January 27th Conference on Irish Economy

Webcast?

Like the € and banking section. If real time means anything these are the most clued in guys around.

Chair: Constantin Gurdgiev (TCD)

Brian Lucey (TCD)

Colm McCarthy (UCD)

Frank Barry (TCD

[btw – I am hearig rumours of an imromptu protest march seeking an edit function on this site]

Wow, what balanced panels.

Feel free to elaborate Ernie.

Fly on wall? Its an open session. Just RSVP if you want to come. You guys are getting confusing I must say

@liam

I realise “right-wing economist” is a pleonasm in this country, but, as far as I can tell, you have the left wing represented by Minister Joan Burton and the right wing represented by everyone else. The potential for “the development of more intelligent economic policy” is virtually nil when almost everyone present has been invested in the unintelligent economic groupthink that got us here. So we’ll hear lots and lots about how austerity is the only game in town and that, dammit, it just has to work and how the problem with Ireland was not that it was too freewheeling and unregulated but that it was not freewheeling and unregulated enough . . . ad nauseam.

Ernie – think its more varying than you make out but feel free to make suggestions for next one.

For those of us who need to remain anon. on this blog (e.g. because we know clients and colleagues read it too), perhaps we should wear our ‘handles’ on a small badge on the day? I will be there. Looks interesting.

@Ernie Ball
I wouldn’t really describe Joan Burton as ‘left wing’ just because she mentions things that suggest maybe everyone should get a fair crack at the whip. Possibly left of centre. As for the rest being right wingers… one or two of them might surprise you.

Ernie remind me more and more of the wonderful Kenneth Williams “infamy infamy theyve all git it infamy”
If he can we would know whom he was: so he can’t and thus he is trapped by his own making.
I suspect there will be a lively and usually goodhoured debate.

I very much look forward to attending as myself.

Ref Joan Burton and unemployment
Perhaps Minister Burton might answer ,how many sustainable Irish businesses and jobs have been destroyed, and will continue to be destroyed, by ruinous Irish commercial lease law i.e upward-only rent reviews tied to long leases and no break clauses. Why did she and her government lie to the Irish electorate in their manifestos and program for government. They had a legal opinion from the esteemed senior counsel Gerard Hogan,stating allowing commercial tenants in legacy leases market rents was achievable under article 43.2.2 of the constitution. They also had the economic argument provided to them by a report from Colm McCarthy. Why all the lies?. Minister Bruton stated on RTE TV before the election this was a Labour priority. No other euro-zone country allows this ruinous commercial lease law.

1. About half of the Irish economy is government controlled.

2. About 28 out of the 30-odd people mentioned here work for the government controlled part of the economy.

3. The government’s role in the economy (other than as regulator) is not on the agenda.

3. The government’s role in the economy (other than as regulator) is not on the agenda.

Oh, i suspect the speakers will be busy snapping off at the elbow the hands that feed them while berating the role of the government right left and cetner….

@Philip II

Kenneth Williams “infamy infamy theyve all git it infamy”

Frankie Howard surely?

Perhaps we should modernise that to: “Austerity, austerity. They’ve all got austerity.”

@PR Guy & Phillip II

http://www.youtube.com/watch?v=h6BJJe9JV_A

Conference looking like a great day out.

+1

Banking and Euro

Do any of the four participants predict a “soft landing” for the euro?

to Paul Hunt

i read and agreed with most of what you had to say, and with reference to your final paragraph to which im in total agreement, you may be interested in a conference with a big difference being planned for the end of feb, i believe our approach has never been done in ireland before and comes with many benefits for solution seekers, what i can promise is, its not another tired talking shop!
ds

Could do with a few Brendan Behan, Patrick Kavanagh types to make it interesting?

George Soros weighs in with some food for thought.

“How Europe’s year of indecision sowed the seeds of future conflict”

“Unless the sovereign debt of the rest of the eurozone is successively ringfenced, a Greek default could cause a meltdown of the global financial system.

“Even barring such a nightmare scenario in 2012, the [9th Dec] summit sowed the seeds of future conflicts – over the emergence of a “two-speed” Europe and the false economic doctrine guiding the eurozone’s proposed fiscal pact. That doctrine, by imposing austerity in a period of rising unemployment, threatens to push the eurozone into a vicious deflationary debt spiral from which it will be difficult to escape.”

http://www.guardian.co.uk/business/economics-blog/2012/jan/06/europe-year-indecision-future-conflict

50% of capacity already – so get in soon if you wish

C

@ernie: PR Guy got in before me:

Ms Burton is RIGHT of centre!!! The Irish labour Party was always a fairly tepid, bland and shallow version of ‘normal’ Social Democratic parties. Firmly right-of-centre now. Few individual exceptions.

Brian.

@liam Delaney—The Nyberg report highlighted groupthink and the herd instinct. Keep up the good work.

