But with all the excitement over default, I think we passed over too quickly the important set of IMF fiscal policy papers that Philip linked to on Wednesday.   The papers provide a useful analytical perspective on Ireland’s fiscal challenge, which I think could frame a more productive discussion on fiscal (and indeed banking) policy.

Figure 1 [p. 8] in the Fiscal Space paper is something only an economics nerd could love.    But it is worth the investment if you have some background in economics.

While not always consistent across the papers, the empirical messages that emerge are quite positive for Ireland.   The Default paper suggests there is relatively little to be gained by restructuring the debt and also that there is capacity to absorb a substantial total bank bailout cost.   The Fiscal Space paper introduces the idea of a limit on the debt to GDP ratio before situation becomes unstable.   Even under quite harsh assumptions, the analysis shows that the limit is around 150 percent of GDP for Ireland, suggesting a greater degree of fiscal space than many commentators and investors assume.

(For both papers, a key variable is the gap between the real interest rate and the real growth rate.   Unfortunately, the two papers use two very different numbers for Ireland.   The default paper puts it at 0.4 percentage points; the Fiscal Space paper at 3.2 points.  An intermediate number somewhere around 2 percentage points is probably not a bad assumption, indicating more fiscal space than noted above.)

If these papers give a realistic picture of Ireland’s fiscal capacity, then the question arises as to why Irish bonds are being hammered.   Patrick Honohan took flack for saying the market rates were “ridiculous.”   But the IMF economists seem to agree that default risks are being overestimated for advanced economies.

A more positive message might be that the fiscal fundamentals are not in as bad a shape as many imagine, and there could be high returns to some attainable improvements in policy.   There is no excuse for the delay in bank resolution legislation that could help put a floor under the costs of bank rescue, for example.  And although the government has taken some hard political decisions to curb the deficit, it is hard to understand the unwillingness to follow best practice and make explicit commitments to future fiscal policy actions (a phased introduction of a property tax, legislated future increases in retirement ages, etc.)   

Under certain, unspecified conditions, either party is free to walk away tomorrow. Not having seen the contract, I can only guess that a ministerial campaign against government policy is not among those conditions.

Does this change the calculus of the desirability of incineration of Poolbeg? Two arguments have not changed. We’re still in breach of the landfill directive, and the alternatives to incineration are expensive and will take a long time to plan and build. Two other arguments would change their importance. We may need to pay less compensation to Covanta, but the signal “Ireland: Closed for business” would be louder.

It may of course be that both parties have invested so much already that they have no desire to walk away.

Cue the green trolls.

A flavour:

Nama is an odd creature: part debt collection agency, part property developer. As well as toxic loans, it may end up with a portfolio of property which was collateral for the banks’ lending binge. It was meant to fix the broken banks, convince taxpayers they might be repaid and reassure the markets the banks’ liabilities would be met in full. Facing in three directions, it has not appeared convincing in any: slow, bureaucratic, initially indecisive, almost excessively transparent (every toxic loan is assessed individually).

It concludes a bit more hopefully.

The summary is here, while the papers are available at:

• Long-Term Trends in Public Finances in the G-7 Economies

• Default in Today’s Advanced Economies: Unnecessary, Undesirable, and Unlikely

• Fiscal Space

A total of 36,438 mortgage accounts were in arrears over 90 days in June 2010, up from 32,321 in March. This meant that 4.6 percent of mortgages were in arrears, up from 4.1 percent in March and 3.3 percent in September 2009.  However, mortgages in arrears have a higher average balance (€190,000 compared to an average of €149,000 for the full sample) so the 4.6 percent of mortgages in arrears accounted for 5.9 percent of the total outstanding mortgage balance.

The arrears on the overdue loans totalled €559 million in June. Those in arrears over 180 days are, on average, behind on 10 percent of their total balance.

So, with this month’s release now available (with figures through July), let me first point out that the Bank are now making historical time series available (not sure a direct link works, so click on Statistics on the — newly rebranded! — webpage and then on Data under Credit, Money and Banking Statistics along the left hand side.)

