Thursday, July 30, 2009

Back in the Slow Lane

I'm just back from a couple of days in Dunfanaghy, Donegal. It's as pretty as ever, and enjoying above average sunshine and below average rainfall these past few months (in complete contrast to what the gloomier climate forecasts say should be happening: but I know, weather isn't climate ...)

What is even more remarkable than the sunshine is the number of half-completed houses. It's disturbing to walk along perfect tarmac roads and footpaths laid out for entire housing estates that have not been built - and probably never will be.

It's a salutary reminder of the madness that gripped the country after 2001. And as a fascinating paper published with today's Central Bank forecasts (even gloomier than climate change ones for a change) points out: much of our growth during the 1992-2000 period was due to a sharp rise in productivity (the delta a variable in the table above that I've created from three separate tables in the paper); but its fall in 2001-2007 was a sign of our investing in housing estates rather than factories during the ensuing madness.

Even a sunny day in Donegal can't take away from the sadness of so much malinvestment and wasted opportunity. We'll never see the like of it again (I hope).

Monday, July 27, 2009

War Without End

I finally got to see the documentary The War on Drugs, broadcast recently by RTE. I only wish the 22 members of the Council of State had watched it before advising President McAleese ahead of her signing the Criminal Justice (Amendment) Bill into law last week.

The message from the documentary is very clear: a war on drugs pursued by the state pretty soon becomes a war on its citizens. It's a war that can't be won, and a war that never ends. Perpetual war.

As with all such measures in other countries there is something initially appealing about the proposed changes to the law. Who could be against protecting witnesses? Or punishing the crime bosses and not just their pawns? And who could be against helping the Gardai to be more effective at their job? But it doesn't stop there unfortunately. As the Irish Council of Civil Liberties points out in their own critique of the bill:
This climate is all too familiar to that which preceded the introduction of measures to deal with organised criminal activity in the Criminal Justice Act 2006. However, it is questionable whether a similar response, such as that which is being proposed by the Government, will in fact, have any significant effect in reducing organised criminal activity.

The use of special powers to deal with organised criminal activity tends to lead to the normalisation of these measures and emergency powers remain available (and used) even after a stated emergency has ended. Gradually they distort the tone and ethos of the criminal justice system by extending state powers.
As The War on Drugs makes manifestly clear: no amount of legalistic innovation is going to stop the formation and perpetuation of drug gangs and the industrial scale criminality that goes with them for so long as we choose to maintain a prohibition on the production, distribution and sale of certain substances but not others. What this means, unfortunately, is that a future Minister for Justice will be back asking the President to sign yet another piece of draconian legislation into law as once again our police, our judicial system and our communities are overwhelmed by the consequences of prohibition.

As AC Grayling pointed out in his own critique of the bill:
Authorities in all countries and at all times, even in Western democracies, find themselves inconvenienced by civil liberties, which make the job of policing society more difficult. In particular, and to the great irritation of governments everywhere, civil liberties interfere with authorities’ ability to detect, arrest, prosecute and convict bad people. But there is a good reason why civil liberties make the work of the authorities more difficult: to protect the great majority of people who are not bad. The inconvenience of the authorities is the freedom of the people, and it is a price worth paying.
On the other hand, compromising the freedom of the people for the convenience of the authorities will cost us dearly indeed.

Friday, July 24, 2009

A Hesitant Recovery

The latest Economic Recovery Index for July from my company shows a marked worsening in the general public's perceptions of the economy's prospects.

The percentage who feel that 'the economic situation in Ireland is getting worse' jumped especially among 35-49s and higher social class groups (ABC1s in the jargon).

Maybe it's just the weather (June's Index was much better) - or the daily feed of doom and gloom in relation to the McCarthy Report etc.

Download here or view below:

Thursday, July 23, 2009

Maximum Folly

One hundred thousand lemmings can't be wrong. Anon
The recent debate in the media about the minimum wage (or is it a debate by the media, as suggested by Karl Whelan?), seems to be a case of A or B. Option A: leave the minimum wage alone; Option B: reduce the minimum wage. But like the beer ad goes, it’s not always A or B, it’s probably C. And Option C in my book is to get rid of the minimum wage.

