Overview on the Irish Crisis

This article for the World Financial Review provides a summary and update on the longer paper that I released earlier this year.

30 thoughts on “Overview on the Irish Crisis”

  1. @Philip Lane

    Neat, factual, soundly empirical … and pleasantly brief:

    The weaknesses identified: (1) institutional EMU etc (2) ‘regulation’

    No quibbles with the former, but discussion on the latter – a sort of a fuzzy abstraction out there in the naive deterministic ether somewhere for which no humas are ever held responsible – could do with a skelp more ‘critical intent’ and ‘critical archeology in political economy terms’ both locally and at EU level.

    Minor Revision: a chat with one of the numerous Professors of Heterdox Political Economy in the local environs should do the trick – that is, if anyone can find one of them.

  2. @ Philip Lane

    Very readable and thoughtfully expressed as ever. I see a lot of coverage for the European Safe Bonds too.

    Here’s some thoughts on one paragraph, which would apply across the article as a whole.

    “The combined interest rate across the different funding lines was initially of the order of 5.8 percent per annum for a 7.5 year loan. While this is in line with standard IMF funding conditions, it is arguable that the European component of the funds could have been priced at a lower rate. While it is certainly important that such official funding contains a premium to discourage moral hazard, the 300 basis point premium built into this funding rate made it more difficult to achieve fiscal sustainability. Such a high premium limited the degree of solidarity across EU partners, while also increasing the risk facing other European governments in view of the potential contagion from doubts about the sustainability of the Irish sovereign position. In July 2011, the European leadership eliminated the penalty premium from its official lending to programme countries, having come to recognise the self-defeating nature of imposing a high interest rate in countries with non-sustainable fiscal position.”

    Could be rewritten as:

    “A bunch of power-crazed maniacs who thought Foucault had written a ‘How to’ manual were desperate to teach a savage lesson to an entity they could not perceive as containing actual human beings. Their rage was driven by an absolute need to deny their own complicity, exposure and frailty, and only when they started to glimpse that ‘this will hurt us more than it hurts you’, was more than just some words they felt obliged to say, did they reverse course. Like vampires, their problem was they just couldn’t see themselves in the mirror. The lesson here is that when the ‘other’ is picked out for blame, be wary as the ‘other’ is a part of ourselves.”

  3. Whose interests, I wonder, do these statements advance and protect?

    “In terms of other structural reforms, the main priority is to improve the operation of the labour market in order to facilitate a reversal in the sharp increase in unemployment (much of it now long-term) since the onset of the crisis. In relation to product markets, there are aspirations to reduce monopoly rents in sheltered sectors (such as the legal and medical professions) and boost productivity in the public sector.

    However, the growth payoff from such reforms may occur with a long lag and cannot be relied on to improve growth substantially within the period of the deal. Similarly, public sector reform has the potential to boost efficiency considerably, but the overall growth payoff will only occur over a long period. Accordingly, it is not realistic to expect a sizeable direct short-term growth payoff.”

    These statements provide an authoritative justification to all those who seek to frustrate, delay, hinder, oppose or obstruct any of these badly needed structural reforms. And there is no mention of the semi-state structural reforms that are being cobbled together behind the scenes, but which could have major beneficial impact on consumers and the economy – but nobody but the ‘insiders’ knows or can see what’s being done.

    I know international macreconomics may be a long way removed from detailed and dirty microeconomic analysis of individual sectors, but surely there must be something in economics for those in positions of influence that resembles the Hippocratic Oath: first do no harm.

  4. I can tell you that the Germanic response to this bit:

    “In terms of other structural reforms, the main priority is to improve the operation of the labour market in order to facilitate a reversal in the sharp increase in unemployment (much of it now long-term) since the onset of the crisis. In relation to product markets, there are aspirations to reduce monopoly rents in sheltered sectors (such as the legal and medical professions) and boost productivity in the public sector.

    However, the growth payoff from such reforms may occur with a long lag and cannot be relied on to improve growth substantially within the period of the deal. Similarly, public sector reform has the potential to boost efficiency considerably, but the overall growth payoff will only occur over a long period. Accordingly, it is not realistic to expect a sizeable direct short-term growth payoff.”