The Bank are also now releasing figures that make the underlying credit situation easier to understand. Detailed figures on lending to households and non-financial corporations, including a breakdown by duration, are now available. The charts on year-over-year lending to firms and households in the press release are based on levels series that are cleaned for factors such as NAMA or exchange rate adjustments that affect the figures for total loans on the reported aggregate bank balance sheets.

Most useful of all, to my mind, is that the Bank now publishes figures for net amounts of new lending (i.e. new lending minus loans paid off) for both firms and households. For example, go to spreadsheet A.5 and click on the tab labelled Transactions and you’ll see these figures broken down by sector and maturity.

These figures are quite volatile from month to month. However, I ran up a chart (see below) of the three month moving average of net new lending to firms and households and it makes it pretty clear that there was a step down in credit availability in late 2008 and that net new lending has been negative for most of the past two years.

This time last year we were inundated with government politicians telling us that NAMA was going to get credit flowing. Well, there’s very little evidence of this occurring yet.

Winding down the whole bank would cost €20 billion – on top of the cost of the split, which stands at about €25 billion – he said.

Maarten van Eden, Anglo’s chief financial officer, added that the split option would also retain €47 billion of the bank’s funding, which would otherwise have to be provided by the Government.

This comprises €23 billion of customer deposits, €16.5 billion of wholesale funding and €7 billion provided by other banks, he said.

A few observations: First, the €47 billion does not include funding from the ECB and Irish central bank, which I presume would be available (subject to liquidity programmes in place) in the wind-down scenario.  Second, surely Anglo’s “deposit franchise” is dependent on the government’s liability guarantees, and again it is not obvious that these it would not be available in a wind down – after all, the bank is presently not engaging in any new business either.  Finally, even in the worse case scenario where the deposit funding disappears, would it really be that much more costly if the government had to borrow to pay off the funders directly?   As it is, the markets are well able to see through the consolidated balance sheet of the government and the nationalised (and semi-nationalised) banking system.  And even with the guarantee, Anglo must offer premium rates (e.g. 3.5 percent on one-year deposits).

It would be good to get commenters’ views on the €20 billion premium cost estimate.

As the Apres Match version of the Minister might say, that’s a lot of noughts.

In addition, the difficulties associated with econometrically testing the proposition are almost intractable, mainly because of endogeneity considerations.  What is certain is the near impossibility of isolating a particular policy episode and conclusively asserting that it does or does not amount to an expansionary fiscal contraction.

Nevertheless, none of the arguments against Ricardian Equivalence are sufficient to enable us to conclude that there is no tax discounting whatsoever.  Such a view cannot provide “a valuable theoretical baseline”.   The same remark applies to policy.   Otherwise, the sort of spiralling sovereign debt burden, which Ireland is currently experiencing because of the bank bailout, would have no welfare implications because it would not affect private behaviour.

Given the recent efforts in several countries to reorganize the research institutional setting to improve research productivity, our analysis addresses the following questions: To which extent has the recent awareness over international quality standards in economics around the world been reflected in research performance? How have individual countries fared? Do research quantity and quality indicators tell us the same story? We concentrate on trends taking place since the beginning of the 1990s and rely on a very comprehensive database of scientific journals, to provide a cross-country comparison of the evolution of research in economics. Our findings indicate that Europe is catching up with the US but, in terms of
influential research, the US maintains a dominant position. The main continental European countries, Germany, France, Italy and Spain, experienced some of the largest growth rates in economic scientific output. Other European countries, namely the UK, Norway, the Netherlands, Denmark, and Sweden, have shown remarkable progress in per capita output. Collaborative research seems to be a key factor explaining the relative success of some European countries, in particular when it comes to publishing in top journals, attained predominantly through international collaborations.

Unfortunately, they did not include Ireland.

