Unemployment session from Friday

Below are links to the unemployment session materials so that this thread can be used for thoughts people have on the contents of the session.

Slides and Podcasts from Friday

Slides and audio podcasts from Friday’s session are available at the following link. Let us know if there are any problems. Some technical glitches with the policy evaluation session but we will put material up later.  We are working on the videos and they will be available at some stage but the audio and slides should be fine in terms of getting complete content. As is the norm, we dont include the Q+A components of the sessions. The hashtag is still ieconf for people commenting on twitter. It would be good if different posters started threads on specific sessions and a couple of people have already committed to do this later. Perhaps use this thread if general comments about the conference or suggestions for future events.

Treaty Agreement: January 30

Information on the Treaty agreed last night by 25 EU member states is available here. Somewhat remarkably, given that draft texts have been circulating for weeks, there is no version of the agreed text.  Anyone out there have a link?

I’d note that the materials released all point to the need to implement the structural deficit rule at “constitutional or equivalent level” while the Independent reports that “preferably constitutional” is in the final draft.

If indeed it turns out that we need a referendum, this is a pretty bad start.

Update: The EU Council have finally released the text here. Anyway, “preferably constitutional” has been retained, which begs the question as to what van Rompuy and his officials were up to with their statements about “constitutional or equivalent level”.

Incoherent privatisation policy a cause for concern

Eoin Reeves and Dónal Palcic write in today’s Irish Times on the issue of privatisation, and they don’t pull their punches. From the piece:

Not only is there a lack of clarity about the companies to be sold and the timing of any sales, but it has also emerged that there are significant differences between the Government and the troika on the role privatisation should play in contributing to any economic recovery. These differences do not bode well in terms of making the best decisions about the future ownership of critical infrastructure industries.

At this stage, two key points of difference between the Government and the troika can be discerned. First, the drip-feed of information provided during the latest visit indicates that the troika views privatisation as a structural reform issue that should be implemented to improve the overall competitiveness of the economy. The Government, meanwhile, appears to be focused on privatisation as a means of raising exchequer revenues.

The second point of difference concerns how the proceeds from privatisation should be used. Whereas the Government wants to direct revenues towards job creation, the troika views proceeds as a means of paying down the national debt.

The troika’s view of privatisation as a tool for reducing costs and improving competitiveness is an orthodox proposition that is traditionally associated with multilateral organisations such as the International Monetary Fund but it is one that can be readily challenged.

Palcic and Reeves finish by making an important point about the dangers of short term political thinking applied to long term strategic assets. This problem is rarely discussed, as far as I can see, in Irish public policy. Hopefully we’ll see some more discussion in the comments about this problem.

Golden Growth: Restoring the Lustre of the European Economic Model

This World Bank report was written as part of the first Polish Presidency of the European Union Council. The report was launched on January 24 2012 in Brussels. I feel it is a good approach to take a European View of the Crisis.  We will see solutions, and problems, differently if they wear our EU hat.
The press release says: The report documents the impressive achievements of the European growth model over the last 50 years. Accounting for the stresses it is experiencing and assessing the longer-term challenges that Europe will face, the report then evaluates the six principal components of the model: Trade, Finance, Enterprise, Innovation, Labour, and Government. It finds that the European growth model has been a powerful engine for economic convergence, helping developing countries in Europe catch up to their richer neighbours and become high-income economies. But recent  changes in and outside Europe necessitate change. The report proposes the adjustments needed to make trade and finance work even better, to encourage enterprise and innovation in parts of Europe which have begun to lag, and address shortcomings in the functioning of labour markets and governments. The changes proposed would restart the European convergence machine, make Europe’s enterprises competitive, and help Europeans afford the highest standards of living in the world.
I was a co-author on Chapter 7 (Government), written by Kaspar Richter, Ewa Korczyc, and Paul Walsh.  My personal view:  Clearly the Economist has picked up on the magnitude of the debt problem facing the EU relative to the rest of the World.  It is also important to note that the size and structure of government spending, particularly social spending, while generous compared to the rest of the world, exhibits huge differences across EU member states. The current debate around the fiscal compact is about aggregate fiscal deficits and debt dynamics. Yet the degree to which member states are so different in the level and structure of their social spending is not really appreciated.  Tax harmonisation is one thing but maybe some thought should be given to divergences in social spending.  As EU citizens facing a potential Fiscal Union, a movement to Eurobonds and increased Political Reform, should Education, Health and Social Welfare supports not be the same for all? Depending on where you live in Europe, and your demographic, and now your debt level, your entitlements can be very different. Some states can deliver a high level of public service and economic growth, even in a high taxation environment, others seem to struggle.  Many countries, and the EU as a whole, seem to need a good deal of Political Reform.   All these good ideas around growth, and reform of taxation and spending, are all fine but can only be implemented with a major restructuring of Political Institutions at the National, EU level and Global Level.  The lack and poor quality of Political Institutions at every level can be blamed for our current situation. Reform of Political Institutions needs to happen to get us back on track.  Ireland can contribute at every level in this reform process. 
Report can be found on the below.
http://www.worldbank.org/goldengrowth

Current versus Capital

Here are some quick snapshots from my presentation at Friday’s conference in Croke Park.   Some background information can be found in the following:

From 1983 to 2010 capital expenditure averaged nearly 12% of gross voted expenditure.  In 2011, capital expenditure was 8.1% of gross voted expenditure, the lowest since 1992.

For the four years from 2012 to 2015 it is planned that capital expenditure will be 6.4% of gross voted expenditure.  For every €100 of voted expenditure, €93.60 will go to the current budget (transfer payments, public sector pay, and other non-pay expenditure on goods and services) and €6.40 will go to the capital budget.  Would this satisfy the equi-marginal principle?

Continue reading “Current versus Capital”