Economists and the Media

Richard Tol has raised some interesting issues about the interaction between economists and the media. One point he makes is how much of the supposed expert commentary in the media is from people who have limited expertise. That’s not too controversial and I think is true of media throughout the world.

As I read it, however, Richard is also making another point related specifically to academics. This point is that only those who are experts in a particular area, as signified by their contributions to academic publications, should discuss this area with the media.

On balance, I don’t see much merit in this argument.

I’d make the following points:

First, while it is true that an economist with more frontier research contributions is (other things being equal) more likely to be smart and on top of their subject area, it is also true that the majority of economic policy issues that are discussed in the media do not relate these frontier debates.

For example, based on my publications in leading journals, I could bore for Ireland on the merits of the New Keynesian Phillips curve or the link between consumption spending and asset prices. However, the media aren’t too interested. Instead, they often ask me to discuss issues that a very good command of undergraduate or master’s level economics would allow a person to explain. In most cases, it does not take a frontier-economics level of expertise to answer the questions about bank balance sheets or fiscal policy that the media are often interested in.

This point probably holds particularly well for my specialised research area of macroeconomics but I think it holds pretty broadly across various subfields. For example, I think it’s now pretty well known that Richard Tol has published a large number of academic papers in the area of environmental economics. However, when economists, including Richard, appear in the Irish media to discuss environmental policy issues, in the vast majority of cases they are making points about taxes to curb externalities or pricing to match costs of services with costs of provision – points that I recall from second year undergraduate microeconomics.

To summarise, a smart economist without any frontier research publications in a particular area is perfectly capable of making useful points about a whole range of issues.

Second, when arguing that an academic should decline invitations to discuss anything other than issues they have published papers on, it’s worth keeping in mind the alternative the public will get to hear if the academic says no. Whatever Richard thinks about Irish academics, there is a large number of financial journalists and stockbrocker economists whose job is to say yes when asked to appear on these shows (in the case of the latter, they often appear to promote a particular interest group’s point of view).

In many cases, an academic that agrees to discuss an issue on which they have not published a paper is doing so because they have an opinion on the issue based on their expertise and because they are fairly sure that the alternative is that the public get to hear something from a journalist with very little background at all in economics or someone promoting a vested interest.

Third, Richard reckons that “The typical listener to the radio or watcher of the TV assumes that because someone is a professor and speaking on the topic, (s)he must be an expert.” Well, maybe that’s true in Holland but it sure isn’t true here. If you think everyone in Ireland thinks I’m an expert on issues I prognosticate on, I recommend reading the comments on this blog. Appearing with the title “Professor” is nice but if you can’t make cogent logical arguments, then the public won’t necessarily buy what you are saying.

Finally, I’d note that there is very little financial compensation for appearing on Irish TV and radio shows (fees are somewhere between very low, e.g. €50, and zero) and, from conversations with colleagues, I believe the majority of reasonably well known economists say no most of the time when asked to appear on these shows. I believe that those Irish academics who appear on TV and radio to discuss economic policy issues are largely doing so because they believe they have a useful contribution to make and that their state-paid salary places an obligation on them to make a useful contribution to debates about public policy.

62 replies on “Economists and the Media”

A further point is that most academics are publicly paid. As such, they have surely a public duty to advance the debate? Would the last three years debate have been as useful and as informative without the input from academics who didn’t have a whole heap of publications on banking, fiscal adjustment, mortgages etc? I suspect not. Let’s recall that when Morgan kelly first came to the public debate he was not by tol definition a banking or mortgage expert. Does that mean he should have stayed silent?

I think we can agree that you know more about banking and finance than I do. Therefore, whenever a journalist calls me up with a question on that subject, I redirect her to you. I think that the public is better served with your expert opinion than with my undergraduate knowledge.

I can probably answer most questions just as well as you do. However, if I become the “public expect” on banking and finance, then there is a chance that the Minister of Finance will come knocking on my door in the middle of the night rather on yours — and I would rather that you answer the 100 billion euro question.

@Karl Whelan
“Third, Richard reckons that “The typical listener to the radio or watcher of the TV assumes that because someone is a professor and speaking on the topic, (s)he must be an expert.” Well, maybe that’s true in Holland but it sure isn’t true here.”
You are mistaking the reading public (and the “arsed to argue about it” public) with the watching it on the telly. If none of you have been on the Late, Late, you don’t exist. And it is unlikely, in it’s current format, that you will be on the Late, Late.

I suggest you get out of your part of Dublin more… even your Prime Time appearances with the glossy Miriam, too few and all as they have been, made an impact here in ruritania. “He’s a professor of finance[sic], you know, not one of them bank fellows”.

