Fiscal Responsibility Bill

Publication of the Fiscal Responsibility Bill 2012
Fiscal Responsibility Bill 2012
Fiscal Responsibility Bill 2012 Explanatory Memorandum

115 replies on “Fiscal Responsibility Bill”

I don’t understand the concept .

Clearly Credit Banks are incapable of generating any wealth (In fact they destroy Biblical amounts of the stuff) so why in Gods name do we get into debt to them ?
What power do they hold ?

The parliament can merely vote how much money they will produce or destroy at any given year.
The market can work out how much its worth by simply dividing the number into the productivity of the state and thats it baby.

Problem solved… no folds of complexity that can be gamed by the various low lives that crowd and orbit those hidden credit temples.

Yes the Republican Script act……keep it simple Yes ?

No more endless debates about debt on this website.
We can all live in peace and get on with the business of living rather then trying to game your neighbour of unearned wealth.

“The Duty of Goverment is to endeavor to comply with fiscal rules”!!!!!!!!!!!!

They need to look up the words Goverment & Duty.

Extreme Orwellian Stuff.

The First duty of goverment is to supply the optimum amount of script to facilitate commerce , not to facialte debt production and the various pump and dump merchants who extract pounds of flesh using subterfuge via the dark arts of Central banking.

And as for the very word Duty……….

A blogger over on
Philip Pilkington: The New Monetarism Part II – Holes in the Theory

He Put it simply as this process needs to be kept simple to prevent gaming of the system.

joebhed says:
July 18, 2012 at 1:18 pm
With all due respect, sincerely, I will place my bets with Lincoln’s hard-gained perspective on public money.

“”The government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers.

The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. The financing of all public enterprise, and the conduct of the treasury will become matters of practical administration. Money will cease to be master and will then become servant of humanity.””

The creation of every $US-denominated “money-thing” represents a claim against the future national economy.
Why should the citizens grant anyone this privilege? It is our collected right.
Why would any business need to create the money that it uses?


Keen’s debt-jubilee transfers the problem of the debt-saturation of all the citizenry that results from debt-based money to the government of that citizenry and leaves it at that.
If you want to have a jubilee, then end the debt-based money system.
Or have the grandkids do it all over again.
For the Money System Common

Let’s check.
Keen is an “endogenous money” adherent, I think his closest tie to MMT.
While proponents of the endogenous money paradigm usually focus on the “internally-generated” determinant of the quantity of money, what it really means is that, with no public money-creation mechanism (all private debt), it is the borrower who is determining the amount of money in existence. Thus , it is all borrowed money.
MMT has no problem with leaving the private debt-based system of money creation in place.
Neither does Keen as far as I have seen.
What this begs for discussion is the rampant departure of wage-based wealth from the wealth that is created.
Wages go down, for decades.
Guess what, wage-earners must borrow.
It’s like magic – endogenous.

Dork – We need to end this – western countries can’t sustain these parasites any longer , it is weakened to the point of debt death.

This thread has been “dorked” from its inception which seems somehow appropriate. One wonders what future historians will make of the “Irish budgetary legislation wot Angela wrote”.

Meanwhile, in the real world, the saga of government overspending continues, notably in the health sector.

You are one of many Quislings this country produces …. spreading this site with lines of slurry.

Who pays you I wonder ?

A country has a fixed amount of wealth at any given time.
How can a true Republic overspend ? – where will the money go ? … it can only be exchanged for goods and services.

This country has never recovered from those Cromwellian days it seems.
It has produced a unstoppable army of debt servants.

This is a good opportunity to recognise the very positive and public-spirited work that Philip has put into promoting the cause of fiscal responsibility. The legislation has more parents than Angela Merkel, and at least one of them is Irish.

Good governance is real world.

@BeeCee Tee.
Yes but if somebody could explain what fiscal responsibility means in a world where free banks can issue the coin of the realm at will it would be greatly appreciated.

Its a nonsense term in the a world of horizontal and vertical money.

You really don’t believe that stuff do you ?
Its merely a method of control by the private banks.

The IMF has even came out and stated they need to take money from people to make private Banks profitable !!!
I mean what do you need as evidence ?

Indeed what do yee guys see when you wake up in the morning ?
A mirror image of what exactly ?

One wonders if the costing, project analysis and evaluation of the new 2.2 billion stimulus just outlined has all the boxes checked in line with objectives of ‘ fiscal responsibility’.

re Health Budget not being achieved.
Below is the link to the HSE projections as presented at budget 2012.

A few points should be made.
1. The collation of expenditure by region mitigates against any functional view of how money is spent. One can say Dublin spent X or HSE West spent Y etc. Not very helpful when you need to reduce expenses.
2. The projected savings look very aspirational. For example how does one reduce the HSE regions by ~12% when one already know that at least 50% of their budget are made up of payroll costs where the basic rate cannot be reduced. Not only that but people still get increments meaning that an increase is inevitable.
3. The bottom line is that one has to reduce non-payroll expense by probably >20% to achieve the budget target.
4. Proceeding along with that logic one gets to a point where one has to shut down services entirely in order to protect the incomes of those employed to provide the services.

Frankly, the presentation of such an evidently non- achievable budget and its acceptance as part of a State budget package, is about as far from ‘Fiscal Responsibility’ as one might wish to go.
Neither the politics nor the economics nor the social responsibility aspect of the governments Health Budget stand scrutiny.

@BeeCee Tee
Its not that complicated Bee
Look don’t take a Dorks word for it.
Listen to a man who predicted the Euro crisis some years ago.

Steve from Virgina.
Credit money expansion (Banks) replaces a great debt with another, greater debt. There is never a net reduction in the debt, only a perpetual increase.
(we are reducing our debt by exporting our debt / symbolic wealth via goods export elsewhere destroying internal commerce)

Treasury money expansion is repudiation of debts => repudiation of (pre-existing) money, institutionalized default (expansion includes purposeful inflation).

Finance offers fiat debt then demands repayment in circulating currency (gold clause effect). Fiat currency offered by the government to retire fiat debt: both the debt and the currency are extinguished at once.

The creditor says, “You owe us, you must pay with circulating money!”

The debtor says, “There is no circulating money, the creditors refuse to lend …”

The creditor says, “We will seize your property instead and destroy your economy!”

The government (which is also a debtor) says:

– “We will create money without borrowing and repay the loans as they come due. We can do this because we are the government, our money is paid to our army.”

– “The loans are fiat — they were created by the lender with the stroke on a keyboard, they were not made from circulating currency. To act as if they were is a crime, a false claim. The lenders will be repaid by a stroke of the keyboard, in the same form as the debts were issued. If you or other lenders touch our property or our citizens we will throw you into prison and decide later whether to feed you or not.”

– “Because lenders have impoverished our country with endless false claims we will punish you severely whenever we can get our hands on you. You are our enemy and we will destroy you if we can, because you have sought to destroy us!”

Dork – We cannot lets this metaphysical fight over the remaining wealth destroy us.

There must be enough circulating medium so as to facilitate commerce – money is a tool of wealth , it is not wealth.

Dork, let me amend that. I understand each of Steve’s paragraphs, but they seem to add up to an incoherent whinge rather than progressing towards a coherent conclusion about how the world might be improved.

So you propose to produce more credit waste then……..

More roads and stuff…….such as our good goverment proposed yesterday.

You can clearly see the demonic system wishing put push onwards & outwards leaving a nothingness in its wake.

At least with debt free Fiat production the money can flow toward less wasteful activities perhaps freeing up a surplus for rational capital growth that can slow down the general depletion.

But the Pig men would have to take second place so I guess its not going to happen.

The Euro wishes to produce stuff people cannot use…..
Its a Deep monetary sickness.


Would you not like to please post on instead? Or at least limit your replies to one per thread? Do you in your heart believe that you’re contributing to the debate by querying the basis for fiat money or giving updates on the Antrim to Lisburn train service? Don’t get me wrong – I’m interested in the status of county Down rail services also (who isn’t?).

I read this website, as a layman, to try and find some explanation as to why my taxes and pension are paying off the debts accumulated by bankers and developers, why my country’s finance minister is begging from our neighbours, and if there is any path out that does not involve insurrection. The Lisburn line and the convertibility of the dollar are obviously important, but can we deal with those issues -after- we get our sovereignty back?

Obviously, this post does not contribute to the debate either, but I’m going to leave the space now to those who are expert the Irish economy, and have something sensible and relevant to say. How about we both do that?

And who is a expert on the Irish economy pray tell ?
Produce this all knowing expert ?

You sound like a good Catholic unwilling to accept that the Bread and wine is merely bread and wine and not the Body & Blood.

The above statement is a attack on the very concept of Goverment.

“The Duty of Goverment is to endeavor to comply with fiscal rules”

What is that ?
You expect people to remain quiet when a obvious falsehood is propagated ?

Don’t you know that bank credit / oil is the opium of this age ?
They wish you to remain hooked on this opiate as you are more easily controllable.
After all that has happened we wish to build more roads.
Have you any idea how sad that is ?
A people devoid of hope and imagination.
A slave people.


Imho, try much, much briefer, less frequent and as coherent as poss. At the mo you just seem to be wittering on and on which, I suspect, under-sells your insight a trifle.

Sorry to be blunt, but you are wrecking the comments section of the site.

Your comments are tangential at best to the topic under discussion at best and you are spamming almost every thread.