The economy, it is sometimes argued, is at present too fragile and thus consolidation efforts should be postponed or even new fiscal stimulus measures added. As I pointed out recently, I am sceptical about this line of argument. Indeed, the strict Ricardian view may provide a more reasonable central estimate of the likely effects of consolidation. For a given expenditure, a shift from borrowing to taxation should have no real demand effects as it simply replaces future tax burden with current one.

The written version of the speech cites two papers by Robert Barro as supporting evidence for this position.

I think it’s worth noting that the Ricardian equivalence idea put forward by Barro—that consumers see deficits and taxes as basically the same thing—has been tested many many times. And the general consensus on this, as I understand it, is that there is very little evidence to support the idea.

Moreover, though the idea works in one very simplified model set up, there are lots of reasons why the proposition does not hold in reality (liquidity constraints, people having finite lives, people not having rational expectations, uncertainty about the path of government spending—see this extract from David Romer’s textbook.)  Very few economists emerge from graduate schools believing in the Ricardian equivalence idea.

There are, of course, lots of arguments in favour of European governments setting out their long-term plans for the restoration of fiscal stability. However, it is a pity to see economic theories that are known to have little support regularly rolled out as arguments for fiscal austerity.

Trichet follows up on his Ricardian equivalence comments by arguing that expansionary fiscal contractions “are not just a theoretical curiosity” with the footnotes citing the old Giavazzi and Pagno paper with its two examples: Denmark in the mid-1980s and, of course, Ireland in the late 1980s. I’ve already said my bit about this, so I won’t repeat it. Suffice to say, this is pretty weak evidence that Trichet is serving up.

UPDATE: Freely accessible working paper version.

The issue has become topical because of a proposed change in EU legislation which would allow individual Member States to permit the cultivation of  GM crops or not. The idea is to combine a European Union authorisation system for GMOs, based on science, with freedom for Member States to decide whether or not they wish to cultivate GM crops on their territory. Any such prohibitions or restrictions would have to be based on grounds other than those covered by the environmental and health risk assessment under the EU authorisation system. It is expected that the new legislation will enter into force by the end of this year.

Yesterday’s Irish Times reported that the Irish Organic Farmers and Growers Association has called on the government to immediately implement the Programme for Government pledge. Would it make sense to do so?

What would GM-free mean?

As GMOs enter the food chain at various points, it is important to be clear on what would be meant by a GM-free zone.
-    Genetically modified microbes enter the food chain through food processing, where they play an important role as enzymes in the production of cheese, beer, whiskey, bread and fruit juices.  They are developed in fermenters in contained facilities regulated by EU directive.
-    Genetically-modified crops have been developed with desirable agronomic properties such as resistance to pests and diseases. In the future, GM crops will be developed with desirable attributes for flavour and nutrition. The EU regulatory process governs approvals of GM crops for cultivation and for use as food or animal feed in the EU. Worldwide, there has been a dramatic increase in the production of GM varieties of soyabeans, maize, oilseed rape and other crops, but the EU approval process has been slow in keeping up. GM crops approved for food or feed use must be labelled as GM if the GM content exceeds the 0.9% labelling threshold.
-    Several animal species have been genetically modified and a number have also been cloned  (cloned animals are not necessarily genetically modified, but one of the reasons for using cloned animals may be the rapid extension of inserted genetic material).  Currently, no GM animals or derived products are on the EU market.
-    However, most conventional livestock production now uses GM feed ingredients such as GM maize or soya. There is no requirement under EU legislation for animals fed on GM feeds to be labelled as such (a majority of the European Parliament voted against a proposal calling for compulsory labelling of food products that derive from animals raised on genetically-modified feed last month).  However, a number of supermarket chains in Europe are working to remove GM feeds from some of their supply chains, such as premium own label brands.

Even among GM critics there is no apparent desire to ban the use of GM microbes. A GM-free area would obviously require a ban on the cultivation of GM crops. The Programme for Government commitment would still allow Irish livestock producers access to GM feed imports. Indeed, the government would not have the right even under the new EU legislation to prevent the import of approved GM food or feed except for cultivation. However, an official label would be created for producers who wanted to claim GM-free status which would require all such food and livestock to be produced with certified non-GM ingredients.

