Thursday, 12 April 2012

Brendan Howlin responds to open letter on economic policy

Last Friday, the Irish Times published an open letter on economic policy signed by a number of economists, social scientists and economic policy analysts, many of whom are contributors to this blog. In today's Irish Times, Minister for Public Expenditure and Reform Brendan Howlin responds.


Paul Hunt said...

This is getting absolutely hilarious - except that it's all so sad and stupid.

In response to the smorgasbord of economic illiteracy offered by this boradly academic loyal left-wing opposition the Minister comes up with (emphasis added):

"In my department we are DRIVING productivity growth and efficiencies in the public sector.

I believe that the response of the public sector to this crisis has been a tribute to our public servants. With fewer resources and considerable reductions in take-home pay they have mobilised to face a considerable increase in the services demanded of them. Much more, of course, NEEDS to be done.

A newly established agency, New Era, is already LOOKING at the investment strategies of the commercial semi-States. The Government is OPEN TO USING the National Pensions Reserve Fund to leverage up investment in the domestic economy and we are EXPLORING ways to encourage Irish pension funds to invest more in our own economy.

We are committed to THINKING CREATIVELY about freeing up resources for investment in the economy.."

When this Government landed in office over a year ago it already had the Troika's blueprint for structural reform and the recommendations of the Review Group on State Assets. Although limited and insufficiently ambitious, both were designed and intended to counteract the impact of fiscal adjustment.

Since then the economic interest groups affected by the Troika's blueprint and the recommendations of the State Asset Review Group have striven might and main behind the scenes to ensure that both of these have been whittled down to near nothingness. Anything that has been advanced is largely for the 'optics'.

These interest groups have been comprehensively successful and I can only doff my hat in admiration. It is a near perfect case study of the exercise of economic power over a government with the securest majority in the history of the state.

Obviously it doesn't matter if the domestic economy founders, once those in those in the nice cabins stay well above the water-line. Those in steerage can shift for themselves.

What a sick joke all of this is.

Martin O'Dea said...


I am losing control of my senses here - I could sate my frustration with Fine Gael minister Howlin's -counter then non-counter; then counter again, of sorts, and fictional reality reaffirming nonsense -or better again I could unload my verbal gun on people who continue to concentrate on public sector pay and protection (things that might be relevant at any point) in light of a revenue collapse, and unleashing some sort of simplistic unthinking ‘it’s the public sector’s fault’ thinking and ‘they have a contract that I didn't take when I entered employment and which I think should be broken now’.
Look - as a tiny example - at the constant cry that in the public sector you can't lose your job but in the private sector you can. This is wrong. You can in both. You are in a contract – you are an equal partner in the contract where you state you will do certain things under certain conditions and the company or public body agree to provide certain conditions in which you can do these things. If one of you breaks the contract then it is either broken fairly or it is not. Why in heavens name would those who get fired wish the same fate on others!!!!

Anyway they are only minor irritants compared to the blindness to the technological advance and its role in all of this. I appreciate perhaps people don’t understand this because they haven’t been exposed to it... I have a very ordinary piece on it in TASC thinkpieces, but any cursory glance online will lead you to some startling yet incontrovertible conclusions – printed houses being the most recent I have encountered, of thousands at this point, (Google it!) But even taking the most conservative view of technological acceleration or just development there is a fundamental point being missed/ignored/un-comprehended here.
One of the issues is the primacy of money above wealth. This is, of course, a key contributor to the recessionary cycles as people disconnect money from value of products and services and so inflate the value of a particular asset by chasing the monetary connection to it like a bunch of sheep running over a cliff together - - but forgetting all of this, even, we must return to the roots of money itself.

Martin O'Dea said...

We know money is an efficient way to run exchanges (better than bartering) and to allow time for investment and so production and consumption. The money should be tied to a total system which includes costs/profits/wages and spending power etc and relies on competitiveness and the value that customers place on goods/services. Of course there are problems of vested interests as Paul suggests above and also incomplete information, suppliers anti-competitive behaviours etc, but we should intelligently regulate here - - again, all of this is secondary to the point that the money in the world has steadily increased because the quantity and value of what we produce continues to grow, universally. This is all due, not to population growth in the plant over the centuries with us all willingly continuing to plough our own field with an old horse, it is due to the continuing increases in our ability to manipulate our environments to give ourselves, greater health care and protection, better nourishment and longevity, more comfort and complex leisure time pursuits, better hygiene and more transportation options, vastly better communication and the ability to cooperate and collaborate at vastly increasing speeds. This is why as I said in an earlier post someone lower-middle class today is by any measure, other than social standing, better off than a high income person from 1912. It is also clearly not a technological utopian advertisement – this is like stating that medicine is bad because you can overdose. Of course technology can be negative! And to be honest – this technological advancement can traced largely from the industrial revolution when we ceased using the human body for many of the tasks of production, but it has gone into absolute overdrive since we harnessed electricity in computation, and looks set to change the world entirely on foot of work in robotics, genomics, bio-tech, nano-tech, 3d printing, self-assembly and many more that will lead to many more. I am begging policy makers and economists to familiarise themselves with this again and again until the understandably counter-intuitive concepts stop creating discomfort and allow logical interpretation of the ramifications.
But, in short, the comparison to FF 1977 is just shocking. It is talking of a time when £1 million would be needed to build a big old factory floor and then settle into a multi-year project to produce a largely unchanging traditional manufacturing based product, and it was asking for investment into an economy largely devoid of the requisite infrastructure for businesses from any era - - it also had a corruption black hole we can only hope has been somewhat ‘filled’. Whether we enter into the area of abundance and we need to make economic readjustments (perhaps by reducing or eliminating costs to certain items etc) on the back of these developments in the future or whether we just appreciate that we should now globally enter into some pretty massive inflation to reflect this productivity and whether or not that can be managed with systems as we have them are questions to be addressed. But to feel that repaying old private debts, criminally bequeathed to a whole country and in so doing allowing 450,000 unemployed and nearly the same again to emigrate at this time is patent and wholly unwelcome nonsense, in the light of the reality of our ability to busy ourselves and improve our living standards accordingly.
I may reread this and realise it was angrily written, but this is really clearly being missed or ignored

Paul Hunt said...

I find it interesting - and not a little frustrating (but, perhaps, that was the intention) - that two of the more high profile, non-academic signatories of this letter have chosen to open separate threads in response to the Minister's op-ed, rather than choosing to engage on this thread.

Perhaps there is a fear that the surreal nature of this 'debate' between the Minister and his loyal left-wing opposition might be revealed?

Nat O`Connor said...

It was just easier to have full length postings rather than having very long comments. We are open to commentary on all threads!