Why not sign up for an account on or the pin and you will get far more engagement. Here even if your posts are very interesting as they have nothing to do with the topic they just get ignored as they fill every single post so do many of the posts.

@ Dork

you have 8 of the 18 posts on here, and approximately 75% of the content. Give it a rest.

@ Moderators

you probably need to consider some more aggressive action on this, its starting to p1ss people off.

@ Joseph Ryan

I agree! This is, indeed, the basic problem with the fiscal responsibility bill. While laudable in its objectives, it – and similar legislation going through the parliaments of other EA countries – is not relevant in the context of the current crisis. The electors of Germany know this and Merkel knows it and she has now gone off on another tack to try and compensate.

More than a decade ago, Jean-Claude Juncker put the basic problem in a nut shell when he said apropos the crisis of the day; “we all know what we need to do but we do not know how to get re-elected if we do it”.

I am aware of the sterling work that Philip Lane has done in the fiscal responsibility area. The prodecures that have now been worked out will constitute a major improvement on what has gone before. But his work – with other colleagues – in relation to creating secure assets to allow the international financial system recover its health seems to me to much more likely to have a real impact.

The issues are, in fact, linked cf. this recent comments by Christian Noyer, the Governor of the Banque de France.

If all countries of the EA strive to balanced budgets in the long-term, what are the implications for the government bond markets?

The analysis by Noyer is very incisive but he avoids giving the obvious answer as to why both the US and the UK can borrow at historically low rates when economies in the EA – apart from Germany – with debt situations and economies in better shape cannot; their currencies are issued by sovereign governments.

As there is no way that the EA can be turned into a sovereign government in the short-term, some intermediate solution has to be worked out. That proposed by Noyer is a banking union with the ESM – with a sovereign backstop – providing a form of insurance to guarantee the entire system. It is, in my view, the only solution that can work but Germany, on present evidence, is either unwilling or incapable of accepting even this.

The comments by Noyer underline just how interlinked the future of the euro is with that of the international financial system or, rather, the other way around. No wonder the IMF thinks that Europe is drinking in the last-chance saloon.

Re the indorkuation problem, it would be relatively easy to tweak the software so any individual poster is restricted to maxes in terms of total-volume and number-of-postings, over a given period of time.

@ Dork
Greetings. I am reading Philip Bobbit’s Shield of Achilles, as recommended by your good self. It’s seven hundred pages, so I don’t think he would really agree that government is simple or straightforward. Bankers have had a grip on the state, especially since the Glorious Revolution, and the only alternative seems to be political totalitarianism. As I get older, the world seems more and more Darwinian.

How about a couple of weeks up in ‘Coolea’. The lark in the clear air. There will be plenty of fun in the Autumn. As Keynes said, in the long run we are all dead, and we have to save some of our puff for the denoument.

I’m glad I am pissing people off.

Anyway I am responding to others for the most part.

Still no one has explained what fiscal responsibility is when you have a effective free banking system operating under the umbrella & protection of the monopoly currency.
Nobody can refute their currency.
Anybody Anybody ?

I remember searching searching searching for a book to explain the third Iraq war back in the day , as none of the rest made much sense.

That answered some of it for me , it is a cracker although depressing.

Ireland it seems is always the most extreme of their experiments.
A killing / mind moulding field of nightmares.

Give them a massive amount of energy credits without any focus to their lives.
Then take it all away and see what happens………

We have been Lab Rats for these guys for a long long long time and it explains the extreme nature of this particular market state.

I would also recommend Mercator by Nick Crane – it fluffs out the geographical reality then beginning to form during the age of exploration before the cabinet wars set this sick process into overdrive.

@ Joseph Ryan

On my last point, this is what the new head of the World Bank had to say yesterday.

“In our interconnected world, we know that crises in one region or in one sector can affect all countries. For instance, even if the crisis in the euro area is contained, it could still reduce growth in most of the world’s regions by as much as 1.5 percent. A major crisis in Europe could reduce GDP in developing countries by 4 percent or more, enough to trigger a deep recession everywhere. Such events threaten many of the recent achievements in the fight against poverty.

To put it starkly, what’s happening in Europe today affects the fisherman in Senegal and the software programmer in India. Therefore, it is urgent that European countries take all necessary measures to restore stability. I am encouraged by the recent steps taken towards fiscal and banking union as well as the additional resources made available by some G-20 countries to the IMF. “

It’s probably futile to try and get back on track, but I found this comment by Veronica on this topic on another thread to be very relevant:

I could add more, but that would probably be equally futile, save to observe the lack of a post on Minister Howlin’s ‘stimulus package’ and to wonder if the little army of economic elves Minister Howlin was seeking to assemble when he announced this Government Economics and Evaluation Service have got to work yet and if they have produced any ‘evaluation’ of this ‘stimulus package’.

We’re well used to the Government’s ‘mushroom method’ – keep us in the dark and layer on the BS, but when those who have a torch and fail to use it one does begin to wonder about what really is going on behind the scenes.

@ Paul Hunt

AAargh! That post you refer to was meant for this thread! I’ll try copy and paste….Must be early dementia setting in, or something.

@ Paul Hunt

Phew! Copy and paste works after all:

‘The Bill seems straightforward enough. I have a concern: the role envisaged for the FC appears very limited. As envisaged in this legislation, it will, to all intents and purposes, be a creature of the Minister for Finance who makes all the appointments and to whom it reports.

Would it not be preferable that members of the FC should present their credentials to the PAC or Finance Committee who might have an equal say in approving their appointment? OK, as things stand, the Oireacthas Committees are themselves a creature of the Executive and subject to the ‘party whip’ as well as having loaded representation in respect of the government of the day.

But such a public appearance and examination of appointment credentials would at least ensure that the FC is not just a collection of faceless, back-room boffins who produce dry reports that are read by nobody except officials and opposition spokespersons and who make periodic appearances before Oireachtas Committees at which they describe what it is they do rather than analyse what is going on in any substantive way. It would also contribute towards generating some public confidence in the institution. Worst of all, the process set out for appointing FC members leaves open the possibility of members being selected on a ‘one for me, one for you’ basis by respective government partners, especially if there is no public scrutiny related to the appointments, which does little or nothing for any public confidence in its independence.

I also wonder whether the proposed budget of €800k pa will be sufficient, particularly if one assumes that there will be a research requirement for the FC. Good quality research is expensive, as are high quality communications with the public, both of which I think should be core values of the FC in operation. So when you add up the likely costs of remunerating the FC members, the administrative costs, rent and rates and the like, necessary travel expenses, publications and materials costs there’ll be little change left out of the proposed budget for a high quality inhouse research function or public education, which are vital if the FC is to fulfil a genuine ‘checks and balances’ role against the inevitable tendency towards government profligacy.

Hopefully, there will be amendments focused on these issues as the legislation proceeds. Meanwhile it would be interesting to hear the views of Philip Lane or John McHale on the blueprint as currently proposed?’

For those wishing to start their own economics blogs and therefore have control over the topics covered there are a number of free options and we all wish you luck, though given that the excellent TASC Progressive Economics gets little traffic you may find it lonely out there on the big bad Internet.

All of the contributors here have day jobs as well as political agendas to pursue.

@The Dork of Cork

“The Duty of Goverment is to endeavor to comply with fiscal rules”!!!!!!!!!!!!

They need to look up the words Goverment & Duty.

That is the unbearable absurdity of the EU’s situation (though to endeavor sounds nice and flexible, does it not?).

We are in the middle of a depression and a crisis of capitalism rooted in private sector failure to manage risk and allocate resources on an epic scale and amplified by the unsuitability of the current version of EMU.

The main response of the EU has been to insist that governments (not investors, not developers and banks only to a small degree) need to be subject to stricter rules on their finances and behaviour. Financial sector malfeasance and neoliberal idiocy causes the problem, social democracy gets the blame.

If Europe’s elites and much of the economic community is so trapped by right wing dogma that they would rather inflict suffering on their citizenry than change their economic paradigm we have to ask ourselves should we abandon the pretence that this is about “economics” at all? It is a political struggle.

Until the ideology behind the current policy failures is identified and confronted for what it is there will be solution to the European component of the global financial crisis.

I tossed the following observations in to a discussion of the Constitutional Convention and the role of TDs and Oireachtas Cttees on another blog. It may have some relevance here:

“The contrast between the recent behaviour of UK House of Commons Cttees and the behaviour of our Irish ‘parliamentarians’ could not be more pronounced or insightful. Britain is not becoming ungovernable; it’s simply that the cosy deals between governing politicians, policy-makers and regulators, on one side, and large, well-resourced and influential companies, on the other side, are coming apart and sufficient public anger has finally been aroused as the damage to the public interest is being revealed. British MPs are simply doing their job, communicating and channelling this anger and seeking to hold those in positions of governance, authority or influence to account.

Perhaps most Irish voters can’t decide between having TDs as their personal brokers with an over-mighty, highly centralised and expansive government apparatus or using their TDs to subject this expansive apparatus to scrutiny, restraint and accountability – with a traditional preference for the former. Many British voters seem to be much more in favour of the latter – and their MPs, having long been in disgrace and considered ineffectual, are realising that they have to bare their teeth at, and to bite, government, if they wish to be re-elected.