    …would be:

    “Let us introduce you to ze concept of ‘investment'”.

  5. @Grumpy,

    Indeed. There are two convenient fallacies being propagated. The first is that these non-banking structural reforms are ‘slow-burn’, so the focus should be on those reforms that generate a faster return more impressive return. But this is nonsense. Even if they are ‘slow-burn’ they should be kicked off as soon as possible. In fact they should have been licked off more than 2 years ago.

    The second is that they are all ‘slow-burn’. This is also nonsense. So much of the sheltered private, semi-state and public sectors is directly or indirectly under government control that there are numerous reforms that could be implemented rapidly.

    All you have to do is ask who benefits from the propagation of these fallacies.

  6. Why do I get angry when I read these sanitized accounts of the most shameful episode in Ireland’s history? An i include the silken Thomas invitation of the Brits in this comparison!

    It started out as providing liquidity? It wa SA 2 year guarantee? ….. Really????? Let’s correct it. When the monster credit bubble peaked the insiders were not fully cognizant of the situation they had a rat like sense that the sh*t was hitting the fan. So they closed ranks and, to avoid any leakage of the extraordinary levels af corruption and cronyism that had characterized the bubble, they bailed out the banks. One convenient consequence of this was that, by guaranteeing Anglo and the rest, nobody could call it bankrupt and therefore, nobody could force it to open it’s books.

    Then the government tried to buy off the other insiders by signing an agreement that said no public sector layoffs, leaving only, ordinary, private sector employees to pay off the debt assumed from the banks. But no bother, we need to competitive so those losers can take it up the popper or Fook off to Australia or wherever, cos frankly, we don’t care.

    And to really cover all our bases, we’ll cravenly kiss arse in Europe and the US, cos god knows we are going to need somebody to forgive us after all this, and we can’t ask the priests any more since we got caught forgiving them for raping our working class kids.

    Should be fookin ashamed of yourselves.

  7. An American academic who has just returned from Ireland and writes of the need for ‘a brutal sense of realism’ but what he had encountered was what some of us would be familiar with — exaggeration of the impact of glimmers of light and the peddling of fairytale panaceas.

    http://www.huffingtonpost.com/sean-kay/ireland-remains-at-heart-of-eurozone-trouble_b_990355.html

    Herein lies the dilemma for Ireland. What is actually mainly working right now for the country is a sense in the global markets that Ireland is doing what has been asked of it regarding its bailout and not causing the kinds of headaches that Greece is. However, if Greece defaults, either in a managed way or in a crisis, the pressure on Ireland to default will accelerate. While some Irish celebrity economists say default will be praised by the global markets, the reality is that it would decimate the Irish economy — likely leading to capital flight and runs on the banks and even higher emigration and unemployment going well beyond the existing 14.5 percent.

    It is with all this in mind that one finds it frustrating to hear stories about how the Celtic Tiger might be back, based on one quarter of economic data. This is misleading and creates a false sense of comfort at an extremely dangerous moment for Ireland. The cuts are causing extreme pain on this society, and there may be a tipping point where disconnect between what is being said about Ireland and what people there are feeling will arrive. And, if this comes on the heels of the Greek crises, this tipping point might well come much faster than many anticipate and with dire consequences for the European and American economies.

  8. @Bklyn_rntr,

    Senior Irish academics have to use a particular code to communicate. There are two layers of encryption. The first layer is the standard international ‘academic economics speak’ which must avoid any direct engagement with political economy and the often base motives that motivate firms and consumers. This is the ‘purity layer’ which seeks to preserve economics as a science rather than the discipline it actually is. This is common across the board.

    The second layer is specific to Ireland. Any message communicated must be channelled through a filter that provides boad support for the thrust of government policy – even if various caveats and reservations are subtly embedded in the text.

    I suspect very few people realise the time and effort expended by senior Irish academics and researchers who pronounce formally on public policy to ensure their message is fully encrypted at all levels.

    In terms of exploring policy options in a transparent manner as part of the public discourse it is absolutely ueless. But that is not the purpose of the exercise. It conveys the impression of senior academics actively engaged in the policy process, even if very few people can decipher what is being said – or even take any notice. But government, if it wishes, can extract some sound-bite or observation that is broadly supportive of its stance.

