Categories Uncategorized Publicpolicy.ie Post author By Philip Lane Post date January 5, 2012 33 Comments on Publicpolicy.ie Frank Convery writes on this new initiative in this Irish Times article. Related ← Ireland’s Policy Stance on a Tobin Tax → The Exchequer Balance 33 replies on “Publicpolicy.ie” This could be a good thing – – it will at least do no harm. It is true that “much commentary does not reflect the underlying uncertainties and ambiguities” but that is unlikely to change on the big issues. The implications for different sectors of the economy and groups, from for example an exit from the euro is unpredictable enough to allow for opinion and would Irish broadcast journalists change their default routine, be competent on swatting away dubious foreign comparisons and demand specifics from interviewees? In the United States, ideology and myths trump inconvertible facts but for many legislators and public, the facts do not count. Taxes at a 60-year low, multi-decade middle class income stagnation and for some including the majority of one of the big parties, trickle-down economics is working. PEW reported a few years ago that Republican Party supporters who were climate change deniers, were more trenchant about their positions, the more educated they were. Values and emotions even cause wars. How to convince the true believers that the narrative about bailing out German banks as presented by Vincent Browne on Wednesday, is not the full story? Also Wednesday, the deficit in 2011 was reported to have been €18bn ex-bank support. The foreign element induces a level of emotion that the inability to fund the day-to-day operations cannot match. We will provide listeners and readers with the sources of evidence – national and international – on which conclusions are based. Authors will declare an interest where such is warranted. and Our board, which includes high-level expertise in accountancy, communications, economics, law, politics and taxation, will be active… This seems like the criteria for a public taskforce or review group usually comprising: state agency and civil servant staff, academics, staff of BIG 4 accounting firms and big law firms, and business representatives from MNCs. Mainly comfortable folk who shy away from controversy as it may impact their firms/representative bodies, who no doubt are well-meaning but have limited experiences in a multifaceted economy. The same people keep turning up because it’s difficult to find the people you should really have. It’s interesting that the issue of jobs and the challenges to the Irish model from the changing global economic landscape – – a major priority of our times – – is not on the 2012 agenda. What is a ‘state-of-the-art’ website? Micheál Martin had a trove of superlatives when he was enterprise minister. He once using the terms ‘cutting edge’ and ’state-of-the art’ in the same sentence! All the same, I wish you luck. Not-Begrudgers Anonymous! A think tank eh? “Irish Fiscal Policy Research Centre” eh? I initially thought this was going to be a right wing US style PR group, calling for social welfare to be cut; but from the Atlantic Philanthropies website, it looks like there a left wing US style PR group, and will probably be calling for higher taxes instead of cuts. Anyway, if they open their site to general comments or threads, I predict the place will become a toxic waste ground within three months. Plenty of “we”! Not enough who? Oeer! Seems like there’ll be a bit of competition in this space. But then again – apart from the rush of blood to the head and the Charge of the Light Brigade on NAMA – this was never intended to be anything other than a ‘commenting blog’. Nothing grubby or anything that might dicombobulate those comfortbaly ensconced at the trough like taking on the economic policy nonsense propogated by government with a view to beating it back – or taking on the dysfunctional, but, for government, easily managed, process used to formulate and decide on this economic policy nonsense. Isn’t it enough to point at it? And aren’t there enough people who are well paid to do something about it? Well.. maybe. But there doesn’t seem to be any discernible or meaningful change in how economic policy is formulated and decided or in the public interest benefits of policy. The austerity is being driven by the Troika, but government has total discretion on how the salami-slicing of public expenditure or the introduction of new or additonal incremental taxation is performed – once the numbers add up to the Troika’s satisfaction. And any meaningful structural reforms – intended by the Troika to counteract the impact of fiscal austerity and to boost efficient economic activity – are being whittled down to nothingness. And, yes, we have a fiscal advisory council, proposed major changes in the parliamentary scrutiny of the budgetary process and a ‘programme’ of public sector reform, but we used to have ‘world class’ bank supervision and financial regulation and we still have, believe it or not, ‘world class’ economic regulation in all those sectors where it is applied. We never seem to tire of these optical illusions – because that’s all they are. Indeed, we want even more of them to satiate this apparently unbounded Irish capacity to suspend disbelief. And I suppose they do make work in the same way as the ‘famine follies’. But the more of these that are constructed, the more attention they attract and the more paper and hot air they produce, the more government can make and execute its decisions without sufficient scrutiny, restraint or accountability. So, in this context, and irrespective of undoubted good intentions, I’m not sure what this new body will actually achieve. The odds are that it provide even more distraction from the necessary focus on what government is planning, deciding and implementing. However, it seems that Chuck Feeney, via his philanthropic body, seems to have a steady flow of funds for Irish activities of this nature. Last year it was this “We the citizens” initiative where some luvvies, pol sci heads, PR operatives and selected consultants used up his money going around the country whipping up apathy. So Prof. Convery and his associates seem to be the lucky recipients this year. Good luck to them, but I fear it won’t make a blind bit of difference to the economic circumstances of the vast majority of Irish citizens – mainly because it is unlikely that the participants, by virtue of their standing in the establishment, will have no incentive to tackle the underlying policy formulation and decision-making dysfunction – and every incentive not to. This could be very interesting. I wonder who (apart from Convery) is involved. I’m also wondering if they will be strictly examining fiscal policy or will they branch out into other areas. I guess the answers will come with time. I sat a course in environmental economics under Convery some years ago. It was one of the better things I did in University. A new field of study, where no hardened attitudes had yet been formed -it was a very positive field of study. Hmm prof Convery is a longtime member of theNstional Roads Authority, the geniuses that brought us motorways that unique in the world …have no service areas (bar one) and are rolled AROUND cities not between. Just saying…. Isn’t some if not most of their areas of concerns already in the remit of groups such as the NESF, NESC, ESRI and even the IPA? Even the trade unions have some