Perhaps an increasing number of Irish voters will come to realise that’s what their TDs are really for; but, then again, perhaps they won’t. There seems to be this innate distaste for, even fear of, robust, adversarial disputation and confrontation. And, of course, smothering and suppressing any dissent or confrontation suits those who exercise power and influence absolutely perfectly.”

If this bill is enacted as drafted the FC will be totally a creature of the Government – and a plaything of the MoF. If it is to have even a shred of credibility the FC should be resourced by and reporting to the Oireachtas Cttee on Finance, Public Expenditure and Reform. But we all know that there isn’t a snowball’s chance in hell of this happening. There will of course be amendments to this bill to convey the impression of bolstering the FC’s independence. But they will merely embellish the optical illusion that is being projected.

The Government will get away with it, because very few citizens are interested in these largely esoteric matters. But the Government will not be able to sustain indefinitely its calculated disdain for, and subversion of, effective democratic governance. It’s simply not possible to predict what ‘event’ (or series of ‘events’) will arouse the anger of sufficient voters. But such ‘events’ are inevitable, because the anger and resentment are being barely suppressed.


“I have a concern: the role envisaged for the FC appears very limited. As envisaged in this legislation, it will, to all intents and purposes, be a creature of the Minister for Finance who makes all the appointments and to whom it reports.

Would it not be preferable that members of the FC should present their credentials to the PAC or Finance Committee who might have an equal say in approving their appointment?”

This government has consistently reneged on or watered down all pre-election promises of political reform. Reducing the number of TDs by 8 is now considered radical. The Fiscal Council won’t be so independent. Political appointments have not been depoliticised.

The political classes have not learned the lessons of the last few years at all. It is very depressing really.

@ Zhou

I’m a tad more optimistic than you or Paul. Mainly because of what happened yesterday whereby the CEO of a major national organisation resigned his post rather than continue under institutional reforms in which he, self-evidently, has no confidence.

We already have an interim Fiscal Council. As noted above, Philip Lane has already made an outstanding contribution to the rationale for a Fiscal Council in Ireland, in progressing the concept with the various political elites and popularising it through the mainstream media as well as this site. That’s why I look forward to a critique of the proposed legislation from members of the existing FC and Prof. Lane who have a greater understanding of what shape it should take than the likes of me or you.

They also have public credibility, and not a little power, in critiquing these proposals and promoting further public discussion. What’s important, I think, is that we get this legislation right and establish an FC that will be the most effective possible in the interests of all of us as citizens. Concerns about how members of the FC are to be appointed, the FC mechanisms of accountability and the risks of overweening political control may be valid, or may be overblown. If the former, and if the Government refuse to make appropriate amendments, then those who are asked to serve on this body will have the ultimate choice: they can refuse.

On the appointment mechanism, I probably won’t be the only observer who has heard a politician ask, off the record, of an economist “Is he one of ours, or one of theirs?”

There are probably, somewhere in the known universe, finance ministers of sufficient integrity to completely ignore such considerations.

Appointed members can though be self-aware enough to attempt to compensate for any sub-optimal characteristics the appointments system may impose.

However, it is at the very least, ministerial gate keeping is not good PR.


On the appointment mechanism, I probably won’t be the only observer who has heard a politician ask, off the record, of an economist “Is he one of ours, or one of theirs?”

Here we have a serious problem.

Economics is an intensely political discipline (one of the ways we judge a persons politics is by the economic theories they hold to) so it is reasonable to ask is this economic expert a supper of the Austrian kool-aid or is she from the reality based community?

For instance if the criteria for getting on the any fiscal council is compatibility with current European Commission and German thinking we will always get economic policy advice with a right wing bias (as to an extent we do now with the FAC) and end up in the kind of intellectual and moral cul-de-sac that Germany finds itself in now (helped of course by the the reactionary politics of the ECB).

The Fiscal Council is an intellectual ornament compared with the UK’s Office for Budget Responsibility which publishes its own forecasts on Budget Day.

Granted, there will be EMU fiscal rules but the FC is obliged to produce at least one assessment in a year (that’s what is hoped for) and the minister can tell Dáil Éireann why he/she (?) is rejecting it.

Of course the FC could become an awkward squad and query how it can do its job with information in a format dating back to the reign of Queen Victoria.

So the insiders have won the day and Michael Noonan who will be put out to grass sooner than he likely thinks, has opted for a quiet life in the short term.

The fools who believed the bubble was self-sustainable have been proved wrong at quite a cost. The current fools are the ones who take refuge in fake exports and IBEC, the business lobby group, which last November said that by 2016, Ireland would return to 2007 jobs levels, today refers to ‘incredibly resilient exports’ and these believers in fairytales are at the heart of policymaking.

The UK prime minister today says there maybe 10 years more of austerity. Like it or not
, it’s rare for a politician to be so candid.

How things have changed since the days of William Shakespeare:


A fool, a fool! I met a fool in the forest,
A motley fool; a miserable world!
As I do live by food, I met a fool
Who laid him down and bask’d him in the sun,
And rail’d on Lady Fortune in good terms,
In good set terms and, yet, a motley fool.
‘Good morrow, fool,’ quoth I. ‘No, sir,’ quoth he,
‘Call me not fool till heaven hath sent me fortune:’
And then he drew a dial from his poke,
And, looking on it with lack-lustre eye,
Says very wisely, ‘It is ten o’clock:
Thus we may see,’ quoth he, ‘how the world wags:
‘Tis but an hour ago since it was nine,
And after one hour more ’twill be eleven;
And so, from hour to hour, we ripe and ripe,
And then, from hour to hour, we rot and rot;
And thereby hangs a tale.’ When I did hear
The motley fool thus moral on the time,
My lungs began to crow like chanticleer,
That fools should be so deep-contemplative,
And I did laugh sans intermission
An hour by his dial. O noble fool!
A worthy fool! Motley’s the only wear.


I try to adopt Sam Beckett’s alleged response to a query on the meaning of ‘Waiting for Godot’: “Do not despair; one of the thieves was saved. Do not presume; one of the thieves was damned.”

But I’m not able to manage it consistently.

I’d love to be proved wrong, but I doubt you’ll see much from Prof. Lane or the members of the existing non-statutory FC on the substantive matters of FC independence, governance, resourcing, appointment or reporting we’re discussing here. I expect there’ll be some comment, but it’ll be carefully couched to avoid consideration of these issues. They have absolutely nothing to gain – and possibly quite a bit to lose – if they were to upset the Government by challenging substantive features of this legislation.

And, let’s be clear, it’s not their primary responsibility to do so. In the first instance, it is for TDs to assert the primacy of parliament when it comes to deciding on fiscal matters – the power to tax and spend is the very essence of governance. If TDs are too lazy, ignorant, brain-washed or afraid to assert the primacy of parliament, then it is not for our ‘public intellectuals’ to raise the banner.

Ideally, it would require a cross-party selection of TDs to raise the banner. If our ‘public intellectuals’ were to weigh in before this banner were raised they would be easily dismissed by the Government as being unhelpfully oppositional, adversarial and confrontational without an appropriate mandate or justification. That is how debate, dissent or critique is managed, suppressed or smothered.

It always was, is and will be the primary responsibility of TDs to raise these issues. Then a properly informed public debate can begin. Which, of course, is the last thing the Government – and its machine – wants.

It’s likely to be successful in this instance, but governing with such hubris hastens the inevitable arrival of nemesis.

“In the first instance, it is for TDs to assert the primacy of parliament when it comes to deciding on fiscal matters – the power to tax and spend is the very essence of governance. If TDs are too lazy, ignorant, brain-washed or afraid to assert the primacy of parliament, then it is not for our ‘public intellectuals’ to raise the banner.”

I fear that our TDs do not have the perspectives needed to assert the primacy of the Dáil.

To get a perspective on this it is worth listening to the interview of John McGuinness TD, Chair, Public Accounts Committee(PAC)/Dáil on Morning Ireland on Friday 6th July last. He was being interviewed on the proposed PAC investigation into the banking crisis.. All the quotes are what John McGuinness actually said

“….We would urge the Government to make a quick decision in relation to this report and to allow the Public Accounts Committee to complete its work and to get the inquiry under way. We see a clear roadmap ahead where if government makes the decision early, we could be holding public inquiries as early as January next year…”

“…and secondly we would ask that the whole issue of compellability, to compel witnesses to attend , would be dealt with before we set off on the inquiry….”

“…Well, having examined all of the aspects of this inquiry, we’re convinced that with Government approval and the various changes in legislation that yes, it can go ahead. The legislation can easily be done before the end of this year. …”

“…We’re now dealing with €64bn taxpayer’s money and I believe that it is quite clear, given that Brendan Howlin is our line minister, we are responsible to him, that there is no need to change the rules in this regard. ….”

“…There are three pillars to this inquiry and if we are allowed to do this, we would base it on the report we now have which is as I said a clear road map. …”

This is a very clear an expression of the complete subservience of the Dáil to the government. It also shows clearly the total control of the Government/Executive on any possible inquiry that any Dáil committee might judge necessary.

What is worse is that the PAC Chairman does not appear to see the complete ineptitude of his position, when he describes a Government Minister as “our line minister” He goes further and takes the complete opposite view of what modern forms of parliamentary democracy are supposed to be about whe he said ” we are responsible to him”

I suggest that few, if any other TD or Senator, would find anything wrong with the perspective underlying what John McGuiness actually said, because they do not actually believe in the complete separation of the directly elected legislative assembly/Dáil from the executive/Government.
Separation of powers only means the special position of the judiciary.