    McLuhan was right; the medium is the message – and there are many layers of meaning. Academic papers and op-eds on public policy – with this blog being the best example of all – form the medium. They convey the impression of engagement, debate and disputation based on evidence and analysis, of the securing of common and of establishing a basis for informed policy decisions. But the reality and the intention is precisely the opposite.

    How ever ill-fitting the labels might be they have some use and we are governed by a coalition of the broad centre-right and the broad centre-left. Policy debates, in so far as they were ever carried on, previously occured within the government machine and primarily between senior politicians and senior civil servants. Now the political aspects of the policy debate have also been internalised and hidden.

    But the government machine realises that there is a requirement for some sort of public policy debate – in particular because of the extent of previous policy and regulatory failures and – to conceal the extent to which it has internalised the debate. So there will always be some ‘useful idiot’ economists who facililitate this ersatz debate in a suitably coded form.

    The noise is used as a substitute for the public engagement that might inform and ensure sensible policy-making secuing a measure of public support. And this suits those who exercise power and influence very well.

  9. @ Philip

    Very succinct and readable summary, but Paul Hunt raises a very serious issue about the lack of focus on urgent domestic reform. Absent the necessary growth, stabilisation efforts are bound to fail. It would be naive to imagine that bond yield swings are genuinely indicative of deafault risk, and the global picture is darkening.

    This bit stands out for me also.

    ‘In contrast to many other advanced economies, the export sector was a stabilising factor, with the decline in output concentrated in the domestically-orientated sectors of the economy’

    The crash is a domestic event. The export sector is, almost entirely, a capital intensive, high tech enclave. That makes the Irish economy unique among so-called developed nations, with consequences which are extraordinairly under-researched. We seem to have nothing but a Forfas report to rely on. The taboo against doing anything which might be seen to undermine ‘confidence ‘ aka the insider consensus, is extraordinary. The subordinate mentality dies very hard.

    This piece of puff from Joseph Quinlan, author the American Chamber of Commerce report ‘Built to Last: the Irish US economic relationship’, in todays’s SBP, is what passes for economic analysis.

    ‘Ireland’s strategic focus on developing cutting-edge capabilites in such dynamic sectors as nanotechnology, clean energy, global business services, pharmacuticals and related activities bodes for more, not less long term US commercial linkages’

    I did not have the opporutunty to do so in the last week, but I refer in this context to a series of perceptive posts by Tony Owens on an earlier thread.

    ‘Ireland suffers in that state strategy-making and course-following is weak for political reasons. The basic ‘industrial’ strategy for more than two decades has been to provide US-style business conditions plus negligible corporation taxes. This has been successful until relatively recently, as one FDI business sector after another has taken root in Ireland, made its money, then been forced by maturation and commodification to depart for lower cost conditions elsewhere. In most cases little is left behind apart from a cohort of skilled manufacturing, engineering and craft people who either bear the costs of reconnecting with the next wave of FDI, emigrate, or join FAS or the IT’s as trainers’

    http://www.irisheconomy.ie/index.php/2011/09/23/dan-o%e2%80%99brien-on-burning-bondholders/#comments

  10. @Paul Quigley,

    The point is that some domestic reforms are taking place, but it is happening entirely behind the scenes. There is no public discourse and anything that will be decided will be announced as a fait accompli. I’m not saying that there is any ill-intent, but it was this type of policy-making that got us into this mess.

    However, you won’t get any hint of all this on this board. This blog has become a carricature of itself. The remaining few principal contributors treat those who comment as a pack of dogs – the commenting contingent. They throw a stick out into the field and call out ‘Fetch”. The stick is almost always flung into a part of the field where either the Troika has nailed down the policy parameters or Ireland has absolutely no sovereignty to make policy decisions.

    There is absolutely no engagement of any substance or relevance. I hang on in the hope that there might be, but the most we seem to get are some effusions from the notoriously prickly Karl Whelan. Yet by blogosphere standards the blog is a huge success. Most posts attract a large number of comments – except, of course, ones like this where there is some attempt to consider what’s really going on here.

    It’s become another establishment authorised safety valve to allow steam to be vented. And, for goodness sake, don’t go near any issues that any under serious and detailed consideration behind the scenes – even if the principal players are well aware of what’s going on (and may even be involved).