The minimum wage has been described as a maximum folly by its critics, for good reason. The noble intention is to lift the working poor out of poverty. Who could be against that? The problem is, most of the people on the minimum wage are not 'poor' in a household or family income sense. Bear in mind that only a tiny minority of employees are on the minimum wage in the first place (1.6% of industry workers, for example - see table 10 pdf), and that there are several derogations for young people and apprentices.

In truth the minimum wage has become one of those totemic issues - support for which is a badge signifying you really care - that has no bearing on the reality of poverty as it is experienced by those actually in poverty. That's not to say that raising the real value of the minimum wage (achieved by keeping it constant against a background of deflation) might not contribute to poverty in the future. As one assessment of the economics of the minimum wage points out:
The central goal of raising the minimum wage is to raise incomes of low-income families and reduce poverty. There are three reasons why raising the minimum may not help to achieve this goal. First, a higher minimum wage may discourage employers from using the very low-wage, low-skill workers that minimum wages are intended to help. Second, a higher minimum wage may hurt poor and low-income families rather than help them, if the disemployment effects are concentrated among workers in low-income families. And third, a higher minimum wage may reduce training, schooling, and work experience—all of which are important sources of higher wages—and hence make it harder for workers to attain the higher-wage jobs that may be the best means to an acceptable level of family income.
The unspoken, cynical truth about the minimum wage, as noted by Stephen Landsburg, is that it is more politically expedient to impose a minimum wage on a minority of employers than to impose taxes on the majority of taxpayers:

By contrast, the minimum wage places the entire burden on one small group: the employers of low-wage workers and, to some extent, their customers. Suppose you're a small entrepreneur with, say, 10 full-time minimum-wage workers. Then a 50 cent increase in the minimum wage is going to cost you about $10,000 a year. That's no different from a $10,000 tax increase. But the politicians who imposed the burden get to claim they never raised anybody's taxes.

If you want to transfer income to the working poor, there are fairer and more honest ways to do it. The Earned Income Tax Credit, for example, accomplishes pretty much the same goals as the minimum wage but without concentrating the burden on a tiny minority. For that matter, the EITC also does a better job of helping the people you'd really want to help, as opposed to, say, middle-class teenagers working summer jobs. It's pretty hard to argue that a minimum-wage increase beats an EITC increase by any criterion.

It seems clear: neither A nor B but C.

Wednesday, July 22, 2009

Touching the Future

I admit I'm a bit of a techno-fetishist. There, I've come out. I've been playing with my new iPhone and yes, it's brilliant. Better even than my iPod Touch. There are limitations of course: the battery life for one (dire), and the camera is a pale imitation of my much loved Nokia N95.

But the biggest delight is the App Store: I'm playing with a few different ones at the moment (a mix of free and paid-for), including WorldView (live streaming of web cams from locations all around the world), and, of course, Bloom. I let my four year old niece play with the latter at the weekend and within 30 seconds she had turned the phone around to a landscape position and was playing it like a piano. I hadn't thought of that - scary how quickly the stuff I think is amazing becomes an easily used plaything for children ...

I got the boxed set of the original Star Trek series as a birthday present recently (thanks sis!) Every time I watch it I think of Arthur C. Clarke's adage about a sufficiently advanced technology being indistinguishable from magic. Only I'm looking at the delightfully clunky 'future tech' used by Captain Kirk et al and I'm thinking that if I beamed back an iPhone to the 1960s when the original series was made it really would seem like magic. (Okay, I'd also have to beam back the internet and a 3G phone network, but just use your imagination).

What is different about the iPhone is the sense that it represents a radical breakthrough in terms of how you think about and use a technology previously limited to voice, sms and a few photos. Some already think that the app market could grow as big as the web. Check out a brilliant report on Mobile Megatrends 2009 here if you are as geekish about this stuff as me ;)

But it will go much further. Idris Mootee is right to propose that the future will be less about gadgets than how they are used. As he puts it:
The future is not more gadgets, but more integrated and modular designs. We will see a wide variety of innovative tools and apps that will emerge to help us leverage the information glut to our benefit. These new devices, systems, and services will enable us to alleviate the symptoms of cognitive overload and compensate errors and weaknesses in everyday life human decision-making. Much like a pilot relies more and more on computers to fly planes, technologies will allow us all to become smarter.