With this perspective on all side of the Dáil and in all political parties, it is very difficult to have any faith in the workings of and outcomes any new body set up to review any part of the workings of Government as executive, whether it be the Fiscal Council or the Constitutional Convention.

The full interview starts at minute 21 on this podcast

If this link does not work, I refer you to the RTE Morning Ireland website section for podcasts
The interview was broadcast at 08.24 ie. the second hour.

@donal ob

Irish politicians must be seen to be patriotic. The “our (line) minister” reference also resonates with this. Some criticism is OK, but anything which looks like someone “running down” “our” country is just bad post-colonial politics.

Amongst the other fiscal council-type bodies internationally linked to the FC website

Belgian Federal Planning Bureau
Canadian Parliamentary Budget Office
Danish Economic Council
German Council of Economic Experts
Korean National Assembly Budget Office
Netherlands Bureau for Economic Policy Analysis (CPB)
Portuguese Public Finance Council
Swedish Fiscal Policy Council
UK Office for Budget Responsibility
US Congressional Budget Office

How does the power and independence of our own FC stack up?


TDs can raise as many objections as they like and government backbenchers, as well as opposition spokespersons on Finance, have a better chance of influencing the content of this, or any other, DoF legislation than anyone else in the political arena. But when it comes to a vote on amendments or the particular stages of the Bill in the Dail or at Committee, TDs will follow their own party policy line since they, each and every one, sign a pledge to that effect when they are elected under a party banner. Until such time as we insert a provision into the Constitution whereby it is an offence to interfere with the right of an elected representative to make their own decision on how to vote in parliament – as is the case in Germany – or until political parties decide to abandon the whip system, or thse rare occassions where party leaders allow their Oireachtas members a ‘free vote’ on an issue, that is the way things are going to be. Think the recent experience of Peter Matthews, FG TD, having to vote against his own proposal at the Finance Committee, for example, or otherwise risk being cast into the political wilderness!

But what happens in the Oireachtas is only part of it. Where I think expert opinion can contribute to public debate and influence the final shape of this legislation is primarily through media engagement and a cogent critique of what is being proposed. The patricular economists who have championed the concept of an Irish Fiscal Council are well known to speak to the facts, as they see them, rather than engaging in hyperbolic rhetoric or ad hominem rants when they engage with such issues in public and, in consequence, their views are respected. It’s entirely possible that they may have other concerns to those already mentioned on this blog or they may not share those particular concerns at all. It would be of interest, though, to hear their views as the Bill progresses.


As a first rule of thumb, those that are primarily governed, appointed, resourced by and reporting to a parliament (Canada), legislature (US) or national assembly (ROK) tend to have most powers and independence from the executive – but also think of the fiscal cliff edge the US will approach at the end of this year.

The second criterion – the extent of executive dominance exercised by the government – is related to this and is inversely related to the powers and independence of an FC. Ireland is more extreme than Britain in terms of excessive executive dominance so the IFAC will be even more of a charade than the UK’s OBR. The northern Europeans, with the possible exception of Belgium – which barely exists as a coherent polity, tend to have considerably less executive dominance and their FCs are more independent and powerful (but not without significant constraints). As you head towards the Med, the whole idea of fiscal continence is simply a joke so the institutions they have are purely for the optics (much like Ireland in some respects).

“Irish politicians must be seen to be patriotic.”

Surely, any politicians (and all members of the governing class) in a country that experiences
1) the worst bank burst in history, relative to the size of the economy;
2) the steepest fall in output in peacetime;
3) resumption of involuntary emigration in search of work (this republic has the third highest unemployment rate in the EU);
4) 15 percent of single people in work categorised as being at risk of poverty (according to the latest NCC report on competitiveness);
5) the highest budget deficit in the €uro area (at 13% of GDP) according to the latest IMF report

need to re-think what they are being loyal to, lest we begin to mutter about last refuges of the inept/incompetent or whatever?

I suggest that the rest of us are well on our way in that re-thinking.


Given the tendency of successive Irish governments towards vote gathering profligacy, can we afford for the FC to be just ‘for the optics’?

I agree with Jagdip – given that the members are unpaid and that they won’t do their own forecasting (they’ll just swallow the ESRI forecast whole) I can’t see how they would need that amount of money.

I really do think an oppourtunity was lost in not making the FC report to the Oireachtas. The Ombudsman doesn’t seem to have any problems in making her dispeasure with Government departments and public bodies very clear because she is formally independent of government. How there will always be cases where people are not as forthright as Emily O’reilly but if you set the FC up from the beginning that critcism of the government if criticism of the hand that feeds them then I think it is the wrong message.

I’d pay the FC well and make them formally indpendent and give them very long non-renewable terms – then see the cat among the pigeons.


In this instance, the Government (and future governments) is hedged in by the TSCG (aka the Fiscal Compact). So, in practice, the nature and functioning of the FAC probably doesn’t make a huge difference, but, in principle, it should, because it would give the Dail the opportunity to assert its primacy in a context where external stabilisers have already been applied.

However, in addition, even with the constraints imposed by the TSCG, the ability of governments everywhere to twist things and to duck and dive is impossible to police effectively, so having a genuinely independent and well-resourced body reporting to the Dail might further constrain the profligacy that seems hard-wired in to their genes.

In any event, this bill will probably sail through with a few cosmetic amendments and we’ll just have the usual self-serving blather from SF and the hard left and a bit of cunning sniping from FF.

It will require the emergence of some less esoteric matters to release the long-suppressed anger and resentment of many citizens.

@ All

What is clear from the facts outlined by DOB above is that the response of Irish governments to the radical nature of the crisis affecting the country has not been commensurate with it. In an odd manner, the bailout has allowed this situation to fester. The IMF blew away some of the smokescreen yesterday with its comment on where cutbacks have to be made (and rather spoiled the holiday going away athmosphere). Discussing how we can better manage our finances in the future when they are presently in chaos does not, with the best will in the world, get us very far.

The low-hanging fruit having all been picked, the choices with regard to the higher will have to be made. This is essentially a political not a technocratic exercise. They is little evidence that our politicians are up to it.

On the other hand, international moves are clearly afoot to resolve the euro crisis, essentially by putting pressure on Germany to do the right thing. This can be defined in terms of what Noyer had to say. With any luck, these will be maturing in October when some steps to sweeten the pill will, in all likehood, be made.

Meanwhile, the ESM must wait on the decision of the German constitutional court. As today’s weak Spanish bond auction underlines, time may run out beforehand.

@ Paul Hunt

‘However, in addition, even with the constraints imposed by the TSCG, the ability of governments everywhere to twist things and to duck and dive is impossible to police effectively, so having a genuinely independent and well-resourced body reporting to the Dail might further constrain the profligacy that seems hard-wired in to their genes’

Nothing to do with genes, as you well know, except in the sense that politics is, like so much else in Ireland, mostly a family business. It’s a small island after all.

One of the reasons the west is declining is the pervasive penetration of polticial systems by private interests. The trade unions moral strength comes mainly from the fact that the management/business class, both private and PS, has such obviously dirty hands.

The po face and the concerned expression are de rigeur, but the horse trading is done behind closed doors. As you say, governance is at the joke stage in parts of the ‘periphery’, but repeated core scandals like Liborgate give the worst possible example. It may be scant consolation, but the coming systemic crisis will probably take down the prudent along with the imprudent. Achtung.

“Until such time as we insert a provision into the Constitution whereby it is an offence to interfere with the right of an elected representative to make their own decision on how to vote in parliament…or…”
That is an amendment that is sorely needed. No party or ‘cabal’ of any kind should have the right or power to compel or influence any elected representative on how to vote.
These elected representatives should be made-compelled-to stand on their own feet in relation to all votes save a vote of confidence.
If governments are defeated more often, then a vote of confidence should be called in the party of government. That would enable the voting down of issues but the retention of government.

re The real Estonia:
There is approx 25% youth unemployment:

Mr Brendan Greeley of Bloomberg clearly did not ask the views of a wide range of Estonian:
While the Estonians got some things right that Ireland did not, it stops there according to this Estonian:

Rainer Kattel is Professor and Director of the Department of Public Administration, and Ringa Raudla is a Senior Research Fellow, both at the Tallinn University of Technology, Estonia.

His summary is as follows:
“In sum, almost all of the above-described factors make the Baltic cases unique and unreplicable in the EU context: first, most EU countries, especially in the troubled periphery, are already in the eurozone, so they cannot justify short-term austerity measures with eurozone entrance as an exit strategy from the crisis; second, very few EU countries have as weak civil societies as the Baltic countries and thus austerity breathes very visible unrest and instability; and third, few if any EU countries have such narrow and detached policy elites who have become accustomed to satisfy their European policy peers rather than domestic partners. Furthermore, there are a number of economic and structural factors that make the Baltics relatively unique. First, high levels of internationalization of the economy (both in exporting and financial sector); second, high dependence on larger neighboring economies (Scandinavia, Poland) in terms of trade and, in the case of Scandinavia, also of technology transfer. All these economies recovered quickly (Scandinavia) or did not experience almost any crisis at all (Poland). Thus, as Wolfgang Münchau argues, while the EU is more and more behaving as it was a small open economy where budget discipline is important for convincing the investors and markets, the experience of small open economies dealing best with such fiscal policies cannot be of almost any use to other troubled EU members.”

