Did the ESRI promote the ‘soft landing’ hypothesis for several years?
It’s a nice try, but the cigar stays in the humidor. For a variety of reasons it appears that many economists who are perfectly capable of understanding and analysing the nature of supply and demand and their interaction in a range of areas fail abysmally when it comes to their own work and activities. This is a near perfect example of this phenomenon.
Given the almost total dominance of government over the Oireachtas, the principal source of demand for public policy research, analysis and advice – that might, however tenuously, be deemed to be in the broad public interest – is from government departments and agencies. In addition, most public policy decisions on which government is able to exercise discretion are made behind closed doors by ministers, their advisors and senior officials. These decisions, inevitably, will involve political calculation and will seek to satisfy the concerns of the various influential narrow sectional economic interests that will be affected – and which would have potential to frustrate the implementation of any policy decided.
‘Official Ireland’ might be determined to continue perpetuating this optical illusion of a parliamentary democracy where a government, while it might hold a democratic mandate to ensure implementation of major policy proposals, has to muster sufficient objective evidence to persuade a parliament empowered and resourced to perform effective scrutiny of government proposals and proposed actions in the public interest – and of the special pleading of narrow sectional economic interests, but this is not the reality.
As a result, the demand from government and its agencies is for ‘policy-based evidence’ to justify policy decisions already made, rather than ‘evidence-based policy’ that may be enacted in the public interest. This is the demand the ESRI must satisfy in this area because, although it might have some limited direct public funding allowing some independence in tackling policy issues, much of its funding is secured via direct negotiation with government departments and agencies. It cannot be other than a case of ‘he who pays the piper calls the tune’ and any assertions that this does not diminish the ESRI’s ability to conduct genuinely independent research in the public interest are totally disingenuous. If the ESRI fails to supply what is required, the demand will dry up.
The ESRI’s independence is even more constrained when analysing sectors where, in addition to funding from government departments and agencies, funding is secured from semi-states and other ‘industry stakeholders’. I have enormous respect for the professionalism and integrity of ESRI staff in these areas, but it is cruel and wasteful to force them to perform the contortions they are obliged to perform to satisfy these paymasters.
The only effective solution is for the ESRI’s activities in these areas to be funded and directed by the Oireachtas, with direct reporting to the Oireachtas. The Government has all the resources it might wish for to provide the policy-based evidence it desires. The people and their public representatives have no ability to secure the evidence-based policy analysis required.
But ‘Official Ireland’ remains determined to perpetuate an optical illusion and to suspend disbelief and nobody seems to care.
@Paul H
“The only effective solution is for the ESRI’s activities in these areas to be funded and directed by the Oireachtas, with direct reporting to the Oireachtas.”
Very interesting suggestion.
David McWilliams was less than complimentary in 2009:
Discontinuation of the permanent tsb/ESRI House Price Index
16/5/2011
The ESRI and permanent tsb have decided to cease the production of the index. This decision has been taken primarily as a result of the introduction by the Central Statistics Office of a monthly index which will measure average prices for dwellings around the country and which is based on information provided by a number of financial institutions.
They had been publishing it without any 3-bed semi figures (probably the largest market segment) since the start of 2009.
So not only were they whoring their name to data whose veracity was questionable, but they spent 2 years openly publishing data with a significant component missing.
To admit that they reason you’ve stopped publishing an index is because someone has finally come along with independent data, says something about an organisation’s research capabilities, no?
The lady doth protest too much, methinks.
Alchemist wrote,
Did the ESRI promote the ’soft landing’ hypothesis for several years?
Interesting question.
I do know that professor Fitzgerald at the ERSI, was sharing podiums with Anglo chief executive at the Chartered Surveyors conference as late as 2008 – post banking guarantee – and that the brochure for the conference had a little gold fish jumping from a small fish bowel into a larger fish bowel. Which, I believe, was supposed to represent the Irish punching above their weight, as a former FF Taoiseach used to describe.
The basic problem, as I analyse it right now, is that we don’t have a green light for a full and comprehensive investigation of the Irish commercial property bubble and banking lending spree. However, rather than economists in Ireland worrying unduly about this fact – the move should be to create the necessary intellectual tools, which could be employed, to shine a light directly on the problems we did encounter in our banking system.
There is some interesting work, which has emerged from Yale university, going back over a decade now, where the disciplines of finance and economics have been gathered together, into a coherent body of knowledge. In fact, Yale have moved ahead of most text books, in this facet. Or rather, the way economics and finance are taught in schools, has been proven incorrect. The text books, have fallen way behind the reality of what goes on, and why it goes on.
