Behaving Like Teenagers?

Hear, hear.

I agree with these sentiments, particularly at the end of the post.

Remember that only eight other countries share our position of being sovereign liberal democracies since 1922, even if you count the denial of votes for women as “democratic”.

That improves the quality of our civic society and I believe it explains the absence of Irish riots relative to other countries. We complain about and protest government policies, but underneath our complaints, we really do accept the idea that political change happens at democratic elections. Certainly we accept it more than many of our European partners. If you look at the list of our fellow long-term democracies, like the UK, Sweden and Switzerland, I think their people would respond to our spending cuts and tax increases like we did. Greece and France are another matter.

Looks like a great piece of work Karl but that chart is not easy to read but I guess we need read the World Economic Outlook.

We will have taken eight years from 2008-2015 to get our deficit under control. Do you have any idea how this compares with other countries that have tackled large deficits?

Karl,
Very well said and you made the point crystal clear. I think Ireland does deserve to be cut some slack given our honest and stoical approach as nation. We mismanaged our boom badly, yes. But we are making extraordinary efforts to claw our way back. Furthermore we have been a nation committed to the European project and worked its institutions very professionally and diplomatically. We are not always causing trouble and upsets. True, two important referenda failed here, primarily because of poor engagement first time round by the political elite. On both occassions, however, we had a fuller debate second time, and the depth of our support for Europe was made clear. In parallel, referenda have failed in some of the bigger nations, through similar failings, but the elites there either did not have balls for a rematch or had no faith that their peoples could be persuaded to endorse the proposals in a second round.

This is the important context which ought to provide a preamble to our discussions with Europe. The other context of course is that the banking-turned sovereign debt crisis is a result of European as well as national failure. One the one hand the larger EU players acknowledge the latter point – they want to renew the economic and financial apparatus of the Union in order to make it more robust, but on the other hand they refuse to allow the extent of European failure to have any bearing on the way the current crisis is resolved.

It seems now that the French and Germans are determined to squeeze a concession from Ireland in return for any adjustments to terms of the rescue package. Whether you agree or disagree with the proposals for a CCCTB, the manner in which Merkel and Sarkozy have hard-balled a small and compliant member state over rescue terms will not go unnoticed in other corners of the Union. It also runs the risk of turning one previously Europhile nation which began to waver into a commited Europhobe. The whole episode has been unseemly and I think very damaging for the union in the medium term. But Merkel and Sarko have no medium term in minde – they both face electoral meltdown in the short term and will place any tricks, however nasty, in the meantime in the hope of shoring up a piece of support.

Ireland has been disgracefully treated by the ECB and by the Franco-German bloc. I think the right solution for Ireland was default and avoiding that was done to protect the interests of the ECB and banks outside Ireland rather than Ireland itself. Ireland is not being punished for the stupidity of Irish banks nor even for the stupidity of the previous government in giving the guarantee. It is being punished for the stupidity of German, French and British banks in facilitating the bubble.

Karl,

Most of the ‘commentators’ you refer to would likely agree with you if you are referring to Dublin mainstream media ones.

You use global data but you may have little familiarity with the typical victim of this brutal recession in the private sector.

I for one have never compared any group with teenagers as my view is that vested interests tend to be more calculating.

As for the ‘silly business’ of privilege days, the point really is that if a bankrupt country cannot implement such small changes among an elite group when tens of thousands of people who want to work face years of misery and depression on the dole, maybe it’s the latter you should fear in terms of civil strife.

Do you not consider the bonanzas arranged by ministers in the last government a disgrace in a small country where the majority of private sector workers do not even have a basic occupational pension?

Yes you may ask, where is the outrage?

Do you know how long this programme of reform has been ‘in process’?

Since 2002 and even the head of the Labour Relations Commisson referred to the ‘scenic route’ when commenting on progress on talks about ‘transformational’ reform under the Croke Park agreement.

Do you get angry when lawyers as public contractors earn up to €10m – some of them investigating bribes equivalent to what they earn per day?

Do you get angry when you hear that the cost of litigation in Ireland is double the level in Germany?

Why does the VHI need to increase premiums by up to 45%?

Why are Irish hospital consultants paid double the level of counterparts in Norway – one of Europe’s richest countries with a sovereign wealth fund worth more than $500bn.

You should get a copy of the Bord Snip report from your colleague Colm and put it on you reading list.

If we cannot get progress on 2 Victorian era special days for civil servants, what chance have we in reducing for example 88 planning authorities?

Thank you Mr Whelan.

Let us not forget that the pro bailout/austerity, anti progressive politics/poor choir have powerful allies in capital and in the larger EU and have always, always, been in favour of dismantling the welfare state and rolling back the advances in workers rights of the last fifty years. They see the current crisis in capitalism as an opportunity for some creative destruction of the state, an opportunity they have grabbed with both claws.

This was always going to be a tough battle to win, we can now at least see who is willing to fight, not just for Ireland but for a just world.

Even Charlie McCreevy himself had ambition for reform at one point but like the Civil Service Arbitration Board yesterday, under the chairmanship of a senior counsel (presumably a wealthy lawyer) said the savings on the privilege days were not worth the ‘grievance’ they could cause and that has been the typical reaction

In November 2003, McCreevy said in a speech in reference to the 2002 benchmarking report “while the Government is committed to honouring benchmarking, I would like to stress that the payments are dependent on compliance with the terms of the agreement. If the conditions are not met in
any sector, grade or organisation then the payments will not be made in that area.”

http://www.finfacts.ie/irishfinancenews/article_1019286.shtml

It took until 2009 for the Government to take action in a situation where it was paying €1.6bn for drugs that had a factory gate price of €1bn.

Maybe off topic. I am just listening to the Moriarity Tribunal report. Michael Lowry in particular is totally lambasted. This guy continues time and again to top the polls. He escapes any sort of accountability. And Karl complains that we are accused of behaving as teengers!

Unbelievable corruption! And we expect sympathy from our EU partners!

Many thanks to Karl Whelan. Not only a superb rant, but highly informative as well. Economics blogging at its best.

It’s true that the experience for PS workers has to be a little more nuanced than many on the ‘right’ claim. For starters they may be married to non PS workers who have lost their jobs and they have, as Karl says, for the most part taken serious hits in their pay. Given that they will have on average greater debts than their private sector counter parts – I’m guessing but I believe it follows from the fact that they earn more – then these hits to pay will be all the more painful. However presenting an overall picture that talks about adjustment in relation to GNP for Ireland and then eliding into Public Sector workers suggests that Public Sector workers and ‘Ireland’ amounts to the same thing.