Costs and benefits of a ban on GM crops

The use of GM technologies in agriculture in Europe is controversial, with critics highlighting its actual and potential adverse effects on human health (the existence of toxic or allergic reactions), the environment (gene flow), biodiversity and ethical issues. Supporters of the technology point to the fact that it is highly regulated, that there have been no documented instances of injury to human health since GM crops began to be cultivated in 1995, and that there are significant benefits both to food production and the environment from their use.  They also point to reputational damage to Ireland’s attempt to brand itself as an innovation society if policy is made on the basis of fears and perceptions which run counter to what science has shown.

Of relevance to readers of this blog is that there does not appear to have been any proper economic analysis of the proposal to declare Ireland a GM-free zone. It is not a foregone conclusion that such an analysis would find against the proposal. There is evidence that on the European market GM-free foodstuffs can command a price premium over GM foods. Even for those of us who support the science, there could be an economic case for banning the cultivation of GM crops if the result was to lift the overall prices received by Irish farmers by more than the additional costs they  would incur by not being able to access GM varieties.

The GM varieties currently available are not of great interest to Irish agriculture, but we are starting to plant larger areas of maize and oilseed rape, and GM varieties of wheat, barley and potatoes could become available in the near future. Teagasc economists attempted to estimate the higher costs of production due to a GM ban some years ago. Apart from sugarbeet (which is no longer relevant), they took no account of any favourable yield effects. Savings accrued to farmers from lower chemical outlays, partially offset by the higher cost of seed. They did not take explicit account of coexistence or liability costs, and the costs of Identity Preservation (i.e. being able to certify that your production is GM-free) were assumed to be borne by the non-GM producer.  The study recognised that the GM variety would probably sell at a discount to the non-GM variety. On this basis, they estimated that crop farmers would be worse off by between €1 and €3 million as a result of a ban.

The discount used in the study for GM varieties may be exaggerated. The bulk of Irish cereals production is sold for animal feed, which is in any case mainly supplied from GM sources. There is little evidence that Irish feed compounders would be prepared to pay a premium for non-GM supplies as long as GM imports are allowed. On the other hand, more stringent regulations on co-existence would further reduce the profitability of GM varieties.  On balance, it is likely that Irish agriculture would lose out from a ban prohibiting the cultivation of GM crops.

Costs and benefits of a ban on GM feed (if it were possible)

The cost-benefit analysis would be different for a second scenario where Ireland also banned GM imports for livestock feed (recall again that this is not a legal option open to the Irish government, but could conceivably be introduced through voluntary collective action).  Here, the main cost would now be the higher cost of sourcing non-GM supplies of maize and soyabean meal for livestock producers. That non-GM feeds cost more than GM feeds is not disputed, but the size of the premium is. Part of the problem is that, with the rapid spread of GM varieties in the main producing areas, the size of the premium today may underestimate the amount that would have to be paid a few years hence. The Teagasc study  estimated higher feed costs of between €7 and €35 million. A more recent Teagasc estimate for pig producers suggests that higher feed costs from non-GM sources could add €60 million to production costs. On the other hand, crop producers could expect to benefit from this feed premium as compounders would now be prepared to pay a higher price for Irish non-GM supplies.

The important element here is that the bulk of Irish beef and dairy production is exported to EU and overseas markets. The unknown question is whether certifying that all Irish food and livestock products are produced with non-GM ingredients would yield a premium in the market place sufficient to cover these increased costs. GM-Free Ireland have produced extensive documentation on the search by EU supermarkets for GM-free supply chains. Another Teagasc study showed that Irish consumers were unwilling to purchase a GM yoghurt or a GM dairy spread even when they offered specific health benefits. The economic literature evaluating consumers’ willingness-to-pay  suggests that quite a high premium exists for non-GM food (around 25% from a meta analysis of individual studies). However, it would be important to determine if this premium could really be extracted from the market place for Irish-produced beef and dairy products which were certified as produced with non-GM ingredients in comparison to the cost of establishing this reputation.

