'All the wrong options have been pursued'

nesf

http://www.irishtimes.com/newspaper/opinion/2010/0308/1224265794036.html

In this open letter, 28 leading economists, social scientists and economic analysts tell the Government that it’s policies for dealing with the economic crisis are wrong. And they chart a different course

THE GOVERNMENT’S economic strategy is failing. The Irish recession has been deeper and longer than almost any other in the industrialised world.

Consumer spending has collapsed while at the same time unemployment and emigration have soared. Crucially, investment has plummeted off the chart. Not only have Government policies failed to stem this haemorrhage, they have actively contributed to this collapse.

The Government has pursued deflationary policies, in particular public expenditure cuts. The most damaging are cuts in transfers to low-income groups which, along with general tax increases on low and average pay in 2009, have reduced spending power in the economy at a time when it was most needed.

Equally damaging have been the cuts in public investment at a time when private investment has plummeted. This has laid the foundations for a low-growth, high-debt future where unemployment will remain high and inequality endemic. All the wrong options have been pursued.

Budgetary policies have been short-termist and reactive. Instead of cutting real waste in the public sector by increasing productivity and efficiency, the Government has cut public services and the living standards of those who can least afford it, further reducing domestic demand and, thus, employment.

These policies are weakening the economy’s ability to cope with growing debt levels. Without a strong recovery, tax revenues will fail to rise and future budgets will simply embed that deficit into the economy.

This will depress economic activity even further. This explains why the Government’s own forecasts for the deficit keep rising, not despite, but because of, its own deflationary measures. We are heading into a joyless, jobless recovery.

We require fundamentally different policies, a twin track strategy, which will maximise environmental and sustainable progress and restore employment while addressing the deficit. We urgently need measures to tackle five key areas which require fundamental reforms: our substantial physical infrastructure deficits;

our poor social infrastructure – early childhood education is poorly developed, primary and community healthcare lag behind European norms, housing lists continue to lengthen, while Irish public transport remains inadequate and under-funded; our high levels of relative poverty and income inequality; our under-performing indigenous business sector – which needs appropriate support to contribute to our export base, RD and innovation capacity; and our unsustainable reliance on carbon-heavy resources and activities.

It may seem astonishing that we face such economic and social deficits after 15 years of boom but these are the consequences of pursuing a failed low-tax, low-spend model which sought short-term gains from the speculative activity of a small but powerful golden circle.

Only the modernisation of our economic and social base through a sustained investment programme and a transformation of our corporate governance practices can overcome past mistakes. This will need substantial back-up in the form of retraining and return to education to ensure people – whether managers or employees – have the skills to fully exploit the opportunities that investment in innovative enterprise generates.

Educational investment, in particular, will be key to strengthening our export base. Driving competitiveness and productivity in the medium-term, while increasing employment in the short-term, is a win-win scenario.

We must mobilise all the resources available to accomplish this transformation. We still maintain a relatively low-debt status in the euro zone, buttressed by the vast accumulated borrowings in our exchequer cash balances (over €20 billion).

We can employ the strength of our combined public enterprises – their off-balance sheet borrowing and investment capacity to invest in our infrastructure and create new indigenous enterprises, both public and private.

We can further employ new funding vehicles – enterprise development bonds (eg green bonds), municipal bonds and the new National Solidarity Bonds – which can leverage our current high savings ratio and international investment. All this becomes even more necessary given the potential capacity of Nama to pile up considerable debt; at the same time there is little evidence of credit being freed up for investment purposes.

The resources and labour to finance this modernisation drive are there. We just need the political vision and will to make it happen.

Addressing the deficit needs a long-term vision of what kind of taxation system we want. In the short-term we need to target the least deflationary sources of revenue so as not to weaken our recovery prospects. A comprehensive property tax – encompassing both housing and financial assets – should be introduced starting with high income groups and eventually extended to all incomes. Reform of regressive tax expenditures (ie tax breaks that disproportionately benefit high income groups), shown by Tasc to be in the billions of euro, should be urgently undertaken to increase the income tax take. Extension of environmental taxes and incentives should be accelerated. An additional tax band at the higher level is needed.

In the medium term, we should explore the potential of social insurance and local taxation to broaden the tax base while providing real benefits in return. PRSI can be expanded to incorporate a comprehensive free healthcare system (in particular, primary care) as well as earnings-related pensions. Stronger local taxation powers have the potential to be more accountable while providing investment in services responsive to local needs. On the expenditure side, it is time to make public sector workers partners in the process to increase productivity and efficiencies.

As other countries have shown, employee-driven innovation (in both public and private sectors) has the capacity to reduce costs and increase output – much more so than crude, top-down employment and wage-slashing measures.