@ Richard

And indeed I would always recommend you rather than me on energy\environmental issues.

The Lenihan\McWilliams Dalkey moment is an interesting argument. But David is a journalist rather than an academic and, if indeed recommendations from that meeting turned out to be important, that point to serious problems with our whole policy-making structure rather than with our media’s treatment of economic issues — there are prominent financial journalists in every country, so I don’t see a point in blaming David for appearing often on TV and giving his opinion (if that’s what you’re doing).

On banking issues, I’d point out that while I do know a lot about this area (largely picked up by osmosis via 11 years in central banks) I’ve never published an academic paper in banking research. An extreme version of your argument would suggest I should never discuss banking in public, thus leaving it to journalists and stockbrockers.

As for that Al character, don’t mind him, I loved your green jersey!!

Talk is cheap.
The ECB / local banks have created the facts on the ground.
We have spent 4 years talking about this implosion.
Now tonight on VB economists wish to talk about perhaps a 5 Billion private debt forgiveness programme !!! which will become or perhaps is already socialised debt.
Not one Irish economist has criticized the flawed nature of the contractual debt money system which is leading to a starvation of the medium of exchange and therefore local commerce.


Keep it open. Structural flaw in present, past, and recent past governance around here is the serious lack of dissenting and pragmatically informed voices in a weak Irish public sphere which is only now learning how to influence power, and policy making.

@Richard Tol

Declan Kidney has no notion whatsoever of putting you on stand-by for the second row. Your noble distaste for the sencond row is well known, and John Hayes has silently veto-ed any thoughts of the front row. Keep wearing the jersey though – we’re sending the U-tube to Richie McCaw.

@ Dork

“the flawed nature of the contractual debt money system which is leading to a starvation of the medium of exchange and therefore local commerce.

Not going to engage here beyond to say that I have no idea what you’re on about and I don’t think anyone else does either.

Either explain yourself properly or (my preferred option) give it a break.

as Karl mentions, my serious economists decline invitations, and others then reign. This is also true in other specialised areas, e.g. law, where there are notorious self publicists.

Not all academics are media savvy, and media aside, public policy debate and formation is rather poor in Ireland.

I think this does need to be addressed, and a public policy network, to enable expert opinions to be heard and channeled, would be a wise investment. The network could
1) Keep a register of experts
2) Ensure some media and presentation training
3) General mentoring and feedback
4) Arrange some events etc
5) Promote blogs such as this one

It would be a ‘think tank lite’ , with perhaps 1-2 FTEs, and could be of huge aid

Perhaps I could add some perspective from the media side?

Ultimately it’s show business. Experts have to be interesting to the audience above and beyond the information they possess. Education must be done via entertainment or no one will watch/listen.

So to be good on radio/tv you have to
a) HAVE AN OPINION – mostly conversations are structured on debate so therefore two sides are needed. Can a producer put you on one side or the other of a proposed debate? Are you identified with a specific area?
b) Understand the needs of the producer. Time limits – ie. you have 3 minutes to make your point, showing up, especially at short notice. Flexibility on panels if conversation strays beyond original brief. Can you be fluent and explain a complex point to a lay audience?
c) have a Hook or What will make people interested in you over and above your expert opinion.

Richard is a TV dream. He just sits there and the audience is going Hey! Who’s that Guy? He has wild hair! And he’s wearing a jersey instead of a suit! What’s his story? So audiences will hang around to see what he has to say before he even speaks. And when he does speak he has a strong opinion, that is happily, also informed.

Seamus Coffey went down really well tonight on the show. He’s got the Cork accent, summed up the situation neatly, sounded authoritative, IS authoritative and happily breezed beyond brief. Expect to get more calls Seamus!

And sometimes, it’s down to who can you get. There are a LOT of shows and a desperate need to fill the slots. Presenters/producers are just so relieved and grateful when someone agrees to take the call and give their 2 cents. Maybe you can say that person shouldn’t take the call, but if Brian does and 6 other people didn’t, everyone at the station is very very grateful.

The only huge frustration is the lack of women contributors. We always try for a woman on the panel and they say no 10x faster than men. You guys much more confident!

The celebrity economist culture and media mix has been
a toxic cocktail . It has driven the sane among us to turn
off radio and papers. They have done more to supress
spending and driven more money out of the countries banking system. Their behavior has been of no benefit to the country and is totally self serving. Their negativity is
stunning by any standard. They famous Constantine keeps saying”by 2013 there will be no money
left ” this is the type of sweeping statement that keeps
the people on a state of fear . We are just expiriencing a
recession which unfortunately had a bubble attached. It’s happened before if will happen again . It’s time
to move on.