outfit whose name escapes me in the fiscal ring. Indeed, isn’t Third Level itself stuffed to the gills with various commentariats grouped as ‘centres’ for this that and the other? If these latter diverse collections are having difficulty ‘communicating’ with the great unwashed, how any new outfit will do better, bar having Michael O’Leary or Declan Ganley chair their media briefings, is beyond me. It is worth reflecting on the twenty years of tribunals, the evidence and conclusions of each which were communicated often in uncomfortable forensic detail. Have they affected much change in public policy? It took the arrival of the IMF before any serious consideration was given to shaking up the legal profession. It wasn’t for the lack of ‘communicating’ about the outlandish legal bills run up at the tribunals. Public outrage was unable to affect policy. Once the vested interests gather around the campfire the less fortunate can freeze. Communication isn’t the problem, lack of a moral backbone seems the greater culprit. I meant to add: if the initiative was retitled ‘The Center for Examining Conflicts of Interests and Entitlement’ Ireland might be fi ally getting somewhere in polity. @ Alchemist “Isn’t some if not most of their areas of concerns already in the remit of groups such as the NESF, NESC, ESRI and even the IPA? Even the trade unions have some outfit” True, but this is a relatively “untapped” juicy, source of funds. I agree, that it is the moral turpitude that is the problem. It always was the main problem, despite much of our ‘elite’ being ‘educated’ at the best Catholic colleges and abbey’s in the country. I can only imagine the extent of the horrors that would have been visited upon us, had they gone to less august centers of moral excellence. @Robert Browne, You will not remove moral turpitude simply by excoriating it. Many people seem to think this is sufficient and to just shake their heads in resignation. But moral turpitude is part of the human condition. We need procedures to prevent, minimise or remedy its detrimental impacts. The real problem is that most Irish people have no experience or understanding of, or see no need for, systems and procedures that subject native power elites to democratic governance. Most other long-established democracies have these, to some extent or other. and often after centuries of struggle, but not Ireland. These elites have so inveigled themselves in to the fabric of society and have been so successful at convincing most people that their activities and behaviour so contributes to the common good that to even question them would dimininish, and could even destroy, their ability to do so. And, over time, they have been able to construct impressive and impregnable legal defences to protect their positions of power and influence – and not the least of these being the libel laws. The fault, dear Brutus, is not in the stars….. @ Paul Hunt +1 on both posts – sadly – for most of our citizens! The IFS in London an example of a group doing very cutting edge research in the areas mentioned by Frank Convery. One thing that marks the IFS out is the degree of interaction with UCL. A number of Irish academics have been associated with or worked for IFS and would testify to the model. Sticking to the Irish case, it would surely be preferable to have early-stage researchers in an academic environment, or research-intensive place more generally, getting training and guidance from professors who are experts in the areas being discussed. In Dublin, UCD and TCD both would provide an environment like this. For example, its almost impossible to do meaningful analysis of the types of issues raised by the Convery article without detailed knowledge of econometric techniques including the software needed to estimate the various models. Other concerns such as access to journals, libraries etc., are relevant. It would be much preferable, like in the IFS/UCL case, that universities would be partners in this type of initiative and that such funding would help to grow both academic economics as well as the policy applications of it. I dont think there is anything in the Irish Times piece to rule out the above happening and I really hope it does. A broader point is that the depletion of academic economics in Dublin is reaching a level that at least one of the main departments is one upcoming retirement away from having only one full professor and people really trying to keep economic analysis and debate alive in Ireland should give this urgent attention. @Liam Delaney “Sticking to the Irish case, it would surely be preferable to have early-stage researchers in an academic environment, or research-intensive place more generally, getting training and guidance from professors who are experts in the areas being discussed. ” Surely any such initiative would then be subject to the pressures of academic institutions eg. – publish or perish – in refereed journals; – micro management by Government Depts in the form of employment control frameworks; – simple shutting out of unpalatable views, based on experience and insight, because it would “embarrass the Minister” and by extension, the senior civil servants who hold office because of the corporation sole nature of the central Irish civil service. What exactly do you mean by the “depletion of academic economics”? Judging by the range of contributors on this site (not all of whom are based in Ireland), I am not aware that economic analysis and debate is in danger of dying here. In addition, given the unprecedented (in peace time) nature and scale of the collapse in the Irish economy, there will be plenty of pickings for academic economists for years. The key question is checks and balances that limit the scope for excess by the powerful – not the state and status of academic economics. Despite the best efforts of economists (since the 1950s), the political and administrative class return to “cargo-cult economics” as soon as they can. see Sean Byrne’s comment in today’ ITimes “The absence of property taxes has led to Ireland being more an asset-based than a production-based economy and the lack of property taxes also contributed greatly to the property bubble.” http://www.irishtimes.com/newspaper/opinion/2012/0105/1224309825740.html NESC admitted as much in August 2010 “In the past decade, Ireland’s approach to fiscal policy, prices, costs and financial regulation were not sufficiently adapted to the disciplines of a single currency.” http://www.nesc.ie/dynamic/docs/The%20euro%20MEDIA%20RELEASE%20from%20NESC.pdf IMO, the EU-ECB-IMF programme heightens the application of economic thinking to how the political/administrative class goes about its work – at least for a while. What kind of joke is being played on us when Minister Howlin talks about getting more economic expertise into government? It would not surprise me if this were done by the kind of contractual arrangements that results in a loss of public comment – thereby perpetuating the weakness of Irish public discourse pointed out by another Dutch professional who also resigned from an Irish organisation last year ““Apart from the recklessness, overconfidence and the total lack of professionalism, one sees clearly a lack of checks and balances not only within Anglo but within the country/ system as a whole,” he wrote in the letter that was read out in part to Anglo staff when he announced his resignation in February 2011. “Parties were not dealing with one another at arm’s length, transactions were circular in nature, back to back and off market pricing. There was misrepresentation, market manipulation and market abuse. “There was a green jersey agenda that, as so often is the case when nationalism is invoked, covered a multitude of sins. The rationale was made to fit the objective at the expense of guiding principles and truth.” He argued that the government authorities were “stuck in their old ways” and did not “recognise nor understand conflicts of interest….