Emigrants, tax rates, and debt

Maybe the West will just end up like Japan with debt to gdp iterating away towards 300% and mostly zombie companies while interest rates stay on the floor.

A careful reading of that Bertelsmann document shows that while Portugal has a history of low investment in education that has resulted in a low stock of education in the working population, it has done a lot since 2000 to remedy the lack of investment. A 10 percentage point increase over 12 years in the percentage of the working age population with tertiary education implies that the share of those newly entering the labour market that have tertiary education must be high.

Hats off to the Portuguese constitutional court for its commitment to the rule of law.

An example of what the new Portuguese government is attempting; reversing the privatisation of TAP.

http://www.theportugalnews.com/news/tap-sale-reversal-difficult-half-the-money-already-spent-ceo/36878

Fasten your seat belts!

Portugal isn-t the only country with dodgy debt dynamics.

@KPR
re: the equation w(1-t) + b + P = E in your 2010 article.

I would make the point that the P (the premium we enjoy as a result of living in Ireland) may have a minus value, particularly for young people renting the Dublin.

From the Kissane article:

“Tax cuts are a political issue at home in Ireland, and emigrants are being used to score domestic political points for an election in which we will have no votes. ”

There is no limit to the duplicity or neck of the Irish politician.

Great article by Kissane.

@ DOCM

The FN is the equivalent of dogsh## on the carpet of the House of Europe. Without growth there will just be more of it. Fair play to moderate French voters for toning down things but the very fact they got such a vote in Round 1 is extremely worrying.

A double dose of good news from Paris at the weekend — Vive la France!

Yes, if Portugal had kept the escudo, the response to the financial crisis would likely have been easier and crucially as a small economy it would likely have had a better outcome overall since 2000 if local policy makers did not have the security of the euro. There would surely have been better economic discipline if the local currency had been retained.

The standard of governance, culture and the institutional systems in a country, remain key factors in success and failure.

Populists of right and left get support during periods of crises and in the 1930s Huey Long, governor of Louisiana, who is said to have inspired the Willie Stark character in Robert Penn Warren’s celebrated 1946 novel, ‘All the King’s Men,’ was the most potent threat to the reelection of FDR in 1936. Fortunately for Roosevelt, Long was assassinated in 1935.

Today, economics that is credible for a lot of voters is a challenge for all these parties. Greece’s SYRIZA this time last year had a wish list but no implementation plans and crucially no response to a worst case scenario, planned for.

In Venezuela, a thuggish government has wrecked the economy and in Poland, which had an economy as small as Ukraine’s in the early 1990s, has a new conservative government and the Economist notes this week that it “has only just started its vandalism.”

Portugal had a credit boom before adopting the euro as the central bank cut interest rates and it began it’s membership of the single currency with a trade deficit of 12%. The jobless rate fell to a historical low of 4.8% in Q1 1999.

This Brookings paper by Ricardo Reis, a Columbia university professor, who is a native of Portugal, notes:

Between 2000 and 2012, the Portuguese economy grew less than the United States during the Great Depression and less than Japan during its lost decade.

http://www.brookings.edu/~/media/Projects/BPEA/Spring%202013/2013a_reis.pdf

Finally, jobs indicators from the US show interesting trends in recent times.

The employment/population ratio at 59.3% in Nov 2015, compared with 62.3% in Nov 1990 and 64.4% in Nov 2000.

The US labour participation rate (of the working age population) was at 62.5% in Nov 2015. Apart from the recent 3 months, this is the lowest since 1977 when the participation of women was rising in the workforce.

The rate was 66% in Dec 2007 at the start of the recession. The fall in the rate has assisted in bringing the narrow jobless rate to 5% and the broad rate to 9.9%.

@ Joseph Ryan

Triumphalism? My comment related solely to the dire predictions of a breakthrough by the FN which I was entirely confident would not happen because I know that France is fundamentally a mature democracy unlike others I could mention. Valls, incidentally, is slipping rapidly in the polls. This is hardly surprising. Predictions of civil war do not sit well in the mouth of a French PM. You will also have noted the huge rise in voter participation in the second round.

http://tinyurl.com/zyjobsx

@ PH

My hope, if not my expectation, is that those sitting in gridlock on the M50 will wake up to the fact that (i) they are part of the new burgeoning economy, not the old (ii) they must avoid participating in the old one where the cards are stacked against them and (iii) organise to do something about it. .