We can afford neither wasteful policies nor wasteful practices. But elevating the ethos of public service and personal responsibility will require harnessing the collective resources of employees through an open and honest engagement by all stakeholders – one that is not afraid to find and, then, repair fault.

What is absolutely crucial is that these twin approaches – investing in sustainable growth and full employment while addressing the deficit – complement each other.

This will require a level of fiscal management we have as yet not experienced. But it is do-able. Embedding investment, rather than debt, into the economy while restructuring taxation and expenditure in a progressive and expansionary manner to ensure a job-rich recovery – this, and not the current deflationary strategy, is the road to success.

This article has been co-ordinated by Tasc, which describes itself as an independent think-tank dedicated to combating Ireland’s high level of economic inequality and ensuring public policy has equality at its core.

Open Letter To The Government: The Signatories

PROF TERRENCE McDonough, Department of Economics, NUI Galway.

Prof Ray Kinsella, Smurfit Business School, UCD.

Prof David Jacobson, Dublin City University Business School.

Prof Paul Teague, School of Management and Economics, Queens University Belfast.

Prof Peadar Kirby, Department of Politics and Public Administration, University of Limerick.

Prof Rob Kitchin, National Institute for Regional and Spatial Analysis, NUI Maynooth.

Prof James Wickham, Department of Sociology, Trinity College Dublin (TCD).

Prof Seán Ó Riain, Department of Sociology, NUI Maynooth.

Prof Mark Boyle, Department of Geography, NUI Maynooth.

Dr Jim Stewart, Senior Lecturer in Finance, School of Business, Trinity College Dublin.

Dr Joe Wallace, Kemmy School of Business, University of Limerick.

Dr Michelle OSullivan, Kemmy School of Business, University of Limerick.

Dr Daryl DArt, Dublin City University Business School.

Dr Roland Erne, UCD School of Business.

Dr Proinnsias Breathnach, Department of Geography, NUI Maynooth.

Dr Mary Murphy, Department of Sociology, NUI Maynooth.

Dr Colm ODoherty, Department of Applied Social Studies, Tralee Institute of Technology.

Paul Sweeney, economic adviser, the Irish Congress of Trade Unions.

Sinéad Pentony, head of policy, Tasc.

Dr Nat OConnor, Tasc.

Tom O’Connor, lecturer in Economics, Cork Institute of Technology.

Rory OFarrell, European Trade Union Institute (Brussels).

John Corcoran, lecturer in Economics, Limerick Institute of Technology.

Michael Burke, economic consultant (London).

Peter Connell, TCD.

Patrick Kinsella, DIT.

Tony Moriarty and Michael Taft, Unite trade union.

Thought some might find it interesting. Personally, I strongly disagree with it for a variety of reasons. That said, I'm bemused by some of the signatories, I mean, sociologists giving macroeconomic policy advice? It's like going to a plumber about how to fix your car because there's pipes in your car...

Hasschu

The higher they go and the heavier they get the more damage they sustain from the inevitable collapse. Ireland was floating in space with no visible means of support for almost three years. The recovery will be slow and painful replete with political instability and social unrest as the public reacts to the inevitable results of a state that is helpless and near bankrupt when it is most needed. Hopefully the usual safety valves will open up soon, one way tickets out.

C G

Constantin Gurdgiev has a discussion here: http://trueeconomics.blogspot.com/2010/03/economics-08032010-28-alices-in.html

C G wrote:

After a very lengthy period of navel gazing, Irish left has produced its own platform for economic policy (here). And what a marvel it is. Right out of Alice in Wonderland.

The letter of 28 social scientists published in the Irish Times is worth a read, if only to see what passes for ‘independent thinking’ in our country. Here are few pearls.

“Consumer spending has collapsed while at the same time unemployment and emigration have soared. Crucially, investment has plummeted off the chart. Not only have Government policies failed to stem this haemorrhage, they have actively contributed to this collapse.”

No one can deny these facts. But there are serious omissions here. Investment collapse in Ireland is driven foremost by the collapse in construction sector – the sector that accounted for over 70% of total private investment in this country until 2007. So no - the Government has not contributed to this.

Investment the authors have in mind is the NDP-related allocations, which are less than 50% about real capital and more than 50% about ‘soft’ investments – in equality, poverty reductions, etc (all noble objectives, but hardly affordable in current circumstances).

Note, however, that the 28 ‘leading’ policy lights do not mention draconian tax increases here as the contributing factors. Oh, no – this article is about how good more public spending would be to our country.

“The most damaging are cuts in transfers to low-income groups which, along with general tax increases on low and average pay in 2009, have reduced spending power in the economy at a time when it was most needed.”