Money as a token ? – you are familiar with the 3 roles of money Karl ? rather then a deposit shadowing a asset most of which happen to be unproductive consumption holes , money value would be backed by the countries ability to tax only.

The lack of money velocity now is a result of banks not lending as their “assets” are not performing , the contraction has nothing to do with the remaining bits of the real physical economy.
These asset values have been blown up by a credit explosion using oil as the agent , the domestic real economy has withered in the face of this asset inflation.
Yet this new lack of money which were chiefly credit deposits that are dying is killing the remaining bits of the real economy because it lacks supply.

Why not divorce all money from Bank balance sheets… sacriliage ?
Destroy all private debt contracts and slowly rise the money supply
This debt destruction will unfortunetly destroy the value of money via inflation if it is not taxed.
But Tax consumption that can be realistically avoided such as private transport rather then water.
In a cash market for property people would be free to move into new property with the minimum of fuss and the state would have no reason to see assets rise to protect its or its banks balance sheets – creating vast efficiencies such as 1 person moving into a single apartment , family to a semi and so on.

The Physical economy is not a series of debt contracts as seen by Central bankers – its fundamentally Physical production & consumption facilitated by token transactions.
Your aim as a economist is to make these transactions become as efficient as possible.
These exchanges are clearly not working effiecently because of the negative debt dynamic.
If Central bankers wish to sustain these debt contracts you will destroy the currency – my bet is on this occurring as they cannot investigate money that is not debt , it will flow to the golden debt sponge me thinks which is always needed by debt money to finally clear the transactions.

@ Sarah
The media serve a less important function than they think. People don’t believe the economy is tanking because some economist on TV says so – they believe it because they can’t pay their bills and their neighbour has lost his job.


Here’s another argument: Prominent academics are opinion leaders. They help form expectations. Expectations matter. So we’d better watch our mouth.

Sorry “cannot investigate” , should be “cannot envisage”…. not sure where that came from……….

Richard and Karl highlight a very important point – the appearance respected academic economists commenting at liberty on banking issues on national TV and radio was one of the disappointing features of the Irish crisis – many quickly showed that they did not understand such basic banking issues as the difference between a bank’s assets and liabilities, non-deposit funding, implications of standard liquidly ratios etc and it was immediately clear that many had never undertaken any “serious” banking research. I agree this might not be terribly significant for the general public, but it does highlight a clear and disappointing lack of expertise and is important for those looking at Ireland as a centre for financial expertise.

I’m completely convinced that the media usually wants comments at the level of a good undergraduate or masters degree in economics, rather than at the level of the latest publication in the AER. That’s fine, not least because that’s the level at which relevant solutions are likely to be identified. For that reason, there might be an argument for less deference to each others’ “more advanced” expertise, in the interest of a bit more pluralism and debate between qualified discussants. I’d be interested in Karl W’s view on Ireland’s waste policy, for example, because even accepting the need for “taxes to curb externalities” etc, economists have been known to disagree on what that logic requires. Similarly, it would be interesting to hear Richard T’s views on the best ways to balance the budget. Of course, there are only so many hours in the day…

Karl to Dork: “Not going to engage here beyond to say that I have no idea what you’re on about and I don’t think anyone else does either.”

I think the Dork is a devotee of the Modern Monetary Theory (MMT) school, which AFAIK is a Post-Keynesian splinter-group. So the leading lights of that school (L. Randall Wray for example) will probably be best placed to tell you what Dork is trying to say.

I don’t like MMT – at least what I understand of it , however I do recognize thats how the monetory system really works i.e. defecits is just money needed to pay down private debt / save goverment debt in a freefloating monetory system etc etc.
What I said above was more of a full Greenback / debt free money postion as championed by Karl Denninger and others.
Its important to seperate what is your prefered monetory system to more “practical” solutions to the global debt crisis given the strange power / debt dynamics in this world.

@ Dork

“Destroy all private debt contracts and slowly rise the money supply”

Ok, so you want to get rid of financial intermediation altogether and produce a hyperinflation.

Personally, I think they’re terrible suggestions but I’ve no problem with you putting them forward — lots of commenters here have bad suggestions. But the long posts repeating these points in obscure ways on every thread are a complete pain.

The rise of the celebrity economist has illustrated for me that economics is a very unsatisfactory subject. Physics has its Uncertainty Principle, seems to me that all economics is uncertain. We have people ranging from the balanced and common sense side of the spectrum (e.g. John McHale) to the outrageously apocalyptic (e.g. Comrade Gurdiev), the latter in my opinion actually exacerbating the crisis.

I think all economists should at least have the decency to add after every opinion they espouse “but of course, I could be wrong”.