They will come in all forms and functions including enhanced cognitive assistance and collaborative filtering, surface-based three dimensional data visualization and display, reputation-based recommendation systems, personal productivity improvement software, affordable context-aware devices, social software tools, and systems that leverage social intelligence.
More than that, the ubiquity, affordability and efficiency of a mobile enabled global society just might be a key enabling technology in taking us to the next level, i.e.: towards a Type 1.0 Civilisation, one characterised by:
Globalism that includes worldwide wireless internet access, all knowledge digitized and available to everyone anywhere any time, a global economy with complete open economic borders and free markets where anyone can trade with anyone else without interference from states or governments, and where all states are democracies in which everyone on the planet has the franchise.
Of course, we still have to manage the energy transition to get to that happy outcome. And as a brilliant essay on Peak Civilisation: The Fall of the Roman Empire reminds us, you kind of have to make the transition because if you're not going forward then you'll end up going backwards.

Though that'll take rather more than a longer battery life ...

Tuesday, July 21, 2009

Working Smarter

There's a lot of sense in today's Technology Actions Report from the government. The technology ambitions are focused and modest (testing a new technology here, rolling out a more developed one there) rather than vague and over ambitious. The same cannot be said, alas, for the job ambitions which are just silly and distract from the otherwise sensible and perceptive thinking in relation to the technology.

I can never understand why politicians need to be seen to be 'job creators' - when plainly they are not (job destroyers maybe, but we'll not go there today). As the press release puts it:
With 6 new and innovative plans for Government action and infrastructure development, the report identifies 30,000 jobs as a baseline target for achievement over the next 5-10 years.
6,000 jobs a year. Or maybe 3,000. And how will they know? Half the jobs appear to be in that magical category of 'indirect jobs' created by some undefined multiplier effect (though maybe it is defined: the rule of thumb appears to 1 indirect job for every direct one). I can't prove it's wrong ... and they can't prove it's right. Mind you, it's beginning to look like they'll have to create 60,000 jobs if we're going to end up with a net increase of 30,000. On the same day that Minister Ryan proudly announced that InTune - an exemplar smart economy company - will sort of, kind of probably create 300 jobs over the next 3 years'ish; Intel announce that they're getting rid of 300 jobs. This year, for definite.

My point is not to diss politicians' forecasting ability (okay, maybe a little), but rather to point out how utterly meaningless and distracting they are. The bottom line is that nobody knows - not me, not the minister, not the report writers. Nobody. You only end up looking silly - like the folks who wrote the 1996 report Shaping Our Future - from which I've lifted their key labour market and population forecasts for 2010. From the vantage point of 2009, every single forecast looks set to be wrong. Every one of them. And yet I don't doubt the authors tried hard to call it as best they could with the information and knowledge they had available at the time.

Don't get me wrong, I understand that in the current climate we all need to be hopeful about the future. Including prospects for jobs and for the economy in general. But could we just have a moratorium on silly, vague, unverifiable job forecasts arising from this or that initiative. And just concentrate on making sure they're the right initiatives instead? Please.

Monday, July 20, 2009

Standing On the Shoulders of Giants

Like most 10 year old boys at the time I was absolutely fascinated by the Apollo 11 mission. You can re-live it minute-by-minute here at we choose the moon which is currently streaming the mission as a 'live transmission' as it unfolded in the run up to the actual landing 40 years ago tomorrow morning, at 2.56GMT on 21st July 1969.

It is a brilliant reminder of the extraordinary achievement of Armstrong, Aldrin and Collins (and NASA). To my mind the greatest human achievement of the 20th century. Will we better it in the 21st century? Alas, I'm with Boris Johnson who laments that we are now so spineless that we will likely never see a man walk on Mars. Truly they were giants.

