Coleman: Obsession with PhD Economists

Marc Coleman continues to fight the good fight against the evil that is economists with PhDs. Coleman seems to be taking his campaign to a new level with his latest claim:

Academia must also change. The obsession with producing only PhDs is the main reason the crisis happened.

I read the last sentence and then started thinking of the number of ways in which it seemed to be wrong. I lost count at about five and then decided to go back to plotting the downfall of the Irish economy along with my other PhD-qualified co-conspirators.

62 thoughts on “Coleman: Obsession with PhD Economists”

  1. Tom Garvin wrote an article recently about how anti-intellectualism was a big problem in Ireland, historically and in the present, and how “grey philisitines were taking over the universities”.

    http://www.irishtimes.com/newspaper/opinion/2010/0501/1224269475580.html

    “Imposing a research model derived from the physical sciences stultifies academic research in languages, history, literary criticism, political science, sociology and the policy sciences. This includes economics, the subject which our Government pathetically hopes will get us out of the trouble which anti-intellectualism got us into.”

  2. Now that’s what I call a fully flowering hysteria. I have a feeling there is going to be an enormous wave of similar in the coming weeks and months. A nasty unstable mix of very hot weather and the slow national financial apocaqlypse should shortly lead to claims from commentators which will outdo that one in the mindless self serving bizarroness stakes.

  3. Have I missed something? This obsession that marc is on about has gone completely overt head

  4. I like this sentence: “The obsession with having only PhD economists — instead of a mix of applied and theoretical economists — is also a huge mistake.” Have I been wasting my time with the applied stuff, boss? I must have been or else Coleman doesn’t know what is required for a Ph.D. – that or he knows full well but is a man of such low character that he’d mis-represent the truth for the sake of gaining notoriety…

  5. The Sindo also had unkind words last week about “eggheads”. Of course, they were talking mainly about Dan O’Brien, but still.

    There is a serious point to be made about how economics seems to those of outside the profession to be capable of constructing a case that says whatever the author (or commissioning client) wants it to say – which does put it back into the realm of being a social science, rather than one of the more concrete, real-world-related ones.

  6. @ Rob Gillanders

    “Applied economists” in this situation, one supposes, is Sindo-speak for those Pulling On The Green Jersey ™ and agreeing with the actions and policies of this Fianna Fáil government.

  7. No…I think it is quite clear he means applied in the actual sense of the word given that he sees a division between applied and theory. For those who are interested, the vast majority of Ph.D. students I know (and I know quite a few) are doing applied stuff.

  8. I have talked with Marc on this a few times. I havent a clue what his beef is. Its a monomania akin to McWilliams and the euro.
    Back to plotting…now where did I put that longhaired white cat…

  9. rereading this – Marc seems to be saying the dept of finance got its sums wrong and somehow inferring that this is the Fud’s fault
    “Either something was wrong in Finance’s forecasting department, or some editing was going on, or both.
    Or the Department had too few properly trained applied economists.
    The obsession with having only PhD economists — instead of a mix of applied and theoretical economists — is also a huge mistake. PhD economists have contributed greatly to developing long-term policy vision like the response to the banking crisis. On more “real-world” tasks of forecasting and tax policy, their experience badly needs to be complemented. ”
    One alternative view, observationall equivalent, is that it in fact had too few economically literate staff, doctorally trained or not. Im not in fact sure that Marc realises that the DoF had at the time pretty much zero doctrandi on its books. I know its the Sindo but still, some basic fact checking wouldnt go astray

  10. I rarely use strong words but this article is total rubbish and written by someone who has little relevant to say. As someone who has hugely erred on the side of optimism in his recent commentary, Marc Coleman is in no position to attribute responsibility for the current mess and the fact that he retains a lot of air space is difficult to understand.

    PhD’s come in all shapes and sizes but the bottom line is that you carry out original research and that you back-up all your arguments by references and that you present your findings in a balanced and well structured manner. Depending on the subject there can be a considerable difference in outlook between those with standard degrees and PhD’s as the latter have had to delve into far greater detail on a particular subject and, in doing so, get a greater appreciation of the background, complexity and uncertainty around it.

    Academia is no wonderland and there can be variations in quality in PhD’s but more often than not people who achieve a PhD have a broad understanding of the subject and are disciplined in the way they approach new areas, with easily transferrable skills such as numeracy and literacy.

    These will often be complimentary skills to those of people who have learnt on the job and have built up working knowledge and there should be recognition on both sides of this.