  11. Paul
    so, in effect you are saying all senior economists in ireland have been coopted? Including the main posters here?
    Wow thats pretty far out there. Perhaps you would be happier on Abovetopsecret.com or some other conspiracy boards? If they are all so coopeted, can you tell us what the payoff was? Who has been appointed to nice plumb posts?
    Answer: none (Well. one has to two but…)

  12. @ Paul Hunt

    I agree with you that our way of reaching decsions in Ireland is in need of a makeover. The habit of co-option is pervasive and our state agencies are run by a system of nods and winks. Our establishment is cunning, but it’s not very far seeing, with the result that there is widespread loss of confidence in those in authority. Tom McGurk makes the point well in today’s SBP.

    This board is one of the nearest things we have to a national debate. It compensates for some of the grosser inadequacies of our academic and political institutions. I don’t know what the founders expected, but I imagine they are as gobsmacked as everyone else at the state of chassis which has overtaken the Irish economy.

    One of the consequences is that the board has turned into a bit of an open house. To the extent that people are perceived, or perceive themselves, as part of the ‘establishment’, they are associated with the bubble and crash, if only by default. That lessens technocratic dominance and makes for democratic debate.

    Times of crisis are always times of opportunity. You make it clear that you are not an insider. The good news is that there are plenty of folk who feel similarly. We are not all going to up sticks or die off, so sooner or later there will be some serious contestation. At the moment we are at the sham battle stage, but the coalition honeymoon won’t last forever.

    Philip 11 has a fair point, but that doesn’t make you wrong. I believe that you are just a bit ahead of the wave. At the very minimum, you are helping to educate a whole cohort of folk about critical areas of economic policy. And all for free.

    Without the board, none of that could happen, or at least not as easily. And there is something deeper, which is that theirisheconomy.ie is much more than the sum of its parts. It is a little piece of history, and some of the sessions are only mighty. As Behan and Kavanagh knew well, the occasional bit of prickliness is a mark of genius.

    So play up, your tunes are good ones 🙂

  13. “the reality and the intention are entirely different”…Paul Hunt

    Beautifully said, sir! And to second paul Quigley, times of crisis are indeed times of opportunity. This board at least offers an opportunity to highlight the hypocrisies and the distortions that insiders use to drive policy to where they always intended it to go.

    So in 2008 we guaranteed bank debt and used economists and journalists to argue that the guarantee was necessary but temporary …. Roll on six months of debate about how the banks will fund themselves, before that became untenable ….. They kept quiet as the guarantee approached expiry and allowed the market to panic thus setting the stage for the bail out …. And in doing all of this, they bamboozled the public out of any real opportunity for debate, but also removed any real opportunity to negotiate with the creditors …. They really sold the country down the river ….

    Phillip cries conspiracy nut in response to paul Hunt’s excellent review, but we all know there is no conspiracy, because a conspiracy requires it to be hidden. There is nothing hidden here, it is bare faced propaganda, formulated by the true insiders and delivered by the neophytes …

  14. @phillip 2

    “Paul
    so, in effect you are saying all senior economists in ireland have been coopted? Including the main posters here?”

    I think what Paul is saying is much more subtle than that.

  15. And another thing, Paul

    The mere existence of this blog has value. It is true that the principals are treating it with disdain, throwing in the odd bone so we dogs can Fight over it…. But every now and then, the dogs bite back ….

    Dork’s rantings about a debt money system (which they claim not to understand) and grumpy’s clear eyed cynicism are just a couple of the many excellent and iconoclastic commentators here. We are ignored and, for the most part, used as an unwitting market test panel. Despite that, we get a few goals when we point out the hubris, the conceit and the complacency of these insiders. We hit them often on the holes in their logic, we smack them where it hurts when we talk about PSpay, and we ridicule their very claim to be “scientists” when we point out the ridiculousness of their “assumptions”.

    It is something that they put up with us, and I hope that, over time, they will see the value of our input. In the meantime, we can only hope occasionally to shake their sense of special certainty and “specialness” by pointing out that there are non economists and insider who see what is happening. keep the faith!