Incidentally, it is nice to know that the minister in charge of health policy agrees with the senior official responsible for implementing it that there is no policy. Michael O’Leary also agrees and recently publicly nailed the main reason why i.e. there is no effective management because of misplaced union political influence. (I am careful in in my use of the word “misplaced” because in the European world of universal health care, the unions have a very strong but correct role i.e. one which allows management to do its job. This is what they should also aspire to in Ireland).

The new left-coalition government in Portugal has just scrapped the teacher-evaluation law introduced by the previous centre-right government. Many commentators have maintained that some sort of evaluation was warranted because of the apparently low quality of education. So a bad start if you think that a much better education system is an urgent requirement for Portugal.

It turns out that the Constitutional Court has just ruled, quite independently, that the teacher-evaluation scheme was unconstitutional anyhow. But the interesting point is that while the new government says that it will abide by the Eurozone fiscal rules, it will at a more micro level appease public sector interest groups, especially those where leftist unions are strong.

The anti-evaluation move was lead by the Portuguese Communist Party (PCP), a relatively small party which did not increase its share of the vote in the recent general election. The PCP is a completely unreconstructed Stalinist outfit, never really influenced by the more “liberal” Eurocommuism of the 1980s and 90s. Bear this in mind when looking at the travails of the essentially reasonable and moderate Socialist Party.

A thoughtful article by Christopher Kissane, good read.

I recently read a book by Ms Anne Chambers, on T.K. Whitaker. The book does blow a lot of smoke up TK’s skirt, but it was a insightful read about a most interesting person.

Coming away from the TK book… one is left with the impression that the country has always been badly managed. Boom to bust to Boom a never ending cycle, inverted Micawberism. At one stage in the 1950’s emigration was so high suggestions were being made for the Republic to rejoin the UK.

The account of the efforts WRT N.Ireland is interesting. However I cannot help feel that the Irish are NOT very good at managing their own affairs.

Ireland has serious problems in a number of areas, some of which are

1) Health services, headlines on yesterdays SBP says it all.

2) Crime, a justice system which is appearing to be unfit for purpose. I dare say it… but I am of the opinion that there is a cartel in operation, where people with multiple convictions are given very light sentences in the knowledge that they will re-offend again and again. This is proving to be a job creation industry for the Legal profession, milking the taxpayer of money via free legal aid system.

3) Housing. Despite the demand of a growing population, it is almost unviable to build a house, investors continue to exit the market due to penal taxation measures enforced by the Revenue Commissioners.

Other problems are Intercountry Adoption…. if you are unfortunate to be infertile…. forget about attempting to effect an adoption internationally. Unless you are able to spend north of 90K euro, and devote 6 years of more of your life to filling out paperwork. Even then there is no guarantee you will be successful in starting a family.

I personally have serious doubts about the ability of state organisations to put aside Rules and Regulations and instead adopt Professional Judgement and Sanity. The herd mentality which gets Ireland into various disasters has not gone away.

Personally ….. I do accept there have been some remarkable achievements by the Irish in governing Ireland over the last 90 odd years.

But successful governance of a nation involves a lot more than luck or hope.

I am sorry to say it… but I personally will look upon the 2016 celebrations as a shameful episode, nothing to be proud of.

The more autonomy which is removed from Dail Eireann and given to Brussels the less Tyranny (via appalling mismanagement) the Irish people will be (hopefully) subject to.

For the times that are in it, Michael O’Leary in his own words, at a medical community conference!