I also agree with the comment that many economists have displayed a shocking lack of knowledge of the true workings of the banking and monetary systems but their apparent independence and academic gravitas makes them more attractive media material than actual practitioners.

How could a hyperinflation insue ? I would suggest credit hyperinflation has already happened.
This is why we have such extreme wealth differentials now.
You can use tax to prevent consumer inflation when private debt contracts are defaulted on.
I said SlOWLY increase the money supply……(no credit would be present) at lets say 2% or the population increase , something rational – not the 20%+ increase in credit aggregates that the Irish central bank oversaw.
The consistent rise of credit over the sustainable increase in GDP is a extreme fraud.
Financial intermediation ? – the banks are only safety deposit boxes now – Brinks & the Post office could do the job that the Irish banks are doing.
Use new commercial banks to provide checking account facilties with no Term facilties – stick all term deposits into Goverment coffers.

We have people ranging from the balanced and common sense side of the spectrum (e.g. John McHale) to the outrageously apocalyptic (e.g. Comrade Gurdiev), the latter in my opinion actually exacerbating the crisis.

My view is the exact opposite. We’ve had the cheerleaders of the boom making excuses for the last three years even as the debts mount up in the tens of billions. Meanwhile, the people who actually saw the real debts figures for what they were and who proposed solutions are sidelined, rubbished, and ridiculed.

Gurdiev has to waste his time dealing with banker’s mouthpieces on late night TV talk shows, while people with strong and consistent track records of getting things totally and utterly wrong have the ear of the entire cabinet. That’s what’s wrong with economics in this country.

So right..and so right everywhere, sadly…..

What’s the phrase, “it’s hard to make a man believe something his livelihood demands he doesn’t believe” or something like that.

The economics profession calls itself a science, when in reality it’s the propaganda arm of government and banks….masquerading as science to stifle debate…..

When an economist actually tackles the effect that interest on EXISTING debt can have on the actions of rational people, then they may actually garner some credibility. To tell a population up to it’s neck in debt that the problem is “confidence” is beyond laughable.

@Sarah Carey

I have an opinion, will do wild hair if necessary, can talk economics (though I’m not a recognised ‘expert’) and own both a suit and an Irish rugby shirt. Can you invite me on the show to help me become a celebrity PR guy? I see myself becoming the Max Clifford of the financial services industry.

I’ve just spent the afternoon arguing about a press release with a really thick pensions marketing director who won’t (can’t) take good advice. Being a media celeb has got to be more fun than that.

However, I refuse to dress up as a woman!

@pr guy

Well the first thing you need to do is reveal your identity!
No one gets asked their opinion on telly or radio unless they are willing to put their name to that opinion. The celebs put their reps on the line every time while some of you hide out.


“Anglo Irish Bank chief executive Mike Aynsley has said the Anglo Irish Bank is no longer a “systemic” risk”

Take a look at the charred landscape. 5 banks in public ownership. The country a ward of the IMF. Bond yields 500bps above sustainable levels. 450,000 people unemployed, many for more than 2 years. A man in Tralee writes to the Times to say the only food in the house comprises bread and cereal. And Mike Aynsley says that the Anglo reactor is no longer spewing radiation. What system is left to destroy ?


Vinny Browne fancies himself as an economist with his opinionated remarks on everything which just makes me press the button for La La land. Gurdgiev is always talking Billions of something and I press the button aka last night.

Could I suggest that TV Producers check the accounts/Directors names in the Companies Office online of the companies where some of their contributors hail from and they will quickly realise which bunch of spoofers like to be on the telly. I do sometimes and usually am not disappointed to find just how big a hole these people can make/create.


I think if you read pr guy’s post above again, you might spot a potential flaw in that suggestion.

In my considered view, as a non-expert in the TV broadcast industry, a somber panel, combined with PRGuy as the rear portion of a pantomime horse, inhaling helium before each sentence would make for classic cutting-edge television.

@Karl Whelan

Yet again the Lenihan/McWilliams kitchen conversation is discussed here.

Why is there no discussion of the fact that in the weeks after the guarantee, when ‘Official Ireland’ as Eamonn Dunphy calls it, thought that the guarantee was a ‘mastertroke’ (Sindo, Daniel McConnell), the guarantee was attributed to the genius of JP McManus, Dermot Desmond etc. . without any contradiction from these worthies?

If McWilliam’s alleged association with the guarantee is worthy of such continued discussion, why is the alleged assocaition of such stars as McManus & Desmond, worthy of no commnet at all?

Do economists really imagine McWilliams had some power over FF, that the aforesaid oligarchs lacked?