  16. @All who commented on my rant(s),

    Many thanks. The nature of the public discourse is an important issue. And, first, let me record again my gratitude to Philip Lane and his fellow contributors for providing us with this opportunity. Secondly – to Phililp II – I’m not alleging ‘co-option’; it is simply that most senior academics and researchers who have knoweldge, competence and some influence and who work in areas with public policy impacts are all compromised, conflicted or contrained in some way.

    This is not a criticism, or an accusation of ill-intent or bad faith; it is simply an observation for which a careful reading of public writings and utterances provides compelling evidence. And such a careful reading will also provide evidence that many are straining at the leash to communicate their messages as clearly as they can without attracting the wrath of the ‘powers-that-be’.

    The problem is that it is not accepted practice in Ireland (or, indeed, generally, throughout the parliamentary democracies of the EU) to have a full and open policy debate prior to final decisions being made. Governments, quite understandably, fear any open-ended debate of this nature might be hijacked by vested interests able to mobilise a measure of popular discontent. And most voters ssem to expect governments to make decisions, stick to them (apart from, perhap, some minor modifications), communicate them effectively and ensure the necessary legislation is enacted. If they, subsequently, are very unhappy, they will use any election that happens to occur (presidential, referenum, European, local, by-election) to communicate their displeasure.

    During the policy-making process, occuring behind the scenes, those with knowledge and competence (and effectives lines of communication) tend to intervene ‘sotto voce’, indirectly and often ‘off-the-record’.

    This is neither an efficient nor an effective way of formulating and implementing public policy. But it suits the ‘government machine’; it seems to suit perhaps a majority of citizens (relying on TDs to advance /protect certain individual or sectional interest and confident that some form of election will always surface to allow a shot to be fired across the bows of government if required); it certainly suits various vested interests which have direct access to the process; and it seems to suit those who have the knowledge and competence to influence policy decisions subtly behind the scenes.

    And, given the current dominance of the FG/Lab combo, the dynamic of governance has changed. How ever ill-fitting the labels, many voters seem to be content that this right-of-centre/left-of-centre combo will be able to thrash out the conflicts that arise behind the scenes and agree broadly acceptable compromises and trade-offs.

    Without some scrutiny and transprency before the event this is very dangerous. But those who might shine a light are either a party to the process or wish to be involved at some stage (and it would be wiser to stay quiet). The best policy is to keep the head down or, if pressed to pronounce, to speak in code.

  17. @Gavin,

    I see where you’re going, but I feel I’ve drifted far enough off topic already. The relevance of this amendment is that it seeks to give the Oireachtas the power that any self-respecting legislature should have to conduct investigations of matters of public interest. (It also highlights the extent to which the Oireachtas was deliberately neutered in the 1937 Constitution and has been continuously made even more impotent since then by successive governments.)

    However, it is extremely limited in that it aims to give the Oireachtas powers to investigate ex post and reactively. There is absolutely no question of empowering the Oireachtas to investigate matters of public interest ex ante and proactively. (There is also a political intent to empower a full investigation of the banking debacle in an attempt to bury FF for once and for all.)

    In contrast, my focus here is on the requirement for scrutiny and disputation, based on evidence and analysis, of public economic policy prior to final decisions being made. The key point is that senior academic economists and researchers are prevented in various ways from advancing, or participating effectively in, this process. They find themselves compelled to remain silent, or to speak in code, or to talk about matters that might interest the public, but are not of public interest, or to use lines of communication to make observations ‘sotto voce’ to the ‘powers-that-be’.

    There is no question that a duly elected government does not have the right to make policy decisions – and to enforce them, but the requirement to maintain democratic legitimacy does not end once the results of a general election are settled and a government is elected. Open, aversarial disputation in advance of final decisions being made (which could draw on the internationally recognised expertise of Irish economists) is the most effective means of formulating good policy and of maintaining democratic legitimacy.

    Making final decisions, using the spin-machine to close down any debate, exercising power and patronage to neuter any dissenting voices and relying on a majority in the Oireachtas to whip through any enabling legislation damages democratic legitimacy and is dangerous. Relying on rare Dail revolts or the results of elections on other matters to communicate public discontent should be viewed as rarely used, but absolutely necessary, last resorts.