“There’s been talk that the HSE needs a Michael O’Leary… it does. …is that something you’d consider in the future and if you were to find yourself in that position how would you go about changing things? …like most people in this room I think the HSE needs a complete and total revolution and thankfully I’m reasonably young so that I don’t make many demands on the health service but I think what’s fundamentally wrong – and I don’t want to get into ‘how would you run the HSE ti-yadda-ti-ya’ – nothing will succeed in this country if it is run by politicians and what is ultimately wrong with the healthcare system in this country is that the government is trying to run it. There is no effective management within the health service because ultimately the unions that are effectively running the show – and running it particularly badly – are by-passing management every time they’re unhappy by running straight to have a meeting with the minister for health and the minister for … I don’t know why we have a minister for health. Governments should create health policy but implementing and delivering health governments should – as they are in most other pieces of infrastructure, transport, health, they are mostly useless and they are utterly useless at it and this flopping around between regional health board HSEs and then the big national HSE and then we go back to the regional HSEs and by-the-way nobody can lose their jobs so every time you create a new administration there’s a whole new load of bureaucrats to sit in on top of the last load of bureaucrats and none of the bureaucrats do anything or can do anything because the unions when they are unhappy will go straight to the government and the government has no power to tell you or the unions to piss off with themselves. I like the American system, Roosevelt it was in the 1930s said if you are a public sector employee the government can’t withdraw your services so you can’t go on strike. You can’t propose that in Europe because it’s almost up there with pedophilia or something like that suggesting that the public sector employees should not be allowed to go on strike but they shouldn’t. They should have arbitration they should have dispute resolution mechanisms but they should not ever ever ever be allowed to withdraw their labour and if they do the government should sack them and you’d solve most of the public sector problems we have in this country. The healthcare service is ultimately not unlike an airline in that it’s a huge big expensive infrastructure provider and the extent to which it is run is that it’s run largely for the benefits of the producers. So you will have people it could be nurses all the way up to surgeons who will work between the hours of 9 and 6 o’clock in the evening and they’re gone weekends. Everyone should be working on 7 day rosters, everyone should be working on shifts, that’s what we do with our pilots and cabin crew. Now the pilots could be working on 5 days on followed by 4 days off but ultimately it’s about production and how do you keep increasing the level of outputs, how do you keep Hospital theatres full 7 days a week, they’re very expensive pieces of kit so like aircraft they should be full operational 7 days a week. They should be running operations 24 hours a day but it needs to be structured that way and it isn’t structured that way but it will never be structured that way as long as it is run by politicians and the unions can influence the politicians and the politicians are unable to manage the unions. And all of that usually brings a tonne of joy to a presentation here in the medical community…”

@ seafoid,

Whistle blowers….good point…. truly shameful. It is a indication of how poorly Ireland values the truth.

Treatment of Children. Children continue to be failed. Rules regulations and procedures come first, reality last. A good example recently is the closure of Arc Adoption due to poor decisions in the Dept of Children and Family affairs. The civil servants who advised the minister Dr J. Reilly will never have to answer for their advice.

Recent flooding…..the natives in Bandon….. how do they feel? Do they feel that they get good service from state authorities…. given over 6 years have passed since the last floods?

How will the population (working and resident) of the Dublin Docklands feel when that area is subjected to serious flooding? The much hailed IFSC under a foot of water!!

What plans are there for a “Liffey Barrier” (similar to the Thames?). Are the authorities aware of the problem which is coming down the tracks?

For the 21st Century…. the state’s institutions will have to up their performance, fooling all of the people all of the time is not going to work forever.

“NEARLY 200 young people died in State care during the decade to 2010. The fatality rate was eight times higher than that initially acknowledged by the Health Service Executive which, having attempted a cover-up of inadequacies involving its record-keeping and family services, hampered the subsequent, government-appointed investigation. It was a squalid exercise in official denial”

@ seafoid,

+1,

When the People fear the Government, there is tyranny. When the Government fear the people, there is liberty. ( famous quote )

I fear the Irish Political establishment, along with their civil servant spin masters.

@ Sporthog

I would fear the ineptitude of the establishment more than anything else . 2010 and 2011 were such eye openers.

http://www.irishtimes.com/opinion/dysfunctional-culture-of-civil-service-management-1.503889

“A fundamental weakness in the Civil Service has to do with the very idea of management. The distinctive work of management is not understood; management work is undervalued; no one is responsible or accountable for the health of the management system, and a dysfunctional management culture has had even more serious consequences than any lack of competence.