Can you not do the pixels over the face and the disguised voice thing? Though I suppose hiding in a panto horse might achieve the same thing.
I have some interesting tales to tell about what really gets thought, said and written in the financial services industry but like many others, I’m not in a position to bite the hand that feeds me.

Where did Libya’s money go in the past few weeks? How much of it will then never see again? And I’m not talking about what the old Colonel might have done. If anyone has the means, have a look at French, German, UK and US banks that have earned fees from Libya in the past 12-18 months. That might point you in the right direction. The Arab spring is an opportunity for some.

@Richard & Karl

I am happy to say I have no reverence for economists or “experts”. Economics is not physics. The postulations of physicists are largely inconsequential for my (or most anyones’) daily life. But economics is actually important and thus the peer review process needs to be public. This is unfortunately convoluted and inefficient because of the need to balance inclusiveness with rational circumspection and rigour. But unlike physics and other exact sciences – which consequently use much more induction than is recognised as necessary by economists; as John Kay explains so succinctly – economic forecasts inform my decisions on whether or not to get a mortgage, invest in a business or buy the next pint as opposed to the opportunity cost of not saving it so I can afford to buy a pint in a year or so.

It is perfectly obvious and indisputable that if “experts” and the powers that be had listened to “celebrity” commentators like D McW years before the crash Ireland would be in a far better position than it is. That is why commentators like them will always be receive with far more credibility by the public than established economic “experts”.

Whether I am “capable” of having a debate about economics or not, I will, because it is IMPORTANT! I need to make decisions and I don’t inform those decisions by passively soaking up the views of “experts”. I learn and inform those decisions by actively participating in debates in order to do important things like breaking down jargon (which is only there to keep the incrowd in and the out crowd out – and is therefore anti-communicative) and developing my own reasoning faculties.

And when the contentions of commentators are subsequently backed up by events (no matter what you say about self-fulfilling prophesies, D McW did not cause the global financial meltdown and severely inhibit our abilities to repay unsustainable private debt) they then receive respect way into the future. The normal response is that “just because he was right once doesn’t mean is always right” is nonsense. Obviously his predictions were not just about one thing but about a whole system and he has thus cemented his position as a credible commentator, far more influential in terms of public opinion than the “experts”, for years to come – and rightly so. He will have to say ALOT of stupid things – as he obviously does, like the rest of us – the wreck that credibility.

And finally, this whole discussion suffers from a distinct sense of unmerited self-importance. I am an aspiring entrepreneur with a start-up tech business, and as such, will have have more effect on the economic fortunes of the country than the so-called “experts”. That is because I live in the real world and am not insulated by academia and funded by the state. Economists have little or no effect or influence beyond the clique of financial institutions and governance. When I am wrong the real economy tells me, by not buying my crap. When you (“experts”) are wrong there is very little external effect or consequences (in the way that a carpenter might build a table and if it collapse after a year then he is shown to be a crap carpenter) beyond the insular peer-review processes defined by “rigour and modelling” relatively distinct from the real world of cause and effect. I have metrics to define my goodness and accuracy. You have “the peer-review process”, i.e. other people’s views. But “views” and papers are all well and good, until something real happens (like a credit crunch) and there is little or no consensus or predictive quality to inform people on what they should actually do to protect & support themselves by earning a living and saving/investing.

Adam Curtis & John Kay describe my views on “expert” economists most succinctly. If I was being mean I would put them at about the same level as the “terror experts” that informed the neo-conservatives on their wars.

That said, I will always listen to the views of economists, but I will never defer my judgement and always respect predictive ability over models and theories. I think it was John Kay in a previous article a couple months back that said – and I paraphrase- “If someone tells you something is too complex rather than explaining a subject in clear language then they usually don’t understand it themselves.”

@ciaron c

In the asset management business there is a saying about economists:

“An economist is someone who will tell you tomorrow why what he said would happen today, didn’t.”

The analysis market in that business is effectively “the media” for a very discerning “audience” 🙂

Economists rarely have that audience hanging on their every word.

And president Johnson in the 1960’s said, give me a one handed economist….

Btw Ronan L, thanks for the link I will read over what’s going to be a very boring weekend indoors. At first glance though, I don’t see the link between credit formation and house prices….the rntr in the moniker is obvious and it is that way since I had a flash of understanding some years ago…that was, “what’s the real, intrinsic value of a house?” and I decided the “value” was whatever a bank was prepared to lend you to buy it…….and from that realization came a lot of others, pretty much in line with the Dork….private money creators are looking for a way to create money…it’s what they do…….but then the cycle or, as I just learned yesterday, the Ricardian equivalence (haaaaaaa!) which means if you spend too much today, then it might make you poorer than would otherwise be tomorrow….apparently there is a discussion about this!

and to illustrate my point, two supposedly academic economists will come later today to your radio to … discuss the morning papers

do economists have a comparative advantage in reading newspapers?

does the labour contract of academics specify journalistic duties?

