President Higgins on Economic Development

President Higgins delivered a lecture at the University of Melbourne last week. It was well received. Given the content, I thought readers of this blog might like to listen to it. The President also gave a podcast which summarises some of his views on economics here.

Author: Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

9 thoughts on “President Higgins on Economic Development”

  1. Thank you for posting this! Look forward to watching the President’s address in full and, perhaps posting a modest comment in response when today’s work is done..

  2. During my undergrad, I was told a difference between normative and positive economics is the latter doesn’t include ideas of fairness. What is ‘fair’ should be left to elected politicians. Although I agree a lot with Michael D, I think the excluding morality in how we answer questions in economics is appropriate (though of course it influences the questions we ask).

    1. Lots of fairy tales in undergrad economics Rory …. those not assimilated, a minority, grow out of it ….

      The Just trumps the Good … this is the CORE of our President’s message … and based on the best of what moral philosophy has taught us since Kant and let us not forget that Adam Smith was primarily a moral philosopher.

      so called ‘positive economics’ ideologically projects the Good [such as nearly $10 Trillion in QE for the <1%] as Just … an odious inversion which allows for the dictatorship of the financial Capital system to dominate us Earthlings in perpetual serfdom as it rapes and ravages the planet.

  3. The President is entitled to his views and he is, indeed, a highly competent, erudite and articulate ambassador for this little island of saints and scholars. But some of the things he comes out with – and there are numerous examples in this speech, are surreal at a number of levels.

    For a start, probably the strangest are the efforts he makes and contortions he performs (in common with so many other left-wing oriented scholars and commentators) to endow this strawman of “neo-liberialism” with such malignant power that statist and collectivist solutions are the only effective remedies. “Neo-liberalism” is simply another mutation of capitalism and the remedies are the same as they’ve always been – except that the political will to enforce them has been either sapped or suborned. Statist and collectivist solutions may have a role to play, but it is quite limited. For example, the current leadership of the British Labour party, whose policies I suspect would meet with Presidential approval, proposes to nationalise the major privatised utilities such as electricity, gas, water and rail. Electricity and gas are largely in public ownership in Ireland and prices to households are more than 20% higher than those in Britain – where the government is introducing legislation to cap their prices. And probably the less said about water and rail in Ireland the better. Perhaps our President is not aware of these “facts on the ground” or chooses to avert his eyes. He praises the work of the CORE group (of which Prof. K O’Rourke of this parish is a member), but perhaps is unaware that the opening chapter of their ebook is titled “The Capitalist Revolution”.

    I suppose we should treat this as an example of amusing and charming cognitive dissonance. And the speech is replete with examples. He praises the IMF for recently questioning their once “sacrosanct policies”, but the same IMF (during its Article IV review of Ireland in June) in a Selected Issues paper raised the question “Why is Ireland’s Income-Inquality so high?”. Needless to say Official Ireland, including the President, ignored this paper.

    The Aussies may have been taken in, but one really has to suspend disbelief to square the President’s pronouncements on public economic policy when Ireland has an MNE enclave that indulges in quite a bit of Leprechaun Economics activities, when economic regulation and competition policy are enforced on a “let’s pretend” basis and when much of the sheltered public, semi-state and private sectors operate on a semi-feudal, rent-seeking basis.

    There is really a massive gap between the passion of the President’s assault on the strawman of “neo-liberalism” and the economic reality he represents as the elected President – but this surrealism seems to be part of what we are.

    1. Excellent! Lots to agree with in your post and any disagreement is a matter of degree rather than direction. There is unquestionably an issue with neo-liberalism that needs to be addressed. It all too frequently provides a cover for a rapacious form of capitalism that corrodes the social fabric. It is clearly not a coincidence that the apotheosis of neo-liberalism in recent years has been accompanied by an increasing interest in ethics, morality and the question of how to build a good and fair society. Having spent considerable time in the UK and the USA, the two advanced countries that have done most to promote neo-liberalism, I would argue that neither is exactly a model of a good and fair society.

