More on Government Economic and Evaluation Service

This post was written by Colm Harmon

The announcement of an economic and evaluation capacity for the public sector has the potential to be a transformative venture and should be welcomed in my opinion.

I think this is far more than just filling the public sector with economists as a matter of optics - at least I hope so.  It is worth noting that this is just one initiative pointing in the right direction - for example, the D-PER recently convened a working group that brings expertise (academic, commercial etc) into the room to review major policy domains including nitty gritty things like how major capital projects are valued (Disclosure - I was asked to participate in this and was glad to).

Some things I hope will happen:

  • I hope the service evolves as an identifiable entity within the public service and not just buried in one Department - from what we can tell so far spreading the economists to wherever demand and skills are matched is the plan.
  • I hope to see a ‘Chief Economist’ role evolve - a visible, public facing role who is an advocate for what the service produces and is strong on communication.   Someone needs to be seen in public!!
  • It is very important to see ‘evaluation’ flagged explicitly and this is again a positive move - it suggests microeconomic policy will evolve as a domain and rightly so.
  • We don’t need to reinvent the wheel in a costly fashion with respect to training and ongoing development of the recruited economists - I hope to see routine movement between academic institutions and the service, and between the services and major policy research groups like the ESRI.
What would perhaps be the most exciting thing from this announcement is that it has the ability to empower public administration on issues of economic policy.  This is more than just about expertise and answering Dail questions on how many staff have economics degrees   For example, one of the less appealing aspects of policy, particularly microeconomic policy, has been the tendency to bury good initiatives in layers of - for want of a better phrase - spin.   The initiatives on job creation (which rightly are about halting the drift into LT unemployment) get announced in terms of ‘X numbers of jobs will be created’ which any sensible economist should drive a cart-and-horses through.    I hope a government service would push against this sort of instinct within the decision making processes.
Update - a link to the service announcement by D-PER is http://per.gov.ie/2012/03/06/minister-howlin-announces-establishment-of-new-government-economic-and-evaluation-service/

36 Responses to “More on Government Economic and Evaluation Service”

  1. Bunbury Says:

    I work in the area of capital projects in the public sector and I often see unbelievable errors in the business cases for particular projects - that is, if a business case is even presented at all. There seems to be no appreciation of the fact that in building a new school, hospital, or other the Government is also committing itself to a long-term stream of current expenditure for staffing, operating costs, etc. There is either no emphasis on energy efficiency at all or else state-of-the art ‘energy efficiency’ solutions are chosen which are costly to operate, break down frequently and end up costing more money than they provide in savings.

    I could go on and on but I would only depress myself. It’s good to hear though that the Government is beefing up analysis in this area so that is positive. Best wishes on your appointment.

  2. Colm Harmon Says:

    @bunbury

    Well observed. Exactly the sort of thing I would like to see addressed. The UK GES uses a largely common evaluation tool across Departments and this would be great here.

    Just to be clear, despite my liking for this initiative I have not been appointed to anything!!! And not canvassing for a job either!!

  3. kevin denny Says:

    Rumours of Colm’s appointment are greatly exaggerated I suspect.
    Project evaluation is one area where this service can be very useful. When I was a student I remember one of my lecturers referring to cost benefit analysis (CBA) as “the last refuge of the economic scoundrel”. The literary allusion probably went right over my head but it highlights the fact that CBA has generally a low status in the profession as it is often just used to justify a decision that has been made already on other grounds.
    Aside from traditional CBA, one thing that this service needs to do is to make clear that economics, in combination with other disciplines, has been able to put numbers on the costs and benefits of lots of policies or at least it provides an intellectual framework in which one can do that. Education and health are areas that are crying out for this.

  4. Ordinary Man Says:

    @ Colm and Bunbury

    I haven’t heard as much sense expressed in three consequitive (sic) posts in a long time.

    ‘Through Life Cost’ is a phrase that should be embedded in all strategic policy and purchasing.

    Too much short term cost saving v long term loss.

    The inverse story of the origins of our woes.

  5. Paul Hunt Says:

    Economics is a discipline. They’re are a few sciency bits at the edges, but these have exploded to allow most economists - mainly macroeconomists - to avoid political economy - and to indulge in a bit of physics envy. The idea that economists with their current training on top of the pussilinamity of those who teach them adding value and advancing the public interest is laughable.

