Lehigh University conference on the Irish Economy Post author By Philip Lane Post date April 12, 2011 Lehigh University organised a conference on the Irish economy last week: the presentations are here. Categories In Uncategorized Tags Lehigh Irish economy 12 Comments on Lehigh University conference on the Irish Economy ← NAMA to Provide Finance → Sovereign Debt and Recovery Locks 12 replies on “Lehigh University conference on the Irish Economy” @Philip Lane Ta for the link. Looks like lots to peruse ……. I’ll start with the AIB connection: Presentation by Gregory Connor & Brian O’Kelly Poor bank regulation, argued here, as the pivotal cause of the crisis. PD, in the very illustrative graphics here, referring to Property Development … and I complement the authors on the dexterity of their empirical analysis … Minor point: if one steps back a little further, and asks another key question: Who designed this pivot?_or from whence did the toxic fulcrum spring? A more than plausible, and also empirically verifiable response, from a somewhat broader take on ‘political economy’ would lead one to yet another PD – the free-marketeering neo-con IDEOLOGY of the Progressive Democrats of Michael McDowell and Mary Harney, and their fellow travellers in Fianna Fail, Charles McGreevey and Bertie Aherne … who wielded the reins of power throughout this period. All strong advocates, nay champions even, of lax, feather light regulation and the supposed all-seeing, efficient, and self-correcting power of the … er … free-market. As Professor Krugman, and others have noted, this ideology is the ‘real’ foundation of the morass that Irish citizen-serfs presently find themselves in. And, to take it a little further, the foundation of the EZ mess, the US mess, and the abject failure of economics as a discipline in recent times. @David O’Donnell Thanks for commenting on our paper. IMHO properly regulated free markets are an amazingly good way to organize economic production and distribution — much better than any of the alternatives. Even when very badly regulated, as in Irish bank regulation of the noughties, they do not compare to the horrors of socialisim (gulags, Khmer Rouge, etc etc etc). Free markets (plus good regulation) seem to match organically the nature of human society at a deep level and that is why they are so superb. Philip, Thanks for the links. I was drawn to your contribution along with Agustin Benetrix. Two points: 1. In the search for economic stability surely the worst of all options is pro-cyclical fiscal policy, ie the one that is currently in place? 2. Related to this, indirectly, are the two threads here which have recently touched on fiscal multipliers. Your work (with Agustin) in this area is very interesting and, somewhat unusually, relates specifically to this economy. It might be very valuable to provide a summary on a thread here of your findings on Irish multipliers so as to inform the discussions more widely. I hope you agree. @ Gregory Connor May I start by congratulating yourself and Brian O’Kelly on an excellent presentation – frightening in some aspects though it was. It would make you feel like the guy in Tesco who was €5 short for a winning ticket – so close to maybe getting it all right. I agree with your previous comment above to David O’Donnell. I agree in that the fundemental flaw in ideological socialism, in my experience is the lack of agreed needs @Philip Lane Many thanks for posting the presentations. I hope to learn plenty from the material. @ Gregory Connor May I start by congratulating yourself and Brian O’Kelly on an excellent presentation – frightening in some aspects though it was. It should make the country feel like the guy in Tesco who was €5 short for a winning ticket – so close to maybe getting it all right. I agree with your previous comment above to David O’Donnell. I believe that the fundemental flaw in ideological socialism was, in my experience, the lack of agreed needs in a society and the restriction on choices and freedom of the individual to act in his/her own interest within accepted norms. I believe this individual freedom to act provides the dynamism for our development both materially and intellectually. I do though strongly believe that the neo-con free marketeers, are as discredited as state sponsored socialism. One aspect of the USA though is that if you are caught outside the rules, they are not a bit slow about putting you in an orange suit and fully agree with your proviso for strict regulation – dogs do what dogs do unless they are on a lead. This country though is still to deferencial in it’s attitude – I hope the next generation are not so forgiving in their attitude. Thanks to you both again. This is sensationally high-class statistical research, covering a wide variety of topics, and of the type that I have often bemoaned the lack of in Ireland. All the authors deserve the highest congratulations, not just for the content, but for the presentation. It puts to shame the contributions of some other economists, limited as they are to one-line twitterings. Naturally, this being Ireland, presentations and analyses of such amazingly high calibre received zero mention in the useless dumbed-down Irish media. I googled and found not a single reference to the conference in any Irish media outlet. Economists of this calibre must sometimes wonder why they bother. To achieve fame as an economist in Ireland, it is infinitely better to scream hysterical predictions of imminent doom and present them at a beer-fuelled comedy festival in some pub in Kilkenny, rather than do diligent statistical analysis and present the findings at a conference in