxes to hire lots of economists in the Civil Service. If you were hired as a special advisor, a la Alan Ahearne, would the advice you’d be tendering be designed to strengthen the economy or designed to bring forward the crash you admit you wish to see?
@ Karl Whelan,
“JTO may imagine that because I might disagree with what AA has said on some issues that this invalidates my opinion on the usefulness of PhD economists. I think that this is just another example of JTO’s usual way of being negative and mean about every issue he comments on.”
Well said.
I very much enjoyed John Water’s column yesterday, Prurient media discourages free speech. It deals with the falability of the human condition and the search for worthwhile ideals.
http://www.irishtimes.com/newspaper/opinion/2010/0129/1224263355117.html
JtO
Nope – join army, wear boots. Become special advisor to minister for finance, talk about nama as though you really really believe it.
See, I live in a society – not just an economy John, and sometimes medicine is painful and harsh….but the patient the better therefor in the long run.
@All
Its not about having economists here there and elsewhere – its whether their views are a) heard and , b) appropriately weighted by the hearer in decision formation
a is a prerequisite for b. People in the ESRI or wherever are doing thing for their organizations, so they are not on board the train for the central civil service. To take an example, it would be nice if there were a couple of economically trained specialists in the Dept Environment who were “marking” the work of Dr Tol et al, capable and competent to understand and critique it and to pass that professional informed critical analysis into the policy arena. Ditto and so forth in Education etc. Its not enough to expect some intelligent and well meaning civil servant to take on Richards work on its own arena.
@Zhou
As Aedin says there is a lot of padding in the Dept Finance data. A look at http://www.finance.gov.ie/documents/publications/reports/2009/Dfincapacityreview09.pdf
reveals some worrying data. Take appendix 10. that shows that for PO grade, the upper middle management core of the organization, only 20% of staff (remember, this is THE core key set of people in regards to influencing the economy) have any economic qualification.
Appenix 9 reveals that there are 108 masters level qualifications in the dept. 25 (less than a quarter) are in “Economics/ Finance (including Economics as part of an Arts Degree or with Statistics)”
So where the idea that the dept is stuffed with highly qualified economists is coming from I dont know.
@David O’D
you bemoan the levels of interaction between the civil service and academia. Go to a DEW workshop, or a seminar series run by Smurfit or TCD on finance, or so on. Count the numbers of policy people there ; then compare that with the number that were circulated.
Most civil servants dont get out of the bunker, im afraid. I run a very large conference every year on international finance. We get people from the treasury of many european and other countries attending, presenting, and discussing. Not that many make it from merrion square though..
This year its on credit institutions after the crash…I fully expect to see none again. Sure why bother?
@Stephen
“its clear from AA and Patrick Honohan’s appointments that the powers that be are beginning to move in the direction of a more economically literate set of advisors and officials, ”
Its also observationally equivalent to getting some of the moderate and quietly influential critics offline…..but that would be a cynical view. personally I think we are far better with them inside, for all the good it may do/ damage avert
I might as well offer one further example of where lack-of-economists’ input is dangerous, to say the least.
On Pat Kenny’s The Frontline TV program last Monday night, it was interesting how Alan Mee, a noted and experienced architect/urbanist commentator in Ireland only got a tiny say at the tail end of the program. Alan Mee devoted a greater chunk of his summer in 2009, working out at UCD architecture school in evening workshops with his students, debating and designing possible solutions to NAMA-land’s problems.
Constantin Gurdgiev also mentioned FKL architect’s attempts at making solutions also, in his interview with Pat Kenny on the same show. But Pat Kenny never got to ask FKL architects a question, and only barely managed to fit in Alan Mee’s contribution in a TV show exclusively dedicated towards the housing overhang problem in this country.
This kind of shows you were the ‘experts’ in urban design and planning fall in the greater scheme of things, as far as the national perception goes. Then we wonder who is to blame at the end of the day. Maybe we aught to begin taking more heed of the experts in various specialities we go to the expense and trouble of training, putting through our education process in the first place.
In relation to Pat Kenny’s TV show last Monday, Pat constantly referred to local authorities being too greedy with development levies. Development levies were introduced recently in Ireland. The subtlety which Pat Kenny doesn’t seem to understand, and which I hope an economist would understand, is that levies in this sense are a form of betterment tax.
From Bill Nowlan’s article in the Sunday Tribune newspaper, 8th Nov ’09:
“Part of the detail of any new comprehensive taxation system is that it must integrate with our development levy system currently in operation under our planning laws.
Levies are a form of betterment tax but aim solely at recovering the actual costs of providing services. These do work and work well. We currently have a second betterment tax in the form of Part V our Planning Act which requires developers to give up to 20% of their land for social housing at existing use value.
This is now becoming a bit of a monster, requiring the state to purchase houses from developers at above market value.”
http://www.tribune.ie/business/article/2009/nov/08/we-need-to-design-a-workable-land-tax/
Bill Nowlan does point out in his Sunday Tribune article, that Ireland needs to avoid the piecemeal approach towards implementing ‘betterment taxes’ as we go forward. But really, what is the purpose of any of these land taxes or betterment taxes?
(Tom Dunne also published a good article on Land value taxation in the Sunday Tribune newspaper on 15th Nov ’09)
The idea with betterment taxes and land taxes is to achieve a more sustainable and affordable supply of new land onto the land market. A positive side-effect of land taxes, is to provide a funding stream for the local authority. But the biggest benefit to society as a whole, is that banks end up with much less exposure to land purchase loans (I.e. that commercial and residential loans are capped at a percentage of the bank’s entire loan book).
Developers are not forced to out-bid each other in some kind of suicidal death spiral into oblivion, as we saw in the Celtic Tiger in Ireland, where they drag the entire working population of the country down with them.
In other words, these development levies which Pat Kenny was in such a hurry to pounce on, and blame local authorities for abusing, were a form of betterment tax. The were supposed to work in such a way, as the prospective buyer of the land resource, would price into his bid, the cost of the betterment tax, and in turn this would alter the balance of the land market for everyone involved.
It would pour cold water on the over-heated land market so to speak. Nobody seems to understand this though. There was precious little understanding of it shown in The Frontline TV show last Monday night. If there were economists within an ass’s roar of the government in Ireland, we would not be stuck in a position, where we had hour-length meaningless debates on The Frontline TV show.
It is interesting to note, on the same TV show, how Pat Kenny jumped in and played a surrogate role for the economist, and brought his own bias and predjudice to bear in turn. A predjudice against local authorities, which is not based on a proper and informed understanding of the economic instrument that is the betterment taxation effort.
BOH.