A Bout of Whataboutery

Whataboutery: "the commonest form of moral evasion in Ireland today."
Cardinal Cathal Daly
I grew up schooled in the practice of 'whataboutery': Northern Ireland's contribution to the art of political debate. You could say it's a variation on the ad hominem attack - only instead of attacking your opponent's character you attack their (or their tribe's) historical behaviour by way of excusing your own. To whit:

"What about Omagh?"
>"But what about Bloody Sunday?"
"What about Enniskillen?"
>"But what about The Famine?"

... all the way back to Cain and Abel (because one was a Catholic Jew and the other was a Protestant Jew apparently ...)

Now it seems the virus of whataboutery has slipped south of the border and infected the debate about the McCarthy report. Ronan Lyons observes that there is an unhealthy dose of NIMBYism in the reaction of different groups to the Bord Snip Nua recommendations: "don't cut us, cut them instead". And unreal perceptions about the true nature of public spending - as the chart above from his post neatly explains.

But I think the reaction is going further than knee jerk NIMBYism. Take the response of the Irish National Teachers' Organisation to the report:
Mr Carr said teachers had neither hand act nor part in the country’s economic collapse and will not accept having to bail out bankers, speculators and developers.

... No primary teacher caused Ireland’s economy to collapse yet they, along with thousands of other ordinary workers, have made a significant contribution to the picking up the tab,” said Mr Carr. “Workers were not responsible for the fall in public revenue and will not be singled out to pay for a budgetary crisis caused by a failure to regulate against the sharp practices in banking, finance and property speculation.”

“Primary teachers on average earn about €50,000 a year,” said Mr Carr. “That’s petty cash to those who advocate slashing moderate earnings.” He said Irish primary teaching continues to attract the best school leavers into its ranks. “This is not the case everywhere. He also said the cost of living in Ireland is higher than other countries in the EU. “Our price levels remain among the highest in Europe.”

As good an example of whataboutery as I've come across in some time. Sure we're paid a lot but ... what about the bankers and the speculators and the developers, and what about the cost of living and what about the pension levy and what about ...

You get the drift. Expect a great deal more whataboutery from those eager to defend the indefensible, including the massively higher level of pay in the public sector versus the private sector (but what about all those bonuses and profits the private sector made during the boom time, and what about the tax breaks, and what about ...)

Like the Cardinal said: it's still moral evasion, and it's still depressingly common.

Saturday, July 18, 2009

A Region Once Again

Sometimes it's the small things that catch your attention. Like the letter I got yesterday from Sky telling me about 'changes' to my subscription payments - as in, the upward only type of change. It's never nice to be told in these deflationary times that the price you pay is going up, like it or lump it. I guess I'll be rethinking my Sky packages as I'm sure will many of their 580,000 or so subscribers in Ireland (estimates from Comreg, figure 5.1.1).

But that wasn't the thing that struck me. Rather it was a supplementary notification about VAT changes planned for January 2010. The letter explains:
Earlier this year, we reduced our prices following the government's VAT cut. As the government has announced it will increase VAT back to previous rate of 17.5%, from 1st January 2010, your monthly subscriptions ... will increase ... from this date onwards.
My first reaction was one of amazement that I had completely missed a government initiative to help Ireland progress towards the smart economy by cutting vat on digital services. Then I thought how stupid of them to put VAT back up again ... and then I realised I was being stupid: the letter was referring to the British Government of course.

Sky don't separate out their Irish subscription numbers in most of their investor presentations, preferring instead to refer to the UK and Ireland combined when citing revenues, subscription numbers etc. Even in relation to broadband subscribers - but they don't provide a broadband service in Ireland!

Now none of this is to beat up on Sky as such - I've tried competing subscription TV services and I won't be switching away any time soon. And the fact that they're using their Irish sales figures to boost their numbers to potential investors/advertisers in the UK is a common enough practice - Tesco and most UK newspapers with Irish editions do the same thing.

But it is striking that 40% of Irish households will see their cost of living rise next January thanks to a change in the UK Government's tax policy on VAT (and yes, they/I also saw that cost of living fall due to lower Sky subscription package rates in Ireland when the UK Government cut VAT last December).