Impact assessment needed before decision is announced

Ireland is a high-cost agricultural producer from a global perspective, and to survive Irish farm produce has to develop a premium quality image. But it only makes sense to pursue higher quality if the market return exceeds the costs incurred. This is unlikely to be the case for a GM ban on crop production. However, a voluntary GM-free label could allow conventional producers (organic producers are already prevented from using GM seeds or feeds) to benefit from specific niche markets where a premium for non-GM products exists. In any case, the economic impact study should be done before the decision is announced.

For example, the latest official breakdown on the 423 highest earners in the State showed that for 189 individuals who earned €500,000 or more in 2008, the average tax rate was 19.86 per cent.

I’m afraid this isn’t true. This report does not relate to the 423 highest earners in the State, as I’ve written about here, here and here. It only relates to a subset of the highest earners who would have paid less than 20 percent because of tax loopholes but who are not doing so now because of the introduction of a minimum rate.

To be fair, I don’t blame the journalists because the relevant document is so poorly written.  At this point, however, I really think the folks in the Department of Finance responsible for this report should consider issuing an official clarification.

Update: In comments, Joseph O’Toole reckons I’m being mean to the Department of Finance because this is a Revenue Commissioners report. Well, I found the report here on the Department’s website, which suggests that they are responsible for its release. But, yes, the report is put together by Revenue Commissioners staff.  So let me rephrase my point: Whoever is responsible for this report might think about issuing a clarification.

It is time to staunch the bleeding. As Irish state guarantees near their expiry date, some banks will not be able to refinance their balances. The government should prepare insolvent banks for forced debt-for-equity swaps, which would instantly recapitalise the banks in question and cap the government’s exposure. This cannot be done frivolously; European institutions are exposed and EU partners must be consulted. But someone must put an end to the practice of handing banks blank cheques. Some Irish pluckiness would benefit us all.

I take it the FT will now be dropped from the long list of august international institutions that the government rolls out to claim support its banking policies.

They start by saying that Ireland was a role model for austerity at the start of the year, but is now a reason for concern. They give two reasons, the first of which is the unknown but large cost of saving the banks. Secondly, they do not believe that the government will deliver in the next budget.

On the banking costs, they state

We have increased our estimate of the cumulative total cost to the government of providing support to the banking sector from about €80 billion (50% of GDP; see “Ireland Rating Lowered To ‘AA’ On Potential Fiscal Cost Of Weakening Banking Sector Asset Quality; Outlook Negative,” published June 8, 2009, on RatingsDirect), to €90 billion (58% of GDP) …

We have increased our estimate of the cost to the Irish government of recapitalizing financial institutions to €45 billion-€50 billion (29%-32% of GDP) from €30 billion-€35 billion (19%-22% of GDP). 

Our estimate includes two main components: the upper end of our estimate of the capital we expect to be provided by the Irish government to improve the solvency of financial institutions, and the liabilities we expect the government to incur in exchange for impaired loans acquired from the banks.

Irish ten year bond yields have risen above 5.5 percent this morning and the spread against their German equivalent, at about 340 basis points, is the highest it has been in recent years. The NTMA have objected to the downgrade, arguing that S&P were using an “extreme estimate” of the cost of the banking bailout.

The criticism by An Taisce refers to traffic projections which are now seven years old, and the fact that traffic volumes have been falling. The NRA counters that roads are build with a longer time horizon in mind. While I agree with the NRA that roads are build with a longer time horizon in mind, it is nevertheless true that the projections are seriously out of date and that the starting position has changed significantly. Furthermore, there are at least some schemes, which are grossly over designed. An Taisce points to  a refusal for planning permission for a dual carriageway between Bohola and Ballina, because the NRA apparently failed to support the project on traffic grounds.