@ Richard Tol

Blather from economists, journalists or business folk on the stories of the day is not here nor there.

Economists have become more common in the media in many countries since the bust. There are many proposed solutions to problems but I guess few of them would make good policymakers.

On RTÉ, economists or others need not fear that they would be subject to forensic questions on economic issues from presenters who may themselves have gorged on the ‘fatted calf’ during the bubble.

What would be news is if academic economists broke out of the conservative cocoon and indulged in a bit of iconoclasm rather than the usual laments about what the Government has done, not done or the perceived lack of political courage of European political leaders.

The Government is producing another multi-year fiscal plan but there are no oracles on Merrion Street.

Yet there is little feedback on how a bankrupt country can best adjust to living within its means in a medium-term of low growth.

But Richard, the Sunday newspapers are full of economics-related stories (e.g. lots on mortgage relief). The way the shows work is that the presenter usually asks each person which story or stories they found interesting. They ask the economist so they can say something about the economics-related story. And, yes they do have a comparative advantage in that.

If the economist ends up talking about non-economics stories, nobody views this an anything other than a non-expert opinion about the Middle East, the presidential election or whatever. But since nobody is going to be an academic expert on all the issues covered in a two-hour show, that’s just the nature of these shows. You might not like that but the shows are popular and making a useful five or ten minute contribution on an economics issue can be a useful public service.

For example, the generation older than me received a massive once-off transfer of wealth when we joined the euro. They had saved in the old, soft currency, the punt, which was a “serial devaluer”, yet, as if by magic, they got all those savings in a “weak” currency redenominated in the “hard” euro currency.

How does David McWilliams continue to get away with nonsense like this.

“How does David McWilliams continue to get away with nonsense like this”

over-confidence causing lack of circumspection driven by the exuberance of having correctly identified our current ills prior to the events despite being slandered heavily then and now and labelled “economically illiterate”? I would have thought it was obvious. Economists must be so wounded by the loss of credibility that all they can do is jibe from the periphery of the public debate.

@ Richard

“the latest euphemism for transfer payments.”

That sounds awfully like someone prognosticating on an area outside their own expertise. But then you wouldn’t do that Richard would you?


@ Ciaran Carroll

How do you reckon DMcW was the Oracle as is also claimed for St Morgan ?

I suggest you go to “You Tube” and search for Margaret Doyle of the The Economist Magazine May 2003 and you will see a piece with this Trinity educated economist in an interview with Eileen Whelan of RTE News on the Irish Property Market . Throughout 2004 and 2005 the Economist Magazine predicted the Property Crash here well in advance of all of the other “geniuses” here. BTW DMcW recommended the full guarantee of the Banks as the solution to the late Brian Lenihan in Dalkey in 2008. That was good advice !!!!

No, I wouldn’t.

I do recall, from undergrad accounting, that there is a difference between making a provision for a loss and realizing that loss. That difference seems to have gotten lost on some professors of economics and even on some professors of business administration.

Debt forgiveness is an income transfer from the bank owners to the mortgage holders.

Income transfers are sometimes justified, but we should not pretend that debt is forgiven. It is transferred.

I was listening to Mr. McWilliams in 2000/2001 saying that there was a property bubble and that prices and the associated loss of competitiveness were unsustainable. You may believe that the bubble only dates from 2003 or so, I think it happened a lot earlier.


“I do recall, from undergrad accounting, that there is a difference between making a provision for a loss and realizing that loss. That difference seems to have gotten lost on some professors of economics …”

If that’s a reference to me, it’s further evidence that you should follow your own advice and stick to the energy stuff.

There are many important distinctions in the mortgage debate. In relation to loss provisions, one can point to three sets of figures.

(a) The Blackrock base case loss estimates.
(b) The Blackrock stress case estimates.
(c) The actual loss provisions so far booked by the banks (these are pretty small so far)

The banks have been recapitalised on the basis of (b), (a) should be the assumed baseline for what’s going to happen, and (c) needs to be adjusted to catch up with reality.

For example, here’s AIB’s annual report for 2010

Page 75 tells us they have €27 billion in Irish mortgages. Page 83 tells us they have €212 million in provisions.

@trp, ciaran, hogan, bw2, richard


Karl says:

“making a useful five or ten minute contribution on an economics issue can be a useful public service”

Some of the comments above particularly of the celebrity guru kind compel me to make what I think may qualify as a useful public service – particularly given that many readers will have taken a fairly recent interest in the Irish economy because they don’t know what to make of what has gone on.