Still, it makes you wonder - as it does Stephen Kinsella - whether Ireland can be thought of as a country, as an independent economic actor if you will, when we are subject to so many external factors beyond the control of the Irish government? Like VAT on satellite TV subscriptions?

Are we a region once again?

Friday, July 17, 2009

Economic Regression

Never let a serious crisis go to waste. What I mean by that is that it's an opportunity to do things you couldn't do before. Rahm Emanuel
Yesterday's Bord Snip Nua report certainly smacks of using the present crisis to good effect. It also sets out how severe the crisis is: the government is borrowing €400 million a week just to meet it's working capital requirements. Coincidently the ESRI published it latest Quarterly Economic Commentary on the same day: the chart from the report paints the starkest picture of our predicament - by the end of the decade (i.e.: next year), our standard of living (GNP per capita) will be right back to where it stood at the start of the decade. What a waste.

The Bord Snip report has done Ireland's taxpayers a big favour in lifting the lid (or is a rock?) on some of the more egregious examples of waste and inefficiency in the public sector. Take, for example, this passage from Volume II on terms and conditions in Institutes of Technology:
The academic contract provides for an annual commitment of 560 hours, a weekly norm of 16 hours for lecturers (630 hours and a weekly norm of 18 hours for assistant lecturers). The contract also provides for an academic year that runs from 1 September to 20 June only, during which all work including exam boards and appeals must be done. The changing nature of academic institutions through semesterisation, modularisation, work placement and remote delivery has meant that the annual commitment is never delivered because of the weekly restriction. Some lecturers end up delivering less than half of their annual contractual commitment with the majority delivering in or around two-thirds. For example, in some cases a lecturer may have no further work from March until September because of student work placements.

... There is no contractual requirement to be on campus other than for delivering lectures and there is no system of accountability for the performance of non-lecturing duties.

... Non-academic staff in the IoT sector generally have more favourable conditions than their civil service counterparts as follows:
• shorter working weeks (as low as 32.5 hours);
• longer annual leave (up to 34 for Assistant Principal equivalent grades);
• with IoT’s closing for longer periods at Christmas and Easter, there are greater numbers of privilege/concession days (as well as entitlements to religious holidays in the case of some staff).
Lecturer salary scales in the ITs, by the way, range from €50,000 to €90,000. Nice work if you can get somebody else to pay for it. Actually, we do.

Stepping back from the details of potential savings (and there is a considerable amount of detail), there are other questions to be asked about the reasons we are now in this predicament and how we will get out of it. Firstly, there is a direct link between the Government's insane decision to guarantee all the deposits and all the bondholders of all the Irish banks last September with yesterday's report. As the preamble to the report makes clear, the Irish Government is now paying a significant premium on its borrowings to meet its operating costs because of international market concerns about the scale of the its exposure to the banks. As noted:
Consequently, Ireland is now in a position where we need to borrow more to fund a larger budgetary deficit, while paying higher costs for this borrowing. This means that ever increasing proportions of our tax revenues will be needed to service the national debt. In 2009 over 11% of estimated tax revenues will be used for this purpose, compared with a figure of about 4½% of tax revenues as recently as 2007.
Of course, even with a less 'ambitious' rescue of the Irish banks, the Government would still have struggled to fund its operations such has been the speed and scale of the collapse in tax revenues. But we might have had a little more leeway in relation to education, health and social welfare than is now the case. Nevertheless, economic reality is now compelling the Government to deal with the consequences of its own largesse than it might otherwise have had to in different circumstances.

A measure of that largesse is shown in the Department of Finance's Analysis of Exchequer Pay & Pensions Bill 2004-2009 published at the start of this week. It shows the extraordinary growth in the numbers and salaries of those employed in the public sector over the past half-decade. Its shows a gross increase in the pay and pensions bill of 40.3% since 2004, and in the numbers employed of 15.2%. All predicated, of course, on that GNP per capita line continuing to grow into the future. But it hasn't, and we need to ratchet back our expectations to something closer to the start of the century. The private sector have been doing that for some time (mostly through job losses and pay freezes, and occasionally through pay cuts). Social justice and fairness requires that the public sector shares in the adjustment. Which it will.