Emer O’Siochru, another expert on the land tax concept published some comments in relation to the same at the ‘smart tax’ web site.
http://smarttaxes.org/2009/11/16/tom-dunne-complicates-a-simple-process/
Again, these sorts of people never are afforded the chance they deserve to offer opinion and analysis. Much of that, must derive from our lack of economists within the rank and file of the CS.
BOH.
“the profession’s blindness to the very possibility of catastrophic failures in a market economy.,…
the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth. Until the Great Depression, most economists clung to a vision of capitalism as a perfect or nearly perfect system. That vision wasn’t sustainable in the face of mass unemployment, but as memories of the Depression faded, economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations. The renewed romance with the idealized market was, to be sure, partly a response to shifting political winds, partly a response to financial incentives.”-
Paul Krugman, NYT, Sept 9, 2009
Why inflict more of this ‘trained incapacity'(Veblen) on government?
One last comment, on the land value taxation issue. I happen to know personally, one of the Green party councillors who got a bee in his bonnet, at a certain stage in the Celtic Tiger land/building boom about ‘development levies’ introduced in the latest planning and development acts.
I feel sure the particular Green party councillor was sore about not getting elected to a local authority position, in one of the elections. His disdain for the system manifested itself in his publically criticising ‘development levies’ at every opportunity he got – both at Green party meetings, and through numerous comments submitted to the Pat Kenny radio show, down through the years.
Pat Kenny, going on good faith, picked up this ball and ran with it. I knew the Green party councillor personally myself and had spent a good deal of time, sitting down reading the planning acts and discussing them. The difference is though, I further-ed my knowledge of real economic debate and analysis, from the likes of Emer O’Siochru, Tom Dunne, Bill Nowlan, David Wetzel and so forth.
My friend in the Green party, decided to stick to his personal dis-satisfaction with ‘the system’ and pursue a more political kind of dis-agreement with ‘the system’. But it was a much less factual or informed, proper economic point of view, in my opinion. The less factual point of view, sadly, is the one which Pat Kenny has decided to run with.
This is at the root of the problems in our national media and our national politics. Well meaning local politicians, who only mean the best for society, but who are too lazy or too old to catch up on some real theory, allow their own personal predjudices to colour their own judgements, too much. The end result is, the prospect of meaningful debate, goes out of the window for everyone.
BOH.
@brian Lucey,
‘All credit *to* cynicism, at the end of the day’-if you want to view the decisions of bringing AA and PK into the fold as purely an attempt to muzzle them, then fine. The govt seems perfectly happy to ignore or denigrate its detractors (the prominent comrade Whelan, for example), so I’m not sure it’s exactly observationally equivalent. Also you’re giving a detractor an awful lot of power in the process, especially pk.
It’s an odd Irish inversion of the norm internationally that, rather than get the top chaps and chapettes on board in advisory capacities early on in crises like this, they get to inform by proxy, on sites like this one. Maybe one of the really big lessons of the last 2/3 years will be that government needs a ready pool of experts from which to draw, depending on the nature of the crisis. For example, it seems pretty obvious that economic geographers should be having their voices heard in the DoF and elsewhere right now-hopefully the irelandafternama folks will be getting that hearing asap. Or maybe they’ll be silenced like poor unfortunate pk 😉
Revised Equation to describe Ireland:
(A x B) x D = C
where,
A = excess of capital in global system chasing after a home, where it can be utilised in substantial chunks. I.e. billions of euro rather than millions.
B = the slant-ed, or lop-sided nature of Irish economics, where more human and capital resources go towards property than anything else, result-ing in the outcome that Ireland’s problems relating to ‘A’ above, are worse than anywhere else in Europe, or the world.
C = the ‘mess’. Hopefully, the soon to be, banking inquiry in Ireland will look at ‘C’ in terms of both ‘A’ and ‘B’.
D = we allowed ‘developers’ to locate themselves in a position, where they engaged in nuclear warfare with one another, and the rest of Ireland’s population didn’t rush in as quickly as possible to drown them with buckets of freezing cold water, with instruments such as ‘betterment taxation’.
@Brian Lucey
Appreciate the update on the ‘abysmal levels of interaction’ between academia and upper civil-service policy actors – and appreciate the qualification because I do know anecdotally that ‘some’ on ‘both sides’ DO.
This begs the question on the CS side of why? and the further question of HOW? to overcome this learning-system-failure somehow? The weakness of this relation – and you provide evidence – must impact on poor policy making – as it is usually (nearly always) the senior CS actors who advise the politicians – write their briefs, etc ……..
@calan,
I’d agree with the sentiment you’re expressing there, but whether you think DSGE models are nonsense or not, you’ve got to admit that a group of punters capable of high quality data analysis and able to talk at the same level with colleagues abroad is a good thing. Another important aspect of having highly trained people in the CS is the suggestion of new methods of data analysis, And even a move toward going out and collecting more, and more relevant, data on Irish society. How many tones have we bemoaned the state of data collection in Ireland, even for simple thongs like property prices and quantities? Having people who could spot those gaps, and be the kind of insiders to prosecute the collection of new data, would be of immense benefit, IMHO.
@ SK,
“How many tones have we bemoaned the state of data collection in Ireland, even for simple thongs like property prices and quantities? Having people who could spot those gaps, and be the kind of insiders to prosecute the collection of new data, would be of immense benefit, IMHO.”
Two points,
I touched on the issue of right hemisphere and left hemisphere of the brain, in my reference to Marshall McLuhan above. I know the ancient audio recording I linked above, does show it’s 1970 era bias today, but McLuhan’s comment is still of use: The third world is a right brain culture. The fact, that the phonetic alphabet is the only alphabet in the world, which breaks the connection with the right brain, and doesn’t use patterns or graphics to describe words and ideas.
There are a whole collection of reasons why the Irish as a race prone to the audio and artistic end of the spectrum, in terms of culture, would find it difficult to implement good systems for measurement and rigourous analysis. Our politicians and civil service are merely expressing the basic needs of our cultural tradition, in resisting economists and their opinions in the day-to-day work.
It really is hilarious, that Ireland, a country which became so obsessed with one thing, building houses for a decade, now cannot even count them. That must be something deep and something cultural. It cannot be adequately explained in terms of incompetence or institutional inertia alone.
This is a problem for the world in general though, as many other right-brain aural cultures, tribes and nations around the world, struggle to become functional and integral components of the global economy. How to plug-in so to speak, into a system constructed by a dominant left-brain Anglo-American culture.