  11. Don’t know enough about the whole PhD malarky to offer too much of an opinion on it, but ill only note that it appears to me that academic economists tend to stay in academia, markets/industry economists tend to stay in industry, and civil service/regulatory economists tend to stay in civil service-land (Honohan is a new exception to this). A bit more movement around from all types would probably do them all a measure of good. As i previously said, academic economists could see the problems that were coming but probably couldn’t be too sure about the impact on price and the timing of it, while markets economists were late to see the looming storm but were probably more tuned in to how the markets would react to it. Having both skillsets would (a) have probably seen better opinion formation and (b) lent additional credibility to the prophesies of doom.

  12. I’m not an economist but since this crisis I’ve been drawn into it – trying to understand.
    To be honest though- at this point -sometimes it seems as if economists have become a little like iceberg experts on the titanic.
    We know what awaits. The lifeboats have been doled out to the chosen few.
    For the rest of us it’s hopeless now.
    No way out of this one. But at least there’s no Celine Dion

  13. Eh? I thought that the criticism was we didn’t have enough PhD’s in the DoF during the bubble/bust years?

    Coleman is right to point out the failings of the DoF but wrong to suggest that it was lack of ability. The incentive for them to say everything was rosy was based on what there political masters wanted them to say.

    The promotion and otherwise in the CS is conditional on being a safe pair of hands, there was no advantage for any senior CS to suggest that

    1. We had a bubble in property up til 07, and;
    2. Tax take from 07 was in freefall.

    Proper mechanisms for independent promotion of senior CS is part of the overall reform package needed for the Republic. A truly independent CS can be a powerful agent in ensuring all the good bits of the checks and balances exist in a modern democracy.

  14. From my brief experience within Irish public service, I’ve seen many PhDs peppered about the place. That most of these are housed within arm’s-length agencies is a (dis)function of professional recruitment into the civil service proper.

    Unfortunately, having a PhD in X but being sandbagged on Y does more for levelling the field of play (handicap) than it does for true productivity.

    Marc is wasting his ammunition firing at economics PhDs. Surely he has noticed the majority of PhD students present at IEA events are working on quantitative/policy-related topics. Perhaps his real gripe is with the encroachment of irisheconomy.ie glitterati on policy debate. “Crowding out” anyone?

    More seriously, all of this owes much to Colm Harmon’s earlier posts on professionalising economics (read: quantitative social science generally) within the cushiest of Irish monopolies: ye olde civil service.

    http://www.irisheconomy.ie/index.php/2010/01/29/economics-expertise-in-the-irish-government/

  15. Once every 6 months or so for at least the last 3 years, Garrett Fitz has written a piece bemoaning the lack of Ph-dizzled chaps and chapettes in the DoF, here’s one, it’s paygated, but there are a fair few like it: :http://www.irishtimes.com/newspaper/opinion/2009/0110/1231515465825.html

    Surely the only positive yet taken from the crisis is the introduction of Honohans, Elderfields, and Ahearnes into the echo chamber. Forecasting, as I think every second post on this blog feels obliged to point out, isn’t really what most of the economically minded propeller heads on the Island do, but still, more econo-wonks in the DoF at least couldn’t hurt, given how badly they’ve gotten it wrong recently.

  16. A PhD is a research qualification, not experiental learning – usually taken after you complete your undergrad years. If the two periods are consecutive – you just might end up as an ‘ignorant expert’ – (not my phrase by the way). Buyer beware I suppose!

    Coleman, not very artfully, completely hashes two separate issues. Formal Authority versus Functional Authority; your position or grade versus your experience and wisdom. He is correct about one thing though. In the CS, or institutions of similar ilk, you do not speak out of turn, and you posit your opinion in Spin-speak.

    B Peter

  17. Mark Coleman published a book in 2007 entitled “The Best is Yet to Come”.

    A rather unfortunate title.

  18. Coleman buries his only correct assertion beneath the badly researched (and inevitably contentious on this blog) comments re PhDs.

    K Forde is clearly correct in highlighting fundamental problems with promotional systems and resulting motivation of individuals in the CS. I disagree however that it is not also a matter of ability. Leaving aside the question of whether or not a PhD per se is the appropriate qualification, the current generalist practise of moving people around within the CS regardless of skillset predictably causes problems.