  6. Colm Harmon Says:

    Just for info this is the recruitment process used in the UK - http://www.civilservice.gov.uk/networks/ges/assistant/recruitment-process

    Lots of focus on translation, communication etc

    @paul
    Good use of pussilinamity in a blog - perhaps a first! Apart from that…

  7. Joseph Ryan Says:

    Where was the cost benefit analysis of the sale of the Govt stake in BOI at a 75% discount?
    Project evaluation is a very good idea if the projects to evaluate encompass all government decisions.

  8. paul quigley Says:

    @ Ordinary Man

    ‘Through Life Cost’ is a phrase that should be embedded in all strategic policy and purchasing’

    Agreed, but the location of the costs are not always obvious, even when they are huge. Even where they are very obvious, they are liable to be excluded from discussion for political reasons.

    The nonsense is perpetrated at macro as well as micro level. The Dork has repeatedly pointed to the fact that the running costs of motor vehicles were never taken into account in plannnig the motoroways. A road without vehicles has little value, so it was economically crazy to disregard that factor.

    Any economist who rasied the point would have been treated as a nutter, because the capital investment process had been captured by bogus strategists and construction lobbyists. Big money was being made, and that’s all that mattered. It still goes on, but there are lesss funds available for misallocation these days.

  9. kevin denny Says:

    Paul Hunt, you would be slightly more credible if you got even basic facts right: most economists are microeconomists.

  10. Gavin Kostick Says:

    @ Colm Harmon, paul quigley, etc

    “how major capital projects are valued”

    I have clearly been captured by mr quigley, but it actually would be in the interests of this development for the economists involved to be aware of the ideas of social and cultural as well as economic capital.

    If, for example, the ‘value’ of our forests is seen as a purely economic affair, then the outcome may not what is most in the public interest.

    I’m suggesting that rather than the tired stand-off of “romantic but wrong” versus “repulsive but right”, an attempt is made to initiate a set of virtuous circles through the interplay of social, economic and cultural benefits.

    Also, as mr quigley points out above, “our beginnings never know our ends”, and this can be negative as in the motorway example, but it can also be positive (or most likely, mixed). The Basin in Phisboro is a small thing, but all sorts of little things flow from it such as the nesting place it provides for herons and chinese ducks.

    By allowing social and cultural adaptability in public projects it may be possible to encourage good things to flow.

  11. Brian Woods Snr. Says:

    Perhaps it might be better if economics was NOT an undergrad subject, but you needed to have a prior in engineering or science, even law, philosophy (anyone read Samuelson? - his undergrad text, not his later stuff). Anything that would ‘humanize’ and ‘politicize’ the manner in which highly personal, non-objective, views, opinions, beliefs, ideas, abstract mathematical theorems (asserted to be factually-based), etc., are foisted upon a totally (well almost) ignorant and self-centred populace in thrall to legislators who are addicted to spending money that they do not have.

    Economics - of whatever ism, has to explain how a physical system may work, given a limited supply of physical restraints, and a bunch of occassionaly rational, but mostly irrational folk. And that is before you encounter the FIRE economy - which I cannot recall being on my undergrad syllabus.

    “Its the frame dear boy” - the frame”.

  12. Ordinary Man Says:

    @ Paul Quigley

    100%.

    I have seen ‘tax-payers’ money spent at local and national level on capital equipment with ‘built in’ running/maintainance costs (that were the true source of profitability) with contracts for service negotiated before the equipment was purchased! (RoI)

    Just last month, a tender awarded for 5.5m Euro on a contract for 4 years, which literally, a boys scout troop could have performed - only one bid submitted. Fact. (UK)

    This type of scam is allowed because the ‘decision makers’ are not spending their own money and there is no accountability or adequate oversight with sanctions.

    They are second raters and they know it. More impressed with Rory McIlroys score last weekend than doing a good job. Hoping to ‘make friends’ and get a bit of the ‘lifestyle’.

    You try selling best value ‘through life cost’ at intial higher capital cost and then talk to me about frustration - one in ten will get the arguement and do the right financial thing.

    The selective use of information inputs in procurement are being slowly irradicated due to improved professionalism in the procurement process but it is still a very ‘malliable’ situation and incredibly slow to change.

  13. Garry Says:

    Maybe Ive missed it but where was the business case for the establishment of this wonderful shiny new economic and evaluation capacity for the public sector …

    Surely it can’t be that the purveyors of best practice wankology are immune to the discipline that they wish everyone else to be under?