Eureka,
well spotted. For an explanation of why it is on Friday see Philip McDonnell’s post. Why is it being conducted in the belly of the beast in the IFSC?

Good to see Brian Lucey back on the Banking panel.

…addressing employment, innovation, education and related themes. The conference aims to provide a forum for new ideas on the conduct of Irish economic policy, including the extent to which academic economics and related disciplines can make a bigger contribution to the conduct of economic policy in Ireland, and the extent to which policy can be designed more effectively.

This is a very conventional/conservative format – – mainly economists and regulators discussing issues of employment and innovation — with no input from people who may have a lot more wisdom than them from frontline experience, which would add a practical realm to the debate and the desire to have an impact.

This contribution should not be viewed in a negative way as I have no negative view about anyone on the panel.

However in the context of the issues of employment and innovation, apart from Colm McCarthy, who else has had to meet a payroll?

This isn’t a public sector/private sector issue as last Nov, two of the Big 4 accounting firms in the same week differed by 14 years on when Ireland will return to its pre-recession level of employment.

PricewaterhouseCoopers interpreted IBEC survey results and arrived at 2016 mainly based on aspirations/expectations on exports.

“Export sales will grow by 44% over the coming five years while firms expect to see domestic sales rise by 22%, regaining all of the losses of recent years. Many firms operating in the domestic market plan to break into export markets in the coming years.”

This is a classic illustration of the limitation of chairborne expertise.

Many firms….as if selling overseas is a dawdle!

Developing new markets is a huge challenge and Minister for Finance Michael Noonan announced in the Dec Budget support for exporters targeting BRIC countries (Brazil, Russia. India and China from the original classification plus South Africa).

It will help a small number of firms but exports to these five countries only accounted for 2.3% of total exports in 2010 with China accounting for the lion’s share. Exports to India were at a decimal point. Besides most of the existing exports are made by foreign firms when idigenous firms struggle to sell in Europe it’s a fantasy to believe taht there are easy returns elsewhere.

This conference could do with a direct input from the unemployed and both people who have had successful startups and those who have failed (the latter are usually ignored but they are very important.)

Academics cannot be expected to make serious proposals on employment in the tradeable goods and services sectors as after 60 years of State support, there is so little useful data on enterprises available.

We know very little about the birth, survival and death of the Irish enterprise and a longitudinal study on firms with potential is rare.

The 2006 aspiration to be recognised as a ‘world class’ knowledge by 2013 was made without any reality check on the great high tech hopes of the 1990s. Trintech, one of the last, was acquired by a US equity firm in 2010.

The facts were inconvenient on past experience.

Another aspect of a debate on employment has to contend with the significant PR aspects to enterprise policy.

On Thursday, the IDA issued 4 press releases including its statement on 2011.

Very little information was released and the count for new projects can include ones for 5 jobs or 500.

Gross jobs, net jobs, adding indirect jobs, full time employment or adding contract workers all come into play to the narrative.

I had a query and I got a rapid response from the press office but as regards the additional net jobs of 6,100 in 2011, which were added to 140,000 staff in client companies, which apparently include part-timers and short-term contract workers, after 24 hours I have got no breakdown on the employment status of the 6,100.

@Edward

[4. Universities are not (yet) “government-controlled”.]

Universities are government funded (including staff pensions) and the bias in their research output from all social science departments tends to favour more of that which funds them – i.e. government.

Being government funded will limit the range of what you say. Reason why the whole of Europe is social democratic / left of centre in its politics is because government controls and pays for everything from broadcasting to education – to an almost monopoly extent. The idea that government shouldn’t do stuff never really gets on the agenda.

That is really about control.

[5. If private corporations did more public policy research, they would be better-able to contribute to a conference about the economics of public policy.]

You’re not wrong there. But it’s a non sequitor.

[6. Nobody is buying the US Republican Party talking points from the right-wing in Ireland, because that faith-based stance would require crazy levels of religious fundamentalism which no longer exist here.]

– er so in order to accept that the state should not own airlines, airports, food companies, tourism promotion organisations, banks etc…etc……you will need to become a religious fanatic – do I have that right?

@Liam Delaney,

“We got a lot of emails and comments here arguing that there needs to be more debate around the issue of austerity. To be honest I agree and I think it’s worth using the session itself as springboard to other debates. In general, the strategy the EU/IMF and Ireland has adopted does not look to be working and we need to have a good discussion about what that means.”

Sorry, Liam – and please don’t take this the wrong way – but the time for ‘more debate’, ‘springboards to other debates’, ‘good discussions’ is long past. The gist of my comment of 10:21am above (which I suspect was so long that most people skipped it) is that traction must be secured with those who formulate and decide economic policy. And these are vaishingly few. They are in this Economic War Cabinet and this comprises the Taoiseach, the Tanaiste, Minister Noonan and Howlin and their key economic advisers and senior officials – probably around a dozen.