    Many positions which require rigorous professional skill are currently manned by individuals with little or no training who have simply come up through the ranks – or completed dubious public sector specific qualifications designed for the Irish civil servants (does anybody ever fail?). This causes major skill, expertise and experience deficiencies throughout the Irish public sector, not just in finance.

  19. “Doing a Coleman” (or maybe Marc Colemanballs a la “Private Eye”) may end up becoming shorthand for a staggeringly sweeping statement. Will Brian Cowen now add an excess of PhD qualified economists to his list of approved reasons (i.e. not involving him) for our economic depression? However, there is and has been an awful lot of good writing and good investigation of the crash in the Sindo. It’s wrong to “do a Coleman” back at them.

  20. I know Coleman says he qualified the sweeping claim in the title of his book by writing that there were problems with the economy. I’m afraid it still falls into the same category. The only way he could have made it accurate was to change it to, “The Best is Yet to Come…it’ll be just after the depression”.

  21. @ Eoin Bond

    (Honohan is a new exception to this)

    Colm McCarthy is an exception too, as I understand it. Indeed, from The Phoenix:

    “Colm McCarthy has been a prominent member of the Irish commentariat for thirty years. Indeed, his prominence in economic debates stems largely from his highly visible public profile. McCarthy had early stints in the Central Bank and the ESRI, and latterly has lectured at UCD since 2005. Nevertheless, McCarthy has spent the bulk of his career as the M in the economic consulting firm DKM. While economists frequently take on consulting jobs, these are generally undertaken for the money and the results are not seen as conferring status within the profession. Academic work on the other hand often involves the acquisition of a depth of expertise in correspondingly narrow areas, a kind of trap which McCarthy has sidestepped through his late entry into academia. Consulting has equipped him to comment on a broad range of topics. His undoubted respect in the profession has resulted from his energetic participation in public forums including high- profile media work”

    (Wonder who wrote that?)

  22. @ Brian Lucey re David McWilliams and Euro-monomania.

    I an an admitted sufferer of that monomania myself.

    Those who dispute the centrality of the Euro in our crisis (and who posit other central causes) need to credibly explain just how it is that exactly the same pattern of crisis has been simultaneously visited upon Ireland, Spain and Greece.

    To my mind, a Euro-centred crisis is the theory that best fits the known facts. But, as in any sceientific argument, one awaits another theory that better fits the facts …

  23. This whole debate on Marc Coleman’s quote is misplaced.

    Due to a spelling error the line “The obsession with producing only PDs is the main reason the crisis happened” was printed as “The obsession with producing only PhDs is the main reason the crisis happened”.

  24. @ All,

    Damned if they didn’t, they’re now damned because they did. And those doing the damning were often hobnobbing with, profiting from or borrowing like boyos from the same bankers. So spare us the moral outrage.

    There is a real ring of truth in this statement to my ears. I recall several conversations in late 2008 in Ireland involving some of the most leveraged private individuals in the Irish state, who used language that would make the air turn blue to describe the behaviour of Irish banks. While at the same time, if they themselves had not been extended credit lines a mile long to buy all sorts of rubbish, that was a waste of money, the knives would equally have been out. This is one instance where the term ideology is a useful one. If you are following an ideology (related to property in Ireland’s case), as a large segment of the private business class in Ireland during the boom years did – there is no room to question-ing of any business strategy. There is no real room for creative, multi-disciplinary thinking. This is why I find discussion about the crisis slightly misleading. The event of the ‘crisis’, has produced a discussion which ignores much of what was wrong prior to the crisis. It is like archaeology. One has to dig through the uppercrust of history which is the crisis from 2008. There is a huge body of literature which deals with the 2008 period and its events. There is not the same analysis done of events prior to that. Attention has been shifted away from the behaviours of a portion of the business class in Ireland who attempted to pursue an ideology (based around property) for a decade prior to the Irish crisis. The haven’t been held to account for forcing their ideology upon Irish society for that period. Lets face it, to have honest, upstanding politics, you do need an honest, upstanding business class who inform the politics. Ireland didn’t have that. That is why things such as the Moriarty tribunal will be welcome to me, to shake things up a little bit. I have seen guys attached to Dermot Desmond and others fling around hundreds of millions with pure abandon. The high moral tone about the cost of the Moriarty tribunal is a bit much for me to stomach. Sure, I would argue for a way to investigate our own affairs in this country, which doesn’t cost a quarter of a billion everytime. But to hear the criticism coming from the business class who behaved so badly, and pursued an ideology for decades in Ireland, is too rich for me. BOH.

    http://www.irishtimes.com/newspaper/frontpage/2010/0524/1224271013398.html

  25. I bet the arch-conspirator, one M. Kelly, is marked with the sign of the Ph.D.

    How else to explain all those inaccuracies contained in his article this weekend, helpfully pointed out by the meeja geniuses who gave us an unburstable property and debt bubble, a few short years ago.