“and third, few if any EU countries have such narrow and detached policy elites who have become accustomed to satisfy their European policy peers rather than domestic partners. ”

Clearly he does not know much about Ireland!

@ Joseph Ryan

Thanks for the reference. There are, indeed, two sides to every coin. What I object to in relation to Krugman is (i) his failure to recognise this and (ii) the prescriptive nature of his commentary.

There is also a crying need to define what is meant by “austerity”. By no stretch of the imagination can it be ascribed to the protected sectors, notably the public sector, of the Irish economy. We are, in fact, running i.e. borrowing to effectively stand still as far as the level of public expenditure is concerned.

I suspect Peter Mathews statement on Vincent Browne is going come back to haunt him on everything from the household charge to turf cutting in Roscommon in the coming months:

“just because something is legal doesn’t mean it’s right”…hmmm

@ Paul Hunt

Institutional issues are only one part of the problem.

I received an email overnight from an Irishman working in London and he gave the Q2 laundry list of achievements on the ‘Action Plan for Jobs’ a grade D.

‘Long on draft strategies and target setting, short on practical actions that relate to the objective of job growth.  I don’t know what I was expecting, but reading this made me quite despondent.’

I noted myself, apart from a litany of this and that done – – we’re mighty with actionless actions — that the only point where there was an attempt to quantify was the prospect of 30 jobs in Carlow.

How do they get away with this Ballymagash routine?

There is of course a whole eco-system, including the mainstream media, supporting it.

People now wonder why so many ‘educated’ fools were beguiled by the property bubble? Wonder today why so many fall for the fairytale that Google is our biggest exporter?

As W.C. Fields once said: ‘there’s a sucker born every minute.’

@ All

Daniel Gros writes in VoxEU: Austerity is killing growth in Europe! This narrative is now firmly established among many influential economists and policymakers (Layard 2012). The data do not support this view – at least if one takes a medium-term view.

Jeffrey Frankel writes in Project Syndicate: Historically, it used to be developing countries whose dysfunctional political systems produced pro-cyclical fiscal policies. Almost all of them showed a positive correlation between government spending and the business cycle from 1960 to 1999.

But things have changed. About a third of emerging-market countries’ governments – including authorities in China, Chile, Malaysia, South Korea, Botswana, and Indonesia – managed to reverse the historical correlation. They took advantage of the 2003-2007 boom to strengthen their budget positions, saving up for a rainy day. They were thus in a good position to use fiscal stimulus when the global recession hit them in 2008-2009.

In fact, a majority of the governments that have pursued countercyclical fiscal policies since 2000 are in emerging-market or developing countries. They figured out how to achieve countercyclical fiscal policy during precisely the decade when so many politicians in “advanced countries” forgot.

@Michael Hennigan,

I agree, but one of the biggest problems is the huge volume of BS being churned out by Ministers, the entire government apparatus and the well-embedded and influential sectional economic interests. The flip-side of Dan O’Brien’s eminently sensible proposal for ministers, on appointment, to vacate their seats in parliament is that the Dail would be required to resource and empower itself to contest, beat back and generally reduce the volume of BS being produced by the government apparatus – and its well-placed hangers-on.

The Dail is the only forum where this BS might be exposed for what it is – but only if it is no longer totally under government control and secures the powers and resources to do this job in the public interest. Individuals, however well-informed or competent they might be – or irrespective of their ‘public standing’ – who might seek to highlight this BS for what it is will always be inundated by these waves of BS. The vast majority have learned that it is wiser to get out of the way, stay silent or, if required to express a view, to do so as cautiously and circumspectly as possible – and many find that it is much safer, prestigious and more lucrative to join the BS producers.


“In fact, a majority of the governments that have pursued countercyclical fiscal policies since 2000 are in emerging-market or developing countries. They figured out how to achieve countercyclical fiscal policy during precisely the decade when so many politicians in “advanced countries” forgot.”

They must have read and understood Keynes!

For anyone interested, Eoin O’Malley has a useful discussion of the main proposal in Dan O’Brien’s IT op-ed:

@Michael Hennigan,

I think the selected emerging market countercyclical policies you describe might be described as an accidental quasi-Keynesian reaction to the 1998 blow-out – particularly in SE Asia. And The Economist isn’t totally sanguine about their prospects:

Their possible inability to achieve their true potential may be related to the extent to which they do not have essential features of a well-functioning, liberal, capitalist democracy as described succinctly by Richard Posner recently:

“So the big question is, given capitalism, what else does a country need in order to prosper? We know that it doesn’t need abundant natural resources or a large population. But it needs a legal and political system that protects property rights, allows a large degree of economic freedom, minimizes corruption, controls harmful externalities (like pollution) and subsidizes beneficial ones (like education), distinguishes between equality of opportunity (which it promotes) and equality of incomes (which it promotes only to the extent of combating poverty), welcomes and assimilates skilled and wealthy immigrants, and (related to protecting economic freedom) avoids public ownership or control of economic enterprises. To create and maintain such a legal and political system a country also requires a culture of respect for business success, of competition and risk-taking, and of consumerism—since, as Keynes argued, consumption drives production.”

Irish governing politicians, policy-makers and regulators could usefully reflect on the extent to which Ireland lacks these features – and then do something about it.

that article is the daftest contribution I have yet read from an increasingly daft contributor. If you have a perceive our problem to be too much clientalism and too little technocracy (is that even a word) then the change proposed will achieve precisely nothing.
If you have to be a glad hander to get elected then turning you into a full time minister will mean you are a glad hander posing as a technocrat.
In addition, how do you retain office. Resign as minister on GE-30, run for the Dail and then resign as a TD on GE+1. Wrines and repeat.
Who takes over as TD when you are appointed as minister-the brudder.

Honestly this proposal is so full of holes.
Bottom line, if you want technocrats like your good self to hold political office then allow for the appointment of some ministers from outside the Dail. The contitution already allows for that by the way. YOu could become Senator Hunt by the way.

That said, I am not convinced at the desirability of technocrats in high office. I am reminded of LBJ quote, “They may be clever but I sure do wish one of them had run for Sheriff”. Most technocrats like your good self come up with numerous good ideas, fewer still are intellectually consistent, even fewer are implementable. Even then the techno boys seem unwilling or unable to bring us lesser mortals with them.


First thing to get out of the way is that I have no ambition whatsoever to end up making political or policy decisions. My focus is on restoring institutions and procedures so that political and policy decisions are more closely aligned with the preferences and interests of an informed electorate.

There are a variety of mechanisms that may be employed to separate and re-balance the powers of the executive and the legislature. This is just one and other long established democracies use a variety of means to apply it.

In the context of the draft legislation being discussed here which goes to the very heart of governance – the exercise of the power to tax and spend, what we are almost certain to see is the enactment of this legislation with a few cosmetic amendments designed to embellish the optical illusion being projected. Even if the opposition forces the adoption of any sensible amendments, they will have to be withdrawn and re-introduced by the sponsoring Minister (often in a form to weaken the intent of the initial amendment).

In this instance it probably doesn’t matter very much because the provisions under the TSCG provide the external constraints and stabilisers, but this is the general approach to policy formulation and legislative enactment – and is a major contributor to the mess Ireland is in.

The Government has completed its first full year of parliamentary sessions. It has very successfully manipulated its requirements under the Troika package, has secured popular consent to the Fiscal Compact and has a reasonable prospect of some relief on the IBRC bail-out. But this surreal pursuit of ‘steady-as-she-goes’ and ‘business-as-usual’ won’t continue to cut the mustard. It has the best part of two years before voters cast their judgement in the Euro and local elections. It would be wise for it to get serious about political and structural reform during these two years. A majority of voters quite enjoyed the delivery of a severe judgement on 25 Feb last year. I sense they might relish the opportunity to deliver an equally severe one at the next time of asking – and, if not then, at the next general election.

Ft reported monti looked as if he had aged 10 yrs since november. But the markets aren’t up to much either. You would need someone like mickey harte to sort things out.

How well informed is the electorate and how do you rate the media’s contribution to irish democracy? I would say celebrity and sport knowledge are second to none…

Horse stable door, bolted!

Yes, but now someone has to clear up the sh**te. This bill makes that someone “us”, the people, and not the financial sector.

@ MH

That (Jeffrey Frankel in Voxeu) is exactly the point made by Phelps in the FT (see link above). He is, however, too soft on Germany, the very home of corporatism.

@ Paul Hunt

I would agree with Tull on the article by Dan O’Brien. Nevertheless, the very fact that an influential commentator is at least identifying the fundamental problem is progress.

@ All


Any suggestion that the water is getting warmer rather than colder as the October date for some resolution of the BTBN (burn the bondholders; not!) arrives would seem to be misplaced.


“Schaeuble told lawmakers today as he opened the debate. “Spain is making the application, Spain is getting the money for bank recapitalization and the Spanish state must guarantee the funds”

Bloomberg Article:

“Schaeuble briefed members of the all-party Budget Committee on Spain late yesterday, giving him an opportunity to reiterate his stance that there will be no direct help for banks from the ESM without changes to its rules and to German law. ”

And just for idiots like myself who think they understand english, from the communique:

“We affirm that it is imperative to break the vicious circle between banks and sovereigns.”
“We urge the rapid conclusion of the Memorandum of Understanding attached to the financial support to Spain for recapitalisation of its banking sector. We reaffirm that the financial assistance will be provided by the EFSF until the ESM becomes available, and that it will then be transferred to the ESM, without gaining seniority status.”

