Quangocide

Proposals by the British coalition government to abolish a quarter of the list of eight hundred public bodies have garnered considerable attention. The full list of public bodies and their proposed destiny can by found here. In some instances functions are being transferred into government departments and in other cases privatized. Curiously the casualty list includes some rather effective value for money regulators, notably the Audit Commission. Their local government audit functions are to be transferred to private audit firms. The Australian state of Victoria made a similar move some years ago, turning the Auditor-General into a purchasing authority in the 1990s. The policy was soon reversed as both political and capacity concerns about audit in Victoria became apparent.

The coalition government is retaining public bodies chiefly on grounds that they perform technical functions, that impartiality is required or that transparency in factual determinations is required (as with central statistical functions). There is a valuable discussion by Ian Magee of the Institute for Government here. Magee notes that value for money was not properly considered in the proposed institutional reforms.  Even if the principles are correct it is not clear they are applied correctly when the Human Fertlization Embryology Authority is on the list for abolition – it has had both an important technical role and removed significant controversial decisions from the partial realm of politics over a number of years. In this instance it is said the functions are to be transferred to other regulators and this is part of broader theme in the proposals of rationalization of regulatory bodies. In Ireland the Cowen government has already commenced a programme of abolition of state agencies leading to the first significant reductions in numbers of agencies, following on from the report of An Bord Snip Nua. Data on this trend will be discussed at next month’s launch of the Irish State Administration Database, produced by a team working under the leadership of Dr Niamh Hardiman in the UCD Geary Institute.

TASC Proposals for Budget 2011

The TASC think tank has produced its proposals for Budget 2011 (a mix of suggested tax and spending proposals, plus recommendations to improve the quality of publicly-available information): the full document is here and the executive summary is here.

Borrowing Rates from The EFSF

Today I re-read this piece that Wolfgang Munchau published in the FT on September 28th. Titled “The Truth Behind the EFSF” at Eurointelligence and “Could Any Country Risk a Eurozone Bail-Out?” at the FT, it concludes that countries that tap the facility will have to pay interest rates of about 8 percent. If this were true, then countries like Ireland could face very substantial financing costs even after seeking help from this fund, which would make successful stabilisation all the harder.

Looking into this issue, it seems to me that Munchau’s assertions about borrowing rates from the EFSF are not correct. By my calculations (see below) the EFSF borrowing rate would be a bit below 6 percent. Now this is still very high but given the large sums that would be involved if the facility swings into action (financing budget deficits and bond redemptions for three years) this difference is likely represent a significant amount of money.

Munchau calculates his 8 percent figure as a 4 percent cost of fundraising for the EFSF plus 350 basis points for administration charges and lending margins and an additional 50 basis points related to the fact that the EFSF will be holding back some of the funds raised as a “cash buffer.” While fundraising costs, administration charges and lending margins and the cash buffer do all come into calculating the correct borrowing rate, my read of it is that Munchau’s calculation isn’t accurate on any of these three figures.

I’ll admit, of course, that this stuff is pretty complicated, so let me start with providing the official sources and then people can tell me if I’ve got it wrong.

Continue reading “Borrowing Rates from The EFSF”

Two Seminars at TCD

There are two interesting economics seminars at TCD in the coming days:

1.  Daniel Leigh (IMF) will present the recent WEO study “”Will It Hurt? Macroeconomic Effects of Fiscal Consolidation” 9am-10.30am on this Thursday

2. Gylfi Zoega (University of Iceland) will present a paper next Tuesday 12.30-2 on the Icelandic situation: “Lessons from a collapse of a financial system”

Both seminars are in IIIS seminar room on Level 6 of TCD Arts Block. All welcome.

Gender Gap

After the EIU, the WEF now also has a global report on equality between the sexes.

Ireland comes 6th out of 134 countries. That is great.

The build-up is peculiar, though. Ireland tops the bill on equality in educational attainment, although bonus points seem to be given for absent men at third level.

Ireland could do better on wage equality for similar work, on labour participation, and on senior jobs — but does rather well on uncorrected wage equality and on female professionals.

I guess that the data are somewhat older, and Ireland is getting points in gender equality because young men left school to be builders.

Ireland does well in political representation, primarily because of Mary Robinson and Mary McAleese. I would think that the largely ceremonial presidency should be discounted. Ireland does rather more poorly on female parliamentarians and ministers.

It gets strange on “health and survival”. Ireland ranks 89th. One subindex is female to male life expectancy. Irish women do not live long enough compared to men.The other subindex is male to female births — 106 boys for 100 boys, but surely not because of selective abortion or infanticide. [THIS PARAGRAPH WAS CORRECTED]

Not sure what to make of this. Ireland’s rank is too high and too low at the same time.