The second point is simple. We do need to clean up how our civil service operates and radically overhaul it’s image – if it is to attract The Right Stuff. So that the right stuff can spend some time with the CS and change back to the private sector again, if needs be. Without undue bias expressed by either side. This is what the bench-mark-ing process could and should have addresses over the last decade, but didn’t unfortunately.
I had dinner a while back, with a colleague. Her husband worked as a civil servant in the Irish museum department somewhere. I was instructed before the event however, by my female colleague, to be on my guard, as many of her husband’s associates in the civil service job, were as she said, weird.
After the dinner event, I had figured out what she meant by that.
BOH.
“This is what the bench-mark-ing process could and should have addresses over the last decade, but didn’t unfortunately.”
The bench-mark-ing process was very sucessful in reinforcing barriers and injecting new life into them, which ensures they will hang around, like a bad stink for at least another generation or two.
Bench-mark-ing was a missed opportunity to engage in cultural re-integration of the weird workforce with the other non-weird workforce.
BOH.
“The errors made by the government were consistent with the advice of a majority of academic economists. Confidence in economists’ understanding of the economy has been shaken…
In the era of economic complacency that ended in September 2008, economists in and out of government by their advocacy and actions planted the seeds of an economic crisis that has shifted economic power from free markets to government.”
Richard Posner, former member of the now defunct Chicago School, in Business Week, Jan 4, 2010
Perhaps economists should stay in the academy until they figure out how the economy works. First do no harm….
@ Calan,
Ireland has become one very interesting ‘test tube’ case for economists to study. It is funny, how economists travelled to Ireland during the (early) Celtic Tigers years to study how we did things. Now they are returning again, for very different reasons. To try and understand how the heck we screwed things up.
I mean, people like Joe Stiglitz, Klaus Kegling, Eva Joly, Paul Krugman and so on, have been all over the world studying situations as they arose, various crisis(s) and what not.
Whether we like it or not, it is unavoidable that economists will play a significant role in Ireland’s future. The only point that Karl Whelan and company here are raising, is given the concrete fact, economists are part of the working-out process, would it not make sense to have people who speak the lingo, embedded in the CS.
From my own perspective, I cannot even attend a dinner party with civil servants, without the fact, that after the CS’s have drank a few shots – they begin to tell you how they have a real job. Which by definition, implies that people who are not CS’s do not have ‘real’ job(s).
That is the kind of integration problem I refer to, and it is something we have to get creative about, in finding a way to sort it out. The bench-mark-ing process was fake, because it focussed the discussion entirely on the economic dimension.
It reminds me of that book by Amartya Sen, where he describes a United Nations meeting. We need to sort out the economic problems of the poorest nations first, and having done so, we can begin to focus more on political and social obstacles. Sen in his book questions this whole thesis, and turns the argument on its head.
Sort out the social and political bedrock first, and then the discussion will inform solutions as to the economic dimensions. As I said above:
“Or simply put, if the civil service ran it’s shop more efficiently and with real economy, one would witness a virtuous cycle being created, whereby the best of talent would suddenly be attracted, rather than repelled, by the prospect of working for the civil service.
That is to say, no one in their right mind would want to work as an economist at a state agency such as Fas. Not alone would one learn bad habits, but worse, having lied down with dogs, one would become a shackled dog also, tied to that particular post. In that sense, Tanaiste Ms. Coughlan etc have done no useful service to the civil service.”
Lets not forget that Ms. Coughlan begun live in the CS or some such branch of it, to begin with. The entire Fianna Fail machine seems focussed on conserving the reign-ing power of those with ‘real’ jobs. The nation’s needs appear to come second, at best.
BOH.
Oh dear….Karl’s last sentence proved highly prophetic! I faced a similar experience when I posted on this last year.
Ok. Question. What is it that you think IS the skillset needed in public policy design and administration?? All of this guff about economics and the quoting of Krugman et al is not telling us anything (incidentally anyone read Krugmans work outside of his NYT columns??? Or Stiglitz for that matter? They won the Nobel for their science -including
mathematics ability – and not their commentary).
If Economics is a skill that is useful the next question is how to deploy it. Economics degree does not make you an economist for example – the post I believe does not exist in the civil service anymore in any real sense. Being an economist means that you are working on the use of your training in the matter of public administration. Moreover as argued before the merits of even taking what is there already and putting some structure on it like the UK GES means an efficient and flexible service working across Departments.
On CB and ESRI – I suspect the CB could form a key part of this more efficient process and for sure they have staff with the credentials and training (though fewer than other CB’s at PhD level). ESRI is not a 100% govt funded ‘think tank’ in the sense that folks seem to see it (it’s block grant is about 30% of costbase and much of the rest is work that has to be tendered for in the normal way). It perhaps is a business model that could be looked at – maybe it should be 100% funded to be the analysis wing of Government? But certainly the notion that it is just available to give advice as if a wing of the civil service will I am sure surprise it’s staff.
Either way the quality of advice depends on the quality of questions asked. I am currently reviewing a report commissioned by the Welsh Assembly. The ‘Economics Research Unit’ there which works across departmental
domains has an external advisory group of both academic economists and senior business figures, and a committment to peer review all work commissioned (where I come into the picture in this case). Neat model – what I found interesting was the appropriate scaling of the unit, the pooling of the economics expertise between departments, the very direct and sharp terms of reference where they go outside for research and the high expectations for this commissioned work with peer review determining if the cheque is written.
To conclude and revert to KW’s original post. The key point is not more economists, but better training, higher expectations,
cross deparment coordination, and greater interactions with the academic community who we hope sit at the frontier
of the discipline through their research agenda. Yep, pretty much what many sensible public administrations already have!
Put another way – we had at UCD a talk to our MA class by a prominent private sector economist (like Aedin, I’ll duck now!) who pointed out that when someone like Bernanke or Mervyn King stand up to talk they have some of smartest graduate student output in economics behind them. It is not too much to suggest that we need someone on our side reading the same academic papers as the US or UK folks.
@calan
didn’t know Posner resigned from Chicago, or that it’s
defunct. Better cancel my seminar there next
month…..seriously this stuff is silly. Search Amazon for a book called ‘Chicago School’ for a lesson in what that actually means and is about. The term is a byword for ferocity of debate and an approach to economics that blends theory with application, and where the training and recruitment reflect only excellence and rigor.
Ok have now just managed to scare myself – maybe a seminar there is not a good idea….
@ Calan,
What I am saying is this. Tanaiste Ms. Coughlan, is a little bit like what William Greider referred to in his comment on Alan Greenspan, The one-eyed Federal Reserve Chairman.