Really? Social welfare payments were cut by 4% in Budget 2010. They were raised by 3.3% in Budget 2009, which means that in nominal terms, post-Budget 2010 our welfare recipients are only 0.83% worse off than they were in 2008. And then there was deflation – in 2009 CPI fell 4.5% and HICP declined 1.7%. Say we use HICP, since majority of those on social welfare don’t have a mortgage – their housing costs are usually covered by the taxpayers. This means that in real terms post-Budget 2010 Ireland’s welfare recipients are still 0.883% better off than they were in December 2008. Is that so deflationary, folks?

“Equally damaging have been the cuts in public investment at a time when private investment has plummeted. This has laid the foundations for a low-growth, high-debt future where unemployment will remain high and inequality endemic.”

One can relate to this statement. The problem is that while some of the cuts were to productive investment, the real error of the Government policy has been the lack of systematic approach to assessing the value-for-money of various projects and freezing or canceling outright the ones that do not yield sufficient returns. For example, parts of road building programmes relied on the outdated and often utterly unrealistic expectations of development in remote locations. Binning these ‘investments’ is ok – they are the luxury we cannot afford. Ditto for Metro North – which in its current incarnation is a White Elephant.

And how on earth cuts in public investment are going to make income inequality endemic? During the Celtic Tiger era, income inequality rose (judging by the works of some of the 28 experts), yet public investment also rose. So public investment boosts did not work then for income inequality. Any reason they should do so now?

Irony has it, the 28 ‘wise ones’ have failed to grasp the idea that far from stimulating public investment, we should be stimulating productive private investment – that is what creates sustainable jobs and growth. And to do that we need lower taxes, and less borrowing by the Exchequer, so our banks have no Government bonds to roll over at the ECB lending window.


“Budgetary policies have been short-termist and reactive. Instead of cutting real waste in the public sector by increasing productivity and efficiency, the Government has cut public services and the living standards of those who can least afford it, further reducing domestic demand and, thus, employment.”

I agree with this. The Government has wasted a golden opportunity to have real reforms in the public sector and public spending, as well as taxation. So why would the 28 'wise ones' give even more dosh to such a wasteful Exchequer?


The authors do not understand that increasing consumption – by borrowing at 5-6% per annum to give the money to our welfare system and to pay public sector’s obese wages is taking money out of investment. Instead, they seem to think that both: welfare payments increases and public sector wages can be sustained while increasing state spending on capital projects.

So do the simple additions. To maintain NDP investment at previously planned levels, on top of the current budget deficit we will need some odd €6-7 billion more. To return welfare payments to their 2009 levels, and to reverse pay cuts in the public sector and reductions in employment there, we will need additional €3.4 billion. These are all net of receipts. So the Exchequer will be borrowing some €29 billion this year - 18% of our GDP. What would the Greeks say with their current 12.7% GDP deficit and heading for 10.7%?

What would the bond markets say? Ah, here we come to the interesting part that the folks in Tasc did not care to consider. At 18% defict, Ireland Inc's bonds would rise to a yield of ca 7.5%. Ok, let us split the difference and say, 7%. Then scroll below for some calculations...


“These policies are weakening the economy’s ability to cope with growing debt levels.”

Really? Most of the non-banking debt – almost 100% of it – in this country is held by private sector firms and ordinary workers. How is paying more in welfare payments going to help deflate this debt? How is public spending on capital projects going to do the job? Oh, by the way, read further to find what the 28 think about savings (which, remember, in the long run = investment).


“We urgently need measures to tackle five key areas which require fundamental reforms: our substantial physical infrastructure deficits; our poor social infrastructure – early childhood education, ...primary and community healthcare..., housing lists..., ...Irish public transport ...; our high levels of relative poverty and income inequality; our under-performing indigenous business sector – which needs appropriate support to contribute to our export base, RD and innovation capacity; and our unsustainable reliance on carbon-heavy resources and activities.”

Well, if that is not a shopping list we’ve seen before in the Irish Times… We do need more schools, and we do need some other capital. But simply to say ‘more!’ is not enough. One must face the reality of constraints on funding. The 28 do not seem to be bothered by the fact that Irish middle classes simply cannot bear any more of their droning about the need for more ‘public sector’ stuff and shorter housing lists. We’ve got mortgages to pay, folks, never mind your housing lists. And their environmental taxes are simply a ploy to tax income even more.

The irony is - word 'reforms' is equated in the 28 minds with 'more spending'. Again, we've heard this before from some of the signatories.

The 28 also seem to not understand where our exporting capacity comes from. Far from being the domain of domestic enterprises, it is reliant on MNCs, who would flee Ireland were the 28’s ideas implemented.