It must be a long time since there has been such a flagrant misrepresentation and tearing up of a European agreement. Lets see what Spain and Italy say of this.
But if I were Spain I would take the money, sign the MOU and then tear it up at a convenient time to suit myself, just as Germany has done with the communique.

As for Bloomberg:
I would not be a regular reader but it is clear from the the few articles that I read, that Bloomberg is a real cheerleader for ‘no bondholder get left behind.
If Bloomberg thought it would get away with it, it would be a cheer leader for ‘ no bank shareholder gets left behind’

It is clear were are in a real war where capital has won every battle hands down so far, mostly it has to be said by the blatant illegality of dumping losses onto citizens via complicit and servile States.
Germany for all its moralising on austerity has support and backed this illegality all the way.
Clearly as far as Schauble &Co are concerned, Spanish citizens are there to be dumped on. Certain views change little over time.


You can’t really have it both ways. It’s not fair to laud an ‘influential commentator’ for raising a key issue – the separation and re-balancing of the powers of the executive and legislature – and then deride his (brief) discussion of a mechanism that might go some way to facilitate this.

As Keynes made clear nearly 70 years ago in an open letter to FDR, we need both reform and recovery. A key excerpt is worth considering:
“You are engaged on a double task, Recovery and Reform;–recovery from the slump and the passage of those business and social reforms which are long overdue. For the first, speed and quick results are essential. The second may be urgent too; but haste will be injurious, and wisdom of long-range purpose is more necessary than immediate achievement. It will be through raising high the prestige of your administration by success in short-range Recovery, that you will have the driving force to accomplish long-range Reform. On the other hand, even wise and necessary Reform may, in some respects, impede and complicate Recovery. For it will upset the confidence of the business world and weaken their existing motives to action, before you have had time to put other motives in their place. It may over-task your bureaucratic machine, which the traditional individualism of the United States and the old “spoils system” have left none too strong. And it will confuse the thought and aim of yourself and your administration by giving you too much to think about all at once.”

Ireland is experiencing neither recovery nor reform in any meaningful sense. I agree that the process has been retarded by the grindingly slow EU decision-making process, particularly when Ireland has been forced to throw itself on the EU’s (and the IMF’s) tender mercies. But that is absolutely no excuse for not taking steps in an appropriately sequenced and co-ordinated manner that are entirely within Ireland’s power to effect. The limited steps that are being taken are entirely inadequate in the context of the challenges. And the patience of many, many voters is being sorely tested.

@ Paul Hunt

Slow-motion incremental change is the best that can be expected. Other than naifs who didn’t dump bank shares in the days after the record peak of Feb 21, 2007, the economic crash tsunami has hardly touched the fortress of the policy-making elites and their well-paid militia.

IBEC, the business lobby group, in its 50 points-of-light recovery plan, this week called for the return of third-level fees – with surely echoes from the amen corner at the universities, which like all the others at the public spending trough, see no need to cut the cloth for a decade of close to zero growth.

Noonan indirectly revealed this week why the Taoiseach’s promise to Shane Ross last year to investigate private fund managers’ fees has been binned. These folk are expected to invest €5bn from private pension funds, in Irish bonds in 2013. Their racket provides better returns than the funds they manage. Evidence from the US suggests that over the medium term, it’s a rare fund manager who can beat a broad-based index. The poor will always be with us!

@ All

The country desperately needs some fresh thinking which IBEC delusionally claimed to be providing this week.

What if the FC produced its own GNP forecast for 2014 and 2015 that are below the official levels of 2.3% for both years?

This is where radicalism is needed rather than the common silence when dissent is in the national interest.

Even the GNP data is distorted because there is a profit assumed on what are for example Google and Microsoft fake exports, rather than all the amounts relating to foreign jurisdictions deducted from GDP.

@ Paul Hunt

I do not think that I am trying to have it both ways, as you say. There is no contradiction between finding a particular suggested solution to a problem unconvincing while at the same time recognisimg that the proposer is making an important contribution to the debate by identifying the problem in the first place.

There is still an obvious desire on the part of the electorate and the politicians that they have put in place to deny its existence. What might have allowed a breakthrough was a minority Fine Gael government with a clear grasp of what needed to be done. I seem to recall Ciarán O’Hagan adverting to this possibility prior to the formation of the present government. Instead we have a two-horse team pulling in opposite directions.

I would agree with MH that the best we can expect is incremental change.

On the practicalities, the appointment of Senator james Dooge as Minister for Foreign Affairs by Garret Fitzgerald shows that the possibilities for bringing technical excellence into the government exists. The problem is not the means but the failure to rise above parochial parish pump politics leading to the present situation.

The record of technocrats in politics and government is awful. Generally they seem unable to lead and convince their followers of the wisdom of the couse proposed. I suspect it is because they never serve an apprenticeship in politics where they learn to convince voters it is a good idea to vote for them.

@ Tull

Whatever James Dooge was, a technocrat he was not!

Voters are not convinced but pandered to under the present system of mult-seater constituencies, a system which voters seem to be very attached to for obvious reasons.

I am not overly familiar with the doctrinal disputes within the economics profession and can only make judgements on comparing what individual economists say to my own empirical experience. Edmund Phelps – also a “Nobel” laureate as recipient of the prize awarded by the Swedish Central Bank (Riksbanken) in memory of said Alfred Nobel – makes a convincing case with regard to the concpet of “social wealth” or, put more simply, “what we have we hold”. The concept is not unique to Ireland by any means.

It is interesting to note that one German research institute has suggested that a one-off “windfall” tax should be applied to try and correct the situation. This would, of course, not need to be applied in Germany. (The latter is nonsense as the benfits of admittedly excellent economic management were not by any means shared equally, a fact which Schroeder himself has conceded, a fact of which the learned professor seems entirely unaware).

@ Paul Hunt

Bang on cue and looking at the bigger picture in which this legislation has been formulated and will be processed and enacted, Dan O’Brien is getting to grips with some of the fundamental problems:

O’Brien is despairing that no sane person (and certainly no-one ever wishing to be re-elected again to political office, deservedly so) will ever implement the “tough” “reforms” that the likes of Dan O’Brien want – screwing children, the elderly, the unemployed, the poor, the working stiff.

I can live with this. I could also live with the Irish Times activating Dan O’Brien to get a real f*cking job, and stop wasting column inches in the major Irish newspaper on discredited right-wing free-market ideology.


I take your point, but any arguments advanced in the public domain (which have a sporting chance of attracting some attention) that highlight the ineffectual nature of the Dail, despite it exercising the delegated utlimate authority of the people between general elections, deserve support and constructive criticism. It is necessary to keep hammering away at this until some ‘event’ occurs that will convince sufficient voters that this is a fundamental problem that needs to be resolved.

On the other front you raise, I do somethimes despair of these influential economists. Yes, in theory, well-designed taxes could solve many problems, but, in practice and polticially, it is damn nigh impossible to secure the democratic consent to enact and enforce them. The restructuring of key market participants in many areas of economic activity and the effective governance of the markets in which they operate is a much more effective solution and one more likely to secure the necessary democratic legitimacy. But it is a medium to longer term reform programme.

My despair at the economists’ antics increases when they dig down below the macro and appear to view labour as the only factor of production and to see labour markets as the only ones requiring major structural reform. A recent post by Philip Lane highlights this one-eyed analysis:

For the 30 years up to 2007/08, most economists (and particularly those influencing and commenting on public policy) ignored the impact of the huge de-regulation and global expansion of the financial sector on the real economy. Those who focus more on the micro sectors below the macro are repeating the same mistake. Certain labour markets may indeed exhibit considerable rigidity and rent-seeking, but it is in the capital markets and financial intermediation that the major problems are arising.

Ireland, of course, has its own devious and dysfunctional manifestation of this malaise. In contrast to other countries where much of the infrastructure and utility sectors are in the private sector, the dominance of the state as owner, director and regulator of these sectors there is huge scope to effect emergency recovery measures in the context of setting out a medium to longer term programme of reform (drawing on Keynes’s distinction between the two). Equally, in terms of fees and payments for professional and other services, where the state is the dominant source of demand, there is scope for emergency recovery measures again in the context of a programme of reform.

A bolder government might find that applying emergency recovery measures to those protected and well-heeled sectors that slice away costly inefficiencies, rent-seeking and monopoly profit-gouging, reduce the cost of living and boost economic activity is the best way to secure the broad-based political support to reduce nominal levels of pay and transfer payments.

However, it appears that the Government is prepared to provoke the ire of the vast majority of citizens by seeking to continue to cut nominal levels of pay and welfare transfers (as well as restricting eligibility) because it lives in abject fear of upsetting, perhaps, as few as 100,000 of the rent-seekers in the sheltered sectors.

There could be no clearer demonstration of where the balance of political power lies in Ireland.


Our latest comments crossed. Your link to Colm McCarthy’s op-ed piece suggests I need only add QED to my last comment.

And if further proof were required, the overseas investment of the ESB in the last decade, plus what is planned for the next 5 years, puts the Government’s ‘stimulus package’ in the tuppenny-ha’penny place. This investment boosts economic activity and creates jobs outside the state (primarily in the UK) – and it is primarily funded by a ‘financing tax’ on all Irish electricity consumers imposed by the CER on the ESB’s behalf.