And that’s the trouble right there – that’s where Michael H. nails it. If we’re so concerned about the ‘naysayers’ and those who ‘talk down Ireland’ and ‘optics’ etc.. then what about the optics of an unreformed public sector, of hundreds of millions being paid to consultants for – er -whatever it is they do, to lawyers and so forth..?

The truth is that the Irish public sector and its Social Partnership creature + many amongst the organised an orgy of looting of the Irish treasury and, at the senior level, they are holding onto those gains.

Let’s just say that inordinate and unearned privilege at the top of the public sector and ancillary professions seems to be repugnant to most people.

Can we agree that such privilege is repugnant and that unless we are willing to tackle it then there is something dysfunctional about Ireland? Is that OK? Is that ‘insulting’?

Like burning bank bondholders (even the guaranteed ones), it is not a question of morality, it is a question of practicality. If we want to be able to reduce the overall level of debt, we are going to have to show that there is no other course of action open to us. That means squeezing all sectors of society. More taxes? Absolutely. Cuts? I’d prefer not, but I don’t see a way around them. Domestic default? It’s already happening and will go further.

What I don’t really see is fairness. Middle incomes are being unmercifully squeezed. Higher public servants get to keep their privilege days, treat their bonuses as salary and avoid responsibility for policy under their control. Lower paid public servants get to pay the pensions levy without ever receiving a pension (beyond the state pension) – they are subsidising their superiors.

Squaring commitments that people have made with the likely (and already happened) impacts to their income is difficult. A private company has the luxury of abrogating responsibility – it can make people redundant without considering their situation. For 10% of the working population that has already been the case. The state is in a different position. It has to consider the consequences, but not just the immediate damage. The long-term damage that an unsustainable debt burden will cause, the long-term effects of the unbalanced economy (the gap between GDP and GNP), the long-term sustainable level of government income and spending. Without considering these, the state runs the risk of driving carefully off the edge of a cliff.

I don’t believe it is about morality, indeed, if it was, then your post would have merit, for it is immoral to take away that which has been freely given and we would have a moral argument to use with our ‘partners’ in Europe. It is about practicality and fairness. Utilitarianism isn’t pretty; it isn’t popular; it is, though, effective…

PS I’ve yet to see a coherent breakdown of the 14.6 bn adjustment that has so far been made? Does anyone have a link?

Karl, I used to have a similar discussion years ago with my grandmother. She’d often comment on something in Ireland and say “Ah, sure things could be worse”. My response – from the time I was a kid – was always “Things could be better”.

Excusing Ireland’s continued sloth by making comparisons with Greece or France is as irrelevant as the well established habit of indexing house prices based on their reduction from the peak. I do not aspire to seeing Ireland as well run as Greece. I aspire to seeing Ireland as well run as it could possibly be. Similarly it doesn’t matter how much the house is down from its peak. What matters is the price now and its likely future.

Returning to your post, looking at simple facts is easiest.

You seem to agree that our Public Sector is still overpaid, our social welfare is still too high and our income tax rates excessively “progressive”. You also seem to agree that there is continued resistance from and protection of a variety of insiders in Irish life. OK so far.

However, you then assert that adjustment should be slow and gradual and that we should get credit for the progress of our adjustment rather than criticism for the fact that we’re still hugely “above par” on many measures.

But, here’s the key domestic point, if you wish to continue to protect people in the public sector or welfare recipients by maintaining excessive pay or welfare then you must choose to penalise someone else, to make them less able to afford a home or to afford car or childcare payments. There is no free lunch. Protecting some will require hurting others. The hurt may be less visible, but it is still there. The damage to people who are unemployed for a year longer than they needed to be is easy to hide. The lost savings or pension of a family working in the private sector is easy to hide. These groups are less well organised than the PS unions or other groups, but they are still real people and the damage to them is real.

By continuing to borrow vast amounts of money with almost no aim other than maintaining the excessive PS pay and welfare rates that apply, some sections of the country are effectively given permission to continue “stealing” money from other people in our own country. Net taxpayers are the ones who will have to pay this money back, and the slower the adjustment the longer and harder you penalise those people.

Who are they? People in competitive industries. People whose income is volatile and uncertain. Young people graduating and entering work today. How long should they be forced to subsidise other citizens, many of whom are significantly better off than they are themselves? My point of view is that this should be “as little time as possible, on grounds both of justice and economic efficiency”. Yours seems to tend towards “as long as is possible, on the grounds that we want not to upset powerful vested interests”.

The key international point (and there is no need to characterise it as “insulting the Irish”) is the simple fact that we are still trying to borrow money – and simultaneously threatening not to repay it – from people who live in countries that have lower PS pay, lower welfare and where taxation rates are effectively higher for the vast majority of the population. This is not an insult, it is a fact. It’s a fact that the lenders see all too clearly and their perception is not that we’ve adjusted a lot, rather that the position from which we are adjusting was truly astonishing.

Ultimately I entirely disagree with the idea that aspiring to a better Ireland in the future equates to “insulting” the Irish today. Ireland can be a far better country than it is today but there are still too many vested interests slowing change; still too much concern about protecting some people over others; not enough fairness or consistency in the rules.

Ireland’s people are not feckless teenagers. Some, like those who reelect our more disgraceful TDs deserve worse descriptions, but most are ordinary decent people. However, many powerful groups in Ireland are cynical and selfish and persistent and do not care about others. Their efforts are, frankly, to delay adjustment as long as possible. It suits them nicely. In my opinion it damages too many others and is immoral in the highest degree. By the time we finish paying back the debts accumulated from a slow adjustment we’ll have accumulated 20 years of brute injustice.

Talk of ‘vested interests’ applied to public sector workers, low and middle income workers and those on benefits is a case of what the Freudians call ‘projection’.

The vested interests that are being feather-bedded are the banks, firstly Irish and now EU. Talk of even moderate burden sharing in the crisis is shot down with tales of all the damage that would ensue on the very same financial sector at the centre of the crisis.

Surely, if this vested interest is too fragile to accept the normal market disciplines re the pricing of their assets, then it is no longer fit for purpose? In which case robbing taxpayers, that is workers, consumers and viable businesses, of their incomes in a vain attempt to prop them up is worse than a scandal- it is unworkable.

The adjustment has been impressive alright but we still have such a long way to go and I think things are going to get tougher for everybody, including those who made the right decisions during the last 10yrs and didn’t buy that house, go on that holiday etc. This of course means they may have a right to be peeved and moralise although of course that won’t get us anywhere.