“There has been a complete lack of engagement from the authorities and decisions have come out of left field,” he wrote.. from Irish Times report on the resignation of Dutch banker Maarten Van Eden from Anglo-Irish http://www.irishtimes.com/newspaper/frontpage/2011/0905/1224303500416.html Previous attempts to bring a level of economic skill and know-how to public policy making and implementation, failed as I suggested in a note on the late Dr. Garret FitzGerald, “As evidence of such slippage and failure, I point to the following: 1) The reconstitution of An Bord Snip Nua, 20 years after a similar exercise was done during the late 1980s. What had been learnt and implemented from Dr. FitzGerald’s ad hoc effort to improve the capacity of the Dept of Finance? Very little, judging by the title of the recent report on the Department of Finance “Strengthening the capacity of the Department of Finance”. See here http://www.finance.gov.ie/documents/publications/reports/2011/deptreview.pdf) This is telling in terms of the failure of Dr. FitzGerald’s generation to make public sector reform stick.” http://politicalreform.ie/2011/05/20/garret-fitzgerald-%E2%80%93-friend-of-the-psai/comment-page-1/#comment-5086 Of course, those of us who live here will have to bear the consequences of some partial economic analysis that supported the post-Celtic Tiger property/construction bubble and the response to its collapse, which are still the major drivers of economic policy now eg. the bank guarantee, NAMA’s ongoing effort effort to guarantee the property market @ Paul Hunt As a systems analyst, I admit to acting as somewhat of a devils advocate Maybe I am more a believer in the possibilities offered by failure than those offered by the ‘success’ of putting the system on life support for 10 to 15 years minimum. However, I believe excoriating softens up the ground and makes it more fertile and possible for ideas to take root. Sorry to say that I agree with you and that no lateral thinking or egalitarian ideas will ever be allowed to take root in this country until all roads leading to failure have been tried over and over. This is not a time for coming up with procedures this is a time to let the system burn itslef out, entropy. We are a little past way in this process now. This is not a time for ideas and burning our brains out, this is a marathon. I am fighting against people who try to rule with, slogans, PR consultants and fear. I believe the best traits in our people on this island will conquer the inherent petty mindedness of those purporting to serve us. Let’s be honest, there is no point coming up with ideas or empirical based arguments about what is internationally recognised as best practice etc. Why? Because you will not be listened to. Richard Tol alluded to rule by mediocrity and that is what we have, gingerly discussed in Regling Watson and Nyberg as ‘group think’ but I believe it is even worse than that. I have no gra to supply people who’s talents have brought us to where we are and who’s motivation is overwhelmingly for self advancment or self preservation, with further strategms to hold onto and petuate these systems and their jobs. I am sure you have noticed that most “professionals” view the current crisis, as having nothing to do with them or alternatively, cyically view it, as a once in a lifetime chance to grab a few million, some cheap NAMA deals etc. The impetus coming from them is to ignore the dysfunctional nature of the way we fail to organise because they see that as the mother loade. I have no problem sitting down with like minded people who genuinely want reforms of politics and economics. I could say ‘models’ but I hate the nerdy language used by economists. I am with Morgan Kelly and Gurdgiev and the plain speakers. The opportunity to rescue ourselves with some dignity has been lost. Last night’s RTE news bullitin alluded to the inevitable, bailout II. We should never have done the blanket guarantee, never have done NAMA or Croke Park and that all of these were done in an effort to preserve a narrow band of Irish society and the status quo by socialising private losses. Our governor joined in the cheerleading to announce this is “manageable”. Nobody in Irish society handed a plumb job will bite the hand that feeds it but I can tell you that I certainly would. I remember going to the Dail with Peter Matthews to deliver a dire verdict on NAMA and now I have to pinch myself when I see him holding a gavel ruling deputies out of order under standing orders. Small wonder I am cynical. The name of the game now is to bamboozle citizens with false statistics and fear and it is working because the educated people in Irish society whom people might legitimately expect to provide leadership are failing to provide the leadership that they previously failed to provide. Change in Ireland is going to be as painful as childbirth but worth it. Purely as a matter of curiosity I’d like to know who or what “We are fortunate to be funded by Atlantic Philanthropies” AP are and where their funding comes from ? @Colm try this http://www.atlanticphilanthropies.org/ @Michael Hennigan ‘This could be a good thing – it will at least do no harm. Not sure ( as usual!) this is the right thread but it won’t surprise some of you that I’m still banging on about “Enterprise Policy” ( and Irish/overseas education/training/experience/”emigration” after over a year. I was in Geneva yesterday preparing a presentation for the Davos annual meeting ( I’m advising a (French) energy multinational). The theme this year – it starts on 25th January – is “The Great Transformation:New Business Models”, ( creating shared value and how innovative businesses combine economic and social considerations for lasting success, creating enabling policy environmnents etc. – that sort of stuff). This morning I read ( in the IT) the statement from the IDA chief about how Irish young people should shift from learning to be doctors, lawyers and teachers to concentrating on technology, biosciences etc. The same statement seemed to vaunt ( deservedly) the successful attraction of New FDI and creation of jobs without concluding explicitly that the net loss of jobs in the (foreign) FDI sector is about 6,000 this year. So, no surprise, it would appear that our young people are, in aggregate, learning the wrong things and successful attraction of the FDI that accounts for over 90% of the export growth we need to pay our debts is not creating a net increase in employment. If we agree that, by inter alia maintaining our low CT rate, we need to continue to attract this export-fuelling, debt repaying FDI, while trusting that this success will trickle down into the domestic ( ex-construction!) economy, but that the sector is not, itself creating net employment then we need to be doing something else, n’est pas. So, coming back ( to Paris) on the train yesterday we ( senior French energy executives) were discussing unemployment