Ms. Coughlan is probably right. We fire someone like the head of the FAS government agency. Sure, some senior CS’s will decide, this job ain’t worth it anymore. I am off to different pastures. Yeah, Ireland looses a whole rank of senior level CS’s, who decide not to stick around, because the benefits appear reduced, given Ireland’s circumstances.
Ms. Coughlan, or rather the government adopted a policy decision, to keep higher ranking civil servants satisfied. But what the government and Ms. Coughlan are blinded to, is the other side of the equation: How many potential T.K. Whitakers might be standing at the entrance door to the Civil Service? Seeing how the CS operates, decide, nay, that doesn’t look like my thing, and buzz off somewhere else.
They end up working for Citibank or Goldman Sachs or somewhere else, and always wonder in the back of their very expansive brains, what it would be like to contribute to the greater good via service in the CS. By protect-ing the CS, to the degree which Ms. Coughlan has deemed necessary, we have not protect-ed the CS at all.
Rather we have closed off an entire opportunity to attract a certain breed or individual, who is now only wonder-ing what to do with their live(s).
BOH.
@ Colm Harmon,
“ESRI is not a 100% govt funded ‘think tank’ in the sense that folks seem to see it (it’s block grant is about 30% of costbase and much of the rest is work that has to be tendered for in the normal way). It perhaps is a business model that could be looked at – maybe it should be 100% funded to be the analysis wing of Government?”
I think I linked this before, you may enjoy it.
It might also introduce some important issues into this current debate at IE, to do with economists involvement in the problem-solving process, for the next 50 years.
The U.S. Economy: The Last 50 Years and the Next 50 Years
Franco Modigliani
Paul A. Samuelson
Robert M. Solow HM
http://mitworld.mit.edu/video/76
BOH.
“Halfway through John Cassidy’s new book, How Markets Fail, there is a revealing anecdote about Morgan Stanley. Back in the mid-1990s, Cassidy asked officials at this once-mighty US bank how they recruited economists, only to be told that Morgan Stanley avoided hiring anybody straight from university.
“We insist on at least a three-to-four-year cleansing process to neutralise the brainwashing that takes place on those graduate programmes,” Stephen Roach, the firm’s chief economist is quoted as saying, noting that academic economists appeared to have become dangerously divorced from reality.”
Gillian Tett, Financial Times, Dec 5, 2009
The task for academic economists is how to get in touch with economic reality: a task made exceedingly difficult given their immersion in unrealistic ‘economic models’.
People ‘dangerously divorced from reality’ should not be advising businesses or governments.
@ Calan,
I think I have told the funny story here before, about the architect Frank Gehry. He once hired a young graduate in architecture from the prestigious Columbia university in New York. The young graduate had studied under the fashion Peter Eisenmann, who has the unusual claim of being both an architect and mathematian.
Eisenmann’s training heavily emphasised mathematics, and this young graduate who Frank Gehry later hired, had some deep problems in relating what he had learned at Columbia, back to the job of working with Gehry. According to Eisenmann’s training, all architectural design solutions had to be interpreted in terms of their basic constituents – the circle and the line.
But this poor young graduate had become so wrapped up in his attempts to rationalise his actions, inside of the mental model as presented by Eisenmann, he could no longer work. He could no longer draw a circle or a line, without agonising over it. Luckily though, Gehry correctly diagnosed the problem and worked with the young man to find his way back from the brink.
I have worked, studied and debated at length with many professional young architects, about these problems. It is a very common occurance, and Gehry’s experience is by no means an un-usual one. The other thing I find significant about economics, is that it seems to share with the profession of architecture, that element of the cult of the teacher, the individual. I could list out a list of ‘big names’ in the architectural world, which could rival a list of names, an economist could list from his/her world.
I do agree with your point, and the description of the problem offered in the above quote. You should check out a movie directed and acted in, by Clint Eastwood, called Million Dollar Baby (2004). It is interesting, it tells a story of an old trainer, who offers to train a lady in her thirties, how to box. In the movie, the old trainer has to submit the student to a process of total un-learn-ing first, before teaching the student how to box for real.
BOH.
@ Colm Harmon
You may find Paul Krugman ‘silly’ but Richard Posner’s book, A Failure of Capitalism, is being viewed by many as the death rattle of the right-wing economic ideology of the ‘Chicago School’.
“Like them, I find it really sad. Here’s Eugene Fama, insisting that there was no financial crisis, just markets reacting rationally to an economic crisis caused by brain-eating aliens flouridated water something or other — hey, macro isn’t his department. John Cochrane, on the other hand, says that it’s all because George W. Bush gave a scary speech…
It’s hard to avoid the sense that Chicago just turned inward on itself circa 1982, and stopped paying attention either to the world or to anyone not of its tribe. And now it finds that the rest of the world is returning the favor.”-Paul Krugman
“This is the way the Chicago School ends
Not with a bang, but with a cackle.” Paul Krugman blog, NYT, Jan 7, 2010
(Of course this is just in the U.S.. In Ireland this obsolete ‘Chicago School’ mindset still has its believers, and some of them are advisers to the government.)
@ Calan,
Some of the work coming out of Yale by Shiller, Geanakoplos, Krugman and many others down through time is indeed interesting, and a most vital counterpoint to the Chicago voice. Indeed, one should wonder, had not Chicago been there in the first place, would Yale itself have adopted such a definite stance as it has done.
I was reading again what Aedin Doris had to say above in the comments:
To my mind, the importance of having Economists in situ in govt. departments is not that they would do lots of analysis themselves – though that would be nice – it’s that there might be some chance that the Civil Service would recognise that an issue facing a department was an economic one, or at least had an economic aspect, and would know what questions to ask and roughly what kind of methodology would be appropriate to address it.
I would also advise Aedin Doris to check out that MIT video I linked above, The U.S. Economy: The Last 50 Years and the Next 50 Years. One of the three economists featured in the lecture compared the population blunge working its way through the demographic profile, as being like a television passing down a snake.
Lets not find ourselves standing around in 10 or 20 years, discussing whose ‘fault’ it was for not anticipating that.
BOH.
@ Aedin Doris,
“So often, you hear issues being discussed that scream out to an economist as economic issues, but the discussion is framed without any economic content whatsoever.”
Also refer to my speel above, on Pat Kenny and his treatment of the issue of ‘development levies’ in the recent episode of The Frontline TV show. I bore all of the hallmarks of a discussion framed without any economic content.
Constantin Gurdgiev was sitting on the panel of course, along with the minister for Housing and a CIF director. But Gurdgiev wouldn’t be fast enough, to realise that Pat Kenny was presenting only a one-sided view of the economic instrument, which is a ‘development levy’.