It all just goes to show we were never as well-off as it seemed- the adjustment is really nothing more than our adapting down to that real standard of living we can actually sustain. The inflation of such an incredible bubble is an indictment of those who governed us (and we who elected them).

It would be a beautiful world if only costs (and debt) weren’t so sticky but the bottom line remains…so what are we going to do, if not adjust some more?

When a catastrophe like ours happens there is a tendency to see everything in the negative and see only what’s wrong. The problem with that is that we attempt to make changes on too many fronts. For sure, there is a massive litany of structural and financial problems in Ireland – from state quangos, to protected professions, from public service to the apparatus of government itself. But we will end up runnning around in circles if we erupt when every single flaw in our institutions, governance procedures, and administrative culture is mentioned. Only so much can be taken on at a given time and given the reality of vested interests, without doubt some battles for change will have disappointing results. But we cannot demur attempting to sustain the mood for change that has accrued.

Michael Hennigan is right: many of our institutions need modernisationa and overhaul urgently.

And rather than facilitating the modernisation of government and administration via benchmarking, the Celtic Tiger masked the deep legacy problems that needed to be addressed.

But having said all that, we need perspective (of the kind which Karls post provides). One commenter so far has highlighted the huge increase in spending during the Celtic Tiger. Yes, much of that went into highly inappropriate levels of pay and was locked in to badly designed institutions. But not all of it was simply waste. Health and education were mentioned: yes pay was and is an issue there, but we shouldn’t forget the enormous increase in personell in these fields, many of whom were required. Take the expansion in special needs and language assistants. Or the extra spending on disadvantages schools. Enormous efforst were made in these areas to bring us from a position of shameful neglect to something approaching an honest attempt to address the problems. Health too: despite all its flaws, and there are many, the Health service now delivers a far higher output than it did ten or so years ago.

Point 1: not everything was waste, not by a long shot.
Point 2: broad, high level swipes yield nothing. Each area must be examined in more detail to locate the main problems.

The big issues need to be identified and fixed. But not everything can be addressed at one time, and to even try will guarantee failure. This is why the current government will need to create a shortlist of significant areas and stay focused on those. They cannot open battles on too many fronts.

Our fiscal crisis is due to paying far too much PS pay and pensions and Social Protection and our banking crisis is due to paying a very wealthy few far, far too much for their land. We need to reverse both processes and find it very difficult to do so. Oh how nice it would be if the EU allowed us to hold on to these ridiculous imbalances by subsidising us and forgiving our debts. Only teenagers would expect that sort of bail out.

Well said Karl!
Now if it could be put to music we have our next entry to the Eurovision song contest?

Great post by Prof Whelan.

I have always understood that economists as with businessmen should be aware of actions being taken “at the margin”, meaning that there is a certain amount of action you can take in one direction before you reach a point where further action becomes counter productive.

Lets call it the marginal return on cuts. In terms of out deficit of course.

Continuing cuts will at some point tip over into counter productivity. There are clearly as M. Hennigan has said inefficiencies in the system but it amazes me how so many apparently well versed commentators seem to think 14% in cuts on a 14% deficit will mean a balanced budget, this ignores the effect cuts have on the tax base, consumer confidence and importantly people in negative equity. So far we have achieved large efficiencies through cuts however there will come a point where further cuts will in effect deepen out problems and create more problems like those outlined by Prof Whelan.

Reform is no doubt needed however its important to be mindful that “cuts” as a means unto themselves must be conducted with the “margin” in mind.

“Irish public sector workers have seen enormous reductions in take-home pay via cuts in gross pay, a pension levy and tax hike and many are now struggling to meet their mortgage commitments.”

Enormous, one of Joe Duffy’s favourite pandering to the audience adjectives.

I thought the pension levy + pay cut averaged around 12-13% – gross. Probably around 6-7% net for median earners? Enormous?

Fine there’s tax changes on top of that which were worse, but they affect everyone and are of course partly to reduce the extent of cuts on the public sector. Also higher and lower earners got hit worse in net terms but the bulk of workers are around the 50k level.

Wonder what Joe-Duffy adjective would need to be dug out to describe the 2000-2008 run up in public sector salaries which gave room for the soft response to the relatively modest cuts.

I too would be interested in a breakdown of the adjustment made, I hope it’s not the case someone thinks that by reducing spending by 1B for 20 years you’ve solved a 20B deficit.

From the quality of some of the rebukes directed against those outside academic economics, I can only conclude that nerves are frayed. It is never helpful to use abusive and dismissive language. And it certainly is dismaying to read ad hominem disparagement – ‘economically illiterate’.

Welfare rates are too high in certain categories relative to the scale and types of employment needed to make a dent in the live register. An unemployed man with several children is unlikely to find a job offering a wage that would compensate for the loss of welfare allowances. This is needs to be solved. I have direct experience of men turning down jobs because of this anomaly.

The cost of living is high in Ireland. Wages aren’t going as far as they were three years ago for all the well-known reasons. But personal and domestic debt is still how high – probably about 40 miles high in €100 euro notes.

I firmly believe that the unless some form of debt resolution programme is rolled out nationally the country is sunk and all the corrections between here and the hereafter won’t save it. Whatever is devised will need to be radical, probably something suspended between the unimagined til now and the unimaginable. If the nation can talk all day and night about the default abroad, perhaps some energy could be devoted to working out how a default at home could contribute to righting wage and spending levels.

Jackh,
Leaving aside the semantics about what constitutes ‘enormous’, middle-paid public sector workers have seen their take home pay reduced very significantly and certainly to the extent that many of them have now extremely tight household budgets given that, as KW mentioned, they are locked in to outgoings such as mortgages. Is any of this as bad as losing the business you spent ten years building? No. Or as bad as being forced to uproot your young family from Rural Ireland and emigrate? No. Nor is any of this as bad as having your family swept away in a tsunami, but that is not the point. The issue is not about where the financial strain of public sector workers lies in the spectrum of possible human misery. The issue Karl was raising was how, as a managed response to a fiscal shock, the Irish response has been remarkable for the depth of the correction that was possible without either a breakdown in order or the necessity of government backing off. Irish government and society has managed an adjustment that has been large in comparative terms and where the only real dissent has been grumbling and an electoral meltdown instead of burning cars and broken windows.

@Michael Hennigan

Maybe everyone in the economy should securitise their future incomes and then lend them to Anglo? That way, they would be guaranteed.

Meh.

Bovvered?

Whatever!

Excellent Karl.