    I fear though that it will require a huge change in public perceptions to secure consent for an approach which would rely on ex ante transparency and scrutiny – even though it would be unambiguously in the public interest. The long tradition in Ireland has been to assert democratic governance in opposition to an external power and, once its influence was removed/diminished, to allow excessive executive dominance of native governance.

    In this respect Ireland differs from many of the established democracies where the process of expanding and securing democratic governance was a struggle that took place over centuries to bring native power elites to heel. Having being deprived of native governance for so many centuries it appears that many Irish citizens have not yet fully grasped that as much, if not more, effort is required to keep native governance in line as was expended to remove the yoke of external governance.

  18. …and another thing while I’m at it. (This also applies to other EU parliamentary democracies but we seem to have it in spades in Ireland.)

    We are singularly ill-served by the mainstream media. And hints of splits, dusputes, rows or debates in the main factions (in particular, governing factions) are played up for all they’re worth. And the response of the High Commands in the factions is to lay down the ‘party-line’ even more severely. In fact these disputes and debates should be celebrated and encouraged – and the media has the primary responsibility to bring them to public attention as part of an on-going debate about the process of governance.

    This is the messy process of democracy in action. There will always be conflicts between various interests and the beauty and wonder of democracy is that, while it will never secure an optimal resolution of these conflicts, if allowed to work it will secure a resolution far, far better than any alternative.

    But I suppose selling politics as entertainment is more lucrative than selling politics as the basis of democratic governance.

  19. @ Paul Hunt

    Thanks for the replies and crystal clear there.

    Going back on topic, I have a slightly different view of how Philip Lane’s paper (and work in general) can be read.

    Essentially his world is a depopulated one – there are no individuals in it.

    So to take:

    “The ultimate treatment of the non-guaranteed senior bank bonds remains an unresolved issue, at least in relation to the main disaster banks (Anglo-Irish and Irish Nationwide) that are in wind-down mode.”

    “In terms of other structural reforms, the main priority is to improve the operation of the labour market in order to facilitate a reversal in the sharp increase in unemployment (much of it now long-term) since the onset of the crisis. In relation to product markets, there are aspirations to reduce monopoly rents in sheltered sectors (such as the legal and medical professions) and boost productivity in the public sector.”

    The first paragraph I read as a message to M Noonan that the unsecured bond issue is still live, and, by extension, that the ECB should be aware of that too. By resisting the temptation to kick either Noonan or JC Trichet (or Draghi) on the shins on the way by, he reopens that space – not in this paper with enough volume to make it so – but this is part, I’d reckon, of other ongoing developments.

    The lack of people and specifics though, I find harder in the second paragraph. I think what he’s getting at are similar proposals as those that appeared in the letter from Trichet/Draghi to the Italian Government (which I’ve no idea isn’t front page news around the world). It’s taken as read here as to what these innocuous reforms are to decrease unemployment and the lack of detail gives it an attactiveness – who isn’t for increased employment – but the lack of a specific method – by wrecking unions? By cutting wages? By making people more sackable? By State spending on stimulus packages, AOB, means I find it very hard to debate.

  20. @Michael H,

    I expect your questions are rhetorical; you know the answers as well as, if not better than, most.

    The ESRI is totally hog-tied. Its funding is comprised in the main of a direct government grant, payments for projects sponsored by public sector and semi-state bodies and competitively secured research awarded by national or EU bodies equally hog-tied to ensure they don’t sponsor policy reserach work that might rock the boat.

    It serves no purpose beating up on those who are enmeshed in, or in hock to, the government machine. They know the extent to which they are constrained or compromised. It probably gets their backs up when they’re targeted for pillory. Resignations on matters of principle might seem like a good idea for those outside the tent, but they would serve no useful purpose and would be self-destructive – not to mind the fact that the processes of the government machine very rarely offer up such clear-cut choices.

    I remain convinced that there are, as Richard Tol has put it, many ‘clever and critical’ public servants in the government machine working to advance the public interest in the face of predations by the entrenched vested interests. And there are many academics and researchers with public policy knowledge and competence who might be required to speak in code in public but who use their influence, quietly, to advance the public interest.