    Do you guys get tattooed with the letters on your arm after a conferral, and do you press same to summon M. K?

  26. @ Pope Epopt: Prof Kelly is ‘merely’ a messenger! There are plenty of others. I accept that it can be intellectually difficult to refrain from ‘dumping’ on specific points – rather that attempting to retain your concentration long enough to ‘get the gist’ of a piece. Its a human condition.

    It is of little lasting consequence that incorrect facts are used. These can be corrected – with the correct ones! What is a problem is the nature of the Spin-speak used by critics. Read the piece challenging MK in to-days IT, from the DoF. Grade A+ gobbeldygook! Most readers would probably assume that a statement from a gov dept MUST be correct. You wish! You must apply the Galloway Paradox: if something is officially denied, then it is absolutely true!

    B Peter

  27. Is there enough teaching of what the economic data actually means to an individual, a corporation or the governments finances?

    Do you leave college knowing how to forecast GDP, Unemployemnt etc?

    Is this not what the article was getting at.

  28. @ Karl,

    “…lost count at about five…”

    He might have a point when a PhD can’t count passed 5!

  29. bty how does the DoF get away with having so few economic bodies on board…all of the civil service in fact? I’m only away of one or two economists and statisticians within the civil service (main depts). Whereas in the civil service in Britain each department has hundreds of economists and statisticians who interact in a mix of applied and theoretical material and have on the job learning (research to PhD level but without the qualification). There is a solid department dedicated to economic analysis.

    and what do we have…I’ll tell you…..about 15,000 admin staff!!!

    Holla!

  30. He seems to be shedding red herrings across his pages.

    All the applied economists were in a similar position to those in the civil service or making money out of what they knew was going to happen!

    There is no obligation on any economist to warn of what they may have thought was about to happen, especially after muppets and spanners like Bertie Ahern were advising suicide for those who did. If they were making ready for the fepression, they were under no moral obligation to advise others.

    The whole problem of warning others, is actually one of ethics and there is no encouragement for that approach in Ireland. Whether or not economists knew what was likely to happen is another question, relevant to the teaching of the subject?

    There was a theoretical regulator who could have warned and a CB that should have warned, but did so privately and were told to shut up. No Ph.D involved there.

    Mr Coleman may as one poster said, be doing this deliberately to besmirch “academic” economists who are now warning what TPTB should be doing and which is no doubt, irritating them no end.

    Nuff said?

  31. Seven govt departments have statisticians on board, most but not all on secondment from CSO. One of those without does have an econonmics section, but ours does not. Equivalent dept in UK has about 20 economists employed. There are quite a few well trained folks in the Dept with solid Masters degrees in economic policy analysis from IPA and TCD but usually they are back into the lucky dip pool as soon as they return. Maybe its a form of decontamination.

    PhDs in the agencies are devalued because practically everyone has one!

  32. Coleman does have points worth discussing (no, really). I have edited the relevant passage to remove the Colemanballs:
    “Academia must also change…The lack of emphasis in many universities on practical forecasting and economic analysis is…alarming.

    …Too many universities, central banks and policy institutes implement a form of PhD apartheid that — bizarrely — punishes job applicants for having real-world relevant experience while recruiting those with brilliant PhDs but no real life experience whatsoever.”
    I would make 3 observations:

    1. In undergraduate degrees in the past little attention was given to banking/credit and bubbles generally. Has this changed since and if not will it be changed and changed permanently?
    2. Stockbroker and bank economists dominated overall economic policy debate in the media in the past. They are welcome to contribute but as we have seen in the bubble and in the NAMA debate they basically promote their employers interest (even Coleman says this). This crisis has seen a huge and welcome increase in academic economist involvement in discussion of the broader economy. But are mechanisms to ensure this remains the case permanently eg., a council of economic advisors, going to be implemented or will the public just have to hope this website remains in operation.
    3. Many times in the NAMA/banks debate I have seen that those coming from the stockbroking/banking area DO have the advantage of knowledge of business, specifically banking, which they are able to use (and misuse) to great effect. It’s the equivalent of being a hugely experienced Senior Counsel up against academically trained academics who have no courtroom experience in a court case. The Senior Counsel has a huge advantage. For this reason and as a general point would more economists moving between not only the academic world and government but also the business world, here and abroad, not be a real improvement? If hopefully many more economists are brought into government ensuring that there is a fair representation from a business background would be a good idea (in spite of all I say about them).