The equivalent of the irisheconomy blog on the Guardian website has the following today. The quotes below are not unrepresentative. It was good to read your dignified and informed piece this morning and I hope your view gets more widely read than this type of “analysis”.

http://www.guardian.co.uk/business/ireland-business-blog-with-lisa-ocarroll/2011/mar/22/ireland

“Ireland may well be the laughing stock of Europe this week as it gets brushed off by France, yet again, in its attempt to get a renegotiated bailout deal.

But it made a mockery of itself yesterday when it emerged that civil servants still get a day off to celebrate the King’s birthday. Yes, the King of England’s birthday. And to make matters worse, they are entitled to a second day off to mark the wonders of the British Empire.”
….
Ireland’s bid to get a renegotiated deal appears to be going badly to say the least. Its refusal to increase the controversial low corporate rate of tax has left it out in the cold – EU finance ministers backed an expanded bailout package agreed for post-2013 but pointedly refused to agree any new deal for Ireland.

French finance minister Christine Lagarde was more than direct when she told reporters last night: “Today we decided nothing on Ireland because we had no indication from our Irish colleague of any kind of modification [to the corporate tax rate].”

All very well and good, but a few facts.

A secondary school teacher with 17 years experience earns around 52 K gross, which equates to 33 k net approximately.

A unemployed person with 3 kids, and full entitlements is capable of earning 36K for doing no work at all. Which activity is the state trying to encourage here?

In a economy which is spending 2/3rds of tax revenue on social welfare something has got to give.

Not that I am for slashing and burning social welfare entitlements, but the crazy cost of living has got to be brought down. If the cost of living is brought down then it is much easier to reduce social welfare entitlements.

Its going to be very interesting to see how Mrs Joan Burton squares this circle!!

@Liam Delaney

At what point will economists propose a rational, fair and equitable proposal to adjust higher level public salaries to private sector equivalents?
As it stands it is the lower paid Irish, both public and private sectors, that are the stock being laughed at, by the bondholders and the salaried bondholders.

@Sporthog
re

A unemployed person with 3 kids, and full entitlements is capable of earning 36K for doing no work at all. Which activity is the state trying to encourage here?

In a economy which is spending 2/3rds of tax revenue on social welfare something has got to give.

Perhaps the blind person should be cut again!

Couldn’t agree more Karl.

I certainly do not feel ashamed of our collective willingness to make necessary adjustments.

Fantastic piece Karl and spot on.

Just because someone can identify an anomoly somewhere or even a lot of anomolies does not justify self-righteous contempt for the country and its people when the facts as a whole are taken into account.

It’s classic prejudice. Take a small % of the truth, ignore everything else and damn everyone based on the evidence of that small %.

@ Liam

http://www.guardian.co.uk/business/ireland-business-blog-with-lisa-ocarroll/2011/mar/22/ireland

“He told her, without any prior warning, that he had introduced a bank guarantee, exposing European banks to something they had no hand or part in. ”

Funny in a macabre kind of way. Ireland is in trouble with Ms. Lagarde because it decided to bankrupt the state to ensure that European banks got paid back?

“exposing European banks to something” — ah yes, exposing them to getting paid back when they probably shouldn’t have been.

Is this really the best the Guardian can come up with in its Irish coverage?

Sad.

Appealing to percentage changes is all very well (as in ‘look, house prices are down 60%, they must be a bargain’), but levels are more important.

KW’s post boils down to: we’ve taken a lot of flak, give us a break….well, looking at levels, we’ve got a lot of flak to take…so rather than praise our own resilience and forebearance, let’s be realistic and steel ourselves for the ongoing squeeze.

I understand people are feeling raw, but would suggest pejoratives on both sides of the aisle can be lumped in the bin.

@ Aidan A
I completely agree the vast majority of the gap in closing the deficit needs to be made on the Tax side.

I think one of the reasons this is sometimes overlooked by some (but not by people like Karl Whelan) is because many in Ireland see themselves as the 51s state of the US. Like the US we seem to have very little regard fort the lower echelons of our society. I guess we are just not as civilised as most Europeans. Universality is a dirty word in this country.
Still no property tax in ireland.

Did anyone see the frontline last night?

One lady suggested a wealth tax to try help our current plight.
Pat Kenny told her that if we did that, all the wealthy would leave Ireland.
Pat makes this comment quite regularly on his programme.
He then quickly went to Stephen Kinsella to get Economic conformation.
Stephen says wealth taxes are shown to have worked in the past and that there are plenty of examples of it working but Pat then just presumes Stephen has agreed with him and carries on lambasting the woman.

@Tomaltach
I can’t give you 2010 numbers, nor numbers for families with three kids, but if you look at the link below you’ll be able to see the 2009 numbers.

If I’m using the tool correctly (i believe i am) on those numbers an unemployed Irish family with two kids has an income only about 800 Euro lower than than a similar family in Germany on the average industrial wage and more than such a family in France.

Factor in costs of childcare, transport, etc., and it’s clear that the two career paths are hard to compare. One is far more remunerative than the other.

Also, that German family is paying about 8500 Euro in taxes and the French one about 5000, which is perhaps part of the reason that they might have strong opinions about Ireland at the moment.

That’s part of the context of our “adjustment” so far.

http://stats.oecd.org/Index.aspx?DataSetCode=FIXINCLSA

Now, the separate issue, which Michael Burke and others raised, is Ireland’s responsibility for the banking debts. That’s an argument our governments all seem determined to lose. Comparatively minor issues like the civil service’s celebration of Empire Day would be funny if many people at home and abroad didn’t feel that they represented a continuing, larger, and almost unbelievable reality. Such symbolic issues, and our apparent ability not to deal with them, is hardly helpful in that other argument.

@Joseph Ryan
I am blogged out for this week and disengaging now to get back some focus but I don’t disagree with you. The more we can do for people who really want to work the better and people at the margin of work should be the key focus of this government even if it means being harsher elsewhere, including at the higher end of the civil service and in universities. I am seriously thinking about this issue, particularly with respect to unemployment. The current situation is devastating for people with debt and low-pay and we need to do a lot more even with the smaller amount of money available.

Excellent post, Karl. Congratulations.

While nothing you have written moves me towards thinking we are progressing fast enough towards a positive fiscal balance for our own self interest, all you have said makes a useful contribution to the debate.

For me, the case for immediately cutting the deficit to zero is neither an issue of morality nor a matter of the good opinion of our European partners. It is simply a matter of practical national self interest.

My perspective is that while delaying the cuts for a few years means less pain while the adjustment is underway, by the time we hit 2015 or whenever the process comes to an end, there is no major respect in which we will be better off, and will be a number of major respects in which we will be worse off than if we had moved faster. We will have substantially higher debt, and we will probably have made less progress towards the effective devaluation that we need to boost competitiveness so as to get people back to work.