    My basic view is that this is not enough. The Oireachtas needs these resources to exercise effective transparent scrutiny of policy proposals and proposed executive actions. We can see the damage that was done when this closed policy-making was conquered by delusion and greed. And the good intentions of the current Government are simply not enough.

    However, it appears that many voters are happy to take these on trust – with a degree of wariness and resignation. And it also appears they are reluctant to award more powers to TDs to scrutinise government lest they get too up themselves and become too distracted to protect their interests now that the largesse awarded by the state is being reduced.

    The pleasure derived from having Irish, rather than English, people in positions of power and influence must have the longest half-life in history since it is diminishing so slowly. Irrespective of provenance, pedigree or nationality those who exercise, or seek to exercise, power and influence must be kept in line at all times.

  21. @Gavin,

    Well done on your tenacity in seeking to break the code. I think you’ve cracked the first para. But, as Grumpy and I have highlighted above, you need to take the para in the text following your second selected para. into account as well.

    The Croke Park Agreement governs public sector reform. NewERA is being developed, largely in the dark, in the NTMA to exercise some control over the semi-states and to provide the means of boosting investment and emloyment as well as bank-rolling some favoured political projects. Consumer protection is being neutered and folded into a new Competition and Consumer Authority which may help to keep IBEC quiet if competition law is strengthened. And the medical, legal and pharmacy professions are formidably capable of protecting privileges and perks.

    All of these sectors have the ability to generate the public discontent, industrial action or just general political nuisance that could upset the sunny, sanguine economic narrative the Government and the Troika are crafting. There will be no public statement that these sectors will have to be dealt with very gently, very carefully and very slowly behind the scenes. But it is widely understood. The assertion in the paper that, while reforms in these areas are necessary, there should be low expectations of benefits within the timescale of the Troika support programme provides cover for the Government’s silence and behind-the-scenes manoeuvrings.

    The need for Government to move carefully is understood, but the lack of transparency about the policy options being considered is worrying. The forces being confronted are formidable, but those who prevent government acting, or who frustrate a government’s intent to act, in the public interest are the government. The Government might find that if it were more open with the public it might secure more easily the support it requires – and not be relying on this academic cover.

  22. Deconstructing Philip Lane (who can take it) and the blog becomes reflexive – which can only be positive. It does appear to be the case that most (if not all) professors of political economy in Ireland are not inside, but outside, the academy. That said, the silence from other disciplines on this blog is absolutely deafening; so credit locally where credit is due.

    Life, however, is interdisciplinary – messy, wonderful, tragic, aesthetic, complex, time and context bound and riddled with illusions, ideologies and power relations – hence the imperative of surfacing that which is human and hidden underneath the elegant mathematical abstractions, and of figuring out in whose interests certain policy initiatives are peddled or proposed.

  23. @David O’Donnell,

    Many thanks for this succinct and eloquent ‘charter’. It sets out precisely what I suspect motivates many of us to continue to participate here.

    It may seem unfair and disproportionate to subject Philip Lane’s paper to such detailed exegesis, but these papers are relatively rare and they have a ‘standing’ both in a national and international context – and not just in the academic sphere, but in the public policy sphere – that other papers, op-eds and blog postings by equally well-recognised and competent academics do not have.

    And we should not underestimate the effort expended in crafting a paper of this nature. The economics is probably the easy part. Setting out the policy implications as lucidly as possible while avoiding any overt conflict with the perceived thrust of government policy is a really difficult challenge. It is particularly difficult when some policies, that both theory and evidence convincingly demonstate should be implemented promptly and vigorously, are being implemented feebly, non-transparently and tardily; and when clear external pressure is bumping up against naked political calculation.

    And the ‘siloisation’ of the academics is also to be lamented. Inter-departmental, ‘cross-cutting’ policy review, formulation and implementation seems to be all the rage nowadays, but the academics remain stubbornly in their ‘silos’. I’m at a loss to identify what would be required to entice them out to engage productively and constructively. If the multi-faceted nature of this crisis won’t I can’t conceive of anything that will.

    And the lack of engagement, say, on this thread is also significant. I realise that facilitating a blog of this nature is a pro bono, high opportunity cost activity, but a chef who runs a kitchen with a gourmet reputation might feel obliged, occasionally, to engage with the clientele.

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