Anyhow, Gurdgiev got a number of issues across which he had intended to say in any case, and good luck to that. But my point is, Pat Kenny was wide open to abush on that occasion to a well placed economics type of smart missile. Missed opportunity.
BOH.
@calan
certainly wasn’t referring to krugman as ‘silly’ but rather the line this thread has taken – as Karl predicted it would (see economist do forecast well after all). The references to a ‘chicago’ voice or even now a ‘yale’ one is a cliche taken to extremes (krugman is in Princeton by the
way…)
And this ‘we got it wrong’ blah de blah stuff is again not
the point of KWs original posting. So what capacity should we have instead
of economics, to pose this as a counterfactual.
Remember – academic economists and their research is not
the point of this thread. Economics training is, and the idea that many problems have an economics dimension to them (as Aedin pointed out) that goes without scrutiny right now. Nobody
said economics was the only consideration, but to argue that economics should be ignored or so short-changed in the process as to be redundant, is pretty narrow.
More on Posner and the degeneration of the Chicago School is available here:
newyorker.com/reporting/2010/01/11/100111fa_fact_cassidy
@ Colm Harmon,
“Nobody said economics was the only consideration, but to argue that economics should be ignored or so short-changed in the process as to be redundant, is pretty narrow.”
All I would have to add to that, is what guys in the private sector often have to say about Ireland. We put into position, offices for regulation or one thing or another, who have to operate in a completely meaningless vacuum, because of an absense of policy structure to begin with. The example offered by NTR’s Jim Barry, being the energy regulator which was a useless office for 4 no. years, before the policy caught up with the civil service appointment(s) progress.
No doubt, that was in part a symptom of Ireland’s spending on its public service, in years when tax revenues were high. Akin to adding ‘fins’ onto a 1950s American family car. It didn’t add much extra functionality, but it looked good to the eye.
If the question of the vacuum is to be addressed quickly in Ireland – be that for housing or for energy resource planning – the economist input is a must, in that effort. But the overarching concept is to get our sequence-ing correct as we go forward. That we are not creating office(s) within the public service which advance beyond what our policy provision is able to support.
BOH.
The appellation ‘Chicago School’ is not a cliche. The Chicago School represents a well-known tendency in economic ideology: many scholarly studies are available on its history and meaning. (there is no such thing as a ‘Yale School’ of economics.)
Many prominent commentators, including Krugman and Robert Solow, have discussed Posner’s book, and have rightly regarded it as a significant event that a scholar such as Posner would recant his Friedmanite ideology.
The New Yorker article by Cassidy, the comments and references in Krugman’s NYT blog, detail the collapse of this right-wing Chicago School of economic philosophy.
-“academic economists and their research is not
the point of this thread. Economics training is”- (Colm Harmon, above)
To believe that one can separate academic economists and their research’ from ‘economics training’ is a truly bizarre notion.
Most economics training is done by academic economists. And their ideology and philosophy, their obsolete neo-classical theory, their unrealistic models and their resulting trained inability to grasp reality are imparted to their students in economics departments throughout the world.
Why any rational person would want to inflict this dysfunctional neo-classical syndrome on government is surely a mystery.
Perhaps its a psychological defense mechanism, a reaction formation, to the disturbing empirical reality that the currrent economic debacle has effectively refuted the pseudo-scientific neo-classical doctrine.
Krugman and Solow are not just ‘prominent commentators’; they are .. academic economists
But Colm is right, that is not what this thread was supposed to be about. The Welsh example is something that sounds very interesting Colm..
@ Calan,
Indeed, all very useful and valid points. I am glad you brought them to bear in our discussion.
Although, your theory, as robust and fortress-like as it may appear to be, does not help to explain certain things. Take Garret Fitzgerald for example.
I referred above to Constantin Gurdgiev’s failure to capital-ise on an opportunity to straighten out Pat Kenny on an economic issue regarding ‘development levies’ charged by local authorities.
There are certain issues, which are like an open goal, as far as economists are concerned, all they have to do is put a shoe to the football.
Garret Fitzgerald is not one of those people who would waste a chance at an open goal. Fitzgerald even demonstrated that to none other than Mr. Karl Whelan himself, on a certain occasion on Newstalk 106 radio, where they both discussed the charter as written by Brian Lucey signed by the 46 economists last summer.
Dr. Fitzgerald administer-ed quite a profound lesson in political economics to the younger intellectual on that occasion. But there is not reason, why economists such as Gurdgiev could not offer the same assistance to guys such as Pat Kenny once in a while.
There is an opportunity for economists to improve their ‘shooting skills’ so to speak, by placing themselves in front of the goal mouth more often. Dr. Fitzgerald is a very decent example of a person who combined economics and politics seemlessly. He could still, stand, as an example to many.
Dr. Fitzgerald is still a fast thinker on-the-ball, at a time, when many are still trying to find the ball.
BOH.
Amazing what gets us heading to 100 comments these
days!
Actually not going to even bother to debate ‘Chicago School’ stuff any longer. I will tell them you said hi, @calan, when I give my
seminar on the ultra right wing issue of how we
can improve social mobility between generations through investment in parental education. Sounds like I will be talking to myself as the
faculty will be too busy addressing how to bump off
banking regulators. All I know is that the thing
that really characterised the ‘chicago school’
of the era of Friedman and Stigler has passed
itself through into an institution where as
the campus bookshop tshirt says ‘UChicago – where
fun comes to die’ – you will spot it next to the tshirt outlining how many Nobel prizes Chicago has won in all disciplines.
@kevin – it is an interesting model – there are lots. Having a Chief Economist and a review panel of folks – including non Irish economists – would be a start. You know well the US system, UK has the PM strategy unit structure. An economically literate and trained civil service and strong links with the academic world (wherever that is – see Sarko’s committee led by Stiglitz, or
the UK one I served on had folks from Harvard and Columbia too) would be great.
Colm Harmon says:
“If Economics is a skill that is useful the next question is how to deploy it. Economics degree does not make you an economist for example – the post I believe does not exist in the civil service anymore in any real sense.”
Allow me to chat briefly about ‘de-ploy-ment.’
I watched The Frontline episode on the housing stock overhang on the RTE website a second time. It really is excellent TV viewing and Pat Kenny does a huge job of cover-ing so many bases in the duration of the program. He did accomodate a huge range of opinions. Well done.
But what the program does highlight well, is the absense of real input of experts in the debate.
Constantin Gurdgiev’s observation, was the many billions of euro the deflation in price of homes, has taken out of the Irish economy. The loss in value of the 1.9 million homes, is equivalent to one full years GDP of the Irish nation. Gurdgiev also made a suggestion, of working with the mortgages we have in Ireland, putting €10 billion plus towards that problem, and it could do a lot better than NAMA as a solution.