It will also give our government more freedom of action in negotiating with EU partners. As long as the government depends on them to pay its bills, it is at the wrong end of a patron-client relationship.

Hugh Sheehy,
The figures on your sheet show the German family on AW about 800 to 1000 euro per month better off than the unemployed Irish Family with two kids. You mention child care – why? only one parent working. Even taking for transport, 800 to 1000 eu per month provides you with a very different standard of living than someone on subsistance. Plus, Irish welfare rates have dropped since that and what way will German wages be moving?
Furthermore, the welfare rates paid to an unemployed German family aren’t much different though they get the benefit of excellent services which in this country we might only dream of.

@Tomaltach
Not “my” sheet, it’s the OECD’s.

When I put a married couple with two kids in the tool it outputs a net income of 31689.4 on welfare in Ireland, and a net income of 32413.71 in Germany for a similar family with one earner on average wage and a second one not working. That family has also paid about 8k in net taxes/charges. That’s a difference of 800 euro per year for working in Germany compared to being unemployed in Ireland.

The welfare level in Germany the tool generates is above 20k, but nothing near the same as Ireland.

As for childcare, if only one parent is available to be at home there’ll be more occasions when childcare is needed than if there’s two. It’ll add up. Similarly, transport costs will eat up that 800 Euro pretty quickly.

That’s the family we’re borrowing money from, or at least that’s the archetype Merkel and Sarkozy will be talking about on the stump.

Rural town residents protest EU/IMF bailout

http://www.breakingnews.ie/ireland/rural-town-residents-protest-euimf-bailout-497956.html

Many thanks to Karl for another great post, and to all for a most informative debate.

@ Brian Woods II

‘Our fiscal crisis is due to paying far too much PS pay and pensions and Social Protection and our banking crisis is due to paying a very wealthy few far, far too much for their land’

@ Hugh Sheehy

‘By continuing to borrow vast amounts of money with almost no aim other than maintaining the excessive PS pay and welfare rates that apply, some sections of the country are effectively given permission to continue “stealing” money from other people in our own country’

Landowners did makes massive gains, but so did a tribe of property professionals, advisers in suits, and wheeler dealers. Another tribe of retailers and lifetyle promoters puffed up on the cash and credit which was spun off the notional asset values. Much of the middle class was sucked in to the process. All very quiet now.

The inevitable banking losses were socialised in order to protect the gains made in that way. Private vested interests forced the government guarantee, in the same way as they had previously brought about a lax regulatory regime.

I wouldn’t use the term ‘stealing’, but the actions of those ‘players’ were clearly wrong. That is to say, they were hugely inimical to our economic development and our social cohesion. The fact that the ECB collaborated in both exercises illustrates how far the failure of governance extends.

The current borrowing of ‘vast amounts of money’ does allow the PS bill to be paid, but that is not all it does. It also serves to dampen the natural public demand for review and redress. It also obviates the need for heavy taxation of gains which can be described, euphemistically, as ‘windfall’.

There is nothing wrong with the notion of public private partnership, it’s just that some people are wrecking it for everyone. Let us by all means have vigorous reform of the public sector and social welfare system. If colleagues with a private sector orientation can embrace corporate governance equally seriously, we could be coooking with gas, as the saying goes.

AAA_Austerity … ain’t workin! And this KW post shows scale …

Socialization of bankin_system … ain’t workin!

Std economics … ain’t workin!

Pro_cyclical or counter_cyclical …?

Something is not adding up … there is a fundamental flaw somewhere …

Looking at the report in more detail gives rise to grounds for pessimism that fiscal adjustments can actually have any positive effect at all on budgetary outcomes. The ratio of budgetary adjustments amounting to 1% of GDP to 0.5% falls in GDP assumes floating exchange rates and a national central bank, or at least interest rates that are correlated to inflation and output levels. We have neither in this country. In the circumstances, budgetary adjustments amounting to 1% of GDP will, if the IMF paper is correct, probably cause falls of GDP in the region of 1-2%.

@Rory O’Farrell

Yes. Tax rises and spending cuts were paired with falls in the current account balance in Ireland in 2009 and Finland in 1992.

See pp. 120-121 of the report for more detail.

@Karl Whelan
“http://www.budget.gov.ie/The%20National%20Recovery%20Plan%202011-2014.pdf

Page 16”
Yes, I’ve read that. I even read the budget documents for each of those budgets.

We’ve cut capital spending, which doesn’t count towards the primary deficit, IIRC. We’ve cut PS increments for a couple of years, but they’re back now? Some benefits have been cut, with child benefit cut more than most, but even most of the child benefit cut was to remove the ludicrous early childhood gift.

Taxes have risen, for sure, but there has been, since 2007, what, a half-billion reduction in spending? Or is it still an increase? We don’t know what tax rates for the working population have become (i.e. tax wedge), because 2008 is now the most recent figures that the revenue have released. How bloody hard it can be to release some up to date numbers I don’t know. Perhaps they didn’t get that laptop back.

My feeling is that the 14.6 bn number is largely spoof. Not spending money you planned the previous year does not count as a cut in my book. I must be wrong, though, because many eminent people that I respect keep using this figure.

@paul quigley
There’s plenty of appetite for good governance in the private sector and among people with a “private sector orientation”. Most of the private sector lives with it every day. Most.

@hugh sheehy

… most?

http://www.irisheconomy.ie/index.php/2011/03/07/renewing-the-regulatory-state/#comment-130873

@Sarah Carey

… bit more o dat blue slip showin … tone is a bit blu_er imho.

Karl,

Not sure I can agree with much of this. Hence the length. Either prop your eyelids up on matchsticks now – or don’t bother reading.

“A call for immediately cutting the deficit to zero so that we would not need a bailout was greeted very positively by many of our commenters, who clearly take the view that this can be done easily if only we had the will.”

That doesn’t really tally with my recollection of how discussion of the primary deficit has evolved on this blog. As I recall it came about in the context of discussions about Ireland’s negotiating hand (you may recall, more publicly, Colm McCarthy’s view that there really wasn’t much of one in October). Some have tried to point out the transparent weakness of a negotiating team publicly pre-committed to a gradual and Croke Park obligated adjustment programme and the total failure of any politician with prospect of power to even discuss the idea of getting out of that straight-jacket by readying the public for the idea that they may have to go to surplus quickly.

Even getting pubic support for the idea that the country would be willing to do this would strengthen the negotiators’ hand immeasurably. As it is everyone, literally everyone knows there would be riots on the streets if the government didn’t keep the credit line available. The public have been told Ireland just has to be a bit stroppier and the EZ will cave, because of the hand grenade – that nobody is prepared to use – because the EZ will just cave.