    Will active measures be taken to achieve these changes? I hope so.

  33. @ Cormac

    If you look at the data you will see mid single percentage deterioration in economic growth and budget deficits in Spain, Portugal and Italy. That suggests a uniform euro effect as you describe. If you look at Greece, that goes to high single digits, that suggests the euro effect over laid with political incompetance/corruption. None of these has as yet seen their banking system implode after 2.5 years of decline-although Greece may be on the cusp of a banking crisis.

    In Ireland, we have seen double digit percentage point deterioration in growth and budget deficits and an implosion of the banking system. That suggests something uniquely Irish afoot.

    To blame the Euro for our woes is to find a scapegoat. I thinke we should look at who was governing us over the last decade, both political, corporate and permanent to point the finger of blame.

  34. @ Ollie V

    “For this reason and as a general point would more economists moving between not only the academic world and government but also the business world, here and abroad, not be a real improvement?”

    Scary event here – me and OV in complete agreement on this point. First sign of the impending apocalypse?

  35. @ George

    The efficiency in the UK is the way analysts are used, not just on a quick consultancy basis which seems is the case in Ireland. Economics and stats are used here in the UK on every level and policy is completely based around the results given.

    I think the CS in Ireland would beneift massively from input from a full/dedicated analytical directorate to feed policy.
    Not some dingo who has been in the CS for the past 40 years with a 40 year career in admin.

    I wouldn’t read to much into the PhD thing, a masters level degree, a few years work experience and bag of common sense should provide the right ingredients for a good economicst/analyst to feed policy.

    No Doubt.

  36. @Eoin Bond
    Yes, reading your earlier post I…..(mouth contorts)….I agree.

    “First sign of the impending apocalypse?”
    Actually, now that you mention apocalypses I haven’t heard about turmoil in the markets since, well, nothing in the last few days anyway. The Great Panics of 2008 – 2010 couldn’t be over, could they? Though if I had to bet I’d bet on them continuing for a while. But they can’t go on forever (in the Eurozone anyway)….

  37. @consaw
    Agree re UK CS. Their output is always impressive.

    Here we seem to have a significant reluctance to slow the process down in order to engage in significant analysis of proposals. Instead we slow the process down elsewhere, getting bogged down in legal minutiae of proposals.
    The Government has to take responsibility for not insisting that all new proposals are thoroughly analysed. D/Finance has the right kind of guidelines in place but doesn’t/can’t get Depts (including themselves!) to live by them..

  38. @ Cormac Lucey

    Cormac,

    Your argument that the euro is the main cause of Irish economic woes has no credibility.

    It may be comfort food for your former boss, Michael McDowell, and the PDs who were boomtime cheerleaders of what turned out to be a historic slump coalition.

    Of course low interest rates and an international credit boom were among the many factors in the Great Recession.

    The result of the reckless mismanagement of Ahern, Harney and McCreevy are comfortable lives for themselves but misery for so many others.

  39. @ Brian Woods

    I agree with this.

    Any degree is a certification of academic achievement not whether a person is an idiot or not.

    People don’t often distinguish between intelligence and wisdom.

    Most economists have an a narrow range of work experiences, including Marc Coleman.

    Prof. Seamus Grimes who works at the Centre of Innovation at NUI Galway, is currently based in Shanghai for the second time in 2 years; between those moves, he was based in Nairobi.

    This type of experience is very important as we get too much of the type of policymaker such as the majority on the Innovation Taskforce, ignorantly waxing on about entrepreneurship and risk from comfortable superannuated perches.

    Regarding the use of the honorific “Dr,” we appear to have an obsession with titles that is common in former colonial countries.

    GPs write to the Irish Times on non-medical issues and identify themselves as “Dr” — a pompous trait surely?

    I guess that most people don’t know that Gordon Brown has a Ph.D (not an an honorary one).

    The executive board members of the ECB who have PhDs such as Jürgen Stark, don’t use the honorific.

    When Larry Summers as president of Harvard had a dispute with academic Cornel West, the latter contacted the New York Times and asked to be referred to as “Dr.”