At a time when the UK desperately requires foreign investment (in particular in the energy sector), I’m sure the UK Chancellor of the Exchequer and the Secretary of State for Energy and Climate Change are immensely grateful for the generosity of Irish electricity consumers.

@ Colm McCarthy

Public Expenditure Minister Brendan Howlin introduced the package, stating that: “We will invest in national roads in order to remove bottlenecks. . .”

In fairness, Colm, Minister Howlin hasn’t proposed the building of a Bridge to Nowhere in his constituency….yet.

Wasting public Monday in Ireland is usually more an honour than a crime.

Separately today in the Sindo there are 2 good news stories on the superannuated of the ancien régime that brought misery to tens of thousands:

Conor Lenihan, former minister for innovation, “is at the heart of a hugely ambitious $8bn (€6.5bn) plan to establish Russia’s Silicon Valley.”

Nikita Khrushchev is more famous for thumping a table at a UN security council meeting with his shoe, than his interest in computing. Like many others including Cowen/Lenihan, the Soviet leader in the 1950s did try and failed to set up a clone of Silicon Valley.

Former Tanaiste and Minister for Health Mary Harney has joined the board of a new healthcare company, Cara.

The Sindo says: “She is also enjoying the speaking engagement circuit.

She said: ‘I spoke at a recent surgeons’ conference in New York on my experience as a health minister and in Berlin on the Irish pharma sector.”

Let then eat cake! It’s galling that this is icing on a lavish pensions cake provided by a bankrupt state.

The Irish are the fools to tolerate this carry-on. Only if we could monetise bullshit?

@Paul Hunt.

The editorial in the Sindo covers matters very well and the conclusion is apt…

“Those of a kindly disposition claim this is informed by the desire to raise the morale of a psychologically crippled nation. But, as Mr Cowen belatedly discovered, announcing an ongoing series of false dawns only has the opposite effect. We can only hope this Government recognises sooner rather than later that no matter how attractive it might seem, the wages of spin is electoral death.”

@ Paul Hunt

I do not disagree witle your analysis but I think that there is a problem of quantification. Like it or not, the bulk of the overspending is in the areas of acquired “social wealth”; excessive public sector salaries, health spending, social welfare, unemployment benefit and unfunded and unfundable pension entitlements. The rent-seekers may be the stopper in the bottle [-neck] but there is no push from behind from those currently benefiting from this overspending.

There is also a major problem of process; problem analysis, identification of possible solutions, choice of solution and subsequent review to see if the correct one has been chosen.

In other words; honesty! As Colm McCarthy’s article reveals, this is in short supply.

We are collectively, as a people, unwilling to face up to the harsh facts.

@ Michael Hennigan

Colm McCarthy is a past noted champion of roads – building (primarily in his role as a columnist in the Farmer’s Journal! but here as well), so this is certainly a case of having your cake and eating it. Some “honesty”.

Building a bypass to remove a ‘bottleneck’ just pushes the problem (commuters to Dublin, usually) a few miles down the road, so another forms. And rinse and repeat – to the benefit of a few vested interests.



resembles my proposal for the state to pay its employees and sheltered private sector with a formula along the lines of – first 50,000 or so in Euros borrowed from the Troika, anything above that in Irish Government bonds or IOUs.

Much easier to do not the constitution is to be amended to allow any act “necessitated by an obligation under the [FC] Treaty”

Micahel H
How could Kruschev have tried to set up a clone of silicon valley in teh 1950s when it really only got going in the late 50’s with the start of Fairchild?
Your comments are usually three or four vaguely related comments on some galling aspect of this state, decrying it. As you dont seem to live here (from your twitter address anyhow) why does it so irk you? Youve bailed – fair dues. But carping on the evils of Ireland from your erie in the shadow of the towers doesnt help. Come back, pay your taxes here and then you can carp away. Stay out, and you should stay out. IMHO.

@ grumpy

What I would qualify as an “honest” proposal!

Consider what Christian Noyer, the Governor of the Banque de France had to say;

“7 – Seventh and last remark: fiscal policy and debt management. Here, I would say that we are all guilty of a certain degree of ambiguity, both at the market level and at the political level:
• on the one hand we want public debt markets that are broad, deep and liquid, because they form the base on which our entire financial system is built. In particular, government bonds are the safest and the most liquid assets. They act as reserves of value for a large number of investors, starting with the central banks themselves which hold them as foreign currency reserves or as monetary policy collateral.
• And on the other hand we want solvent States, i.e. with perfectly controlled deficits and levels of public debt, which logically places limits on the growth of public debt markets.

This contradiction is known by economists as the “Triffin dilemma”. It was first identified in relation to the U.S. balance of payments deficits and the value of the dollar, but it can also be applied to fiscal equilibrium. The economy needs a growing volume of risk-free assets, but the more they are issued, the more risky they become.

We cannot totally side-step this dilemma, but we can avoid making it worse. It is clearly not good for major developed countries to find themselves in a situation where their solvency is put into question, or to allow markets to think that under certain circumstances, they may be unable to honour all their commitments. But this is what we have done in Europe, against the better judgement of the ECB, by introducing the principle of private sector involvement. The idea is attractive in theory. However, its consequences for financial stability are extremely negative. There has never been any doubt about whether the United Kingdom or the United States would honour their debts. Today they are enjoying very favourable interest rates compared with Spain and Italy even though the latters’ fiscal fundamentals are better. I know that some attribute this difference in borrowing conditions to the actions of the UK and U.S. central banks. I do not agree. I believe that Europe has a major project ahead of it to recreate a broad, deep and liquid public debt market that is completely and unambiguously free from insolvency risk.”

As part of the approach outlined by Noyer, the illusory “social wealth” of the developed economies of Europe must be absorbed in a manner which is the least disruptive. They may have blown their credit card limits but they are not insolvent. To allow a situation to continue in which the markets assume that they are would be absurd. But the ineptitude of the current generation of European leaders does not seem to have a limit cf. David Starkey in today’s Sunday Times.


O’Brien is despairing that no sane person (and certainly no-one ever wishing to be re-elected again to political office, deservedly so) will ever implement the “tough” “reforms” that the likes of Dan O’Brien want – screwing children, the elderly, the unemployed, the poor, the working stiff.

In the ideology of Dan O’Brien (and many posters here) you will find a fundamental opposition to the idea of modern popular democracy, which matches closely with Hayek’s opposition to “unlimited democracy and the appalling vista of an Omnipotent Elected Assembly interfering with property rights and the free market. Brad de Long had a nice note on this a decade back which is worth a read:

The rights fundamentally anti-democratic impulse is clearly visible in the current neoliberal iteration of the EU: We have an unaccountable “Independent European Central Bank” beholden to the financial and Austrian gold bugs (both is amazing, I know), the strictures placed on democracies by the Fiscal Compact (Keynesian is now illegal) and in the case of Greece the replacement of the ruling prime minister when he attempted to offer Greeks a referendum on the principle of Austerity for the little guy.

The movement in Europe towards technocratic rule and the elimination of “neoliberalism incompatible” policies from the set available to governments of the Eurozone is a creeping coup by the right. Make no mistake, these people are dangerous ideologues and democracy in Europe is more threatened by them than it has been in eighty years.

@ AlbertPrior

So who are you and what’s your twitter account brave one???

You are what the late William Safire would have called “nattering nabobs of negativism.”

In 1959, Soviet premier Nikita Khrushchev visited IBM’s plant in San Jose. In 1939, Hewlett and Packard founded their company in a garage in Palo Alto.

As for the Russian Silicon Valley venture promoted by Khrushche, check Google if interested.

How dare an Irish citizen express an opinion!

Foreign companies including foreign personnel are responsible for 90% of tradeable exports.

Shur it would it would be all grand like Albania without foreigners supporting farmers, providing jobs and citizens overseas daring to express opinions to some at home with their begging bowls.


@ AlbertPrior

Stay out, and you should stay out. IMHO.

Have a modicum of decency and identify who you are.

How brave the web makes types like you.

I assume that you are both anti-immigrant and anti-emigrant.

Joseph Welch, head counsel for the United States Army, famously asked Irish-American bully Senator Joseph McCarthy in 1954: ‘Have you no sense of decency, sir? At long last, have you left no sense of decency?’

Michael Henigan
Part of the problem with many of the comments on this blog is they lack any sense of solutions. I don’t for instance think it remotely sensible or practicable the proposal by grumpy re bonds but it’s an idea. I think I like many feel that you are nattering nabob-like at times. Your data and analysis are good but I being honest cannot rember one single suggestion you might have made on how we get out of this mess. So if you have apologies but refresh my memory.
Do you live overseas? Not that I care but out of pure curiosity..

@ AlbertPrior,

Sometimes it is only when one gets from the inside to the outside that one can clearly see the extent of the problem. A bit like a bad relationship, one only understands how bad it was when one gets away from it, allows a period of time to pass and then reflects on what they went through!!

I think Mr M. Hennigan is based in Malaysia, where he lives and works, uses the services of the Malaysian state and pays his taxes there.

Why on earth would he pay taxes in Ireland when he does not use the services of the Irish state?