in France (10% and up to 30% among the young), ‘délocalisations’, “de- and re-industrialisation”, education, young peoples’ need to get out of France early and WORK abroad ( in English and other languages), how this might/should be done and MOST IMPORTANT, we agreed, WHO, specifically, in the French policy-making edifice was RESPONSIBLe ( and accountable!) for answering these questions. We concluded that NO one person was responsible and that the only one we could think of was already more or less pretending to run everything ( including the G20 and the world) but that he was really only concentrated on his number one priority: GETTING RE-ELECTED. It was agreed that at the same time as briefing the CEO of our (very big) global energy group for his Davos intervention we would ask him to talk to the person running everything ( he knows him quite well) and tell him that the best way to get re-elected would be to REALLY set about finding the answers to these questions by publicly appointing ONE person to find the answers, now. Then we turned to discussing three quotes from Tom Friedman (“The World is Flat”, “Hot, Flat, and Crowded” etc. in yesterday’s NYT: 1.) “The IT revolution is giving individuals more and more cheap tools of innovation, collaboration and creativity. And the globalisation side of this revolution is integrating these empowered people into ecosystems, where they can innovate and manufacture more products and services that make people’s lives more healthy, educated, entertained, productive and comfortable”. 2.) “The best of these ecosystems will be cities and towns that combine a university, an educated populace, a dynamic business community and and the fastest broadband connections on earth. These will be the job factories of the future. The countries that thrive will be those that build more of these towns that make possible “high-performance knowledge exchange and generation.” 3.) “Therefore, the critical questions are how we develop more ultra-high-speed networks and applications in university towns to invent more high-value-added services and manufactured goods and how we educate more workers to do these jobs -THE ONLY WAY WE CAN MAINTAIN A MIDDLE CLASS”( my capitals). We agreed that what Friedman was saying, although he was speaking about America, had relevance for France and that “lower level” jobs would flow from this as people needed housing and nourishment and other essential and non-essential services. We concluded that France’s education system would have to change radically, young people would have to start REALLY learning English earlier, get out of France to study and gain work experience abroad earlier and that Le Petit Nicolas would stand a better chance of getting re-elected if he told people this NOW, appointed someone to take charge of this process NOW and that we would tell our CEO to tell Nicolas this NOW, before our “boss” says what we’ll tell him to say in Davos in a couple of weeks. So, maybe this is something that would come out of publicpolicy.ie? And Michael (Hennigan) would be proved right that “no harm” will be done. But here’s my question. “Why wait?”. Yes, this body might do some good and at least will do no harm. And Chuck Feeney has been a great friend to Ireland (education, particularly third level, has hugely benefited from this generosity to the tune of hundreds of millions). I suspect though, looking back a few years, this centre will ruffle far less feathers than that other previous Chuck Feeney backed centre in 2005: the Centre for Public Inquiry (CPI) http://en.wikipedia.org/wiki/Centre_for_Public_Inquiry. I’d guess the man himself would never in his wildest dreams have quite foreseen the level of controversy that centre and its creation would have sparked off. He probably thought he was merely setting up an investigative journalism non-profit outfit, a type of body that’s quite common in the US (e.g. the rather similarly named “Centre for Public Integrity”). And there was probably a fair degree of naivety involved in its creation too, i.e. the background of everyone involved should really have been gone through with a fine-tooth comb in case it could used later to smear the centre. It was a real pity this earlier body went down in flames given the ambitious five year programme of investigation it had planned. Some very uncomfortable questions would have been asked. Some of this is described in a relatively recent article http://www.irishcentral.com/news/-Irelands-property-crash-could-have-been-avoided-101287479.html?page=1 by Frank Connolly, its director and centre of the controversy (so admittedly perhaps only paints one side of the issue). Whatever the actual rights or wrongs, it was the sheer level of resistance to and suspicion of the body that was an eye-opener to me at the time. The US manages to make room for these kinds of bodies in its public sphere. There seems to be far less room (if any) here. Our libel laws also featured heavily in the incident. After the, perhaps quite understandable, withdrawal of funding from its principal backer, the CPI tried to limp on for a while. It was the threat of litigation (from Treasury Holdings) regarding a forthcoming report on the Dublin Docklands Development Authority that was the final straw. Presumably they didn’t have the resources to contest this legally and the centre was shut down. Our libel laws mean such investigative journalist outfits/centres are not really viable. The US has robust protections for freedom of speech in its constitution. In contrast, the protections afforded in our 1937 constitution are quite flimsy in relation to the right to reputation. Everyone needs to be able to protect their good name. But IMO the balance is skewed far too much in one direction here and the balance needs to be recalibrated. Any wealthy individual or organization can with a team of high priced lawyers go a long way in silencing dissent. I’m sure it’s a terrifying experience for any ordinary person to be faced with a high stakes legal writ for defamation from a wealthy or powerful person where they could possibly lose their home and all they possess if a court case went the wrong way (let along how to even fund the legal costs). That’s part of the reason why such outfits are not really viable here. A newspaper will have the revenues and legal team on staff (and perhaps backing of a wealthy owner) to fend off such challenges. On the other hand, the only practical way a small non-profit investigative journalism body could do this here is if they are fortunate enough to have some benefactor with deep deep pockets capable of backing them all the way. A CPI mark 2 would be fantastic. But I suspect Feeney is a low-key kind of guy more interested in just getting on and doing some good with his money and not that keen on public confrontation with political establishments, and for various reasons a great once-off opportunity was lost back in 2005. Anyway, apologies for dragging this thread off-topic but, given something of a theme about dissenters and dissension in public discourse on this blog lately, thought this digression might be somewhat appropriate. @Robert Browne, I’m afraid you’ll have to wait for change. Ireland has been through this before – and more than once. The ’30s were grim, as were the ’50s and the ’80s, but general living and economic conditions did improve over time and, although there is currently some severe absolute and relative harshdip things