Those are wonderful ideas, which in that raw state alone, are more than enough for politicians, civil servants and policy makers to run with. Certainly, I could never have conceptualised the problem, in the manner in which Gurdgiev could do, with his brief contributions.
Allow me to apply a soccer sport analogy to this. It strikes me, that as well as the long range pile-driver shot specialists, such as Gurdgiev on the team. We also need those kinds of players who can hoover up the easy opportunities as they present themselves. Something closer to Dr. Garret Fitzgerald’s style.
What I mean is that, given Pat Kenny spoke so much about ‘development levies’ in the course of the TV show, it is interesting, no one offer-ed any kind of explanation, of where the ideas for development levies had come from. How they fit into the overall bigger framework to do with land values etc.
The point I am making I suppose, if I were the Alex Ferguson of the economics skill-set, to put the ball in the net as many times as possible, over the course of 90 minutes, you would have to arrange your team with players who have different strengths. What Karl Whelan or others suggested above, with up to 12-15 economists working together in a special inter-department-al unit in the Irish government – with Alan Ahearne as team captain – there are things one can achieve with a team, that may be less feasible with mere individuals, in one’s and two’s.
While Gurdgiev was wheel-ed onto The Frontline TV show as the token, expert economist, he covered the long range chances (to use the soccer sport analogy). It would be interesting to see how much more penetration the economics point of view could achieve, was there someone scoop-ing up the short-er range opportunities also.
BOH.
Kevin Denny says:
“The bottom line is this:if you don’t have your own economists, you cannot hope to interpret the evidence that exists on policy. Therefore your policy cannot be based on evidence. What then is it to be based on?”
In order to have evidence, one has to collect it. The fact I tried to highlight above I suppose, is the reluctance of an artistic right-brain culture such as the Irish, to engage in measurement, rigourous analysis and evidence collection.
There is more than a bit of crystal ball polishing that must go on, by experts such as Dr. Peter Bacon, when they are commissioned by government to charge into some study. One wonders what, if any evidence we provide policy makers, when we do consult with them.
It is highly possible, as suggested by others above, that economists may form part of a very effective evidence-gathering team. I would refer people here, to a simple analogy, the sucessful TV program Time Team, where a collection of various experts are invited onto a site over a period of 3 no. days. In order to gather what they can about the site.
It is a blitzkrieg style of team work, where they hit the problem with absolutely every tool of investigation, in a short compressed period of time. The real lasting value of that exercise, is that it sets up the framework, for much later work organised in the longer term by vanilla archaeological teams.
BOH.
Stephen Kinsella says:
“I’d agree with the sentiment you’re expressing there, but whether you think DSGE models are nonsense or not, you’ve got to admit that a group of punters capable of high quality data analysis and able to talk at the same level with colleagues abroad is a good thing.
Another important aspect of having highly trained people in the CS is the suggestion of new methods of data analysis, And even a move toward going out and collecting more, and more relevant, data on Irish society.
How many tones have we bemoaned the state of data collection in Ireland, even for simple thongs like property prices and quantities?
Having people who could spot those gaps, and be the kind of insiders to prosecute the collection of new data, would be of immense benefit, IMHO.”
I quote Stephen’s contribution here again, for no better reason, than it is worth quote-ing, and fits nicely into the idea I suggested of a Time Team kind of group of individuals, composed of economists amongst others, who might travel around to different ‘sites’ within the Irish civil service.
A useful method to overcome the reluctance of an artistic right-brain culture such as the Irish, to engage in measurement, rigourous analysis and evidence collection, might be, to have access, even for a brief period to the best-of-the-best, all at once. As suggested by the Time Team experiment in the UK, it might lift some projects off the ground, which have long awaited such a stimulus to get them started.
BOH.
I’m not sure about the Time Team idea, the idea of a government deploying a kind of economics SWAT team doesn’t appeal. Economics takes a lot of hard,painstaking analysis building on lots of previous work, collaborating with other people here and abroad. so pulling in a few experts for a few months is not the way to go in general- though there maybe occasions when its a good idea.
For example, if I was going to spend say €40b on a bank rescue scheme,wouldn’t it be worth gettng some of the best guys in the world around the table?
@Kevin Denny,
I take your point about the benefit of assembling an ad hoc group of international experts to assist in addressing a profound financial and economic crisis, but surely the best way is to organise things to avoid these largely self-inflicted crises arising – or, at least, to minimise the self-inflicted severity. We’ve had two in the last quarter of a century.
Economics is at the heart of the business of government – spending tax revenue ostensibly to enhance economic prosperity and the well-being of society. In my view this is a matter of structure and process. Separating the executive and the legislature and empowering and resourcing the legislature, in particular, with an economic analysis and scrutiny capability, will compel the executive to up its game in terms of the economic analysis underpinning its policy proposals. In addition, there is a requirement for a separate completely public-funded body to identify and conduct research on key policy issues, to present policy options and to scrutinise and to propose modifications to policy proposals generated by the executive. (The ESRI could be re-structured to perform this role.)
In addition, there may be a requirement to constitute a fiscal stability council (comprised of the best-qualified domestic academic talent with, perhaps, some international input).
This would be most effective way of ensuring demand for high-quality economic expertise in the entire process of public policy design, scrutiny, modification, implementation and review.
@ Kevin Denny,
Where the Time Team concept could be useful, would be to spread the message of economics and its benefit more widely amongst some of the modest, grass roots kinds of projects in the civil service. It could of course be supervised by mature economists, but could be a way to introduce younger inexperienced economists into the workings of the civil service. In order to give them a realistic picture of how the system in Ireland actually works.
The great thing about the Time Team approach, is that ownership of the project doesn’t pass away from the civil servants. But rather, ownership and full responsibility for that project remains as is. But after the Time Team has gone away again, the civil servants do get an opportunity to digest all of what they have learned. This in turn gives them a chance to plan and see, going forward in the future, where exactly a potential hired economist might ‘plug in to’ their operation in the longer term.
It is a bit like the problem I faced years back, before ‘property’ became sexy. There was no point in telling local authorities about the value of architects, and what they do, because they had no concept of what an architect might do. Indeed, over 90% of individuals in Ireland had no clue as to what an architect is.
The other major advantage I can see with a Time Team strategy, involving economists, is they can jump from one project to another fast. They don’t have a chance to settle in and form opposing trench warfare-like positions in relation to a single topic. Because in 3 no. days (or whatever length of time) the entire show breaks up and moves back on the road again.