“It may seem astonishing that we face such economic and social deficits after 15 years of boom but these are the consequences of pursuing a failed low-tax, low-spend model which sought short-term gains from the speculative activity of a small but powerful golden circle.”

Really? I didn’t notice a low tax, low spend economy. The Government accounted, pre-crisis for EU-average level of spending in terms of GNP, and removing the MNCs out of Ireland’s income accounting, leaves the Irish Government in control of over 60% of the entire economy. Low tax? Our taxes are now second highest in the EU at the upper margin level. All of this before you factor in some of the highest indirect taxes and charges.

But wait, to be really wise, the 28 must have done some thinking – low taxes compared to what? To the services and benefits we receive? One has to be ignorant to suggest that given the poor quality of healthcare, the abysmal quality of our transport, and pretty much every other service supplied by the State, our taxes are low. Compared to the French and the Swedes, and the Germans, we are paying through the nose for the little service we get.


“We can employ the strength of our combined public enterprises – their off-balance sheet borrowing and investment capacity to invest in our infrastructure and create new indigenous enterprises, both public and private.”

Please, help me – does anyone actually believe that our semi-state companies are that good in creating 'new indigenous enterprises’? More CIE? ESB? Bord na Mona? Aer Lingus?


“We can further employ new funding vehicles – enterprise development bonds (eg green bonds), municipal bonds and the new National Solidarity Bonds – which can leverage our current high savings ratio and international investment.”

Again, there is apparently not a single person authoring this letter who understands basic finance. At what rate would you borrow through these bonds? Current yield is 5%. Greece at 6.3%. To make these bonds attractive to anyone, you’d have to price them around 7%. Are the 28 suggesting that returns to these bonds will be in the region of 10% (to cover issuance costs and administrative margins)?

Suppose we borrow at 7% for 10 years, invest in new private (not public) enterprises. The rate of survival for start ups in Ireland is, historically, around 25-30% over 5 years. In 10 years – it will be around 15%. To get 10% return on these bonds, the state will need to invest in new ventures that will survive through 10 years slog while yielding over 22% annually! Enterprise Ireland never had this spectacular of a record, even during the boom time. Even Michael O’Leary is not that good.


But wait, the above passage is about taking our savings and spending these on public investment and state enterprises. How is that going to help our families with their debt? And how is that going to provide financing for companies and private sector in general? What effect will this expropriation of personal savings (for it will require compulsory expropriation, given that the bonds will have to be self-financing, aka priced at yields of below 2-2.5% pa - the expected rate of real growth in the economy over the next 10 years) have on consumption? The minute we start even talking about destabilizing peoples savings, all cash will flee the country and consumers will tighten even more their expenditure. Sadly, none of the 28 'leading lights' seemed to have heard of the precautionary savings motive - the one that drives our current savings ratios.


And so they conclude – having established not a single fact or provided not a single relevant statistic or estimate that: “The resources and labour to finance this modernisation drive are there. We just need the political vision and will to make it happen.”


NB: The 28 call for reforming tax system – I agree, this is needed. They are also calling for abolition of tax breaks. I agree – they unnecessarily complicate tax code and should be yielded in exchange for simple low flat tax rate on all income. But we do not need an additional tax band for higher income – we need to bring people on lower incomes into tax net to make them real stakeholders in this society. Again, this can be done by simply dropping the income tax rate and with it – the deductions.

Time Magazine

Not to get personal but to further the point nesf made, not one economist from Trinity, UCD, NUIM or UCC signed that. It appears to be a bit of an idealogical front tbh - "Peter Connell, TCD" appears to be an IT consultant ffs...

Économiste Monétaire

Anyone with an opinion is now a 'leading economist', according to the Irish Times.

I had a discussion about this during the research methods course of my LLM.

The class of law students got offended when I suggested that no one present was really qualified to offer an informed opinion on the statistical methods of sampling small populations. Things didn't get better when I said their opinions on the financial crises were more conjecture then reasoned debate.

I mean, for issues of health I go to a doctor. For legal issues I'll talk to a solicitor. Why then does everyone in the street feel qualified to opine on the methods of solving the issues surrounding the Irish economy?

nesf

Deleted User wrote: »

I mean, for issues of health I go to a doctor. For legal issues I'll talk to a solicitor. Why then does everyone in the street feel qualified to opine on the methods of solving the issues surrounding the Irish economy?

To be fair, everyone on the street has some opinion on how to fix a medical issue and definitely has an opinion on how judges should act (generally along the lines of harsher sentences etc).

nesf

nesf wrote: »

To be fair, everyone on the street has some opinion on how to fix a medical issue and definitely has an opinion on how judges should act (generally along the lines of harsher sentences etc).