Unfortunately gold-plating of projects is not unusual. In the ESRI Mid-Term Evaluation of NDP 2000-2006 we pointed out that “roads with capacity of 55,500 AADT, or anywhere near it, appear to be a significant overdesign for the numerous lightly-trafficked sections of the N8 and N9″. Such schemes cannot pass a reasonable cost-benefit analysis when compared to more appropriately sized schemes. Unfortunately, the lesson does not seem to have been learned and the tax payer is expected to pay for overdesign again (the fact that some of the schemes are PPPs is irrelevant here as these also have to be paid for by tax payers).

Take the example of the N2, for which there are two proposed schemes in the system. I have already referred to the idiotic scheme to by-pass Slane where the key issue could be simply dealt with via a HGV ban.

The second scheme is in North Monaghan, where a by-pass of Monaghan and Emyvale to dual carriageway standard is being pursued. Interestingly Monaghan has already been by-passed and anyone who knows the road also knows that there is no danger of congestion except through Emyvale (for which a by-pass is likely to be supported by some analysis). Traffic counts bear this out - average total volumes (north and southbound) for 2010 amount to 5,413 AADT. Why then are we building for 35,000 AADT - almost seven times the current volume? Further south, the section between Castleblaney and Clontibret has been upgraded to 2+1, and further south still between the M1 and Castleblaney a wide 2 lane road is perfectly sufficient to achieve the target level of service (80km/h) - both of these sections of road carry a higher level of traffic than that, which is supposed to be upgraded to dual-carriageway standard. 

The construction costs of a dual carriageway are 82% higher (according to the NRA Road Needs Study) than for a wide 2 lane road - can we really afford such goldplated schemes?

Holbrooke Shields and others re Censorship

‘Is Comhar SDC practicing a form of censorship by not publishing Richard Tol’s comment

Response

Tol’s comment was received on Friday 20th at 11:47, and it was posted Monday 23 at 09:59, as were the comments by Holbrooke and Lucey which were submitted on Saturday 21st . The delay was a product of the fact all comments have to go through an administrator because a huge amount of spam comes through, and the office is not staffed over the week end.

Conclusion

Discussion is appreciated and welcome. Keep paranoia at bay if there is a delay in posting. We’ll check out the management of Irisheconomy.ie to see if turnaround can be improved.

Richard Tol
1. He takes issue with “much [of Palo Alto] will be submerged if sea levels rise significantly” On the basis that:
‘A quick check of the elevation of Palo Alto (e.g. http://www.topozone.com/map.asp?lon=-122.1875&lat=37.4375, or even http://en.wikipedia.org/wiki/Palo_Alto) would reveal that this is just not true’.
Response:
My information comes from the presentation of Patrick Burt, a man of substantial entrepreneurial endeavour and (with his wife Sally) business achievement, who lives in Palo Alto and now serves as its very successful mayor. He comes across as careful, serious, measured and modest in his analysis of data. Both the slides he used and a podcast of his talk in the Science Gallery TCD are available here,  in which he presents the implications of sea level rise in terms of submerged area and (especially) estimates of infrastructural damage.
Conclusion 1
It is possible that Tol is right and Burt is wrong, but I doubt it. I leave it to the reader to read both analyses and make up their own minds.
2. Even if sea level threatens submersion, Tol argues that ‘people there know how to build dikes and can pay for it too.’
Response
People will of course adapt, by some combination of moving and (individual and collective) protection measures. Notwithstanding the Dutch successes as regards keeping the North Sea at bay with dikes, there is a significant literature - typified by Pilkey and Young’s The Rising Sea, Island Press, 2009 – that mobilizes considerable evidence to demonstrate that letting nature take its course is nearly always the cost effective and environmentally responsible thing to do.
Conclusion 2
It is possible that dikes are the answer to rising sea levels, but – with the possible exception of the Netherlands - I seriously doubt it
3. ‘Projected Sea level rise by 2100 is less than one tenth of that (9 metres).’
Response
The most characteristic challenge of modern climate science, and modern climate economics , is how to handle extreme uncertainty, and specifically how to capture theoretically and empirically the implications of potentially catastrophic change. The economic perspective is addressed by Marty Weitzman of Harvard (See for example: Weitzman, Martin L. ‘Modeling and Interpreting the Economics of Catastrophic Climate Change’..Review of Economics and Statistics, 91 (1) 1-19 February 2009, and his working paper ‘GHG Targets as Insurance Against Catastrophic Climate Damages’, June 2010 and is the best thinking and writing in this area, for which work he is a credible candidate for the Nobel Prize in economic sciences. Projections of sea level rise by 2100 will be made, but the outcome could be dramatically high or low; we simply don’t know, and it is a conceit to imply otherwise.