Personally I’m with the Keynesians on this. There is a classic debt spiral and it is not sustainable, but indignance and haughty comments about economic illiteracy are about as helpful as a fart in a space suit. The creditors want to see Ireland make the kind of effort that can be banked and presented to their electorate. It ain’t happenin’ in their view, and they have the money.

Their electorates are entitled to ask “if you don’t think the deal is good enough, why take the money” – and enough of them are.

Today the 2yr yield closed at 9.87% up 0.622. There was a rumour of a missed coupon. I reckon you could tell the emergency creditors to get stuffed and issue 2yr gilts tomorrow at about 20% without Trichet mopping up. Off you go.

“The conclusion often reached from these discussions is that the Irish people are a feckless and inflexible lot who are “behaving like teenagers” in looking for help from Europe.”

I noticed someone used the teenager analogy yesterday on this blog. If it is used “often”, I have missed it – I thought yesterday was a first, or more or less. Similarly I haven’t noticed anyone accusing the Irish people of being “feckless”, though I have noticed a few people using the word in an attempt to caricature the arguments of those urging speedier reform – along the lines of your own observation earlier about a commenter:
“You and others choose to ignore that perhaps because you prefer pigeon-holing people with opinions you enjoy disagreeing with’ Hmm.

“I understand the moralistic instinct that underlies these comments as well as its implicit faith in simple solutions.”
Is that fair? Maybe you have the idea that urging the country to focus on its primary deficit and its relevance for negotiating strength, default, the skewing of its economy towards public and semi-state sectors etc – with a view to replacing drift with decisions- makes one a member of some sort of rabid, GOP- style conservative, socialist-hating cult.

“In my opinion, however, this kind of commentary is based on a gross misunderstanding of the challenges posed by the scale of the Irish fiscal adjustment.”
In my opinion, you should consider whether your opinion might be based on a gross misunderstanding of “this kind of commentary”. As maybe one of the founder members of the dare-to-mention-the-primary-deficit club I put it to you that the deafening silence there was about this a few months ago and during the election campaign, combined with the cheap talk about “playing our hand” and “playing hardball” and the untouchable nature of Croke Park despite the clearest “unforeseen budgetary deterioration” you could possibly imagine – was “ based on a gross misunderstanding of the challenges posed by the scale of the Irish fiscal [situation]. It [was] also extremely unfair to the Irish people and acted to undermine [sensible discussion about realistic tactics] for looking for additional help from the EU.” Just a thought.

“Let’s start with a hugely important fact that tends to receive little attention. The Irish adjustments thus far have been enormous by international standards.”

Yes, but lets add another fact that tends to receive little attention within the Irish debate but, importantly, is known by the emergency creditors.. The Irish boom and run up in costs and payroll was enormous by international standards. There is a marketing trick in the fund management business used to sell more volatile funds. Pick a starting date that corresponds with a turning point – usually a trough obviously; compare the performance to other less volatile funds; point out the out-performance. You see the problem. I don’t think anyone has sensibly suggested the Irish fiscal adjustment from peak is planned to be or has been other than very significant, but outsiders cannot ignore the extraordinary froth that their attention was so loudly drawn to at the height of the craziness.

Some got trapped by that “economic illiteracy” and are going to need write-offs. Not though presumably, economics lecturers.

“In my opinion, those who wish to characterise the Irish public as feckless teenagers have it exactly wrong” – I’d be happy to join you in that – if I came across any actually doing so and appearing to mean it.

“Fiscal adjustments are extremely difficult to implement. Every society in the world has powerful institutions and organisations designed to protect vested interests and various types of status quos. Many of these societies would respond to one year of fiscal adjustment on an Irish scale with mass public protests and strikes.”

Part of the point of raising the public spending and “P”oltical economy aspects is to try to draw economists into the debate about this very point. Irish society could be sleepwalking into notable social change. What possible reason – surely not inconvenience – is there to write papers about it afterward when the public could be better informed as it happens and have a better understanding of what is going on, why, and where it might lead?

Different sectors have different capacity to resist reform that the creditors think will get the country into a position that it can exist in the Euro alongside Germany. Economists should be able to recognise the rational incentive for every grouping to resist reform so that others take the hit. If on the average, there is enough reform, those who resisted successfully will be quids in in the post reform society.

In Ireland we know the protected professions and public sector are in the strongest positions to resist using the political system. This they are doing.
This is entirely predictable but where it gets more interesting is if the creditors don’t fold after the private sector and welfare recipients have been squeezed. At that point – just as the Greeks have had enough of paying up as the tax collection efforts on the wealthy flounder and the protected remain protected – is there scope within Irish society for a similar reaction from the downtrodden private sector?

Am I wrong about this idea of rational incentives? I would be interested to hear arguments as to why. If correct, then it does seem disappointing that, given Ireland’s current situation, there seems to be little attempt by its resident economists to project it into the wider public debate. Is there an obligation on society to protect those outside the powerful groupings or are we red in tooth and claw socialists?

“Yet there hasn’t been a single strike of notice because these workers and their union leaders understand the gravity of the fiscal situation” – there were fairly vindictive strikes and work “to rules” prior to the Croke Park Agreement. The country is essentially insolvent and its public sector are highly paid – higher than hose in the emergency creditor nations and yet there are to be no compulsory redundancies, further significant pay cuts etc. Even the dumbest trade unionist has copped on by now that this is an unimaginably generous deal in the circumstances – particularly so since the automatic self-destruct clause is very generously being ignored by the political class.

“And rail against welfare benefits being too high if you want. But these are the least well off in our society and they have put up with consecutive cuts in their modest incomes without serious protests. “

– No thanks. Apart from the classic example of assistance from lots of different benefits allowing some people to draw down amounts many people find irritating, most welfare benefits are paid to people who need them and experience extreme insecurity. There is no reason to think that for example, the ceiling on public sector pay under Labour Party policy of, what, a cool 250K in the face of the national squeeze required, does these vulnerable people any favours. The Labour Party seem a bit confused about who needs protecting from social injustice.. Ireland has such a perverse economy that what would normally be the “left” actually ends up sticking up for overpaid, inefficient, entrenched, stifling semi-elites that are actually some of the most privileged in the country. Sinn Fein seem to have a clearer view on this, but they continue with the fantasy that default has no consequences

This last paragraph:
“Requesting a small amount of assistance from our European partners (particularly in relation to the repayment of loans made to insolvent banks by the ECB and European bondholders) to help Ireland avoid a sovereign default—this shouldn’t be too much to ask for if European solidarity is to be more than just a cheap slogan.”