So far as I can see all other ministers and senior departmental officials take their riding instructions from the concentration of politcial and official power in this High Command and they need its approval for any initiatives in their own territory.

We now have ‘government by decree’, since the Oireachtas is a pure ‘rubber-stamp’ (while Labour can keep the defection rate manageable), and the only restraint under which it operates is how much of the ‘fear of god’ specific narrow sectional economic interests can put into them.

Debate that.

@all (including Ernie)
In my presentation in the “Housing” session, I hope to present how to implement a workable, fair and efficient interim property tax, a Site Value Tax based on my estimates of the contours of land value around the country. (Ernie: I think my choice of SVT makes me not only left wing and right wing at the same time but also a greenie, all at once!)

Looking forward to an interesting session,
R

@ RL:

This is the sort of stuff that may appear in your IN box.

Dear Ronan. I have some agri land, lying fallow. I do not intend to put it to any productive use, nor lease it. How might this be valued? If a tax is levied – what will I pay the tax with? I am unmarried, no family, I have an OAP pension; 208 euro per week and cash savings in PO.

Yours, OAP.

Brian.

Hi Liam. How about Energy Security ? (no energy, no economy). We are not well situated in this respect. Energy ties everything together.

Brian.

@Liam Delaney,

We seem to be speaking at cross purposes. It’s probably me, but, once a problem or a challenge – or a set of interacting problems – is identified in the public policy sphere, the purpose of a ‘debate’ is to bring together those with demonstrable knowledge and competence to craft and present solutions – many of which may differ in scope, focus and elements (and how they interact with other possible solutions). The purpose of the ‘debate’ – again in my view – is to thrash out these possible solutions in open and frank discussion, with adversarial disputation based on facts, evidence and analysis and with the intent being to secure some common ground and to arrive at a solution – or a set of solutions – that is feasible, practicable, possible to implement and will be able to secure the necessary democratic consent (since it is a public policy).

The purpose of having such a ‘debate’ in public is to engage, inform, enlighten and, ultimately, to persuade as many of the public who are interested as is possible. It does not mean that every problem is solved – some many require much more time and effort than others, some may actually be intractable, while the resolution of others will depend on the actions and reactions of external parties beyond Ireland’s control, but, at the very least, some progress should be made towards crafting solutions.

The other key aspect of such a ‘debate’ on public policy issues – in this case, economic policy issues – is that there are two parties involved. There is the supply side and you and your colleagues have assembled many of the economists with demonstrable knowledge and competence (and, partly as a result, most with high public profiles) on Irish economic policy. For convenience I’ll call them Public Policy Focused Economists (PPFEs) to distinguish them from Public Policy Influencing Economists (PPIEs). The latter are those economists who seek to influence public policy to advance or protect narrow sectional economic interests. The latter have a perfectly legitimate role, but it is vital to differentiate them from the PPFEs who advance, or purport to advance, in a disinterested manner, policy proposals in the broad public interest.

(Some economists flit between both camps and, while I’m sure many are well able to deal with conflicts of interest, I have my doubts about some and it would be wise to be sceptical about some of their pronouncements. However, I have no doubt, whatsoever, that the economists you and your colleagues have assembled are unambiguously within the PPFE camp.)

So what is being supplied? In this case, for each PPFE, it seems to be the demonstration of academic or intellectual mastery of a specific topic or aspect of economic policy. There is clearly widespread interest in viewing this demonstration – or performance. But is this, or should it be, the only demand that is satisfied? Is this the only thing that could or should be supplied?

The primary source of demand should be those who formulate and decide economic policy. But there is scant evidence in public of such interaction of supply and demand. Now it may be that there is considerable interaction, away from public view, between PPFEs and politicians and policy-makers. (We all remember the late Brian Lenihan’s midnight flit to the home of DMcW.) Some PPFEs work as advisers to government and some have secured leading or high-level quango positions. (It may be that performances at conferences such as this are auditions for such postings.) And government, on occasion, commissions reviews and research by PPFEs. I have absolutely no problem with any of this. I would far prefer to have those with demonstrable knowledge and competence inside the tent, that to have to rely on generalist bureacrats, gifted amateurs or ministers’ ‘yesmen or yeswomen’.

But it is crucial that as much as is possible of this interaction between supply and demand on public policy is in public. The clue is in ‘public’ which is both a noun referring to the people and an adjective meaning openness and transparency. These things are ‘res publica’.

And this interaction should be at two levels. First, those who formulate and decide policy should demand this policy advice from the PPFEs and it should be presented in an open and transparent manner. Secondly, those who formulate policy should advance their proposals and these should be subject to critique by the PPFEs again in an open and transparent manner.