My best stab at it – would be, that rather than Irish economists getting stressed out over this – and in the interests of preparedness, in advance of their gaining a ‘green light’ to do a full and proper investigation of the Irish banking collapse, that a small brigade of dedicated tutors and students (perhaps set up within a place like the ERSI), devise a way to study the Yale economists’ theory of the leverage cycle. I would enjoy an opportunity to discuss this at a later stage with those interested.
What is done, is done at this stage. It was a thoroughly rotten time, for Irish economics theory, trying to exist in the shadows of Haughey, Ahern, Cowen etc. We tend to forget that now. That is, where intelligent people were asked to stand up on a podium and preach fish bowel theory beside drowning banking institutions. But what we can do, is achieve something from now on, if we keep our nerve and apply ourselves in the right way. Regards, BOH.
@ PH: “But ‘Official Ireland’ remains determined to perpetuate an optical illusion and to suspend disbelief and nobody seems to care.”
In no way should my comments be viewed as a personal attack on Dr. Ruane. There is absolutely no malice intended. My intent is to highlight the optical illusion she is perpetuating – or feels compelled to perpetuate – about the interactions between the funding, governance and activities of the ESRI.
It has proved convenient to charcterise the critique advanced by Richard Tol in terms of any assertions he may have made about xenophobia, racism or nepotism, but the substantive elements of his critique, as I understand them, have not been addressed – other than via the optical illusion presented in this op-ed.
But surely is it not time for the Director of the ESRI – and others in similar positions – to acknowledge publicly that the optical illusion that is being perpetuated is simply a part – indeed the remaining part – of the grand optical illusion that sustained the double bubble? And is it not time to concede that sustaining this optical illusion and seeking to suspend disbelief indefinitely are seriously detrimental to the interests of the vast majority of citizens because it prevents the definition and implementation of the structural reforms that are vital to counteract the impacts of this necessary fiscal adjustment – and that it results in a huge waste of resource that could be deployed far more productively and effectively?
@Paul Hunt
All your posts are sound and factual in my eyes.
I was thinking that she fits in with rest of the cabal and could not be singled out as being unusual other than that she is female. For reasons I do not fully understand although it might be related to the cult of motherhood that is common in Ireland. I tend to assume that women are honestly doing the best they can for society. For that reason they must be given the benefit of the doubt. I know there are women you would not want to meet down a dark alley but they do not usually work for the Gov’t or its agencies. Also, she is the product of a society that is severely dysfunctional.
9 replies on “The ESRI Responds”
Did the ESRI promote the ‘soft landing’ hypothesis for several years?
It’s a nice try, but the cigar stays in the humidor. For a variety of reasons it appears that many economists who are perfectly capable of understanding and analysing the nature of supply and demand and their interaction in a range of areas fail abysmally when it comes to their own work and activities. This is a near perfect example of this phenomenon.
Given the almost total dominance of government over the Oireachtas, the principal source of demand for public policy research, analysis and advice – that might, however tenuously, be deemed to be in the broad public interest – is from government departments and agencies. In addition, most public policy decisions on which government is able to exercise discretion are made behind closed doors by ministers, their advisors and senior officials. These decisions, inevitably, will involve political calculation and will seek to satisfy the concerns of the various influential narrow sectional economic interests that will be affected – and which would have potential to frustrate the implementation of any policy decided.
‘Official Ireland’ might be determined to continue perpetuating this optical illusion of a parliamentary democracy where a government, while it might hold a democratic mandate to ensure implementation of major policy proposals, has to muster sufficient objective evidence to persuade a parliament empowered and resourced to perform effective scrutiny of government proposals and proposed actions in the public interest – and of the special pleading of narrow sectional economic interests, but this is not the reality.
As a result, the demand from government and its agencies is for ‘policy-based evidence’ to justify policy decisions already made, rather than ‘evidence-based policy’ that may be enacted in the public interest. This is the demand the ESRI must satisfy in this area because, although it might have some limited direct public funding allowing some independence in tackling policy issues, much of its funding is secured via direct negotiation with government departments and agencies. It cannot be other than a case of ‘he who pays the piper calls the tune’ and any assertions that this does not diminish the ESRI’s ability to conduct genuinely independent research in the public interest are totally disingenuous. If the ESRI fails to supply what is required, the demand will dry up.
The ESRI’s independence is even more constrained when analysing sectors where, in addition to funding from government departments and agencies, funding is secured from semi-states and other ‘industry stakeholders’. I have enormous respect for the professionalism and integrity of ESRI staff in these areas, but it is cruel and wasteful to force them to perform the contortions they are obliged to perform to satisfy these paymasters.
The only effective solution is for the ESRI’s activities in these areas to be funded and directed by the Oireachtas, with direct reporting to the Oireachtas. The Government has all the resources it might wish for to provide the policy-based evidence it desires. The people and their public representatives have no ability to secure the evidence-based policy analysis required.