    Phrases in the OP like “potential to transform” and “things I hope will happen” dont inspire confidence.

    Shut it down now… its a make work scheme for economists.

  14. consaw Says:

    Colm,

    This is great news.

    Do you have any more information on the structure set, timing and set up? i.e. will there be a likewise recognised professional body in Ireland such as the ‘GES’, a way to professionaly badge public sector economists?

  15. DOCM Says:

    @ All

    I hate to rain on this particular parade but this initiative simply reflects the inability of the Irish establishment, for want of a better word, to come to grips with the radical steps required to deal with the low levels of performance in the public service. It is posited on the assumption that the activities of the public service are somehow homogeneous and that what is missing is a homogeneous element in relation to cost benefit analysis which can be filled by a certain discipline that is widely available.

    Neither of these assumptions is true.

    If Ireland is to react to a crisis much deeper than that which impacted on two Scandinavian countries, Sweden and Finland, in the 90’s, it must deal with it following the best practice demonstrated there, not by copying outdated and often failed approaches from the UK public service the patterns of thought and behaviour inherited from which, seemingly, being impossible to break.

    The essential steps are to recognise (i) the heterogeneous nature of the public sector (ii) the often major similarities with activities in the private sector (iii) the need for abolition to the extent possible of the demarcation in terms of recruitment and career structure between the two and (iv) the need for recruitment of the required varied skills on that basis.

    I am not holding my breath.

  16. Ordinary Man Says:

    @Garry

    ‘Maybe Ive missed it but where was the business case for the establishment of this wonderful shiny new economic and evaluation capacity for the public sector …?’

    If, through their hopefully broader analysis, they can take 10% of the cost per mile for a road in the RoI they will have paid for themselves and saved the State some money - how’s that for a business case?

    They need to be well directed, covering cost and adding value within two years or I agree with you - shut it down.

    @ Gavin

    I agree with the ‘reality’ of increased social capital as a desireable output but, for the most part, it is ignored as an input or a required output in most government capital procurement processes (lip service at best).

    BW Snr. (if I understand him correctly) makes, I feel, an excellent point in that advising/assessment Economists should have a more ’rounded’ background enabling them to bring a broader perspective to their analysis.

    The key problem there though is quantifying and costing these various politically/socially desireable/undesireable outputs - wiser than I maybe able to advise.

  17. Carson Says:

    @ Brian Woods Snr

    “Perhaps it might be better if economics was NOT an undergrad subject, but you needed to have a prior in engineering or science, even law, philosophy”

    Hadn’t Brian Lenihan a legal background? That didn’t seem to serve us too well. Hank Paulson on the other hand has an MBA from Harvard and performed a vastly superior job in managing the banking crisis for the US government during Sep/Oct 2008.

    In other news, Q4 QHNS released:

    http://www.cso.ie/en/media/csoie/releasespublications/documents/labourmarket/2011/qnhs_q42011.pdf

    Latest unemployment estimate now 14.6%. Employment down. Labour force participation down. Unemployment up. Not great reading I’m afraid.

  18. Johnny Foreigner Says:

    Obviously CBA will be abused if economists are happy to take the lead from policy makers on ‘assumptions’ But it has great potential in analysing the claims made by rent seekers. So many applications for State funding are on shaky ground from the start. Let’s say two universities want State support for a collaboration and claim that 100,000 jobs will be produced - that kind of guff should weaken not strengthen the application if a proper evaluation is performed as it shows the applicants have not acted in good faith.

  19. Ger Brady Says:

    @Gavin
    There is a concept in economics called hedonic pricing which may go some way to accounting for aesthetic/cultural values of certain public amenities.

    It obviously doesn’t or can’t capture all the value you are talking about (it might not be possible to), but it might be of interest.

  20. Garry Says:

    @Ordinary Man I thought I was being blunt but maybe not….

    Thats a rubbish business case, its like me walking into Enterprise Ireland and saying, If I can get 1% of the market for computers will u give me funding… Im really very good at the computer thingies, Im qualified and all

    “If” is the biggest word in the English language. If my aunt had balls….

    What will this service cost?
    How will it be paid for?
    Who do we fire, what service do we shut down to make establishing this service cost neutral?
    How do we measure if this service is delivering?
    How do we fire the useless/bottom 10% of the people we bring in to this service?