When Minister for Finance Michael Noonan said, in commenting on the €3.5 billion accounting error in the Department of Finance, that there was no point in blaming an individual as “it was a systems problem”, he and many others who repeated his diagnosis displayed a lack of understanding about what constitutes the work of management.

The distinctive work of a manager entails working on the business, as distinct from in the business. If the error was caused by a systems failure, then responsibility lies with the senior managers who are paid precisely to design, install and maintain good systems.

Other elements of management work that need to be assessed include staffing, for example ensuring key skills are in place; managing money; improving operational efficiency and developing and executing good strategies. Organisational reviews carried out on several departments, together with other reports, reveal widespread shortcomings in these aspects of management.

Because the substantive work of management is not understood, it is not valued. The more an individual moves up the Civil Service hierarchy the more their attention is directed toward serving the Minister. Career progression depends far more on this than on how well they manage a department with perhaps a thousand staff and a budget of a billion.

That managerial work is neither understood nor valued is borne out in the disclosure to me by a secretary general not very long retired that: “I never received one day’s training in management.”

The research on performance management systems consistently reveals that unless there is authentic accountability at the most senior levels, the system becomes discredited.

As things stand, the 1924 Ministers and Secretaries Act in effect conflates the performance of the Minister and secretary general, such that you cannot give a negative performance rating to the latter without reflecting badly on the Minister.
With this “Faustian pact”, as John McGuinness called it, between the two parties, this is not going to happen, as illustrated graphically in the debacle over the collection of the household charge.

Was it the Minister or his officials who got it wrong? We will never know. Minister for Communications Pat Rabbitte has frequently expressed his desire to bring in the necessary legal changes which at least would allow for the possibility of holding secretaries general and Ministers accountable.

A further consideration is that unlike Britain and other countries, we do not have a “head of the Civil Service”. If we did, that person would have a central role in reviewing the performance of the most senior officials.

In an address to the Institute of Public Administration in 2007 on the topic “Building Capacity”, the late John Murray, a highly respected professor of business management at Trinity College, defined capacity as having these elements:

The ability to deliver services to meet citizens’ expectations. (This is the function that draws most heavily on managerial competence, as it involves getting work done through others.)

The ability to provide effective advice to the political decision-making process. (This reflects the entirely legitimate preoccupation with serving the Ministers.)

Then Murray added “ . . . and in a manner that only those living in captured and corrupt systems can fully appreciate, it [capacity] relates to a value base that owes unswerving allegiance to independence, probity and a commitment to speaking truth to power”.”

Good article here by Mr Eamonn Delaney 16/12/15

http://www.independent.ie/opinion/comment/its-unfair-some-parents-have-no-choice-but-a-catholic-school-but-dont-blame-the-church-34291416.html

The last line says it all really….

“You should really blame the fudge of the Irish State and its inability to make plans on such a crucial issue.”

It’s not just education the Irish state has problems in planning… but a lot more… unfortunately.

@ PQ

By the way, on the general issue of management in the public sector, the central problem confronting those attempting an analysis is their inability to get outside the mindset of the “Westminster model” (which may have been suited to running an empire but is certainly not suited to the circumstances of the states that once made up the latter). The irony is that Devlin, half a century ago, suggested a means of breaking out of it but it foundered like many other less worthy initiatives since.

The John Murray 2007 talk on Building Capacity is linked here ;

http://www.tara.tcd.ie/bitstream/handle/2262/23939/IPA%20Paper%20Murray%2007.pdf?sequence=1&isAllowed=y

It is a very good read.

The Civil Service reminds me a bit of Jabba the Hut, given all the Star wars excitement at the moment. The working classes are Princess Leia.

The Building Capacity paper is outstanding in terms of analysis and presentation but arrives at the wrong conclusion even within its own terms.

“Public discussion of capacity most commonly focuses on the ability to deliver services. For most citizens, that is what the apparatus of state does. It is a feature of daily life, experienced through the delivery of traditional core activities of justice, education, health and defense but also through the provision of a vast array of public services and transfers ranging from the weather forecast to renewing motor tax or the collection of refuse.”