But ‘Official Ireland’ remains determined to perpetuate an optical illusion and to suspend disbelief and nobody seems to care.
@Paul H
“The only effective solution is for the ESRI’s activities in these areas to be funded and directed by the Oireachtas, with direct reporting to the Oireachtas.”
Very interesting suggestion.
David McWilliams was less than complimentary in 2009:
You have been warned!
http://www.davidmcwilliams.ie/2009/05/03/you-have-been-warned
The greatest fiasco for the ESRI was their House Price Index in conjunction with Permanent TSB.
They finally put the thing out of it’s misery in mid-2011:
http://www.esri.ie/irish_economy/permanent_tsbesri_house_p/
They had been publishing it without any 3-bed semi figures (probably the largest market segment) since the start of 2009.
So not only were they whoring their name to data whose veracity was questionable, but they spent 2 years openly publishing data with a significant component missing.
To admit that they reason you’ve stopped publishing an index is because someone has finally come along with independent data, says something about an organisation’s research capabilities, no?
The lady doth protest too much, methinks.
Alchemist wrote,
Interesting question.
I do know that professor Fitzgerald at the ERSI, was sharing podiums with Anglo chief executive at the Chartered Surveyors conference as late as 2008 – post banking guarantee – and that the brochure for the conference had a little gold fish jumping from a small fish bowel into a larger fish bowel. Which, I believe, was supposed to represent the Irish punching above their weight, as a former FF Taoiseach used to describe.
The basic problem, as I analyse it right now, is that we don’t have a green light for a full and comprehensive investigation of the Irish commercial property bubble and banking lending spree. However, rather than economists in Ireland worrying unduly about this fact – the move should be to create the necessary intellectual tools, which could be employed, to shine a light directly on the problems we did encounter in our banking system.
There is some interesting work, which has emerged from Yale university, going back over a decade now, where the disciplines of finance and economics have been gathered together, into a coherent body of knowledge. In fact, Yale have moved ahead of most text books, in this facet. Or rather, the way economics and finance are taught in schools, has been proven incorrect. The text books, have fallen way behind the reality of what goes on, and why it goes on.
My best stab at it – would be, that rather than Irish economists getting stressed out over this – and in the interests of preparedness, in advance of their gaining a ‘green light’ to do a full and proper investigation of the Irish banking collapse, that a small brigade of dedicated tutors and students (perhaps set up within a place like the ERSI), devise a way to study the Yale economists’ theory of the leverage cycle. I would enjoy an opportunity to discuss this at a later stage with those interested.
What is done, is done at this stage. It was a thoroughly rotten time, for Irish economics theory, trying to exist in the shadows of Haughey, Ahern, Cowen etc. We tend to forget that now. That is, where intelligent people were asked to stand up on a podium and preach fish bowel theory beside drowning banking institutions. But what we can do, is achieve something from now on, if we keep our nerve and apply ourselves in the right way. Regards, BOH.
@ PH: “But ‘Official Ireland’ remains determined to perpetuate an optical illusion and to suspend disbelief and nobody seems to care.”
I do, Paul! Keep at it!
Cheers, Brian.
Give the poor woman a break.
Read this.
http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0020124
@Mickey Hickey,
“Give the poor woman a break.”
In no way should my comments be viewed as a personal attack on Dr. Ruane. There is absolutely no malice intended. My intent is to highlight the optical illusion she is perpetuating – or feels compelled to perpetuate – about the interactions between the funding, governance and activities of the ESRI.
It has proved convenient to charcterise the critique advanced by Richard Tol in terms of any assertions he may have made about xenophobia, racism or nepotism, but the substantive elements of his critique, as I understand them, have not been addressed – other than via the optical illusion presented in this op-ed.
But surely is it not time for the Director of the ESRI – and others in similar positions – to acknowledge publicly that the optical illusion that is being perpetuated is simply a part – indeed the remaining part – of the grand optical illusion that sustained the double bubble? And is it not time to concede that sustaining this optical illusion and seeking to suspend disbelief indefinitely are seriously detrimental to the interests of the vast majority of citizens because it prevents the definition and implementation of the structural reforms that are vital to counteract the impacts of this necessary fiscal adjustment – and that it results in a huge waste of resource that could be deployed far more productively and effectively?
@Paul Hunt
All your posts are sound and factual in my eyes.
I was thinking that she fits in with rest of the cabal and could not be singled out as being unusual other than that she is female. For reasons I do not fully understand although it might be related to the cult of motherhood that is common in Ireland. I tend to assume that women are honestly doing the best they can for society. For that reason they must be given the benefit of the doubt. I know there are women you would not want to meet down a dark alley but they do not usually work for the Gov’t or its agencies. Also, she is the product of a society that is severely dysfunctional.