are generally better now than they were in the ’80s which was better than the ’50s, and so on. And I expect the black economy is booming. The ’30s produced only a limited mutation in those who exercise political and economic power. The ’50s did produce a shift, but the ’80s merely produced another mutation in the same way that the recent crash has generated only a minor mutation. Citizens in most nations don’t like ‘revolutionary’ change. There are always some chancers who’ll ride it to their advantage – and the majority of the people often end no better off (and sometimes even worse off). And Irish people seem to like it less than most. So, slow, painfully slow, incremental change is all that is on offer, I’m afraid. @Richard F, I admire your tenacity, since you are banging on about a key strategic issue for Ireland. But I fear you may be a tad infected by French dirigsme 🙂 The ‘man from the government’ isn’t the solution to this problem. Ireland’s non-sheltered sectors are remarkably resilient, but they are being dragged down by the gloriously inefficient sheltered sectors and need to be set free. And this inefficiency, in the main, is not the fault of ordinary workers in these sectors; most perform to the best of their abilities. It is the result of dysfunctional policy, regulation, investment financing, structures and procedures. In addition, I’m a tad surprised that you’re seem to be falling for this Corporate Social Responsibility guff. The other Friedman (Milton) got it mostly right with “there is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” But he was a little less forceful on the role of governance to devise and enforce the ‘rules of the game’ and to prevent the accretion of market power and the abuse of political power. All this fluff about CSR or ‘shared values’ is an attempt to prevent effective governance of capitalism (after the manifest failings of its western financial branch), to protect the hegemony of existing large corporations (who hire the MBAs graduates and amply reward their teachers) by conveying the impression of enlightened self-governance and to maintain some sort of competitive advantage over the more rough-and-ready businesses in the emerging economies. And the company, whose CEO you are advising – it can only be one of two in France – is more a part of the problem than it is of the solution. @Finbar, I’m out of puff after reading that; you’re allowed to use paragraphs, you know 🙂 You’ve nailed one key part of the problem in terms of the chilling effect of the libel laws on freedom of expression, but the other part is the huge volume of legislation that has been enacted and regulatory determinations in place – most of which has been enacted or made, resp., under the influence of the narrow sectional economic interests and which is designed and intended to protect their interests. Most people have little knowledge of the huge edifice of policy and regulation that is in place in the context of the rapid multiplication of the herd of quangos in the last 15 years. This is, perhaps, the biggest barrier to structural reform. Unpicking even the edge of this garment would provoke a furious assault from the vested interests comfortably enveloped in its folds. It would be a brave government which would even think about doing this. And in the Irish context that’s a quintessential oxymoron. It probably deserves to be defined as a figure of speech all on its own. @Paul Obviously the enter key must have been malfunctioning on my keyboard! 🙂 Freedom of expression versus our defamation law is definitely a serious problem. With all the talk of constitutional conventions in recent times, reform/deletion of the constitutional blasphemy provisions (why this of all things?) is something that has been latched onto for some reason. Can’t see why they couldn’t more usefully revamp freedom of expression provisions (and associated defamation laws) as they’re at it. Even the competent and comprehensive but very conservative (nothing even remotely radical suggested) 1996 Oireachtas review of the constitution (chaired by W.T. Whitaker) made some useful suggestions how this might be restructured ( see page 268 and onwards of http://www.constitution.ie/reports/crg.pdf ). On regulation, that’s where I start to feel out of my depth! This is a very good blog but I feel it’s probably best to defer to the more economically literate on most topics! 🙂 But I’ll make a few random observations anyway. In certain respects it does appear to me we’re a heavily regulated country. There certainly appears to be a quango (or even several) regulating every conceivable area. It has always been a bit of a mystery to me who actually oversees these quangos. Who sits on their boards? Why are they there? At least the UK, after some controversy in the 90s, quite comprehensively and effectively cleaned up its quango appointments system with public appointments commissions and commissioners (though perhaps in a somewhat overly bureaucratic way). Nonetheless, it has largely removed such appointments as a source of controversy. So far here some of these posts are now advertised (though I think ministers don’t even necessarily have to appoint from the pool of people who have bothered to send in a CV) and for some of the more high paying positions (chairs and CEOs) they are supposed to come before a Dáil committee, but which won’t have any power to actually block the appointment anyway. So the system hasn’t really changed all that much. The continuing lack of transparency means questions will remain as to why these people were appointed and as to who they really represent. Enforcement of regulation definitely seems quite uneven to me in this country. It has struck me that there was never much problem enforcing regulations on the poor ole taxi-drivers (seen very much a working class profession) whereas kid gloves were always used when interacting with some of the higher professions. And veering more into Joe Duffy territory (probably why economics is best left to the economists! 🙂 ), regulation during the building boom seemed to be one of the biggest gaps of all. A huge amount of building was thrown up in the space of a short span of years. Might not have been a bad idea if even a small percentage of the tax revenue generated had been funneled back into funding building inspectors and regulators who could have physically checked on the standards of buildings being constructed (instead of the virtual and notional regulation we actually got). Unfortunately, instead we’ll probably have quite a few homes literally falling down around people’s ears in another 10-15 years. In general, the relationship between Irish people and regulation has been quite a strange one! 