First, I think the new reality of having some level of economic competence to be able to sensibly discuss much of the news has revealed a real weakness in Ireland’s journalistic community. Very few have any real feel for it. as ertie said, you partied-on or were a weirdo malcontent. That ignorance means they are grasping out, pulling in people to fill that gap. The public don’t trust the faces and voices from the banks etc, so the obvious thing to do is ring someone from a university – at least they are unlikely to be talking their employer’s book (though there are exceptions, not sure about a guy being introduced to the audience by his business partner as simply a lecturer at a university).

The parallel obsession with mystic gurus who identified the property bubble is getting ridiculous. If you take a step back so you don’t limit the field to Irish commentators the reality is that the view that Ireland was in a property bubble was common and mainstream.

Not only that, but anybody who even regularly read the FT in the late 90s would be aware that many, mainstream financial analysts took is as read that an Anglo economy, with its property owning traditions, would likely experience first a big boost to property prices as Germanic low inflation expectations brought down interest rates and then later on there would very likely be a debt hangover and declining prices as people eventually realised that the borrowed money would have to be paid back in full instead of inflated away in the traditional manner.


That David McWilliams communicated much of this to the Irish people when most were just along for the ride and frankly, thought that a property boom was a great idea, is very much to his credit. I admire him for doing so so publicly. But what he did was to import ideas that most of his counterparts in Ireland preferred to ignore.

As far as I am aware MK only started taking an interest in the property market around mid 2000’s, which is kind of curiously recent, but it certainly was fortuitous timing.

What is going on is a resort to branding – as one type of brand has been undermined they are seeking another to replace it. Its a bit lazy and a bit dangerous.

If you are reading this and have not been immersed in economics or financial markets for years and years and are struggling to work out what to make of your available “experts”, relax a bit. There are no magical mystic gurus of infallible economic wisdom. Take arguments on their merits – not on who uttered them.

Personally, I did quite a good job of analysing Ireland. I expected the acceleration of the boom if the Euro was joined when people were telling me the property market looked toppy – but I underestimated how long it would be extended due to Eastern European immigration so loose a couple of marks there, but hey – saw that splash of petrol for what it was at the time and didn’t bail out, got that it had turned into a really mad bubble and would burst spectacularly. Even thought a bank or two would go bust. Believe me that’s not bad going, and holding those views eventually became a distinctly uncomfortable experience.

So I’m not in awe of alleged gurus. The “gurus” and the people who made the right calls know they are not gurus – or they have lost the run of themselves. Every view expressed by anyone, including me, no matter how expert might at any time be complete hogwash. everyone gets things wrong sometimes, everyone talks shite occasionally.

I think it was Colm McCarthy who made the point that one of the biggest mistakes was the intollerance of dissent. If you hold a view – particularly if it is such a popular view that journalists phone you up to pronounce on it in public, have a think about where that puts you in the herd.

Note to journalists – do read the FT occasionally.

@Richard Tol
Perhaps if you prefaced your remarks with “And here I am not speaking infallibly”, it would permit you to comment on matters outside you expertise comfort zone without you being taken as being an authority?


I never said that D McW was a guru. I think lots of what he says is complete rubbish. I also think he has become very over-confident and brash in his columns.

I don’t want to talk about D McW specifically as their are many dissenters getting air-time now, but he is particularly vocal and particularly well-received by the public.

That said, the resentment that economists have for “celebrity” commentators is completely unwarranted. People seek to understand things without having deep knowledge of the subject matter or the jargon. They seek to understand things in order to make decisions on their lives. If many people who took out mortgages in 2003-2006 had listened to D McW and his ilk and rented instead, then we would be in a far better position than we are in. And yet is is derided here and elsewhere for expressing his views. He doesn’t care if anyone here thinks he is an expert or not, he has shown himself to be a valuable contributor to the public debate – as opposed to an insular academic debate. He is not a guru, but it is depressing reading supposedly respectable economists moan like children. It reeks of a jealous need to control their turf in a debate by defining the parameters of who qualifies to contribute.

Now I respect that they shouldn’t be called experts, but I think that is often more inferred by the audience than made explicit by the commentators.

If there was a way to stop Colm McCarthy wheeling himself out and Gurdgiev moaning on, I’d be happy to explore it.