In other words, it would be an opportunity to combine economists of many different viewpoints, and their differ-ing views on economics, would for the duration of the 3 no. days, be a benefit rather than a liability. It would mean for the owner of the project, the group of civil servants, they would find themselves exposed to a broad range of ideas from the Time Team.
I suppose, what I am getting at too, is a kind of end-of-aisle display, in marketing and super-market terms. A quick sample of the product and what it does. A test drive.
BOH.
@ Paul Hunt,
“Economics is at the heart of the business of government – spending tax revenue ostensibly to enhance economic prosperity and the well-being of society.”
I have only realised lately, that the Irish government is the largest employer in the state.
By Irish government, of course, nine times out of ten, that translates into joe soap’s language as: Fianna Fail is the largest employer in the state.
My biggest fear, having realised this fact for the first time, is that government has immense responsibilities to take care of. By government in that sense, I mean, whatever minister for trade and employment happens to sit in the house of the Oireachtas.
The Oireachtas is a much slower moving organisation than anything in the private sector. Yet it has to take measures continually to update and modernize itself, as an employer.
I mean, the Oireachtas is to Ireland, what Dell corporation used to be, to Limerick and its surrounding region.
But what I don’t fully understand, perhaps someone here can explain it to me, is how we expect the Oireachtas to even care a damn about the private sector of the economy? When most of its actual time, 24/7/365 has to be devoted towards keeping its own shop in order, namely the civil service and public services.
How is that supposed to work?
I mean, at best, the Oireachtas can only glance over the status and development of the private sector economy. But in 2010, we stand around hoping that the government will intervene in some fashion, in order to set things right again in the private sector. In addition to doing their day job, administer-ing and caring for the public sector.
I don’t understand that logic.
What I do understand is, in Ireland we have something akin to an invisible Berlin Wall. Each day, a number of people in the Irish workforce, go through the invisible Berlin Wall and earn respectable and sustainable incomes working in the public service. While on the other hand, those of us in the private sector, it is like we remain in the Eastern block.
Then in the evenings, as one of George Lee’s interviewees in the Berlin Wall documentary series commented – the east and west Berlin workerforce meet up together in the pubs and saloons. The east German is there counting pennies and realises, I can’t even buy a beer for my girlfriend.
The west German worker comes in waving $100.00 notes and buying drink for everyone.
All I would say, is to the civil servant(s) out there in NAMA-land and (D)Ireland, tone it down a notch when you find yourself on the town, knocking back those shot glasses. I know those of us in the private sector don’t have real jobs, and never did, but we try to live a life also.
BOH.
The Oireachtas is a much slower moving organisation than anything in the private sector. Yet it has to take measures continually to update and modernize itself, as an employer.
BTW, this is why government gets to hire someone such as Dr. Peter Clinch, and roll out something new and shiny called the ‘smart-er economy’. I applaude this effort, and furthermore, it is nothing short of what a major employer aught to be doing anyway. An employer needs to continually assess its own procedures and processes and find ways to do things, which make the best sense, at a particular point in time. But my question is, while the Oireachtas, associated departments and resources are busy making this smart thing work, what is going to happen to the private sector? Who is covering that base? No one it seems.
Paul: there are many models, some of which have been discussed above. Whats clear is that governments around the world don’t follow the Irish model of marginalizing economics. The chances of getting a new publicly funded body at the moment are not good though. My strong sense is that government regards economists as at best a bloody nuisance and at worst a threat. Recent events, like this blog [which I strongly support], may only have confirmed this.
Brian: There is something to be said for getting academic economists closer to the policy process because in general we don’t have a good idea of what its like at the coalface. I wonder how civil servants would feel about, say, a trio of nerds breezing in for a few days, doing-their-business, then leaving? It might work, with careful management, but it would still need in-house expertise.
All I would say, is to the civil servant(s) out there in NAMA-land and (D)Ireland, tone it down a notch when you find yourself on the town, knocking back those shot glasses. I know those of us in the private sector don’t have real jobs, and never did, but we try to live a life also.
I am not the only one saying this by the way. Richard Curran in the Sunday Business Post has commented also, on the trends in Ireland, the way he sees it. We had only just arrived at a stage in Ireland, where it was ‘cool’ for young men and women to think beyond the traditional straight-jacket, of public service or profession(s). Business and innovation was just beginning to bed down and become respectable and established within the Irish culture and psyche. But it now appears as though, that was a flutter-ing illusion, a brief burst of summer, and we will return again to the grey dismal place that Ireland always was.
I watched an interesting documentary on PBS last night, about the famous law man of the west, Wyatt Earp. In a real sense, Wyatt Earp’s story and that of the Irish business person share many, many parallels.
http://video.pbs.org/video/1390089466/
It was unfortunate, that in all the towns that Wyatt worked through in his life time, his attempts at becoming respectable and settled always eluded him. Sometimes it was just within his grasp, only to recede away again, into the distance. In fact, it should be pointed out, that the shoot out at the O.K. Corral in October, 1881, had much to do with Wyatt’s desire to become town sheriff. Like Wyatt, it seems as if, the business man in Ireland, is about to be kicked out of Tombstone.
BOH.
@ Kevin Denny,
“I wonder how civil servants would feel about, say, a trio of nerds breezing in for a few days, doing-their-business, then leaving? It might work, with careful management, but it would still need in-house expertise.”
That is why I referenced the Clint Eastwood movie Million Dollar Baby above as a useful touch point. Because it describes the situation of the ultimate coal face expert, the old boxing trainer, looking at this girl who shows up at his gym each day. It is a nice movie, with an important story to tell, about much more than just boxing.
@Kevin & Colm
It’s a small world. I sit on that Welsh Economic Advisory panel. If you are interested in any aspect of it I woud be happy to fill you in.
@Chris, @Kevin
I suspect one for an offblog chat so drop me an email colm.harmon@ucd.ie and we can do that. It is a nicely scaled model in my view.
Well, darn, I thought this thread was about economics expertise in the Irish government.
So i raised a question that if this ‘expertise’ was of the orthodox, neo-classical economics variety the government might be better off without it, given its obvious intellectual and empirical failure.
For its intellectual failure read Stiglitz’s new book Freefall. For its empirical failure observe the world-wide economic debacle.
I should expect that most know that Solow and Krugman are academics as well as commentators. I merely invoked their names as two, of many, who have seen Posner’s recantation in his book A Failure of Capitalism as marking the demise of the Chicago School, – a notable event given Friedman’s influence on Thatcher, Reagan, the war criminal Pinochet, and many Irish academic economists some of whom advise the government.
In a real sense, Wyatt Earp’s story and that of the Irish business person share many, many parallels.