Not to the same extent as economics - and in these cases most people will acknowledge that they aren't an expert (IANAL having even made it into the popular vernacular).

I don't offer opinions on the differences between schools of thought in cancer research, but everyone knows exactly how to solve every economic issue.

You see it over on irisheconomy.ie where people will come on and state that, no Krugman/Shiller/Stiglitz etc are totally wrong. The general populace has neither understanding nor respect for the profession.

WalterMitty

He's correct. Devestatingly so. This is why the country is FUBARed when the likes of Sweeney is advising ICTU on economic recovery.

leninbenjamin

Deleted User wrote: »

The general populace has neither understanding nor respect for the profession.

To be exceptionally blunt, but the profession has done little to endear itself to the general public in the past. A scientist or engineer may come up with some great invention, a doctor might provide a cure, lawyers and the judiciary are very visible at the least, accountants will reduce a tax bill, etc. etc. whereas the economist, by and large he tells everyone what they should be doing from the sidelines. He's like a football coach, largely forgotten in times of success, completely vilified when the **** hits the fan. It's the nature of the role more than anything else.

leninbenjamin

leninbenjamin wrote: »

To be exceptionally blunt, but the profession has done little to endear itself to the general public in the past. A scientist or engineer may come up with some great invention, a doctor might provide a cure, lawyers and the judiciary are very visible at the least, accountants will reduce a tax bill, etc. etc. whereas the economist, by and large he tells everyone what they should be doing from the sidelines. He's like a football coach, largely forgotten in times of success, completely vilified when the **** hits the fan. It's the nature of the role more than anything else.

Good analogy - that is another profession where everyone knows better then those who have the job.

Économiste Monétaire

leninbenjamin wrote: »

To be exceptionally blunt, but the profession has done little to endear itself to the general public in the past. A scientist or engineer may come up with some great invention, a doctor might provide a cure, lawyers and the judiciary are very visible at the least, accountants will reduce a tax bill, etc. etc. whereas the economist, by and large he tells everyone what they should be doing from the sidelines. He's like a football coach, largely forgotten in times of success, completely vilified when the **** hits the fan. It's the nature of the role more than anything else.

I agree with your analogy that it's viewed as a spectator's sport. FYI: Zaraba wrote what's in your quotation box, not me

Flamed Diving

During booms we are called "doom & gloom" merchants for trying to take the heat out of the party, and when it crashes we are told that "we didn't see it coming".

As predictable as night and day.

kippy

Flamed Diving wrote: »

During booms we are called "doom & gloom" merchants for trying to take the heat out of the party, and when it crashes we are told that "we didn't see it coming".

As predictable as night and day.

Sorry to derail this topic even further but I believe the public has lost (maybe they never had) that much respect for economists.
Mainly because an "economist" can have so easily have vested interests (Like many areas in society in fairness) but these vested interests sway greatly their outlook and advice. I suppose its fair not to expect them to bite off the hand that feeds them, however its very difficult to take an economist seriously any more after what a large number were saying during the boom. Not all of them called it (vested interestes) right and indeed those who did could never get the timing correct (stopped clock right twice a day etc). It didnt help that they were shouted down either........however there werent enough of them with the right influence to make any difference anyway.

Kippy

Flamed Diving

kippy wrote: »

Sorry to derail this topic even further but I believe the public has lost (maybe they never had) that much respect for economists.
Mainly because an "economist" can have so easily have vested interests (Like many areas in society in fairness) but these vested interests sway greatly their outlook and advice. I suppose its fair not to expect them to bite off the hand that feeds them, however its very difficult to take an economist seriously any more after what a large number were saying during the boom. Not all of them called it (vested interestes) right and indeed those who did could never get the timing correct (stopped clock right twice a day etc). It didnt help that they were shouted down either........however there werent enough of them with the right influence to make any difference anyway.

Kippy

Just out of interest, could you throw a few names out there? Who are these economists you speak of?

leninbenjamin

Économiste Monétaire wrote: »

I agree with your analogy that it's viewed as a spectator's sport. FYI: Zaraba wrote what's in your quotation box, not me

my mistake, apologies.

kippy

Flamed Diving wrote: »

Just out of interest, could you throw a few names out there? Who are these economists you speak of?

To be honest - I dont have a great recollection for that and perhaps these so called "economists" were not "economists" in the strictest sense of the word however they were referred to as that.
I do know however that "economists" for the various banking institutions, stockbrokers and other organisations only got "negative" in the recent past (as opposed to those who were calling a bust years ago)
Maybe someone else can assist with the names and examples of such.

