The Irish Academy of Engineering has released a report here which argues that enegy investment plans should be scaled back, and expresses scepticism about our high renewables targets.
Category: Uncategorized
The National Accounts suggest that the activity peak was about Q2 2007, so the last reading on pre-recession employment was about Q1 2007. The QNHS published yesterday gives Q1 data for 2007, 2008 and 2009 on the new basis. Figs in 000 are from the sa Table 3.
Sector Q1 07 Q1 08 Q1 09 % Chg 09/07
Agriculture 108.9 116.9 102.7 -5.7
Industry 305.3 288.1 268.6 -12.0
Construction 270.7 256.6 184.0 -32.0
‘Public Sector’ 453.2 463.7 480.7 +6.1
All Other 963.1 1013.6 945.3 -1.8
Tot Employment 2101.2 2138.9 1981.3 -5.3
Unemployed 98.5 109.9 223.4 +126.8
Labour Force 2199.7 2247.6 2203.0 +0.2
‘Public Sector’ is the sum of NACE categories O, P, Q, Public Administration, Education and Health, and includes over 100K not formally public servants. Some commercial Semi State employees are in Industry. The most dramatic collapse is in Construction, down 32%, with Industry down 12%. The OPQ ‘Public Sector’ has grown 6%, and is the only sector exempted from the downturn thus far. The quarterly peak was actually in Q4 08 and there are now recruitment curbs and budget cuts, so this sector may turn negative through 2009. But to date, the OPQ sector has added 27,500 since the downturn started (+6.1%) while the rest of the economy has shed 147,400 (-8.9%).
The propagation of the employment contraction out of construction in 07 into the rest of the private economy in 08 is clear. The QNHS unemployment rate grew from 4.5% to just 4.9% through 07, but soared to 10.2% in the four quarters to Q1 09. Since the most sharply-contracting sector has a mainly male workforce, an interesting effect is that 45.1% of the employed workforce is now female, an all-time record. Labour force growth has ceased and the participation rate has been dropping steadily for a year. In total employment terms, the fastest decline was in the most recent quarter, and with probably not a single sector now expanding, the Q2 figures will hardly bring much joy.
Pages 9-13 of the report contain an impressive array of data showing indications of Ireland’s falling competitiveness. They also indicate that the IMF team and the Irish authorities disagreed about the extent of the competitiveness problem, with the Irish being more optimistic (due to our falling wages). We all agree, I presume, (and the IMF agrees) that to the extent that our nominal wages fall, we will become more competitive. But, it would be nice to have more data on the extent to which this is happening, in Ireland and elsewhere. As the IMF points out, you can’t just assume that wages are not falling in any of our competitors (and that is even leaving aside the issue of nominal exchange rate changes). Good comparative quantitative evidence (as opposed to anecdotes) would be nice: does anyone know of any?
There are many outstanding websites where universities make available the full video and notes from major guest speakers. Indeed, this is becoming increasingly the norm in good institutes and departments. The LSE ones below are particularly good and have enormous relevance to the issues being discussed on this blog. One of the recent talks is about the future development of capitalism by Dani Rodrik. There are also three recent videos of Krugman talking about the return of depression economics and one of Shiller talking about Animal Spirits.
Sorry about the overly technical title to this little entry. I want to ask a question rather than make an informed contribution to the discussion. Here is the question:
Why is the Irish government effectively withholding information about house prices from the public at large?
As house sales prices began to fall in 2008, a relatively minor legal-technical glitch prevented estate agents and newspapers from publicly revealing the prices of completed sales. The government could have easily fixed this legal glitch with new legislation, and also could have improved the system to allow full, complete disclosure of all house sales prices. Rather than fix the legal glitch, the government has scrupulously maintained the new status quo, imposing an effective news blackout on house sales prices.
My question: why and for whom?
The absence of price information has probably slowed the house price correction, since it plays into the behavioural bias of potential sellers who psychologically tend to resist price falls (behavioural finance researchers refer to “framing” and the “disposition effect”). The resulting disequilibrium in housing supply-demand has slowed completed sales to a crawl. This, in turn, has done damage to a range of industries and occupations: home furnishings, real estate brokerage, the legal profession, and newspapers, among others. These industries/occupations would have been hit by the recession in any case, but the lack of house pricing clarity made the situation worse for them.
As a basic principle of economics, price information release is almost always welfare-enhancing. There are some special conditions when this is not true, but as a general principal it seems pretty solid. So not having house price information goes against the public interest. It must be done for the benefit or one or more special interests, or for political purposes.
One big beneficiary is bankrupt or near-bankrupt property developers. The lack of price clarity makes their true value more volatile and uncertain. This allows them to play for time even if, using true but unobservable house/property prices, some or all of their businesses are currently bankrupt.
Today’s papers note that banks are also see themselves as benefitting from house price obscurity. Perhaps, if revelation of true property prices also would make them bankrupt, they can use the lack of price clarity to play for time. But in the case of publicly-traded bank shares and debt securities won’t the investment community see through this obscurity and (if anything) over-correct for this obvious information blackout? See, e.g., Douglas Diamond’s classic piece, The Optimal Release of Information by Firms.
Are there other beneficiaries or other reasons? What is the true driver of this odd piece of (implicit) government policy, or should it be called non-policy? The economic competence of the government could be queried, so perhaps it is simply bad decision-making on their part? I do not know the answer.