  40. @michael hennigan

    Your Finfacts website makes for good reading but to use a word you often use I think your spoofing on this one. Don’t lump together standard degrees and PhDs as you are far more likely to get idiots emerging from the former thinking they know everything. Genuine critical analysis is (in theory) an important developed skill of those with PhDs while masters tend to encourage more technical competencies.

    Younger PhDs can often carry out the bulk of research donkey work and can get little credit for it as star academics summarise their results and go on a world conference tour. There is enough discrimination against PhDs being overqualified for jobs and under-experienced in the workplace without you adding fuel to the fire.

    Rather than calling yourself a doctor, in most job interviews outside your immediate field of study you would try to bury the evidence of what you were doing for those few years as employers become suspicious that there is a smart alec in their midst.

    Doing a PhD can often involve gaining a lot of experience in many different areas although this is somehow not considered equivalent to ‘experience in the workplace’ which often involves doing a repetitive and limited series of tasks. That’s not to say that academia isn’t prone to living in bubbles and having too many coffee breaks…

  41. @ Michael Hennigan
    It would be better to park any personal issues you have with Cormac Lucey and engaged with the issue he raises.Your summary dismissal of his perfectly supportable point in relation to the centrality of the Euro in Ireland’s disaster is dissappointing.I am a relative newcomer to this blog and rate your contributions as (often very) well informed and incisive.
    Why is it that you and so many others cannot accept the blindingly obvious ???
    Yes,the abject calibre of our politicians,regulators etc was a major factor .However it was the level of interest rates and more importantly the ability to explode bank balance sheets which resulted from Euro membership which blew us up more than anything else.

  42. @ Tim Morrissey,

    Don’t lump together standard degrees and PhDs as you are far more likely to get idiots emerging from the former thinking they know everything. Genuine critical analysis is (in theory) an important developed skill of those with PhDs while masters tend to encourage more technical competencies.

    Good points Tim, as always. Keep it coming. I gave this thread a day to allow it to settle in my brain. Since this morning, I have suddenly realised that I personally know half a dozen professionals involved heavily in fourth level research. That is just the physical sciences, no including the other half dozen I know doing something in social sciences (and whose work I do follow up). I wasn’t conscious of this fact until this evening. In the past year or so, I have had more enjoyment reading, listening and learning about the work of a few Phd graduates working in the construction industry – than almost anything else I have done in a while. The stuff they get into, analysing deeply how the construction industry works and suggesting problems which need more attention, is so useful. There is probably no other way to get into that level of depth and inquiry, than through some kind of funded fourth level research. In fairness also, many of the guys I have got to know myself at the fourth level of education, in the engineering field, do make a real effort to present what they are doing and discuss it. The other side of the coin is, there are huge chunks of the construction industry, in which I work, where there is no formal degree, Phd or otherwise one can obtain to demonstrate competency in. In the industry that I know best, there is indeed a huge gulf between the academic and the reality. A change of pace, which is indeed quite shocking. The reward structures are quite different and may appeal to different kinds of people. I haven’t entirely made up my mind on this one. One particular young Phd qualified engineer springs to mind. In terms of the general concept, there was nothing in his work which a degree qualified engineer would not understand. But I noticed, the Phd qualified engineer knew a heck of a lot more about the difficulties of the real implementation of the concept. I find his feedback on that score very illuminating and helpful in my day job in project management. That is the difference. He can show me a project he did in Britain, where he had equipment on site at all times during a project to capture real data about how the structure was behaving as the project went on. A bit like that movie I guess, about those crazy people who following Twisters in the United States. There is no other way to do that sort of crazy, deep, on-site stuff, without (A) having a screw loose, and (B) having a supply of eager beaver Phd students with excess energy to release. The work needs to get done somehow, somewhere I guess. It wasn’t until this evening I realised I am a beneficiary of this work, indirectly, myself. BOH.

  43. @All
    Corruption has probably had an equally big effect on our crash as membership of the Euro has had but it is also rarely mentioned in mainstream media. This excellent blog puts a strong case for its pervasiveness and harmfulness.
    http://www.publicinquiry.eu/

  44. @ Paul M

    Cormac Lucey has a point but he has over estimated the relative contribution from Euro membership to our demise. The truth is the economic downturn here is of an order of magnitude 2-3x greater than the downturn in the other peripherals, with Greece filling the runner up spot. Therefore there must be other dominant factors at work.

