11 thoughts on “Time for Independent Fiscal Committees”

  1. @Philip Lane

    You’re a smart lad Philip ….. but I’m questioning the idea of ‘independence’ in a financialized world. In local terms I agree with you on the potential usefulness, if limited, of semi-independent fiscal committes a litte distant from the political groups – but the REAL POWER appears to be with the MEGA-FINANCIALS ………. delinked from all national contexts and doing what they like …………

    Now that you are on a roll – can you, or anyone figure out if these hydra-headed derivatives/credit-default swaps are fac,ts, norms, things, or abstractions? Important to figure this out – as a prerequisite to figure out how to push them into the black-hole as well. I’ve come to the conclusion that financialization is completely out of control and a threat to the survival of mankind – it is out-Ferengi_ing the Ferengi and The Matrix is now.

    e.g. Fed Reviewing Goldman’s Moves on Greek Debt
    http://www.nytimes.com/2010/02/26/business/global/26greece.html?8au&emc=au

  2. I think it’s a very useful idea, particularly in terms of establishing credibility in relation to fiscal targets, as the two authors point out.

    My only concern is that in Ireland, these tend to be social partnership institutions and – looking at things like NESC and the NCC – the aim is to go for win-win recommendations.

    This body, by the nature of it, would have to be sufficiently independent that it can state painful messages and yet still not be so aloof that voters think “Hang on, who are these guys, telling us how to spend our own tax money?”

  3. @Philip,

    Any non-elected (perceived) interference in fiscal policy will be met with calls of ‘no taxation without representation’.

    However, the idea set out by Besley and Scott seems to be to have an independent monitoring body that would issue recommendations to government on fiscal policy.

    How far would that be from the services provided by this blog?

    Or is there a suspicion that if the government were paying for the advice, they might be more likely to listen to it?

  4. @Philip Lane
    Congratulations on the award.

    @LorcanRK
    An independent national economic security council which issues LOUD, clear, repeated warnings, long before bubbles pop and booms burst, is a necessity for Ireland. We need an institution for stating the bloody obvious (ISBO). It should penalise reckless governments by issuing them with warning ISBOs. It can also state plainly on an annual basis what the overall economic situation of the country is. We should ignore what the UK does because for us it is imperative. Otherwise we are doomed to an endless cycle of economic train wrecks.

    I fear though that the Sir Humphreys in the DOF and the politicians will give us nothing. Worse still, they will give us a tame, toothless equivalent of the proposed new “Mayor” of Dublin (more accurately named the “Chair” of Dublin). Nothing short of the utter destruction of the country would make them radically change.

  5. @Philip Lane,

    Congratulations on receiving the Bhagwati Award.

    Following on from your recent paper on a new fiscal framework for Ireland it appears that you sense the time is right to push for this particular institutional change involving the establishment of an independent, external panel of experts to assess the thrust of fiscal policy. The concept appears to have considerable merit, there are precedents in other jurisdictions and it seems to be gathering influential support.

    The principal problem I have with this proposal is that it adds another institutional layer to the process of policy design and scrutiny. In my view it would be far, far better to, yes, establish this panel of experts, but establish it as a resource for, and reporting to, the Oireachtas Committee on Finance and the Public Service. Based on the periodic reports of this panel the Minister (and his/her officials) would be obliged to appear before the committee to justify current and proposed fiscal policies. This would compel the Minister and the officials to up their game in the face of informed and pertinent scrutiny. The Minister could no longer rely on whipping the lobby fodder during divisions and parliament would be empowered.

    I am beginning to detect a limited, but slowly increasing, recognition that not just the current policy and regulatory failures, but those that occured during the GUBU decade from 1977 may be traced to the steady increase in almost absolute power exercised by governments between elections and the corresponding decline in the power and authority of parliament to the current position of almost total impotence.

    Indeed, I would go further and propose that all Oireachtas Committees should be re-structured and that each should have a panel of experts to support and inform their scrutiny of public policy in the relevant areas.

    We have more than enough institutions – indeed the largely unaccounted for and unaccountable quangocracy has grown apace; we simply need to resource and re-empower the instiitutions we have to do the job the people pay them to do.

    However, no sitting government will countenance any restraint on the almost absolute power it currently exercises. Reform will be possible only if the political classes advance the case during a general election to secure the consent of the people – from whom, let it not be forgotten, all power and authority flow.

  6. Familiar stuff Philip!

    Seriously, regarding the “no taxation without representation”. Would the committee not be appointed by the government? Surely this wouldn’t greatly diminish it’s independent status?

    Direct voting is a non-runner.

    The idea is fine and the argument is sound but how the committee is chosen really is a major headache.

  7. @Philip,

    Congratulations on the Bhagwati award. Really pleased for you and your colleagues.

    It seems that the idea of Fiscal Policy Councils is catching on. The arguments in favour are pretty clear from an economist’s perspective, but the politics are a different kettle of fish. You’ve already acknowledged this In your own recent proposal for a Fiscal Policy Council in Ireland, in which you noted the importance of a political buy in across the board.

    So I think it might be useful at this point if you could interest your colleagues in the Political Science Department in examining the political implications of this reform; specifically how it would impact on how governments and parliaments conduct their business in this area, what its impact might be on the transparency of policy formulation and where it should fit within a package of reforms of our parliamentary system.

  8. @Tony DeMello

    Now that you are retired Tony, perhaps you might consider a non-executive position on the Board of The Institute for Stating the Bloody Obvious (ISBO), in the public interest of course?

  9. @David O’Donnell
    The members of this board will need to have unimpeachable technical qualifications. I only know ten things (or less) about economics. But more importantly they must have the courage to shout STOP. They shouldn’t issue warnings – that doesn’t work in Ireland and never will. They need to SHOUT them.

    The people on this board will need to be able to take the assault which the 46 academic economists got over their NAMA letter, then get up, dust themselves off, and start SHOUTING again, even more loudly. Never mind any canon law rubbish from the newly elected cronys – of right or left – who take over from the current cronys when they are kicked out. Never mind the lines they feed to their media attack dog pack. “Where is their mandate? etc etc”. No one gave our current government a “mandate” to destroy the economy and the banking system but that is what they did. No one gave the government of 1977 such a mandate either. Our politicians are compulsively dishonest, congenitally reckless and inherently dangerous. For that reason it would be best if the Irish academic economist community select ALL the members of this board. If the crony establishment select them, even enough of them to dishearten and impede and scare the rest into timidity, then this board will be worse than useless.

    We need technically well qualified SHOUTERS.

  10. I find it interesting – but, perhaps, I should not be surprised – that this post which advances a simple proposal to exercise some restraint on the virtually untramelled power exercised by governments, for good or ill, in the economic sphere attracts so little traffic. Whereas, the succeeding posts which focus on the minutiae of the exercise of this power attract so much.

    I remain convinced that we are at nothing until much broader and deeper attention is paid to reforming the “rules of the game”.

    @Philip Lane,

    Slightly off-piste, but, perhaps, not entirely irrelevant in the context of cumulative policy and regulatory failure, I’m not sure if the Observer, in its feature on the latest surge of Irish emigration, did full justice to your observations, but there is a heart-wrenching poignancy in “it’s the lonely guy in the East End bedsit in London that we should be worrying about”.

    We owe it to the disenfranchised, the soon-to-be disenfranchised, the “out-siders” and all those whose hopes are being destroyed and who have so much to contribute – and who want to contribute – to change the “rules of the game” to establish the basis for future economic prosperity and social justice – and to prevent a repetition of past failures.

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