Flamed Diving

kippy wrote: »

To be honest - I dont have a great recollection for that and perhaps these so called "economists" were not "economists" in the strictest sense of the word however they were referred to as that.
I do know however that "economists" for the various banking institutions, stockbrokers and other organisations only got "negative" in the recent past (as opposed to those who were calling a bust years ago)
Maybe someone else can assist with the names and examples of such.

As far as I can tell, most of the "economists" that work for banks have little more than undergraduate training in economics, at best.

Masters level is a minimum requirement, with Karl Whelan recently stating that only Phd level graduates have the necessary training. I will give a shiny penny to anyone who can find me a Phd working as an economist in a bank.

Flamed Diving

Flamed Diving wrote: »

As far as I can tell, most of the "economists" that work for banks have little more than undergraduate training in economics, at best.

Masters level is a minimum requirement, with Karl Whelan recently stating that only Phd level graduates have the necessary training. I will give a shiny penny to anyone who can find me a Phd working as an economist in a bank.

Pretty much every investment bank in London has PhD level economists working for them.

Sarno and Taylor (for example) push their students into working with their funds during their training and many will work as consultants for them. Part of the problem of getting a good macro professor in Europe is that a lot of the good ones are working in industry.

however, in that role I doubt they are working on general economic forecasts.

SkepticOne

Dr Dan Mcgloughlin of Bank of Ireland would be the obvious one here.

Another big problem is how reports are published - quite a few times if you read an newspaper account of a forecast, and then go read the forecast itself there will be large discrepencies and failure of the paper to publish the caveats and assumptions of the model.

Flamed Diving

I have those shiny pennies, I promise.

Flamed Diving

Flamed Diving wrote: »

I have those shiny pennies, I promise.

Time Magazine can send you my address!

Time Magazine

Flamed Diving wrote: »

I will give a shiny penny to anyone who can find me a Phd working as an economist in a bank.

SkepticOne wrote: »

Dr Dan Mcgloughlin of Bank of Ireland would be the obvious one here.

Flamed Diving wrote: »

I have those shiny pennies, I promise.

McLaughlin does have a PhD, so you owe those pennies to Mr. Skeptic.

BTW, this is pretty funny.

silverharp

How about Krugman:D (aug 2002)

http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Ostrom

nesf wrote: »

That said, I'm bemused by some of the signatories, I mean, sociologists giving macroeconomic policy advice? It's like going to a plumber about how to fix your car because there's pipes in your car...

They generally deal with all the vulgar 'social policy' stuff. You know, the annoying practicalities of 'ideas in practice'...

For what its worth, Sean started out in the ESRI (with a postgrad background in stats and economics), and James Wickham runs the labour market research cluster in Trinity. I do broadly agree that some aspects are best left to the numerate, but the economy is more than macro policy.

Time Magazine

efla wrote: »

They generally deal with all the vulgar 'social policy' stuff. You know, the annoying practicalities of 'ideas in practice'...

For what its worth, Sean started out in the ESRI (with a postgrad background in stats and economics), and James Wickham runs the labour market research cluster in Trinity. I do broadly agree that some aspects are best left to the numerate, but the economy is more than macro policy.

What would you think if a bunch of monetary economists wrote a letter to the Irish Times on fathers' rights calling themselves leading social analysts? Brian Nolan is missing from the list of signatories and that's not one bit surprising tbh.

Nobody is doubting their ability to comment on social policy.

There are two broad elements of economics: how much money we have, and what we buy with it. The latter is absolutely up for public debate. The former is pretty much fact and the realm of macroeconomists, not James Wickham.

Flamed Diving

I have to default on those pennies...

nesf

efla wrote: »

They generally deal with all the vulgar 'social policy' stuff. You know, the annoying practicalities of 'ideas in practice'...

For what its worth, Sean started out in the ESRI (with a postgrad background in stats and economics), and James Wickham runs the labour market research cluster in Trinity. I do broadly agree that some aspects are best left to the numerate, but the economy is more than macro policy.

They're talking about macro policy here. That is the issue. No one disputes their social policy credentials but when talking about which tax system would be more deflationary we're not dealing with a social policy issue but a macroeconomic one.

Flamed Diving

Flamed Diving wrote: »

I have to default on those pennies...

Been studying Argentina much?!

Ostrom

Time Magazine wrote: »

What would you think if a bunch of monetary economists wrote a letter to the Irish Times on fathers' rights calling themselves leading social analysts? Brian Nolan is missing from the list of signatories and that's not one bit surprising tbh.

Nobody is doubting their ability to comment on social policy.