Let’s see:
* Nepotism (being appointed to Daddy’s old job to get started on the first rung, hiring his own brothers as deputies)
* Fraud (collecting taxes and, well, keeping them)
* Theft (of two horses)
* Brothel-keeper (though he didn’t own a newspaper, to his credit)
* Greatly-inflated claims of what he had achieved (his whole alleged career in hi biography)
* One for seeking media attention while only one step ahead of the law himself at any point
Yes, I see the resemblance too.
All I would say, is to the civil servant(s) out there in NAMA-land and (D)Ireland, tone it down a notch when you find yourself on the town, knocking back those shot glasses. I know those of us in the private sector don’t have real jobs, and never did, but we try to live a life also.
Mother of God – what, you’ve had to give up your second skiing a year, so you now begrudge Mary the money for her mortgage?
The other major advantage I can see with a Time Team strategy, involving economists, is they can jump from one project to another fast.
My observation of the real-life, actual ‘Time Team’ (given some extremely modest knowledge that I have of how the real thing goes) is that they arrive in on someone else’s careful, professional dig with a couple of JCBs and needing a big ‘discovery’ for the ratings. Not something that I’d think would be conducive to the good running of a small business, never mind a country.
Stiglitz’s new book Freefall. For its empirical failure observe the world-wide economic debacle.
Isn’t Stiglitz rated as the top economist in the world?
a notable event given Friedman’s influence on Thatcher, Reagan, the war criminal Pinochet, and many Irish academic economists some of whom advise the government.
Not to mention the Brylcreemed Young Turks of the Irish right wing who were most recently washing up within Declan Ganley’s wholly-owned ‘party’, Libertas.
@Kevin Denny,
You, inadvertently, may have misunderstood the thust of my comment. Probably my inability to express myself clearly. The “model”, as you label it, which I describe, is simply that of a properly functioning parliamentary democracy. With the expection of the UK (with whom Ireland, for historic reasons, shares the characteristics of an elected dictatorship and excessive centralisation of power) – and, of course, France – many of the established EU parliamentary democracies have taken steps to reform the balance between the legislature and the executive – and this has impacted on the design, scrutiny, modification, implementation and review of economic policy (with an accompanying impact on the role of economics in this process).
The UK Government, self-servingly, has ensured that consideration of a very light-weight package of parliamentary reforms will run out of time to allow implementation. The current Irish Government has absolutely no interest in any reform in this area. And the terms of the banking inquiry have finally confirmed the total emasculation and irrelevance of the Oireachtas.
And as to a new publicy-funded body, I believe the ESRI, already, provides much of what is required, but it relies on external funding to finance a goodly portion of its research. Separating its externally funded activities and beefing up its capability to act as a “clearing house” for the “market-place in policy ideas” that Frank Barry recently advocated would go a long way to place economics in its justifiably central role in the policy making process.
Many, many posts ago, when this topic was discussed, Colm McCarthy rightly pointed out that it was useless to talk about the supply of high-quality economic policy analysis and advice when the demand did not exist. My argument is that major structural reform is required to generate this demand and that economists should be in the forefront of the campaign to force this structural change.
The current economic and financial debacle did not come out of a clear blue sky – it was stewing for a decade in the absence of sensible economic policy input.
@Paul Hunt
With the expection of the UK (with whom Ireland, for historic reasons, shares the characteristics of an elected dictatorship and excessive centralisation of power) – and, of course, France – many of the established EU parliamentary democracies have taken steps to reform the balance between the legislature and the executive – and this has impacted on the design, scrutiny, modification, implementation and review of economic policy (with an accompanying impact on the role of economics in this process).
Why have their growth rates been so crap in the past two decades then?
@Aedin Doris/Brian Lucey
Good spot on the ‘related disciplines’. One must always study the language when reading statistics!
Come on, JtO, GDP growth is only one metric and I think I would be in good company if I asserted that it has major deficiencies both as an absolute and relative measure. I don’t think health professionals would gauge the health, nutrition levels and well-being of a population by just measuring the length of willies. Nor, do I believe, should economists.
There may very well be a benefit in having more PhDs in the Irish Civil Service. However, I would be slow to assume that the educated generalist model is fundamentally incorrect. People highly specialised in one discipline can sometimes find it hard to cope with the many conflicting demands that have to be reconciled in civil service work – including policy work. In addition, specialists frequently want to stick with their specialism and it is difficult to cope with that in any organisation in which top level posts are fundamentally general management in nature. What is undoubtedly true is that the modern day civil service, while still being essentially generalist, requires a much greater level of technical expertise than previously and a Masters qualification of some kind is pretty much required for advancement to senior mangement jobs. As regards why civil servants stay “in the bunker” and don’t go to conferences – very simple. They are too busy being civil servants. The second word in the title isn’t there by accident.
[…] The Irish fiscal debate could usefully move in this direction. The piece is also relevant to the thread below on economic expertise, and to broader debates about whether technical expertise in general is […]
@ EWI,
glad you watched the Wyatt Earp documentary, I thought it was fabulous.
I felt quite chastened by it though, Earp had been my favourite cowboy hero as a kid.
But the documentary does give a very full, rounded impression of the life of Earp and his times.
BOH.
You fellows are far too hung up on formal qualifications. Mr. Greenspan had next to none, Dr Bernanke has plenty. Neither could see bubbles… one claimed to be most expert in depression economics, between them they seemed to know the correct policies to spark a depression.
Perhaps the DoF officials are too busy working to get formal qualifications to match their work experience? Perhaps there are plenty of excellent policies that are being ignored by ideological politicians? Perhaps academic excellence does not translate to administrative adequacy?
The D of F does not need more Academic Economists but does require hard nosed coomercially minded qualified Accountants. The Report by the D of F in 2009 on the composition of their staff structure showed that they did not employ one qualified accountant. It appears they employ a bunch of eggheads who could not see that using “one off” capital income to pay for new “ongoing” current expenditure was going to result in the crisis that currently exists in Government Public Finances. These are the same people who consider themselves the elite of the Civil Service. If they worked in the Private Sector they would have got their P45s a long time ago. Instead this bunch are rewarded with Rolls Royce pensions paid from larger Government Deficits which they helped to create.
On a tenuously related note – and just to post it before Richard Tol does – I see there is a new ranking table of University Economics Research departments. (https://econtop.uvt.nl/rankingsandbox.php).
Not one Irish instutution in the world’s top 200 – shock!
The objectivity of this ranking, carried out by the University of Tilburg, is obviously unimpeachable, considering that Tilburg itself is only ranked at number 23.
Perhaps our civil servants are correct that they would have little to gain from studying Economics here?