Conclusion 3

I wish I was as certain of anything as Tol is of everything.

4. ‘Rigour and scrutiny, however, are not part of Convery’s vision’.

Conclusion 4

If this is true, I’m in good company.

Brian Lucey

‘The evidence on top down innovation fostering is v much that it doesn’t work so I’m not sure what use such would be’.

The evidence tells us a few things – a top down system where government decides what innovation is, and invests accordingly, will not work, or at least not indefinitely (there were some early successes in France and Japan, but most were not sustained).

But we do have a good sense as to the prerequisites that need to be in place if progress is to be made. As outlined in my Commentary, they include: finance provided by angel investors (often relatives), and by venture capitalists; a profusion of new ideas that could increase productivity in existing businesses and create new markets (these often come from universities and their graduates); legal expertise that helps compliance with the law and protects the new ideas (intellectual property); and entrepreneurs who are willing to take on the risk and commit themselves body and soul to making it happen. The role of the public sector is to provide low taxes on enterprise, correct for market failure in R&D and innovation (tax breaks for R&D and innovation) and venture capital funds, provide protection for intellectual property and support for relevant infrastructure (without Department of Defence funding of internet, Silicon Valley would be a pale shadow of what we see today). To which we should add attention to the market and what consumers want and area willing to pay for, and the expertise to convince them of same.

UPDATE: The Irish Times (2) has seen the report of the National Strategy Group for Higher Education. Strikes me as less radical than Lucey and Larkin.

* Clarification: I know a few anecdotes about a few courses at a few Irish universities.

Rigour and scrutiny, however, are not part of Convery’s vision. He claims that Palo Alto “will be submerged if sea levels rise significantly” — ignoring that Palo Alto is 9 metres above sea level (projected sea level rise by 2100 is less than one-tenth of that); that people there know how to build dikes and can pay for it too; and that Palo Alto is special because of its people rather than because of its physical characteristics.

I left a comment to that effect on his blog, but discussion is not appreciated in sustainablalaland.

UPDATE: Comments are up now at Comhar.

UPDATE: Frank Convery responds. I close the discussion here.

I am surprised that he doesn’t mention a rather obvious fourth candidate: the size of the economic collapse has been much less this time around (except in a few unimportant countries such as our own). The duration has been shorter, also, and I think that is very important: after 1929 some economies continued to contract until 1932 or 1933. And this crucial difference is due to different policy responses:  much more aggressive monetary policies, fiscal stimuli, and much more important automatic stabilisers.

The extent to which Europeans have become more tolerant can be exaggerated. In 1928, the Nazis only got 2.6% of the German vote. Contrast this to the 13.9% received by the anti-immigration Dansk Folkeparti in 2007, before our crisis started, or the 5.9% achieved by Geert Wilders’ revolting party in 2006. Since 2008, the political extremes have benefitted, just as Hitler did (the Nazis’ share of the vote jumped to 18.3% in 1930).  Wilders’ party received 15.5% of the vote in 2010, while the terrifying Jobbik got 16.7% of the vote in the first round in Hungary. Sarkozy has been actively courting the xenophobic vote in France this summer. There are probably a few other examples around which people could point to.

Severe recessions can still bring out the worst in people, it seeems.