There are two broad elements of economics: how much money we have, and what we buy with it. The latter is absolutely up for public debate. The former is pretty much fact and the realm of macroeconomists, not James Wickham.

I'm just reacting to nesf. But surely dialogue is preferable? Glancing through the names i recognize some projects/departments who should have something to contribute - if not specifically to your area of expertise (which i dont at all dispute). Do you take issue with the content or title?

Time Magazine

efla wrote: »

I'm just reacting to nesf.

No problem, he gets everyone's backs up now and again :pac:

But surely dialogue is preferable?

"Dialogue" is a one way to put it.

Unjustly dragging the name of economics through the media whirlwind again is another. Average Joe thinks Dan McLaughlin and Eddie Hobbs when they hear "economists", not Philip Lane or Brian Nolan.

These lads are welcome to express their opinions, as I am welcome to comment on animal rights. I'm not going to call myself a legal expert because I did a six-week law course when I was in secondary school. It is extremely disingenuous to mislead the public like this.

I'm not sure whether it's an editorial mistake or whether it was a bit of a cheeky move by the "28 leading economists, social scientists and economic analysts." Nonetheless, it's a bit of a farce.

Glancing through the names i recognize some projects/departments who should have something to contribute - if not specifically to your area of expertise (which i dont at all dispute).

Yup, I like James Wickham's book on transport in Dublin; Seán Ó Riain has done some great stuff on the unemployment scenario; and I'm sure Peter Connell is a perfectly competent IT consultant.

Do you take issue with the content or title?

The title is awfully misleading.

The content is fairly vacuous. Statements like "[Government cut-backs] will depress economic activity even further" are of course correct, but as irrational booms have shown time and time again economic activity can be over-stretched and need to be pulled back. The authors are entitled to their opinions, and dialogue is welcome. But the bit of authority that the title gives it makes it unfair on the public to think that this is some sort of genuine economic analysis.

And for what it's worth, if some relatively-unpublished Austrian economist managed to get himself a teaching job in Blanch IT and started spouting such political rhetoric, I'd jump on it as well.

nesf

efla wrote: »

I'm just reacting to nesf.

Why though? Do you believe Sociologists are qualified to give macroeconomic policy advice?

Flamed Diving

Deleted User wrote: »

Been studying Argentina much?!

Yes, actually. But pre-1810 Argentina. So not quite the same thing, either.

SLUSK

Now when all other options have failed lets try free markets anyone?

Ostrom

nesf wrote: »

Why though? Do you believe Sociologists are qualified to give macroeconomic policy advice?

Absolutely not, but I do believe that some have valid contributions to make beyond macro policy - the title is compltely inappropriate, and on second reading it does more of a disservice to ourselves than economics.

The problem (and unfortunate reality) is that most Irish sociology departments are staffed by researchers engaged with cultural studies. I'm not suggesting their work is of any less value, but (in this case) it doesn't inspire confidence reading contributons in quantitative American sociology that contribute useful findings to public policy debates.

Probably good old physics envy on my part however....

efla

efla wrote: »

Absolutely not, but I do believe that some have valid contributions to make beyond macro policy - the title is compltely inappropriate, and on second reading it does more of a disservice to ourselves than economics.

The problem (and unfortunate reality) is that most Irish sociology departments are staffed by researchers engaged with cultural studies. I'm not suggesting their work is of any less value, but (in this case) it doesn't inspire confidence reading contributons in quantitative American sociology that contribute useful findings to public policy debates.

Probably good old physics envy on my part however....

Honestly, there is room in this debate for both macroeconomists and sociologists. There are key fundamentals which seem to have been ignored in the debate that should be the realm of macroeconomists - but also we (I use the term as a macroeconomist-in-training) are guilty of missing out on the more human aspect of policy.

Instead however, based on reading the comments over on irisheconomy.ie, it seems the barricades have been raised and shots are flying back between both camps. Pity really, as a solid interdisciplinary analysis is what seems to be required but none of the top people qualified to perform such a task seem that interested in working with other groups.

noodler

If anybody wants to see what Economists thought of the letter..

http://www.irisheconomy.ie/index.php/2010/03/08/all-the-wrong-options-have-been-pursued/


Philip Lane of TCD (more businessby profession than Economics but the man is very knowledgable on all things in the economy- I only bring this up because of the profession debate in the thread) felt the investment ideas were sound for the most part but that the fiscal austerity was absolutely essential and that the government was right to take do it.

Time Magazine

noodler wrote: »

Philip Lane of TCD (more businessby profession than Economics but the man is very knowledgable on all things in the economy- I only bring this up because of the profession debate in the thread)

Philip has a PhD in Economics from Harvard. He's very much an economist.