    Where is the business case?

    I suspect it doesnt exist, but everyone ‘knows’ its a good idea…

    If its a good thing, then those involved in it have an obligation to demonstrate what they mean by an “Economic and Evaluation Service” … And where better to start than by putting themselves under the microscope? If they cant eat their own dogfood, then why should anyone else?

  21. John Corcoran Says:

    On evaluating public esctor projects Professor WT Baxter of the LSE developed a concept termed “deprival value”. It might be worth considering.

  22. Ordinary Man Says:

    @ Garry

    You walk into Enterprise Ireland with that one if you like - good luck.

    Did you miss paragraph 3 of that post?

    As to your cliché, well it is more common than you might think. Maybe you should ask someone you know. ;-)

    To the point, most proposals to develop a business plan I have ever seen start with a series of ‘Ifs’ at a meeting.

    If the market is £X, if we can secure Y%, if we secure margin over cost at Z, we could make £££.

    Now you asked 6 questions.

    If you are not an economist or an accountant,
    if you don’t invest in one’s expertise,
    if you just keep doing it the same old way, what do you think your chances are of successfully achieving/realising the the initial ‘IFs’ (X,Y & Z) objectives?

    Because that is where it all starts in my experience - a strategic discussion of ‘ifs’, targets, desires, outcomes etc.

    As to your last paragraph - repeat the three Ifs above.

    To my understanding that is what they are trying to do and I would give anyone a fair wind with proviso, see paragraph 3 previous.

  23. PR Guy Says:

    A genuine question: Why does the public sector need economists to undertake CBA/review business cases?

    I’ve read four in the past week (and >20 since Christmas) in the private sector and not one of them was written by an economist. Fairly ordinary people who work for clients seem to think it’s their job to be able to articulate a business case for their proposals and estimate/add up correctly. Don’t they teach them to do that in the public sector?

  24. Ordinary Man Says:

    @ PR Guy

    I wouldn’t think so.

    Unions, demarcation, job description, technical competency when spending public money etc.

    Though the latter does not seem to have prevented them doing it up until now.

    :-)

  25. Brian Woods Snr. Says:

    @ Carson: Yeah, some dopey folk about. I was thinking that having a prior in another disclipine - then embarking on the SS Miltonian might aid the student in ‘framing’ econ in a different manner. Economics is actually Political Economy. The politics being prior to the economics.

    The parable of bringing the horse to the water comes tp mind.

  26. David O'Donnell Says:

    @Michael Hennigan

    +1

  27. Gavin Kostick Says:

    @ Ger Brady

    Thank you. I shall look it up.

  28. Paul Hunt Says:

    @Kevin Denny,

    I regret that, in my haste (and using a darned iPhone), my apparent infelicity of expression and alleged lack of precision allowed you to dimiss so conveniently the point I am making. And as for Colm’s comment…

    The use of Regulatory Impact Assessments (RIAs) and Policy Impact Assessments (PIAs) and the ‘public consultation’ exercises mounted by Govt. Depts. and government agencies are primarily designed and conducted to propagate bullshit that either advances the interests of various interest groupings or seeks to conceal the real intent.

    This proposed increase in ‘economic competence’ in Govt. Depts. and agencies is intended to ensure bettter quality and more expanisve polishing of turds.

    On all matters of public policy and economic regulation various interests will conflict, opinions will differ, evidence and analysis may be advanced to support or rebut the cases being advanced by various interests and there is an absolute requirement to ensure open, transparent, adversarial disputation to ensure that policy and regulatory decisions are in the broad public interest.

    This is just another attempt to increase the workforce in the ‘bullshit manufacture’ industry.

  29. TryTryAgain Says:

    Thanks Colm for the link to the announcement. It says that recruitment has already begun but there is nothing on http://www.publicjobs.ie

    Does anyone know where the jobs are being advertised or is it a case of “lets pretend it’s open to outsiders but really don’t bother us?”

  30. Colm Harmon Says:

    @TryTryAgain

    thanks - indeed this is going to be a test of the seriousness of this.

    My hunch - and only a hunch - is that some of the recent competitions for economists at a more senior level (I think D.Communications etc advertised for one recently) as well as the competition for entry level positions which were certainly advertised in recent months into DPER/Finance (apologies don’t have a link) will now form part of this new structure.