“Behind this most public aspect of capacity lies another equally important aspect, but one experienced in a very restricted forum: in the market for advice and wise counsel, particularly at the interface of the political and administrative systems…”

“To state the obvious, the delivery of public services ultimately depends on the quality of policy decisions. No amount of capacity to deliver services efficiently will make the wrong service a good one.”

The conclusion drawn by Devlin, and recommended for Ireland, 50 years ago, and followed nowadays generally by countries not victims of the Westminster model (the experience of the UK, Australia, Queensland and New Zealand is all that is cited by the author!), with Sweden being the most advanced, was that it was essential to almost hermetically separate policymaking at a central government level from management and implementation of agreed policy, with procedures for (i) arriving at the correct policy decisions and (ii) governance oversight – mainly by parliaments – of the executive agencies – with clear legislative mandates -charged with implementing them.

If public goods constitute “a vast array of public services and transfers ranging from the weather forecast to renewing motor tax or the collection of refuse”, why then attempt to manage such a heterogeneous range of activities as if they constituted some form of homogeneous whole, subject to a central department, such as is currently the case in Ireland? And which is, in any case, in direct contradiction with the aim of allowing agencies to get on with their specialised jobs.

The correct approach has, nevertheless, been attempted in a half-baked way over the past half century but largely incorrectly in failing to break down the identifiable functional units to be given executive agency status (the HSE being the most glaring example) but most importantly because the central budgetary control function has not been developed adequately.

This last mentioned issue is the key. In its absence, all that is left to the DOF (the only department that should carry this responsibility), if things go off the rails, is to pull some rudimentary emergency brakes e.g. highly damaging staff recruitment embargoes etc.

Maybe an existing system could be bought off the shelf from the Swedes?

http://www.esv.se/ESV/English/Outcome-of-the-central-government-budget/

The likely political objections to such a step are obvious as politicians would have their hands taken off the largesse tiller. What is less obvious is why those paid from the public purse, but labouring under the current inadequate structures, are not pushing for such a development.

@ “Building Capacity” – it takes 24 pages to say what? It might have been said in 3 – and perhaps better.

DOCM – you might try to forget about the Nordics – we are NOT one of them, and never will be. We are us. Like it or lump it we worship the Mushroom Policy (keep folk in the dark and pile on the horseshit).

Our civil service does cannot do innovation. It has to operate within a specific Rules-and-Regulation paradigm. Hence any critiques of what is ‘not right’ has to be couched in quite careful terminology since any critique is an implied allegation that some CC folk are not doing their job (according to the Book!). Can’t have that, now can we? So, any changes have to be steered from the top down – even if they appear to germinate from the bottom up, they are in fact ‘orchestrated’ from the senior levels.

If one really – like really, would care to understand how our civil service operates and to understand just how meaningful re-structurings cannot happen (absent a catastrophic event), you need to have a firm grasp of “System Effects” (see: Robert Jervis). Its not happy reading. Actually William Kingston (‘Interrogating Irish Politics’: DUP 2007) is a much more enjoyable read.

You want a ‘flexible’ CC – with capacity? – then re-write the Rule Book. And who will do that re-writing? Why the Mandrinate, of course. 😎

@ BWS

I beg to differ. Our history, since joining the EU (an exercise of real sovereignty in the sense of agreeing to exercise a considerable part of it in common with other European countries) has been one of disentanglement, voluntarily and involuntarily, from the administrative and cultural inheritance of being part of the British Empire. Regrettably, the academic community has tended not to keep pace and is still firmly stuck in the Anglosaxon world, the term widely used on the Continent.

I concede that we have yet to fully find our own way. That the term Madarinate has little footing, other than in re-runs of Yes Minister, is another hopeful indicator.

And still another from the pages of the IT which I noted after posting above.

http://www.irishtimes.com/opinion/letters/the-hse-and-local-accountability-1.2468768

Allowing the functional agencies, in all their variety, existing and to be created, get on with the job and fixing responsibility with them for the outcomes, can only happen in the context of the reform I sketch in above.

DOCM: Good luck with your wish list.