Flamed Diving

Phillip Lane

Professional Positions

Professor of International Macroeconomics, Trinity College Dublin, October 2004 to present

Director, Institute for International Integration Studies (IIIS), Trinity College Dublin, January 2002 to September 2008

Associate Professor of Economics, Trinity College Dublin, October 2000 to September 2004

Lecturer in Economics, Trinity College Dublin, July 1997 to September 2000

Assistant Professor of Economics and International Affairs , Columbia University, July 1995 to June 1997

Education

PhD, Economics, Harvard University, June 1995. Thesis Title: ``Essays in International Macroeconomics.''

A.M., Economics, Harvard University, November 1993.

B.A. (Mod.) (Econ.), First Class Honours and Gold Medal, Trinity College, University of Dublin, June 1991.

Économiste Monétaire

I don't believe many people would categorise Philip Lane as B-Schooler over economist, given his record of publications (and the fact he's head of the economics department at TCD). He's arguably Ireland's most prominent economist.

noodler

Time Magazine wrote: »

Philip has a PhD in Economics from Harvard. He's very much an economist.

Thats not really what I was getting at, I was simply stating his current profession in TCD before someone jumped down my throat here about it (given we are in a thread moaning about sociologists etc piping in about economic concerns).


EDIT: To the two above posters, again I know his record I was just second guessing any criticism.

Flamed Diving

noodler wrote: »

Thats not really what I was getting at, I was simply stating his current profession in TCD before someone jumped down my throat here about it (given we are in a thread moaning about sociologists etc piping in about economic concerns).

You're not making any sense.

Économiste Monétaire

noodler wrote: »

Thats not really what I was getting at, I was simply stating his current profession in TCD before someone jumped down my throat here about it (given we are in a thread moaning about sociologists etc piping in about economic concerns).


EDIT: To the two above posters, again I know his record I was just second guessing any criticism.

No one is jumping down your throat. I think it's more bemusement that someone would categorise Lane as a business guy. You might be confusing him with Brian Lucey.

noodler

Flamed Diving wrote: »

You're not making any sense.

I apologise, I will try and elaborate more, I didn't want somebody with no prior knowledge of the man to jump in and say he has more of a business role at TCD given the majority of the posts here were critical of the list of names attached the to IT article (which also contains many business and finance names).

I apologise if I implied in any way that Philip Lane was in any way not qualified to speak on the economy - I have followed him for more than three years and have great respect for his work.

noodler

Économiste Monétaire wrote: »

No one is jumping down your throat. I think it's more bemusement that someone would categorise Lane as a business guy. You might be confusing him with Brian Lucey.

Thats exactly what I did. Mixed up their professions.

Slip of the hand, move along - nothing to see here.

Time Magazine

noodler wrote: »

I apologise, I will try and elaborate more, I didn't want somebody with no prior knowledge of the man to jump in and say he has more of a business role at TCD given the majority of the posts here were critical of the list of names attached the to IT article (which also contains many business and finance names).

It looks as though the three of us are on offensive here, sorry about that. We're not, we just like claiming Lane as one of our legion

I have followed him for more than three years

I'm surprised he hasn't submitted for a restraining order at this stage :pac:

Économiste Monétaire

Lucey is the dirty B-Schooler; Lane is the Godly economist . Lucey can often be seen pimping his MSc course to undergrads in the postgrad section, while also writing to the Irish Times.

noodler

Hey I may only have the Masters but I certainly consider myself to be in the economist camp than any other business of socilogical camp.

Économiste Monétaire wrote: »

Lucey is the dirty B-Schooler; Lane is the Godly economist . Lucey can often be seen pimping his MSc course to undergrads in the postgrad section, while also writing to the Irish Times.

I swear I didn't mix the men up - just their professions. I SWEAR!

noodler

And anyway back to the link I was whoring before I put my foot in my mouth.

http://www.irisheconomy.ie/index.php/2010/03/08/all-the-wrong-options-have-been-pursued/

blucey

Économiste Monétaire wrote: »

I don't believe many people would categorise Philip Lane as B-Schooler over economist, given his record of publications (and the fact he's head of the economics department at TCD). He's arguably Ireland's most prominent economist.

Whats wrong with B-School economists pray tell....some of us even have publications....

Économiste Mon&#233 wrote: »

Lucey is the dirty B-Schooler; Lane is the Godly economist . Lucey can often be seen pimping his MSc course to undergrads in the postgrad section, while also writing to the Irish Times.

and its only pimping if you take pleasure in it and wear a fur coat in the daylight....:) or dont economists like the market now ???
BTW - the course is now the only one in Ireland with university partnership in both PRMIA and CFA...
http://people.tcd.ie/blucey