I just can’t tell you how outsiders who are currently focusing on Ireland scratching their heads and trying to work out what to make of the place are likely to react to this. A cheap slogan. After putting up with years of lecturing from McCreevy and Harney; watching companies re-locate HQs for tax reasons which apparently they were mistaken about all along (no advantage to be gained or so they say – how does this look?); Lisbon etc.
If you can’t see it, its not worth me wasting the pixels on.

Hugh Sheehy might be vulnerable to the perhaps cheap shot, that he’s “probably never heard of macroeconomics”, but there are plenty of your German and Chicago School counterparts that are not. Then there’s Morgn Stanley…..

Just for reference Hugh, that’s usually a jibe that you are confusing a company’s finances with that of a large collective like a country – which actually has a self interest in running deficits during recessions. Its not the principle, its more the scope of Ireland’s problem combined with the lack of a free printing reserve central bank. Everybody knew the score that ECB = Bundesbank-Nua when the country went into the Euro. It’s a question of engaging on a practical and realistic level given the views and comparative power of the other parties.

@Kevin O’Rourke
“But expect lots of comments from our more economically illiterate commentors to the effect that there obviously hasn’t been an adjustment since we still have a large deficit…”
That really is quite low.

@Kevin Walsh
“Increments never went away. What was cut was the rate of pay at each point on the pay scale. And it’s a genuine cut because it applies during (a) the pay period in which it’s imposed – you get less money than in the previous pay period and (b) in all subsequent pay periods, you get paid less money than you would otherwise have been paid.”
Unemployment must be making me stupid as I don’t get (a) at all. Do you mean that there was a paycut? and (b) means it was permanent? But you still get an annual payrise?

@Kevin O’Rourke
Oh, I believe there were real paycuts, or maybe I should say I believed it. It is the wording of the response that made me wonder – if @Kevin Walsh had said “there were paycuts, but no changes to increments” I’d have wandered by more informed than I was. Now I wonder if it just means that people reach the top of scale more quickly so no increments are due them…

PS some economic illiteracy for you. If the adjustment is so large and painful, why has spending gone up since 2007?

No, people aren’t getting granted increments more quickly. Why would they be?

It’s also relevant to add that the the lack of institutional refom through the decades, the ‘buck stops nowhere’ culture; the economic crash; the Moriarty Tribunal findings; the way the State banking guarantee was issued and the subsequent slow motion response to the banking crisis, are all part of the same tableau.

@Michael Hennigan

You’re out of date. Bank time is already gone, by agreement with the unions.

Regarding the payment of increments in general, a stop on increments would disproportionately affect people in lower grades and people who have fewer years of service, as compared to people in such grades as Secretary General which don’t have an incremental pay scale, people in posts with allowances, and people who have received an unsatisfactory performance review (who aren’t entitled to increments under PMDS).

It would also lead to bizarre anomalies like someone hired on 31st December getting a permanent pay benefit compared to someone hired on 2nd January.

Basically, if you want to cut pay costs in the civil service, cutting pay levels is far more transparent and equitable than stopping increments.

@ grumpy

Fair play to you for getting stuck in so firmly, but, like your good self, Karl has put in a lot of hard yards on this site and elsewhere. If every economist was as public spirited, and as willing to take positions on contentious issues, we would be in a much better place.
Just a couple of comments.

‘Irish society could be sleepwalking into notable social change’.

Hard to disagree with that diagnosis. Too many people are just waiting and hoping for the best.

‘outsiders … currently focusing on Ireland… scratching their heads. After putting up with years of lecturing from McCreevy and Harney; watching companies re-locate HQs for tax reasons’

Those were the activities of the ‘dynamic’ private sector, and the ‘business focussed’ politicians who were well rewarded for ‘delivering’ the Irish state. Moriarty is a just tiny window into a broad landscape of pecuniary influence. Much of want was done was good, but too much of it was rotten.

‘The creditors want to see Ireland make the kind of effort that can be banked and presented to their electorate
…Personally I’m with the Keynesians on this. There is a classic debt spiral and it is not sustainable’

If you believe that closing the primary deficit will simply exacerbate debt deflation, why recommend such a step ?

‘Ireland has such a perverse economy that what would normally be the “left” actually ends up sticking up for overpaid, inefficient, entrenched, stifling semi-elites that are actually some of the most privileged in the country.’

Social democratic parties have been enmeshed in scandals all over the world. To the extent that Labour has long been part of the mainstream, it has enjoyed the spoils. Not all state functionaries are Labour folk, however. It is our ‘private sector’ oriented parties which have mostly built the wobbly castle.

‘….is there scope within Irish society for a ……reaction from the downtrodden private sector ?’

Undoubtedly, but it will have to face down the public sector elite which you mention, as well as their associates, the big private sector players. These groups are apparently opposed to each other, but, in practice, operate hand in glove. With notable exceptions, the so-called independent media are as tightly controlled as the state broadcaster. Hence the vital necessity for this and other blogs.
Thrashing out a consistent platform for reform requires us to go beyond the public/private sector divide. Many homes have good folk working in both sides of the house, but thankfully divorce is unusual.

@Hugh Sheehy

That OECD tool you refer to for wage/welfare calculations – could you post a link to it please? Apologies if a link has already been posted and I missed it. Thanks

@The Alchemist

http://stats.oecd.org/Index.aspx?DataSetCode=FIXINCLSA

Fascinating stuff and a phenomenal response to Karl Whelan’s initial contribution.
After working my way through most of it with all the arguments for/against spending cuts v tax increases as % of GDP etc my conclusion is that unless we get the benefit of very high (and unlikely) growth rates or a substantial write-off of debt Ireland cannot survive as a member of the Euro. For political reasons it will be impossible to continue indefinitely with spending cuts and tax increases and keep our relatively free democratic system.
We must at some time look at the alternative of leaving the Euro and allowing macroeconomics to help us make all the adjustments necessary. We will then have a de facto devaluation, massive debt default and essentially start all over again. I realise this means massive cuts in public spending and tax increases but at least we get control over our own destiny and can begin to make rational political decisions. I also realise there will be massive short-term disruption to banking systems,savings,pensions etc. but we cannot continue to “kick the can down the road” much longer building up more debt as we go. Its time someone shouted stop.

@ Gavin kostick

“The other kind are more ideological and see a small state as the answer regardless of any situation. The answer is always slash the budget.”
But they are quite easy to spot. They are the ones who do not argue for tax increases as part of the solution.