    The critical things in my view remain unclear, namely the idea that someone will be appointed to act as the head of any service, and that it has a strong role. Dan O’Brien makes this point in the IT today. See http://www.civilservice.gov.uk/networks/ges/what-we-do for an example of a service at work. Nick Stern was last but one in charge of the GES there. As was the very wonderful and much missed Irishman Norman Glass - http://www.guardian.co.uk/politics/2009/jun/29/obituary-norman-glass.

    So I hope that we do see advertisements. And that you will not be proven right in your ‘outsiders’ reference…!

  31. David O'Donnell Says:

    hindsight is wonderful …

    http://www.irisheconomy.ie/index.php/2012/03/08/the-glidepath-rule/#comment-249751

  32. DOCM Says:

    @ Colm Harmon

    On the Dan O’Brien article; the analysis is excellent but the conclusion faulty for the reasons that I have outlined in my earlier post. He even makes the point for me.

    “Now the State is a hyperactive, high-spending behemoth, engaged in a mind-boggling number of activities – from services provision and regulation of complex industries, to never-ending tinkering with the tax system and the design and rollout infrastructure, and much more besides. All of this takes place as the pace of change is endlessly accelerating and in an environment which is hugely influenced by developments at EU level and globally”.

    And the solution is to create another service of a non-existent discipline! That of providing some kind of a standard assessment service for “a mind-boggling number of activities”.

    The only solution is to break down the artificial barriers that exist between the public and the private sectors and to bring to an end the entrenched frame of mind - only some of which stems from a conscious defence of vested interests - which fails to see the need to do so.

    http://www.irishtimes.com/newspaper/finance/2012/0309/1224313063551.html

  33. DOCM Says:

    @ Colm Harmon

    Coincidentally, the issue of breaking down the artificial barriers between the public and the private sectors came up on the Marian Finucane show today. This item also appeared in the Sindo.

    http://www.independent.ie/national-news/date-is-set-for-radical-plan-to-outsource-state-services-3046330.html

    I am sure that you will also have read the Buckley Report on remuneration in the higher civil service, the authors of which seemed unaware that any distinction should be drawn between public servants and public representatives (and threw in hospital consultants for good measure).

    http://finance.gov.ie/documents/pressreleases/2001/report38.pdf

    The Public Sevices Management Act 1997 introduced a common “management system” across the public service on the erroneous assumption of heterogeneity, blurred the necessary distinction between the resposnibilities of politicians and public servants and introduced a major administrative drag in the conduct of the business of departments. The justification for the abolition of the Civil Service Commissioners and the Local Appointments Commission and the introduction of alternative arrangements in 2004 has also always escaped me.

    These are the issues that require discussion.

  34. DOCM Says:

    @ Colm Harmon

    Correction. For “heterogeneity” read “homogeneity”.

    Given the most recent developments, notably in relation to the debate on the PNs and the reported position of the ECB, I am beginning to revise my view that nothing will change with regard to the division between chiefs and indians implicit in the Buckley report and to which the authors were also oblivious. In relation to health, for example, the proposal to introduce a universal health service must eventually puncture the perception of an immutable “consultant versus the rest” hierarchy.

    The really decisive consideration, however, is that our leaders are not actually in charge (and have taken up roles as talkshow participants instead).

  35. DOCM Says:

    @ Colm Harmon

    With apologies for hogging the tail-end of this thread, but the leader in today’s IT cannot go without a mention. It does suggest that there is some awareness in government of the need to tackle the fundamental problem if not created, definitely exacerbated, by the Public Service Management Act; that of the blurring of the distinction between the responsibilities of politicians and public servants with the enormous waste of public funds being the result.

    http://www.irishtimes.com/newspaper/opinion/2012/0312/1224313153158.html

  36. H1N1 Says:

    Colm,

    Two quick points:

    1) one huge problem over the last 10 years was not that CBA was not undertaken but that it was routinely ignored. There are plenty of CBA reports floating around the shelves in public sector agencies. Part of the problem is that economist positions are relatively low ranked in these organisations and it has been all to easy to ignore them, which leads me to my next point:

    2) the grade at which these economist will be hired I predict will be Administrative Officer or Executive Officer grades. If this thing is to work the economists need to be senior enough to demand to be listened to.

    I fear that this is window dressing, with economists being given jobs but no seniority / responsibility. Hope I am wrong but I have seen from the inside what it is like to be an economist in the public sector…not holding out much hope!

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