an esteemed American university. Without overdoing the boasting, many of the points made correspond to what I have frequently posted here – in particular: (1) Net public debt in Ireland will peak at around 108 per cent of GDP, which is not significantly different from the OECD average. This figure is roughly the same as the 1980s peak, but, because interest rates are much lower now than then, debt interest payments as a proportion of GDP will be only about half what they were then. So much for the default option. It is bonkers. (2) Although the Irish government is currently incurring debt, Ireland Inc is not. As the paper says, Ireland Inc is entering balance-of-payments surplus and is currently paying off its debts. (3) Even at the bottom of the recession, real GNP per capita was twice what it was in the mid-1980s, a far larger increase than any other OECD country managed in that time. This is despite the fact that the population increased by almost 40 per cent in that period, again a far larger increase than any other OECD country managed. So much for the McWilliams/Kelly theory that the pre-2007 boom was all based on construction and the buying and selling of houses. As I have asked many times before on here, if it was so based, why did real GNP bottom out in early 2010 at a level almost twice what it was in the mid-1990s? It has since starting rising again, by 4 per cent between Q1 2010 and Q4 2010. (4) Ireland’s demographics are more favourable than those of any other developed country. Almost uniquely in the developed world, Ireland is not facing a demographic timebomb. (5) The stock of human capital is increasing more rapidly in Ireland than in any other developed country. No other developed country has such a large gap between the educational attainments of its population entering the workforce and its population exiting the workforce. Only 65 per cent of those aged 65 have post-primary education – for those aged 25, it is 98 per cent. Only 18 per cent of those aged 65 have third level education – for those aged 25, it is 42 per cent. (6) Based on the GNP per capita measure, even at their peak in 2007, house prices only required a real fall of 28 per cent to bring them into line with their long-term average, not the 80 per cent McWilliams/Kelly have claimed. Anything over that is overshoot and largely the result of media-induced panic. (7) Even after the cuts in child benefit in the last couple of budgets, child benefit in real terms is 2.5 times what it was in 2000. So much for Fintan O’Toole’s and Vincent Browne’s claims that the FF/PD government was a rapacious right-wing government out to screw the poor. In the U. Kingdom, where I am posting from, and which had a caring Labour government for most of that time, child benefit in real terms has not increased at all since 2000. Ditto for most other social welfare benefits. (8) The so-called health crisis, that dominated Irish media headlines from 2000 until the advent of the recession, was in fact a fraudulent invention by the media, in particular by a handful of left-wing journalists like Maev-Ann Wren and Gene Kerrigan. During this period, Mary Harney became the most vilified minister since the foundation of the state. But, as the paper on health shows, there was dramatic improvement in health levels, mortality rates, life expectancy and Ireland’s health service ranking during her period in office. Just to repeat, these aren’t simply my claims – they are what the papers presented at the LeHigh conference say. Notwithstanding the fact that it wasn’t in office during the period covered by the various papers, the new government needs to get its finger out and start trumpeting these successes as a means of restoring both domestic and international confidence in the Irish economy. The fact that the interest rate on Irish bonds has fallen almost continuously for almost a fortnight, from almost 10.5 per cent to just over 9.0 per cent, shows that the message is slowly, very slowly, starting to get through. @JtO How hard did you look for media coverage of the conference? Government will only be able to blame predecessor ‘for the next nine months’ Back to ‘real’ value creation ………. Godart, Görg & Hanley – Multinational vs Domestic (Manufacturing & Services) Conclusion: both ‘down’ during ‘crisis’ – but most ‘foreign’ not behaving differently to ‘domestic’ in terms of ‘exit’. This perplexing ‘no diff’ appears to pop up regularly on such comparisons, including this one. Anyone got a link to the working paper? @ JTO & Seamus Coffey I would have to agree with JTO that publicity of some of these conferences and lectures would be of benefit to all – if the non-academics are permitted attendance (a nominal charge levied in these straightened times even?). JTO I assume works in the private sector/semi-state and may not be able, to see everything in advance and allow for a scheduled visit to attend same. Publicity on the last day of the conference is really not much publicity at all in this context. Enough of the boasting JTO 🙂 So if you hear of anything that might be of interest, why not give it a bit of promotion a week or so in advance. @ Dr. Agustín S. Bénétrix & Philip Lane On, again, your excellent presentation and Fiscal Reform recommendations. Yes please to all and as soon as possible. As Joe Durkin ESRI said this morning on RTE – enough with the talking and just ‘Do it.’ Yet another viewpoint. http://macrobusiness.com.au/2011/04/economic-ideologies/ @ Michael Excellent link and a point well made, many thanks. The irony in Irelands context is that appears ‘ideology’ went out the window when the election was over! 🙂 Comments are closed.