    In my opinion, the most likely culprits are a financial regulatory system whiich resulted in our banks levering up excessively, while the evidence from the periphery is that their national champions did not follow suit to the same extent. In addition a pro cyclical fiscal policy which doled out bubble tax revenues to the public service in terms of numbers and rates also contributed to our demise.

    The culprits for this fiasco are probably in order an i) incompetant political elite ii) an underskilled public administration and iii) the usual suspects in the private sector.

    In truth our problems are more homemade than caused by membership of the euro.

  45. @ Michael Hennigan

    You have not even attempted to answer my question. So I’ll ask it again:
    “just how it is that exactly the same pattern of crisis has been simultaneously visited upon Ireland, Spain and Greece?”

    @ Tull McAdoo

    Is our downturn 2-3x that of Spain and Greece or did we just experience it earlier? Our GDP fell heavily in 2009, Greece’s kept growing (according to official statistics!!!)

    In any event, one would expect our crisis to be greater than those of Greece and Spain as (i) our private sector debt level as a % GNP is significantly higher and (ii) the growth in our private sector debt level over the 1997 – 2007 period was much higher. If, as I do, you believe in a financial recession centred on stretched balance sheets (bank and individual), then we are sadly worst placed.

    Read Richard Koo’s excellent “Balance Sheet Recession: Japan’s Struggle with Uncharted Economics…” for his exposition on the theme of balance sheet recessions: http://www.amazon.co.uk/Balance-Sheet-Recession-Uncharted-Implications/dp/0470821167/ref=sr_1_3?ie=UTF8&s=books&qid=1274769185&sr=8-3

    He has a more up-to-date book which (as so often) I have bought but not yet read. You will often find his Koo’s views featured at the Zero Hedge site.

  46. @ Paul M

    Paul,

    I believe that the outcome would not have been materially different outside the euro.

    The builders party with cheerleading for tax cuts from the one club golfers, the PDs, coupled with a pathetically weak Central Bank, would not have delivered prudence.

    In Iceland, the PM became governor of their central bank; in Ireland, Bertie Ahern would have been the de facto governor and who would have said boo to him?

    High interest rates like Iceland’s would have given an overvalued punt and a huge inflow of carry trade cash.

    A peg to sterling would have also resulted in a smaller but still significant inflow of hot money to the perceived “miracle” economy, seeking yield without a fear of a drop in the value of the currency.

    I also reject the argument that we had no control of monetary policy within the EMU.

    In Spain, the main banks, as distinct from the politically controlled savings banks, the <i.<cajas, were forced by the Bank of Spain to make extra provisions during the good times and the result compared with the Irish banking experience is plain to see.

    Only a minority EMU countries, ones that were appallingly governed, are now basket cases.

    @ Tim Morrissey

    Tim,

    I didn’t wish to imply that standard degrees and PhDs were similar.

    My main point was the distinction between intelligence and wisdom.

    Anyway, I have been called worse than a spoofer!!

  47. @ Cormac Lucey

    You have not even attempted to answer my question. So I’ll ask it again:
    “just how it is that exactly the same pattern of crisis has been simultaneously visited upon Ireland, Spain and Greece?”

    Cormac,

    Larry Summers said yesterday: “There is an old joke about economics exams. The questions never change, but the answers always do.”

    I’ll stick to the answer I gave above – – the common denominator is poor governance with histories of corruption.

    Denmark had its currency pegged to the euro and it is one of the world’s best governed countries; it does matter.

    Where Spain’s central bank was proactive in risk, it had its desire effect and Banco Santander is one of Europe’s soundest banks despite their property bubble.

  48. Cormac,

    Just consider what did happen with our own currency: The General Election of 1977 had marked the entry to Irish national politics of Bertie Ahern, Mary Harney and Charlie McCreevy. In 1978, a public spending fuelled boom in Ireland resulted in a budget deficit of 17.6% of GDP (gross domestic product) – – a record for developed countries according to the International Monetary Fund (IMF), for the period 1970-2008.

    http://www.finfacts.ie/irishfinancenews/article_1019384.shtml

  49. @Michael Hennigan – “and Banco Santander is one of Europe’s soundest banks ”

    I will remind you you said that in a year or two’s time 😉

    I would watch that space we call Spain very closely.