So your conference offers many things – demonstrations of intellectual mastery of specific policy topics, possible critiques of government policy actions and proposals, some recommendations on policy options and discussion/clarification of options – but it is not, in my view, a ‘debate’. Nor is it evidence of effective interaction between the supply of, and demand for, economic policy advice.

The PPIEs have much more influence over the formulation of economic policy than the PPFEs. This imbalance is a major cause of the mess Ireland is in. It must change and the ball is in the court of the PPFEs.

@Paul Hunt
Apologies if I’m taking you up wrong here, but I think you are describing a ‘debate’ as a formal debate between two teams arguing over the truth or otherwise of some motion. This isn’t a ‘debate’ in that sense, it’s a conference, but debate – discussion, argument, questioning, explaining, backing up – can, and probably will, happen here. I’d imagine that the questions session after each presentation will not
want for debate.

As for whether it’s evidence of the interaction of the supply and demand of policy advice – well it’s certainly evidence of supply, right? The demand side is the TDs, senators and civil service, and I’m sure there will be representatives from these there.

Surely this is exactly the type of thing the PPFEs should be doing – get a bunch of really good experts in policy relevent fields talking about what they know and invite all interested parties to come and participate in the debate, not in an overly structured ‘debate’.

Short of storming the Dail with regression output and models in hand I can’t think of a better way of communicating the knowledge and I can’t see too many of the panel members charging down Kildare St., unless it’s one of their New Years Revolutions (copyright Tim Vine)

@DS Ah, thanks Dave. Sorry I might have misread your intention in initial posting! Look forward to seeing the event.

@Phillip II

Perhaps, but I guess what I should have said is that the PPFEs have served up this conference, so the ball is now in the court of the policy makers and it is up to them to return it, in person preferably, to mangle this metaphor even further.

And a perfect example of this optical illusion propagated by ‘official Ireland’ that everything in the garden is rosy has come to light:
http://www.independent.ie/opinion/analysis/daniel-mcconnell-a-fearless-whistleblower-or-a-disgruntled-crank-2982488.html

In the words of the late, great Claude Cockburn – some time of Youghal and the IT (Gageby era) and grandfather of current BBC Economics Editor, Stephanie Flanders – “confirmed by official denial”.

Many of the PPFEs are complicit, by commission or omission, in the propagation of this optical illusion. And so it goes on.

@Paul

I get that you think there is a lack of adversarial disputation in a conference like and I’ve largely agreed with you on that. I was trying to say that I don’t think adversarial disputation is necessarily the best way to inform or develop policy. I think it’s better suited to either/or, or True/False, situations where there are a limited number (often two) of disputants trying to score points off the others. In the end, the winner’s position would be adopted wholesale.

I think it’s better to have someone who really knows their area (hopefully) to present their analysis/idea and then have a discussion about where they are strong, where they are weak, and whether it can be improved. And better again to do that three or four times and then have a good chairperson sum up the main points that arose, and everyone goes home/to the office/to the pub and thinks about it, and maybe gets a better model in their head of how things work. But I’m weird like that.

@Brian
Re your hypothetical letter
“Dear Ronan. I have some agri land, lying fallow. I do not intend to put it to any productive use, nor lease it. How might this be valued? If a tax is levied – what will I pay the tax with? I am unmarried, no family, I have an OAP pension; 208 euro per week and cash savings in PO.
Yours, OAP.”

As it happens, the proposal is for a residential site value tax, although I would hope in time that Ireland is mature enough to apply it across the board. Let’s suppose for a minute that agri land is included in land value tax…

The case you present is hardly a sympathetic one as this person is using scarce land for their own pleasure garden and refuses to acknowledge either the benefit they get from the land or – more importantly – the cost they impose on society by not using it. If they have ten acres valued at €10,000 an acre, they would be expected to pay perhaps €2,000 a year in site value tax. If they do not wish to pay this, they can sell their land. A smart tax system can reflect the final value if it turns out to be say €8,000 an acre and not €10,000.

Once you made the person an OAP, effectively this is the pension-tax issue recast. Society can choose to reward inefficient and unfair use of land among a wealth-rich, income-poor group if it so chooses – once we are all aware that is the choice we are making. In the paper, I will be suggesting a lien on the land so that those who can’t pay up-front can live in their home without worry. It is of course entirely up to the Government, though, and it could opt to buy off the “Grey Power” vote with a one-off “If you’re over 65 when this is introduced and you’ve no income, no taxes for you”.

Likewise the stamp-duty argument, which can easily be overcome with grandfathered tax credits, reflecting the amount of stamp duty paid (possibly weighted by number of properties unless you want to reward those with seven loans as much as those who only bought a family home).

Or indeed any other interest group you want to favour.

But we at least need to be frank to ourselves about which interest groups we’re favouring – at the cost of everyone else – and why.