I am in Vienna. The restaurants are busy. The hotels are full. I see nine construction cranes from one window. It looks hotter than the Dublin boom.
The Austrian banks are supposed to be over exposed to ex communist country bad property debt.Where are the funds coming from?
Send Honohan to Austria, Von Moses may have the solitution.

I was in Frankfurt last week.The bad news is the begrudgery is getting worse. The good news is that if Spain defaults and DB or Commerzbank fails the taps will open wide.


The idea of the “idea” is to stimulate thought and discussion about the choices that have been made and those that might be made. I’m not sure many of the choices made so far can legitimately be claimed to have been sensible or practicable either. In general the willingness in snookered little Ireland to engage with alternative ideas is remarkably absent.



@ Anewdawn

Your data and analysis are good but I being honest cannot rember one single suggestion you might have made on how we get out of this mess.

There are no new dawns to declare and I have no soundbite solutions.

Neither are there instant solutions and credible longterm solutions cannot be expected in blog comments.

There are of course short-term things that can be done but schemes and so on are not solutions.

Recall what happened all those proposals in national ideas competitions in recent years?

There is no one longterm solution. Developing new export markets is never easy and what is unique?

Two-thirds of indigenous exports are to English-speaking countries.

I do run 2 websites and the data I use in comments is not casually plucked from Google — in fact some level of expertise coupled with a good memory, is necessary to productively use Google.

I’ll just cite a number of themes I have covered in recent times with relevant research.

1. SPIN — it’s pervasive and pernicious and there’s a big market for it.

It’s pernicious because it is used to avoid dealing with the truth about challenges ahead.

It’s for example manifested in fake export data – – an issue I researched and published an article last April on. 33% to 40% of services exports are fake and nobody has queried the data.

2: EMERGING MARKETS: Accenture Ireland recently commissioned a report on how Irish consumer product companies could sell in emerging markets in particular in China and India.

I think my analysis is more useful than a paid report from the Economist Intelligence Unit!

Glanbia, Ireland’s biggest dairy processor, has 4,000 employees. It generated revenue of €115m from the Asia-Pacific region in 2011, where it currently employs 60 people – – of which 45 are in China.

The heads of 3 of the biggest indigenous companies (including Glanbia) in recent years have recommended that Irish companies should not give priority to China.

3. COMMERCIALISATION OF RESEARCH: This is the Holy Grail for delusional politicians but the evidence is clear that it cannot become a jobs engine.

Successful commercialisation usually is a response to a market need and the companies that succeed are usually not the pioneers.

We should have a public science budget but not one that costs €23bn in a decade.

It’s also easy to estimate big jobs gains from green energy in a decade

but even Germany has been felled by competition from China.

I wrote in 2006 about the goal of becoming a ‘world-class knowledge economy’ in 2006. There were no lessons learned from the 1990s; Iona was acquired by a US firm in 2008; Cognotec went bust in 2011 and Trintech, one of the last great hopes, was sold off to US private equity investors.

Today, any successful spinout with potential is acquired by a foreign firm before there is any valued added for the Irish taxpayer.

4. GOVERNANCE/PUBLIC SECTOR REFORM: At some point, the problems of high longterm unemployment and the cost of running the country will have to be addressed.

The Brussels Santa Claus is expiring and unlike 1987-91, the global market is much bigger.

So-called knowledge jobs can be as likely created in Beijing as in Dublin.

So Michael Henigan you HAVE no solutions? Fair enough, honest (BTW – im not in a uni). But then, you are, dare we say it, hurling on several ditches. A foreign ditch, an exiles ditch, a ditch offering naught but criticism both of the analyses of others and of their proposed solutions. Why not come off the ditch?

There is no shortage of ‘solutions’. Indeed there are, at least, four broad frameworks under which various sets of solutions are being advanced. First, there is the hegemonic framework that the global wealthy, mainly right-wing, elite established over the 30 years up to 2007, under neocon or neoliberal flags of convenience, and which they are doing their damnest to sustain. Confronting this effort with some venom is the ‘raid, tax and spend’ brigade from the know-nothing, learn-nothing left – but one often finds they have common ground with many on the nationalistic, populist, xenophobic right.

Trapped between these competing ‘frameworks’ one finds the bulk of governing politicians, policy makers and regulators in the advanced economies, nowadays leaning to the centre-right, but frequently including the centre-left. Previously they allowed their legitimacy, authority and competences to be suborned, over-ruled and undermined by the wealthy and influential elites and they are really struggling now to re-assert their legitimacy, authority and competence and to develop a ‘framework’ to implement effective solutions. And in this effort they are being assailed by the no-nothing left and the unhinged right whose simplistic rants, unfortunately, are gaining some traction with increasingly angry and resentful electorates. As a result they being compelled to pursue incremental, but inadequate, behavioural and procedural remedies supported by very limited institutional reforms.

And then there is a small, disparate, but growing band of those who seek to shackle capitalism in the public interest in a reformed liberal, democratic dispensation which will require deep-seated structural reforms in political and economic arrangements.

In the Irish context this translates to ‘steady-as-she-goes’, the maintenance of an illusion of ‘business-as-usual’ and the crossing of fingers that ‘something will turn up’ by Official Ireland.


There are no quick fixes for Ireland. Our problems are deeply embedded in the dysfunctional culture we developed over the las 800 years. There are some similarities with Greece on the foreign occupation and subjugation fronts.

Things would have to get much worse before we cut the number of TDs’ by 2/3 , knock down the silos, establish a realistic minimum wage and on and on.

@ Paul Hunt,

A very apt synopsis.

But it’s a bit more than that, it would appear that there is a generation out there who have gone “Bad”. Their knowledge is confined to…

1) I know my rights
2) I want it now.
3) It’s somebody elses fault.
4) I’m a victim
5) Pay me for doing nothing.

I sometimes wonder are we coming to the end of civilization?

“But it’s a bit more than that, it would appear that there is a generation out there who have gone “Bad””

This is ludicrous


You may be betraying your age. Since the dawn of civilisation the older generation has always believed that the younger generation was going to hell in a hand-basket. As Keynes once observed, civilisation has been hard-won, handed down to us by our fathers and its fabric will be damaged from time to time, but it will endure. I repose my trust in the sound good sense of a majority of citizens, both in Ireland and throughout the EU, though I do despair occasionally of many of those they elect to govern, of many of those appointed to implement governance, of much of the fourth estate and of quite a few of those funded from the public purse to educate, inform and enlighten the public.

But good sense will prevail in the end – though it may take a long time.

Indeed Sporthog. We are coming to the end of civilisation. Just as they were in BV 63. Oh the times…. oh the customs.
Get a grip.

@ Paul Hunt,

Good to know you still have hope. But I am afraid I do not share your optimism. Europe has always been in some crisis or another and our politicians could not work themselves out of a paper bag. Honesty, truth and responsibility don’t exist anymore.

@ AlbertPrior,

Tell that to the society who had to endure the London riots recently. You are obviously of the “stiff upper lip”, “there is a war on, but don’t mention the war”.

Yes Sporthog, “honesty, truth and responsibility don’t exist anymore”, like they did during the Arms Trial, or during the widespread abuse in industrial schools, or during the Famine, or when we all lived in caves..tell me when exactly this Golden Age was?
And if you want to argue for some profound cultural change between generations, at least do those of us from ‘the generation’ you are looking to malign the decency of backing up your rants with something other than your own opinion

@ rf,

Yes of course, the recent riots in London were a figment of my opinion, yes all very clear to me now!!

It would appear that your toleration of opinions / viewpoints / perspectives other than your own is sadly……….lacking.

Perhaps that is something you could work on as part of your career development?

What about the Spitalfields Riots of 1769, The West End Riots of 1886, The Battle of Bow Street in 1919, The Battle of Cable Street in 1936, Brixton riots 1981, Broad water Farm 1985, Poll Tax 1990. You have a point though, during the post war social democratic era, there was only one riot (on Wikipedia) in Notting hill in 1958. Does that tell us anything?

For what it’s worth I’m actually in favour of differing perspectives but, understandably, don’t have much time for ‘all that’s wrong with the world’ being pinned on one ‘generation’, (mine) or one class or one race, or what have you. And thanks for the career advice!


A vermin virus of the anonymous web wants simple solutions from the security of his public sector cubicle!

Remember Bertie Ahern,once seen by many as a master of the universe? The magic seemed like magic for a while!

Michael Henigan
I work for myself. I’d like some solutions. Neither you nor I know if Mr Prior works, if so in the public or private sector. As if it mattered. Michael, your prejudices are showing. Calm down and stop assuming everyone who disagrees is a public servant on a huge pension.

@ Anewdawn

Thanks but no thanks for the unsolicited advice.

I don’t know who you are; unless you had a previous handle, you appear to be new here and all I’ve seen are a few one-line comments.

The other individual who also appears to be using a pseudonym, also appear to be new here.

I make an assumption based on an IP address and what reason would an igrnoramus suggest that I have no right to comment because I live overseas?

It’s unfortunate that some people who fear revealing their true identity, use anonymity to personally attack people who reveal who they are.

Do not confuse this with robust argument. Such people are cowards and the web has many of them

They pollute the web.

It’s also ridiculus of you to make a statement: “stop assuming everyone who disagrees is a public servant on a huge pension.”

It’s in fact an ignorant statement and is the blowback from addressing issues that seldom get an airing in the media.

Anyway, enough time wasted as you are incognito!

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