Category: Political economy

A Brave Speech from the Irish Central Bank – The Missing Paragraph

The Director of Credit Institutions and Insurance Supervision at the Irish Central Bank, Fiona Muldoon, has been widely praised for her speech to the Irish Banking Federation, calling for faster action by the banks in dealing with the mortgage arrears crisis.  The speech makes clear that the damaging nexus of the former Fianna Fail government, linking the politically connected property development industry to the banking industry and an overly compliant bank regulator, is no longer in place. The Irish Central Bank is now able and willing to stand up to the industry that it regulates in order to protect the public interest, and it is supported in this stance by the ruling coalition. This is an important positive outcome.

The speech was a step forward, but it was not an unusually brave speech, despite the impression one gets from the wide praise it received in media coverage. A truly brave speech would not be widely praised, since it would need to unsettle people rather than confirm their existing beliefs. The speech ignores a big part of the reason for the mortgage arrears crisis – the deep-seated Irish political aversion to house repossessions. Without facing up to this big part of the mortgage arrears crisis, there will be no solution.  Here is an extra paragraph, offered with proper humility, which might have changed Fiona Muldoon’s partly brave speech into a truly brave speech. I have kept the “teenagers” motif, which was a clever oratorical device in the original speech.

“I cannot come here and give a speech about mortgage resolution without once mentioning repossessions; that would be cowering. The notion that 167,000 mortgages-in-arrears can be resolved without a substantial proportion of repossessions is delusional. We on the senior Central Bank staff could give speeches ignoring this reality, thereby pandering to political sentiment, but we will not do so. Meanwhile, the government’s most recent attempt at reforming Ireland’s repossession laws was a shambles, and virtually the entire law was declared invalid by the Justice Dunne ruling in July 2011. This has left Ireland, and it’s banking system, with virtually no repossession system at all since that date. Rather than fix this urgent legislative cock-up of its own creation, the government has chosen to ignore it and pretend that it will go away. The ruling coalition is acting like a bunch of teenagers; blaming everyone else in the household for their problems while neglecting to do their own homework.”

ESRI Geary Lecture…and Seminar by Tim Besley

Further information on Geary Lecture and seminar by Tim Besley below. To reserve a place at either/both event(s) please email geary@esri.ie and state clearly which event(s) you wish to attend.

Geary Lecture: Tim Besley

4pm Friday 19 October at ESRI

Making and Breaking Tax Systems: The Institutional Foundations of Fiscal Capacity

We have become accustomed to governments having the fiscal capacity to support revenue raising of more than 40% of GDP.  But such levels of taxation were unheard of before the 20th century.  This lecture will review some of the trends in taxation over the past one hundred years and how the tax systems were created which support the needs of modern governments.  It will use this historical perspective to reflect on the challenges that need to be confronted in trying to build a centralized fiscal state in Europe.    

Research Seminar, 1pm Friday 19 October, at ESRI

The Welfare Cost of Lawlessness: Evidence from Somali Piracy

This paper estimates the effect of piracy attacks on shipping costs using a unique data set on shipping contracts in the dry bulk market. We look at shipping routes whose shortest path exposes them to piracy attacks and find that the increase in attacks in 2008 lead to around a eight to twelve percent increase in shipping costs. We use this estimate to get a sense of the welfare loss imposed by piracy. Depending on what is included, we estimate that generating around 120 USD million of revenue for pirates in the Somalia area led to a welfare loss of anywhere between 0.9 and 3.3 USD billion.  Even at the lower bound, therefore, piracy is an expensive way of making transfers.

ESRI Geary Lecture – Tim Besley, LSE

This year’s Geary Lecture will be delivered by Tim Besley, Professor of Economics and Political Science, LSE. He will speak on

“Making and Breaking Tax Systems: Institutional Foundations of the Fiscal State”

Date: Friday 19th October

Time: 4pm

Venue: ESRI, Sir John Rogerson’s Quay

Booking
Attendance at the event is free but must be pre-booked. There are a limited number of places available and early booking is encouraged. To book a place, please send details of attendee’s name, organisation and contact telephone number by email to geary@esri.ie

New issue of Administration

A new issue of the journal Administration is now available. Full details here. Some of the articles are available to non-subscribers:

Irish Governance in Crisis

In a piece in yesterday’s Sunday Business Post my colleague Dr Niamh Hardiman  makes a plea for better understanding of the roots of our current crisis in weaknesses in governance institutions. Such an understanding is a precondition for effective reform. She addresses weaknesses in parliamentary scrutiny, the capacity of the civil service for appropriate engagement over policy making, and the effectiveness of the public service itself. She highlights institutional explanations for tendencies for public policy to favour sectional interests, but argues that understanding the institutional weaknesses is the key to addressing them. The article is behind a paywall, but a fuller, multi-author examination of the issues is available in a book arising from a UCD project on governance, Irish Governance in Crisis, edited by Niamh Hardiman (Manchester University Press, 2012).