      In that light, I hear the president’s speech a little differently: as a call for a more considered society that better balances the benefits of liberal capitalism with its disbenefits. And I cannot but agree with him on that. However, I am thoroughly with you on the issue of hypocrisy: Ireland would not stand too much scrutiny as a model of a good and fair society either. That said, I’d argue it is closer to it than the UK or the USA, in some respects at least. The same IMF reported that Ireland has one of the most effective redistributive tax-benefit systems in the EU. So arguably, we have some of our principles right. Our challenge is to shift the fundamentals so that redistribution is less necessary. But we are clearly not alone in that: the UK, as one example, is arguably failing miserably in that endeavour. It may have cheaper electricity, but its rates of illiteracy and innumeracy among 18-24 year olds is appalling and augurs ill for its future, especially outside the EU. There are social fundamentals like education and training that demand at least as much attention as more overtly economic fundamentals like cheap utilities.

      1. Many thanks for your comment. I fully agree with your observation that the “challenge is to shift the fundamentals so that redistribution is less necessary”. But the extext of redistribution is broadly proportional to the huge trough in which the rent-seekers have their snouts. And the majority of voters support the politicians who facilitate and maintain these arrangements. It would require voters in the lower income quintiles who do not benefit to any any great extent from the Great Redistribution, but who have to pay for the troughing of the rent-seekers in the higher income quintiles, to wake up and smell the coffee. But, unforunately theei political support is spread across the spectrum.

    2. Neoliberalism is clearly defined :

      – Fiscal is not acceptable
      – the economy is always in a state of equilibrium
      -inflation is exclusively caused by money supply growth

      Neoliberalism is the reason why the EZ does not have a lender of last resort (the economy is always in a state of equilibrium).

      It is the reason why Ireland had to pony up for Anglo (there is no lender of last resort and there are no other features of a monetary union rather than a shared currency because the people who designed the system didn’t think they would ever need them since the system is so robust).

      Neoliberalism explains why Central Banks chose QE despite the fact that it has never been tested in practice. Increasing the money supply automatically generates inflation. Except it doesn’t when there are no payrises. .

  4. The President’s lecture(?) and his audio interview, are what they are – soft-pedal versions of his personal views, beliefs and opinions. Presumably the contents were pre-vetted to ensure their balm-like qualities. Nothing new here; just move along quietly. Now, if he had mentioned ….

    Ireland has some emergent, and emerging economic problems which are proving, and will prove, intractable using the policies that have so-far, proved to be not only ineffective, but in some instances downright harmful to Irish citizens. The political spinmasters are on full-time alert so as to be immediately available to side-line or divert any incipient large-scale public outrage or revolt. They appear to have learned something after the Irish Water train-wreck. The mortgage tracker scandal seems to be nicely hemmed in – for now. The Residential Property Tax issue (its actually an income tax, not a property tax) is dormant, but could get quite nasty. Then there’s …. and …. and. It does go on somewhat.

    President Higgins mentioned the CORE economic curriculum initiative and its accompanying on-line text – ‘The Economy’, as possibly providing an alternative to our current hegemonic, neo-liberal, Permagrowth economic paradigm: I’d have considerable doubts about this.

    Any alternative or replacement curriculum would need to emphasise, early on in that curriculum, the real physical nature of contemporary economies; the unsustainability of Permagrowth – due to the exponential decline in the easy availability of finite resources; the exponential increase of the release into our biosphere of organic and inorganic chemical toxins and the millions of tonnes of non degradable, unusable waste materials – each of which render both land and water environments ‘dead zones’. Econometrics can only cope with monetary or financial costings of factors of production. People, resources and places are beyond it since the persistent, real physical damage to our biosphere is not a financially resolvable economic externality, but is actually the physical rendering of habitable areas as uninhabitable – for both flora and fauna.

    No amount of money can restore degraded arable land: it needs to lie fallow for 20 years, assuming that the organic and physical matrices of the soil have not been degraded beyond remediation. There needs to be an urgent discussion about our fragile and quite limited local, regional and global fresh-water resources and the fatal damage being inflicted on this life-sustaining resource by the dumping of toxic and radioactive run-offs and effluents produced by unconventional methods of fossil fuel extraction. I’d dearly like to observe in all contemporary economics curriculae, an explanation of the absolute requirement for 2 litres, per person, per day of liquid fossil fuel – to provide the meanest, lowest, most basic level of a capitalist, early 1900s style living standard. Think I’ll be waiting? I guess so.

    As for morality and ethics. I know for sure that these matters are now only for Leonora Hemsley’s ‘little people’. The Big Folk live in consequence-lite bliss. Or should that now be consequence-free?

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