@ All,

When the international authorities issue warnings, not to fly to a war inflicted area such as Libya, Egypt or Tunisia, I often imagine the numerous Irish folk who are compelled to buy airplane tickets to those very destinations. To do so in defiance of what they are being told. The Irish do not protest en masse through the streets as other cultures do. But that is not to say, the Irish do not protest. BOH.

http://designcomment.blogspot.com/2011/03/defiance.html

@ Mickey Hickey,

Thanks for the comment, I enjoyed reading that. BOH.

@ Kevin Walsh

The main point here is the tortuous process of reform rather than the particular issue.

Unless the sick pay system is reformed, then people will compensate by taking sick leave.

A report by the Comptroller and Auditor General  published in 2009 said sick leave had jumped since the 1980’s in the Irish civil service  with the absence rate rising from 3.3% to almost 5% of available working time, which was lost to sickness absence in 2007. On average, 59% of all staff employed availed of sick leave in that year.

The average employee was absent for just over 11 days.

Maybe the IT spoke to the wrong Eoin Ronayne.

CPSU seeks clarity on privilege days for senior staff

http://www.irishtimes.com/newspaper/ireland/2011/0323/1224292846993.html

IT: Yesterday, CPSU deputy general secretary Eoin Ronayne said while its members retained the two privilege days “we agreed not to contest the loss of our bank days on the understanding that higher grades wouldn’t keep their two privilege days”.

The difference in sick time is almost entirely down to the long-term ill. These are given the boot from private companies in a way that does not happen in the public service.

But for me, that is more of a reason to reform the private sector than the public service. It is unacceptable that sick people get the sack prematurely, ill health could visit anyone and should be treated with a little patience.

@ Yields or Bust,

No. Wrong, wrong, wrong. In Ireland, it wasn’t until we had gotten well used to over inflated wages/salaries, and too much employment opportunity following too little labour resources, that we got bored with that – and the only other thing we could go onto next, as a nation, to stem the boredom of having too little to do, and getting paid far too much to do it – was to try to compete with each other, to see who could pay more for a 2 up, 2 down. We allowed the sense of our own invincibility, get the better of us. We thought we were indespensible and were poised to rule the world. Pride as they say, always comes before a fall. And what a fall it was. BOH.

@BOH

This type of ‘analysis’ is as meaningless as it gets, in trying to explain why the property boom eventually ‘got going’ in the way it did. Property booms in virtually every jurisdiction where they have been studied generally stem from one place and one place only and that is the banks in question lose the plot and forget the underlying drivers of property price dynamics which is pricing the asset class on a long run stable yield basis. All other metrics are proven losers.

In the case of our own bubble when in 2006 Irish banks were lending money at less than 1% net yields which was c80% less than average European risk free rate at the time represented in pretty stark terms an example of banks losing the plot.

This is nothing to do boredom or invincibility. All to do with stupidity and greed.

Property markets live and breathe with the availablilty of credit – without it property transactions (in 98% of cases) simply don’t happen. So anyone who believes in tooth fairy stories such as ‘ruling the world’ and the like would want to wise up and face the facts regarding leverage driven asset markets i.e. those who provide the leverage hold ALL the aces.

The banks in lending the way the did for the best part of a decade at less than risk free rates at the time was a plain old fairly predicable banking pricing error. Nothing more nothing less.

Yields or Bust says:

Property booms in virtually every jurisdiction where they have been studied generally stem from one place and one place only and that is the banks in question lose the plot and forget the underlying drivers of property price dynamics which is pricing the asset class on a long run stable yield basis. All other metrics are proven losers.

That is only because of the ineffective way they are studied. By that I mean, there are no labour economists talking to property economists and comparing notes, to establish the actual sequence of what does happen in a property boom. As opposed to the reflection that goes on afterwards, when members of the economics academic establishment decide to troll through the data – like, years after the event – and establish conclusions, which we are all supposed to abide by.

Take an example, George Lee’s RTE episode in which he analysed the Irish saga of the Celtic Tiger, called How we blew the boom, which is a very good piece of documentary television, produced by someone who knows a little thing or two. However, when I reflect on the case that Mr. Lee presented in that documentary, and how it has been picked up by others since, such as Pat Kenny etc, and re-hashed a few times or more, I consider their entire theory to be flawed. Because it makes a lot of the right points, but gets the sequence out of order.

Like I said, the lack of cohernent analysis of property cycles within the economics establishment, has more to do with a communication failure between different branches of the same. Namely, that the labour economists move in different social circles, and are on a different peer review/publication program, to that of the property economists. And never the twain shall meet. There is an impressive dissertation topic right there if someone cares to run with it, maybe Phd level, I dunno. If we are prepared to live as per tradition, by this fatal project management to align the two together, to output a real and coherent analysis of what did happen, then I suggest, we deserve the sort of half-baked, simplistic academic results that we are all familiar with, as far as property goes.

The trouble with property, and it does remind me of Michael Lewis’s book, Liar’s Poker, about the mortgage bonds department at Salomon Brothers, it is the poor relation. No talented academic economist in their right mind, is going to be caught within a country mile of that subject, and hope to achieve tenure before they reach middle age. The sexy areas to study in are labour, markets, international, contractual, blah, blah etc. No sane economist, Irish or otherwise will want to claim to understand property economics in depth, or run the risk of being labelled as a hack. Including contentions to that effect regarding Peter Bacon etc, etc, Cutzpah, etc, etc.

Anyhow, Yields or Bust, thanks for analysis, and in fairness, Karl Whelan’s original contribution in this blog entry, does contain an awful lot of insight. I only hope to counter balance that, with some of my own pet theories. BOH.

@ Yields or Bust,

Thanks for your reply, and your points are well taken btw, and well made. However, I have enough experience in management of groups and projects through the years, to know, the first place you start with any analysis or form of information, is to look for flaws in the logic and the sequence in which the info was assembled. It is one of the basic principles, that we know from lateral thinking etc. The jigsaw tends to get put together according to the order in which folk find and put together the pieces of the puzzle. In the case of economics, there are various ‘markets’ for the information, various funding streams to be cogniscent of. For instance, one group of economists will be under fierce pressure from the media, government etc to compile analysis of consumer price index, rates of employment, rates of tax take, population trends and so on. That tends to happen fast as the information is available. Then you have other groups of economists who are under different kinds of pressures, and may walk onto the scene much, much later and at a different pace, using different sets of tools.

All I am saying is be cogniscent of how the ‘picture’ was put together, who was doing it and in what order. If someone could look at that properly someday, and pay attention to it, it would be a great thing indeed. It might provide us with some fresh perspective. BOH.