Although the absolute score for Dublin has declined in the Global Financial Centres Index, its relative position has improved from 13th place to 10th place (other financial centers also face various problems). See the full report here.
No doubt we all noticed this article in today’s Irish Independent. Aside from the issue of whether great universities require great academics or great beurocrats (and the intriguing question of how come, in this trawl for world class talent, the people chosen are so often Irish), one needs to ask what price Irish universities need to pay to get great academics, assuming that they want them.
Presumably that price is falling rapidly, for several reasons. First, a little bit of googling suffices to make it clear that the academic job market is collapsing in the United States. The contributors to this blog will all be familiar with this AEA site listing cancelled or suspended job searches, and there are many more indicators available out there. Second, the high Irish property prices which were used as an excuse for high salaries are also collapsing.
And then there is the bigger picture. The state just can’t afford to pay enormous salaries any more. Moreover, there are obvious political considerations that can’t be ignored. Given that people at the bottom are going to see their net income fall, the case for a cap on all wages paid for in whole or in part by the taxpayer is becoming increasingly compelling. Many posts ago, I suggested a cap of 200K, but that now seems much too generous. 150K should be enough for anyone, and if people want to chance their luck on the national or international market places, good luck to them.
Kevin has raised the issue of differing attitudes in Europe and the US about the need for expansionary fiscal policy, with the Germans being particularly reluctant to adopt expansionary policies. This piece in today’s FT shows that some of the difference in attitudes reflects German concerns about US monetary policy.
The piece cites Christoph Schmidt, an adviser to Angela Merkel, as saying:
I see an inflationary risk in the US in the medium term because of the development of money supply there.
It also cites Klaus Zimmermann, president of DIW:
The central banks in the US and the UK are now literally printing money. This creates an inflationary potential that is difficult to stop.
In other words, rather than recommending that Europe follow the US in providing more fiscal stimulus, these influential German economists prefer to argue that US policy has already become dangerously expansionary and provides a bad example.
In my opinion, these statements illustrate three popular misconceptions.
The FT has an editorial today that recommends that Irish firms look overseas in order to obtain a more diverse pool of non-executive directors. My impression is that the practice so far has been to primarily recruit non-execs from the US and the UK. A broader geographical range might contribute more to diversity, rather than focusing on countries with very similar approaches to corporate governance.
Axel Weber made an interesting speech last night. He recognises that European fiscal assistance to a member state may be possible, but only under extreme conditions. Moreover, in order to comply with the ‘no bailout’ clause, any loan would have to be conditional (he does not specify the list of conditions).
Key part of the speech:
“It should be emphasised that the “no-bail-out” rule, as stipulated in the EC Treaty, is an indispensable instrument for preventing moral hazard behaviour by the member states. With that in mind, issuing blank cheques would definitely be the wrong course of action.
Yet, EMU is our common destiny. If any kind of help for a member state were necessary in the improbable case of an extreme emergency, the clear conditionality of such support would be essential in order to comply with the Treaty.”