🙂 @Paul Hunt I must leap to my own defence. If I gave the slightest impression of being a defender of French (or other) dirigisme, mea maxima culpa ( My friends would be VERY surprised and appalled!) Ditto for the “man from the guvmint”. That said, and from a (long) time and spatial remove, I believe I’m right that both the decision to promote Ireland as a low corporate taxation location for mainly US FDI export activities, initially to the EC and later to the EZ, and the tax incentive measures that fueled the housing and construction bubbles were Irish Government decisions and ‘policy’. The preservation of our low CT tax rate is still a central, and perhaps the only, remaining significant plank of so-called Irish economic “sovereignty”. In purely pragmatic terms, I’m not sure that we’d survive for long economically if this was NOT Irish guvmint policy. You have me over a barrell when it comes to nominating which, among the plethora of “industrial” ( hate the word, can we say “enterprise?) bodies or ministries is best ( if at all) placed to address the central strategic challenge ( my hobbyhorse) that even continued successful IDA success in attracting FDI will NOT cure mass unemployment in Ireland. My post was simply (another) attempt to underline the raised stakes now involved in continuing to “remain at the races” in this now truly global battle for FDI. And the level of “world class education” and international working experience needed ( early) to remain at these “races”. There are elements of guvmint policy that impact directly on our ability to remain competitive in the FDI “race” but I’m not seeing any thinking along these lines apart from the same ( very good but old) FDI battle to create new jobs that will increasingly fall short of net gains every year if we don’t adopt a new policy. And don’t worry. Just because I QUOTED Davos CSR “fluff” doesn’t mean that I, or my French company ( or its CEO) are anything less than brutally realistic about why and how successful large international companies operate. You introduce a very interesting concept that, you rightly say, the other Friedman avoided when you talk about “governance” ( not entirely sure what you you mean!) “enforcing” the “rules of the game”. In global terms, what you call the “rough and ready businesses” in the emerging economies are NOT complaining about the “rules of the game” and are busy accreting market power and, yes, OFTEN, co-opting whatever political power they can muster in what is a more and more brutal global trial of strength. I’m not aware of China OR India ( at least the guys I meet) moaning about the rules of the game. Because it’s a game they’re winning! The tension/stand-off between existing and nascent powerful corporations and the increasingly impotent regulatory national, regional and global “instances” IS the game that the elephants are dancing right now. And the mice play in that arena. When they can. Truth is that the elephants don’t have much of an interest in whether the mice play or not. So when you say that the elephants are a “problem” you ‘re ignoring the issue of whether whether the mice will have day jobs or not! Everything depends on the elephants dancing. In this global game, Ireland, particularly the non-sheltered sectors you say are “resilient” simply cannot afford to continue to sustain the sheltered sectors. I think THAT is a matter for the man from the “guvmint”. @Finbar, We’re going miles off-piste, but, when you begin to appreciate the huge edifice of legislation and regulation that is in place governing economic activies – not to mention all other activities, it is truly frightening. And much of it is an optical illusion – like the ‘world class’ bank supervision and financial regulation we had in place before the then government was compelled to appoint Prof. Honohan and Mr. Elderfield to actually do what it said on the tin. But, despite being an optical illusion, it works very well to protect and advance the narrow sectional interests of the various groups, factions and elites affected. And it can become very real if their interests are threatened. The economists can apply their neoclassical economics all they like – and I’m sure this new centre will do some good and interesting work, but it is all labour in vain while it ignores this institutional and procedural reality, or illusion, as the case may be. In actual fact it is far easier, politically and procedurally, for government to pursue this salami-slicing of public expenditure and incremental increasing of taxation than to tackle these institutional issues. This ‘top-down’ austerity can be spread across the board and, with a bit of political judgement, leave most people equally p1ssed off. Getting stuck in to this ‘bottom-up’ structural stuff is guaranteed to disturb a hornets’ nest of vested interests. All have vicious stings, but some, such as the ESB, could actually bring the country to a stand-still. And those who prevent a government doing what it has decided to do in the public interest are the government. No government wants to be forced, or to be seen to be forced, into this position. And, more importantly, this carefully cultivated image – for international consumption – of a stable political system administering austerity to a docile electorate would be shattered. Far better to leave the hornets’ nest undisturbed and to spread the pain as evenly as possible. The only problem is that austerity on its own is causing and will cause the economy to stagnate or shrink and the hornets need to be tackled to reduce the deadweight they impose. But the hornets will threaten to sting – and will sting – if they are disturbed. They have no worries about a sinking economy even if their absolute position declines becasue their relative position will remain secure – and might even be enhanced. We’ve been here before – in the ’30s, the ’50s and the ’80s. What’s another decade? @Richard F, Thank you taking my comments in the spirit in which they were intended – of an open and frank exchange from which both sides can learn. I don’t think we’re far apart, I agree with your global take and I fully agree with your final point. But I think you are stuggling to define what the state should actaully do to support (direct?) outward-looking entrepreneurial activity. (I’m pleased, pace George Bush Jnr, that the French have finally found a word for ‘entrepreneur’.) My sense is that government should sort the sheltered sectors to ensure they provide a support to, and do not impose a burden on, the non-sheltered sectors. Just let the non-sheltered sectors off. Markets generate information for economic decision-making in much greater volume and far more efficiently than any number of bureaucrats possibly could. I fear government failure more than I fear market failure. If the Fiscal Policy Research Centre actually has the terms of engagement alluded to by Convery in his IT piece and if its work is actually cross-disciplinary and not dominated by economists then I think it will make an impact over time on influential persons within and beyond Ireland. While much comment above expresses frustration with the scope for change in Irish law, representation and governance, I think some constructive practical proposals would be helpful too. Perhaps some encouragement for the IFPRC’s mandate would be appropriate, given the need for truly independent research on the many areas of public policy where commissioned work lacks credibility or depth? Remedying the limitations of Irish civic society is a never-ending process akin to maintaining the Forth Bridge. There will be no decisive ‘victories’ in de-scaling the hull of the state sector of parasitic accretions and keeping things shipshape. But filling research vacuums such as that relating to economic outcomes of state R&D, environmental resource utilisation, energy and disaster provisioning, health of air and sea links, education strategy and it’s operationalisation etc with objective cross-disciplinary research seems to me to be an unqualified good. The truth will set us free. @Paul Hunt ‘But I think you are struggling to define what the state should actually do to support (direct?) outward-looking entrpreneurial activity’. ‘Markets generate information for economic decision-making…. far more efficiently than any number of bureaucrats possibly could. I fear government failure more than I fear market failure.’ ‘…the French have finally found a word for ‘entrepreneur’ OK Paul. First, and anecdotally! Wee George Bush was not wrong about the lack of ‘entrepreneur’ in the French vocabulary. Or at least in praxis here. Although it’s the root of ‘entreprise’, ‘entreprendre’ means to undertake, venture ( fairly sedately!) or take steps towards. ‘Entreprendre une femme’, for example, means to make advances to, or court, a lady. Not ‘mash’. It’s only very recently that ‘entrepreneur’ has come to mean thrusting, creative, imaginative, agressive! seeking out of and execution of business opportunity and this meaning, perversely, has mainly come from the ‘Anglo-Saxon, néo-libéral world, through English. And American English at that! It has taken time and it’s just about respectable now. Until recently, an ‘entrepreneur’ was a contractor ( as in building – traditionally VERY sedate!) and an entrepreneur de pompes funèbres, for example, was an undertaker! Next first, I am, indeed, struggling to define the role of the state in fostering/driving entrepreneurial activity and enterprise strategy. I believe I’m not alone. Clinton, at the last Irish Economic (‘Diaspora’) Forum in Dublin ( I’m NOT a fan) stated, correctly in my view, that most successful economies, and particularly the coming BRIC leading economies are now indivisible mixes of public and private ‘ enterprise’. Many of you economist types will have the figures to back up the fact that government spending is often 50% of economic activity in many ‘advanced’ economies, certainly in Europe. Second next, your ‘markets generate’… more efficiently… than bureaucrats’ statement comes very close to my own ‘credo’. Advise me, do ‘effccient markets’ still work? For the unemployed middle class, for example? All that said, in ( international) business for many years, I’ve always paid much more attention to the word ‘effective’ than to its close but not intimate friend ‘efficient’. I would contend that our biggest global ‘effectiveness’ challenge in the ‘West’ right now is how we are going to ensure the survival of our middle class’ in the face of its rapidly-rising, and very effective cousin in the BRIC economies. And the magnitude of this challenge is, for me, best measured by ‘our’ capacity, or the lack of it, to ‘create’ employment. I would contend that the very validity of our mixed system of ‘democratic enterprise and business/political governance is in question right now. Finally, for now, and to bring this back to the thread topic, the formation of the IFPRC may be a welcome initiative but in this real, brutal, traumatised world, the ‘purpose’ – ‘stimulate constructive discussion among policy makers, civil society and the general public’ may be more ‘democratic’ and ‘efficient’ than ‘effective’ if the process is not fairly urgently oriented towards ‘action’. I repeat, we, in the ‘West’, made the ‘rules of the game’. We’re NOT playing by our own rules. And others are beating the sh** out of us with nary the slightest complaint about the rules! So, in an Irish context, what is the role of the state? Which part of the state? WHO, in the state? And if not the state, who? Yes, you’re right. I’m struggling. Help me out here! @Richard Fedigan “I would contend that our biggest global ‘effectiveness’ challenge in the ‘West’ right now is how we are going to ensure the survival of our middle class’ in the face of its rapidly-rising, and very effective cousin in the BRIC economies. And the magnitude of this challenge is, for me, best measured by ‘our’ capacity, or the lack of it, to ‘create’ employment.” Richard I think the fundamental answer to maintaining a middle class, between the owning/ruling class and the serving class if you will, is intellectual property. Despite the enormous importance of this topic for individuals and economies not operating at the level of survival it is routinely ignored by many economists and analysts and widely misunderstood by the vast majority of policymakers. Outside certain public services and professional guilds, IP is the only legal form of monopoly permitted in most Western economies. Being able to create, manage and monetise IP is the difference between low margin low wealth-creating enterprise, rapidly emulated in the lowest cost location and something better. Whether we are talking about the assiduous development of unique knowledge and experience by a gifted individuals, or investment in the development of patented, copyright or branded high margin products and services by an enterprise, the key thing is the ability to control ones market for a time. Similar sums of money are invested annually in the US on developing intangible assets (much of which is IP) as is invested in tangible investments, presently around a trillion USD. But since the 50’s the proportion of total investment represented by intangibles has tripled. There is a strong correlation between sustainability/profitability of all types of economic actors and effective IP management. Yet corporate and national accounting conventions continue to ignore the value of IP assets, there is minimal discussion of these issues on learned blogs like this one, and Ireland’s national education, science and innovation systems treat IP as esoteric and legalistic mumbo jumbo. There is a world of difference between state investments in producing R&D publications to be instantly digested and applied by every other country around the globe, and applied R&D (technology development) aimed at producing patents, copyright material and private know-how directed at a financially-lucrative opportunity. The difference is that of legally-defensible market power. Until Irish enterprise and science policy is reframed to acknowledge this, there will continue to be an embarrassingly low return on such investments. Irish STEM schools and graduates are insufficiently unaware of the implications of increasingly dominant IP on continuous professional development demands and career choices. There is a hazy understanding that ‘knowledge’, ‘research excellence’, ‘innovation’ and certain thematic areas of enterprise are important for growing individual and national wealth, but the specific mechanisms by which this alchemy takes place are not widely understood. The alchemy is IP management. As this changes, Ireland will rebuild its middle class, populated less by providers of commodity professional services and more by tech entrepreneurs, private inventors, competitive intelligence professionals, creative content developers and the traders who disseminate their work. It seems to me that the state can be helped to embrace the transition to an IP-based economy and update its policies and the mindsets of its servants, or not. But regardless of this, the transfer of power and wealth from those who have traditionally controlled (exacted rent from) tangible assets towards those who can adeptly manage and exploit IP will continue. Many thanks for this, Tony. I have no difficulty accepting that the the transfer of power and wealth from the traditional ( rent-extracting) ‘controllers’ of tangible assets towards managers and exploiters of IP will continue on a global basis. (although some of the current ‘money’ guys, the future Warren Buffets!, will see it and get in on it too). I think this is pretty much what (Tom) Friedman is talking about in the (three) quotes I cited in an earlier posting. However, I have a bit of difficulty with your leap from there to ‘Ireland will rebuild its middle class”, presumably in replication/reflection of, mirroring of, or anticipation of this new ‘paradigm’. Unless you think it’s going to be organic and just gonna happen! You contend, and I would agree at the risk of provoking further (Paul Hunt!) criticism of my ‘dirigisme’, that ‘the state can be be helped to embrace the transition to an IP-based economy.’ However, you seem rightly to call both of these hopes ( they’re not facts or inevitable) into question not least by your significant ‘or not’ after ( the state’s ability) ‘to update its policies and the mindset of its ( presumably public!) servants’. So, we seem to be agreed that there are some (inevitable) global trends but you seem more optimistic about Ireland’s ( inevitable) role in these trends. I’m less optimistic and believe that a lot must be done to WIN a role for Ireland in this process. So what interests me is/are the mechanism(s) by which we’ll get there. As you probably know by now, my faith in everlasting FDI commitment to Ireland ( even with the best efforts of the IDA) as a central plank in global positioning is pretty shaky. This is particularly the case as even continued success is not creating net employment, future global FDI will come increasingly from BRIC countries and Ireland knows very little and exports even less to these economies. You seem to be the kind of guy who’s ( technically) competent in and comfortable with, fast, chaotic, ‘smart’ global CHANGE. I happen to love it too, especially in an international context ( tho’ I’m far from technically competent!) My ‘struggle’ ( Paul Hunt, rightly, again) is that as far as a ‘new’ enterprise policy and an educational system geared not only towards the ‘tech’ and IP revolutions but also towards the centrality of international WORK experience is concerned (these are integral elements of the same challenge) I have no idea whose job this is in Ireland. It’s ‘just the same’, as we used say in Dublin, in France. Once again, many thanks for educating me. @Richard “However, I have a bit of difficulty with your leap from there to ‘Ireland will rebuild its middle class”, presumably in replication/reflection of, mirroring of, or anticipation of this new ‘paradigm’. Unless you think it’s going to be organic and just gonna happen!” I have it backwards. It’s middle class will rebuild Ireland. There will continue to fragmentation of salaried employment in large enterprises towards self employment and entrepreneurship through communities of practice. This is alluded to by Feldman who in your quotes describes very well some visible aspects of this phenomenon relating to creating and managing intangible assets. The phenomenon is very clear in city regions like Cambridge UK where the Cambridge Network, Cambridge Connect and various small private networks channel an increasing proportion of enterprise activity. Educated and internationally-travelled Generation X’ers will lead the rebuilding of the middle classes in Ireland, the UK and the US through the mobile mini-multinational businesses they are building. Many such businesses generate high margins and contribute substantial tax flows. Over the coming two decades such mobile businesses will come to represent a very prominent influence on power and policy in these countries. These developments are unstoppable, though the state could facilitate by promoting and celebrating the nomadic lifestyle that this new diaspora of business people and episodic expats adopt. Also by tracking these individuals, using its networks to help them build their businesses and careers, supporting them financially during periods in their careers when they need this and so forth. In return, this new diaspora might take more interest in domestic Irish affairs, contribute employment, tax revenues, and a more international outlook @ Tony O ‘It’s the middle class will rebuild Ireland.’ Well that sounds more like reality Tony ( and thanks for your gracious response). Of course, this implies that the politicians, in Ireland and other ‘Western systems, who claim to be “creating” jobs ( outside the public service of course) or adopting “job-creation” policies are more or less irrelevant to what we seem to agree are ‘organic’ processes. That said, I believe that clearer (and more honest) communication of the impotence of politicians by politicians ( I HAVE heard Richard Bruton saying on more than one occasion that it is not the role of government to “create jobs”) allied to more creative thinking (and execution) by one or two state agencies can make a difference by anticipating these developments, communicating much more effectively about them and through some of the outline measures you mention above. A note of caution on the ‘diaspora’ notion. While the diaspora concept has particular resonance in the US ( where I lived and worked) where pretty much everybody accommodates very strong ‘American’ behavioural norms, work ethics and aspirations at the same time as ‘origin and ‘identity’ – I don’t like the term!) narratives, I believe that we need to jettison this ‘identity’ criterion in business. I believe it’s neither accurate nor flattering to attribute business or career success achieved by Irish people abroad to their “Irishness” whatever that means! ( Most “successful” Irish Americans have never been to Ireland. Indeed, growing protectionism and xenophobia aside, in the increasingly globalised, ‘internationally-travelled’ world you describe, successful people ( and the average ‘Joe Soap’ consumer-citizen) will more and more want to know whether a product or service is “good” or “excellent” according to their lights before checking whether whether it’s “Irish”, “American” or “French”. Or at least we’d better hope so since most of the consumer-citizens will not be American or European, much less “Irish” or “French”. @Richard Fedigan, Tony Owens, I see you’ve being having an excellent and informative exchange in my absence – perhaps because of my absence. The rolling nature of this blog means that some of these issues are being picked up in a more recent post: http://www.irisheconomy.ie/index.php/2012/01/08/capitalism-in-crisis/ All three barnches of government have a role to play in upholding the rule of law and, most importantly, in protecting and policing the creation and trading of property rights. They have a role to play in ensuring the economic environment is conducive to efficient provision of goods and services, in enhancing and protecting human capital – education, training, health, the well-being of citizens, collective social insurance, re-training during unemployment – and in managing the depletion of physical natural resources and the provision of infrastructure and utility services. After that, let business do what business does. As for markets, I’m some what like Gandhi, who, when asked about western civilisation, replied “It would be a good idea”. Functioning markets to the greatest possible are the best protectors of the interests of citizens, who, as final consumers, pay for everything except exports. It’s a never-ending battle. People are afraid of being witch-hunted by media. Contracts of employment forbid speaking publicly about the very area that people can see the inside madness of activity. Comments are closed.