There is not a hope this side of hell that we will go Nordic. Its simply not in the genetic make up of our politicians (being parish pump types) nor the upper levels of our CC whom have stealthily and craftily engineered a commensal fusion with their counterparts in the upper levels of our parliamentary parties – ie: “Please do not bother us too much and we will do likewise”.*

The administrative structures, rules and regulations we have will have to do until there is some widespread catastrophic bureaucratic failure – which cannot be plausibly attributed to “a system failure”. Only then may it be possible to get the re-structurings that will allow for transparent accountability and genuine sanctions to be meted out for those responsible for wayward policies and decisions.

Please try not to hold your breath on this one – its likely to be a long wait.

*I believe Peter Mair may have coined the term ‘cartelization’ to describe this process. ‘Cozying-up’ might also be appropriate. Makes good sense for both parties. Not so good for us citizens.

As for the HSE: Byzantium AD 1200 – or near enough.

@ BWS

It all depends, it seems to me, on whether Labour rescue anything from the debacle of the party’s involvement in government. As I said on another occasion, it was a mistake for Fine Gael to agree to split the finance portfolio and an even bigger one for Labour to accept the expenditure side of it (which was not that surprising given the union background of the party’s leading lights). If the electorate endorses the party’s return to government, a return to the status quo ante – and stasis – will be confirmed. If not, who knows what will be cobbled together and what the possible eventual outcomes will be.

P.S. The “catastrophic failure” has already occurred. It is the failure to respond correctly to it which is at issue.

The long term effects of “labour mobility” on Bulgaria, Ireland, Greece, Spain, Croatia, Cyprus, Poland, Portugal, Romania and the three Baltic Member States are going to be quite something to see.

http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Crude_rates_of_population_change,_2012%E2%80%9314_(per_1_000_persons)_YB15_II.png

None of Portugal, Romania, Poland, Estonia, Latvia or Estonia have had population growth since before 2012. Latvia has lost 10% of its population to good old labour mobility since 2004.

Ever closer union.

@DOCM

Regrettably, the academic community has tended not to keep pace and is still firmly stuck in the Anglosaxon world, the term widely used on the Continent.

Of course the “Anglosaxon Word” (sic) refers to everything outside the Brussels consensus. Everyone else has it wrong apparently.

So the “academic community” (and unsavory intellectual types, people without ties, etc) need to free themselves from global group think and instead open their minds to the dynamism and intellectual breadth of ordoliberalism, austerity and goldbuggery.

It defies belief that after the last seven years of epic policy failure and economic underperformance the Eurozone’s would be political and institutional elite are still convinced that it’s the rest of the world that has a problem.

As you were.

@ BWS

With the occasional exception e.g. the bans on smoky coal, plastic bags and smoking in public places, Irish politicians never move until forced by events to do so. It seems to be what distinguishes them most. The likely catalyst for the immediate future is the abject state of the health service. If, for example, “local accountability” for taking care of the sick becomes the motto, should this not also extend to the ambulances in which they are conveyed?

http://www.independent.ie/irish-news/health/ambulance-staff-rota-blunder-to-cause-chaos-at-christmas-34300421.html

It seems to me that a majority of the electorate may now view the situation in the same manner as it is viewed by Michael O’Leary.

“With the occasional exception … … Irish politicians never move until forced by events to do so.”

I’d extend this to all principled politicians – whose principles are perfectly flexible, you understand.

Bureaucratic, pyramidal bureaucracies metastize both vertically and horizontally until they resemble a proto Tower-of-Bable. They are then re-set to a smaller, mirror-image clone of the original – and its “off we go again!”

The catrastrophe I have in mind is what “The Gripper” meted out to the striking (aka: revolting) US Air Traffic Controllers. That taught some folk a very nasty lesson indeed. Not something I would be comfortable with, but The Chief has to be able to ‘pull rank’ when required. Otherwise – why bother having a Chief?

@JR

The Germans will not support Deposit Insurance in the EZ
over fears of moral hazard. Handing over AIB to private hands after its second collapse in a generation would be even more dangerous from a moral hazard perspective than letting Italy have a deposit insurance scheme.
The DNA of AIB is suicidal.