“Experts” were a major part of the whole landscape of the property boom; there seemed to be endless numbers of economists (affiliated to various vested interests) ever ready and willing to come on any show. Am amused, though, at some of the vitriol that has been directed at David McWilliams in this blog. He’s obviously not a tenured academic economist! 🙂 He’s basically an economics journalist (and part showman/entertainer too). To make a living he has to churn out some 80-90 newspaper column articles a year on a narrow range of topics. Obviously the output quality is going to vary hugely. And was a touch of hubris there too. Probably began to believe his own hype. But, nonetheless, thinking back over the whole property boom, I struggle to think of anyone else in the media prior to about 2005 who gave any warnings on this topic (other than perhaps an IMF report early in the decade). McWilliams must have been hammering on about this subject since about 2000/2001. I can think of a number of other voices (some academic) from about 2005 onwards alright: Alan Aherne with some articles about property bubbles, Moore McDowell too (not sure he’d make any of the world citation rankings mentioned here, but always struck me as full of common sense anytime he appeared on some radio panel discussion). There were some warnings from the Economist and noises from the OECD around that time too. Websites like the “PropertyPin” appeared about that time also. Finally, some more voices joined the chorus towards the tail end of the bubble (2007 onwards): Morgan Kelly joined the fray and George Lee (with his memorable “Boom” programmes on RTE).

But McWilliams was pretty much a lone voice during what was probably the initial phase of the property boom (up to 2004/5 or so). I can remember very much buying into what he argued at the time. Am no expert but he made a lot of sense to me. Can remember from 2002/3 or so the banks were all too happy to throw money at people. Can remember friends looking for mortgages at that time. All one had to say to the bank was that one was getting some extra overtime at work or one would rent out a room and they’d be all too happy to bump up the amount they’d be willing to loan, no problem. Buying into McWilliam’s arguments, I did expect a pretty significant property crash at the time (maybe in the next 2 or 3 years, say by 2005). Didn’t quite turn out like that! 🙂

Instead the property boom entered a whole new phase: Eastern Europeans building apartments for more Eastern Europeans. Talked about that notion rather tongue-in-cheek at the time. But think there was a lot of truth in the notion. Was rather bowled over at the scale of that trend at the time. It’s probably only in more recent times we have more concrete figures on that phenomenon. A good source of data is a recent CSO analysis of the economic activity of PPS numbers issued in this period (see ). From that report it can be seen that just over 800k PPSN numbers were issued from 2004 to 2008 (these figures exclude anyone under 15 and any Irish nationals returning or otherwise). At the end of 2008, a full 433k of these PPSN numbers were still economically active (either in employment or in the social welfare system). A fuller breakdown of the 433k economically active numbers gives 38k as belonging to UK nationals, 48k to nationals from the EU15 (excluding the UK and Ireland), 257k to the 10 accession states, 12k to Romania or Bulgaria, 4k to the USA and 74k to the rest of the world. An injection of new workers of the order of 20% of the workforce in just 5 years! Even excluding 90k or so from the UK/Older EU members/US in that period there’s still definitely much support for the notion of “Eastern Europeans building apartments for other Easter Europeans”. After 2004/5 this must have been as big an expansionary factor as a pre-existing lax credit/regulatory regime.

The very tip of the bubble have been around the second half 2006 or so. I remember there was an absolute buying frenzy at the time. There were literal queues of young house-buyers trying to get their names down for the latest housing development (in case they’d be left behind). There was palpable panic in the air.

There was the start of a different kind of mood around 2007. Some of the cautionary voices started to be heeded (Morgan Kelly and co.). Programmes like George Lee’s were having their effects on the public mood. Can remember people with full mortgage approval at the time beginning to have doubts about the market. That was the brief plateau before the bust.

I suspect our property boom/bust will set records for its severity. It had mostly already come and gone before many cautionary voices were raised about it. Looking back over the whole period, whatever else one might think of McWilliams, for quite a long time he was almost the sole contrarian voice. He definitely deserves credit for this in my book (even if he may not appear on any international citation rankings of academic economists).

I remember David McWilliams excellent agenda programme from the year 2000 -it at least mentioned the Savings & loans scam and the Boston property Bubble.
Never bought based partially on this confirmation of my own beliefs which began to harden after the credit bubble began to expand post summer 95.
I thank the man for that even if I disagree with some of his Keynesian solutions.

@ Finbar

Thats an extremely interesting and understandable analysis.

If immigration put pressure on housing and most Eastern Europeans were renting, that would put pressure on rental prices. Rental prices being high made it viable to buy rental properties. It was tough for Irish renters to find inexpensive accommodation so there was pressure on them to buy so as to obtain an asset for the future, further pushing up property prices. Once the construction boom ended and the demographics changed (Eastern Europeans went home) rental prices plummeted. You can get a small but decent two bedroom apartment in the middle of Dublin for 800 per month now, which would have cost 1400-1600 a few years ago.

Demographic shifts and economic migration played a very significant role in the “correction”. I hadn’t considered that as much.

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