  50. @ Michael

    Bertie and co. hardly had an influencing factor back then to be fair

    I think the discussion here has completely gone of the boil now…
    i.e. “Coleman: Obsession with PhD Economists”

  51. @BOH

    As you pointed out there is much good and necessary work that goes on at 4th level that is rarely noticed by the wider public whose vision of (male) PhDs/Postdocs seems to involve a mix of the Swedish Cook in the Muppets, Ross from Friends and C3PO. Growing up in Ireland there is a readily available vocabulary in the schoolyard to describe future aspiring PhDs including ‘speccy four eyes’, ‘nerd’, ‘geek’, ‘weirdo’, ‘beaker’ and the corner boys/girls are just waiting there for the next guy/girl to come into the crosshairs. This continues into adulthood and until the younger nerds are scoring on a regular basis in the likes of Muldoons in Waterford and Copper Face Jacks in Dublin the smart economy will not be truly successful.

    There are probably five main reasons why Morgan Kelly is able to write what he
    does and these are that he’s….

    > intelligent
    > stubborn/independent
    > well trained in the art of critical analysis
    > hard-working
    > removed from the day to day swings and roundabouts of commerce that have daily/quarterly outputs

    Regardless of whether or not his future predictions are bang-on accurate he has done a great service to all those who could have easily been tempted by the dizzying property ladder since 2007 and for this alone I would happily contribute to giving him a pension with bells on it.

    The same cannot be said for Marc Coleman and the other cheerleading economists and I would recommend that they get their salary deducted to the average industrial wage and spend a few minutes in the scuppers with the hosepipe on them a la ‘What should we do with the Drunken Sailor’….

  52. @ Tim,

    All quite true. I had hoped that cultures were starting to change a bit during the Celtic Tiger. But assessing the situation in the round today, I’d say that Ireland still has progress to make on many of the fronts you have described above.

    @ Michael Hennigan,

    Interesting views on the history of the Irish economy. BOH.

  53. Seeing as it’s such a general topic…..

    I tend to bring many things back to Plato’s Republic. In this work he divides the human thought process into three parts.

    70% rudimentary (in fulfilling normal tasks, we switch to “pilot” mode)
    15% creative and emotional, maybe even sensational
    15% intellectual and analytical

    The latter two have an influence on the former (they give it flavour, if you like).

    He divides society the same way and goes on to say that there is a constant state of conflict between the intellectual and the artists/sensationalists (who respond emotively, often too soon for their own good). The greater number (“rudimentary” or mass) are more likely to identify with the artistic/sensationalist faction.

    It is my belief that there may be a similar balance between industry economists/civil servants/journalists (suffering conflict of interest and prone to bias, and often sensationalism) and academic economists (who would be expected to research in an unbiased and analytical manner). I would hope that academic economists also assume the responsibility of informing the general public who are not really concerned unless it concerns them directly.

    My question is; where have the academics been for the past 15 years? We are in a world of pain, and the revelations have not coming early enough from academia.

    I agree with Marc Coleman in some respects, and think that academics should have had their “fingers on the pulse”. If you have 100 academics, you should hope to have 100 voices, each on slightly different. If you have 100 bank economists…well then tell-tale signs are more likely to go unnoticed.

    Whether a PhD can prepare an individiual for intellectual and critical thought is not the question. Whether individuals with PhD’s think critically is something that the above would call into question.

  54. @ Michael

    You refer to poor governance as the root of our problems.

    I don’t defend poor governance. But, having lived and worked at a senior level in Germany for seven years, I can assure you that there is considerable corruption there. For example, the current German finance minister had to resign as leader of the CDU as a result of his incomplete account of donations to the CDU by weapons manufacturers. There are many, many other public examples.

    I would go so far as to say that Germany is as corrupt than Ireland.

    But Germany is not in the same economic predicament as we are. The reasons, unsurprisingly, are economic. Their EMU interest rates were too high for them over the last decade – thus deflationary pressure on their cost base and a reduction in unit costs.

    Ireland’s EMU interest rates were too low for us over the last decade – thus inflationary pressure on our cost base and a steep rise in unit costs. We now face the opposite: a prolonged period of EMU interest rates which are too high for Ireland and which impart a deflationary impulse (in addition to all the other factors which are doing so).

  55. I was too late with my post, but I would be interested in hearing any views on this. I don’t understand why it takes Morgan Kelly to alter the perception of the economic landscape for so many economists. In reality, he made some very simple comparisons that a geography student could have made – he put numbers in context. He also stated that unemployment data is one only of the only economic indicators he follows. His proposed solution was key, but I’m surprised to see so many in “battlestation” mode over, since his press release.

    Peter

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