But all this is mostly bean-counting: the government is being forced by its 'bankers' (the bond market) to put its house in order by cutting costs so they are more in line with revenues (i.e.: taxes). What of the wider economic impact: will the implementation of the Bord Snip recommendations make a bad situation worse? The answer, as always, is that it depends ...

Firstly, cuts to public sector spending reduces the need for yet more tax increases (though we will have more once the Commission on Taxation reports in the next few months). This means that businesses and workers are more incentivised to earn additional income and generate more revenues - other things being equal. Remember, recoveries are mainly microeconomic phenomena. Moreover, different policy responses to recession impact on different parts of the economy. As noted in this paper recently which looked at four types of fiscal stimulus packages:

1. an increase in the public consumption of goods and services;
2. an increase in subsidies targeting enterprise sector investment;
3. a reduction in social security contributions;
4. a reduction in indirect taxation.

The authors simulated the impact of the four fiscal stimulus variants on the euro area: the chart indicates with an “X” the instruments that appear to be the most effective in relation to selected policy objectives, differentiating between their short‐run (ST) and medium‐run (MT) impacts.

Of course, the application of An Bord Snip's recommendations will be the reverse of a stimulus: instead of increasing public consumption it will be decreasing same. The 'good' news in this scenario is that the negative impact will be felt over the medium term - by which stage a global recovery might just help us avoid making a bad domestic situation even worse. Beyond that it seems that that national governments can do little to affect the long run growth rates of their countries anyway. As an extremely open economy our future fortunes will be determined elsewhere.

Though that will be of little consolation to those public sector workers made redundant - even if private sector workers will feel that the pain of our economic regression is being shared more equitably than it has been until now.

Wednesday, July 15, 2009

An Inhospitable Climate

The British are increasingly worried about their energy security. We should be worried too. One (more) consequence of the credit crunch has been the mothballing of various plans by major energy companies like RWE and E.On to invest in new electricity generation capacity in the UK. Just as the UK needs to be rapidly expanding its capacity (which we will benefit from as well).

The figure is from a new report by Nigel Hawkins for the Adam Smith Institute - Re-Energizing Britain. Hawkins argues that the belated u-turn on building nuclear power stations to replace those now being de-commissioned came rather late. Not least because the capital cost of building nuclear power stations is substantially higher than coal and gas power stations (even if the generation costs are lower when up and running). And right now, raising billions for investment in power stations is even more difficult than it used to be. Hawkins worries that the German and French power companies now dominant in the UK may look to other countries to invest (including Germany if its ban on new build nuclear power plants is lifted as some have suggested).

Building smaller nuclear power stations doesn't solve the problem either - a false economy, as noted in this analysis of micro-nuclear. Though I like the Russian innovation of building a floating nuclear power station - I wonder could we float one into Dublin Bay on those occasions when the wind doesn't blow?

I look forward to a growing emphasis on more efficient and effective energy generation technologies in coming years. As a recent paper on How to get climate policy back on course (pdf) points out, target emissions setting strategies such as Kyoto have failed - and will continue to do so. What is needed an engineering focus on decarbonization which directly addresses the main source of CO2 emissions (and pollution in developing countries): namely the provision of heat and light, mostly via electricity generation.

And who knows, by doing so we might even shed more light than heat on our own tortuous energy 'debate' here in Ireland.

Monday, July 13, 2009

Nobody's In Charge

The challenge for the State is to steer economic and social endeavour towards objectives of improved living standards, well-being, quality of life, social cohesion and inclusion, and environmental sustainability. Sharing Our Future, p.125
It isn't actually. The challenge for those temporarily in charge of the State is to avoid getting in the way of those individuals, businesses and communities who - through their own endeavours - are raising our standard of living, our quality of life, and improving our environment. Though I don't hold out much hope for that given the tone of the new report from Forfás: Sharing Our Future: Ireland 2025 - Strategic Policy Requirements for Enterprise Development. The report signals a profound leftward shift by our political masters towards a more dirigiste approach to policy development for Ireland. Take this extract from page 117:
There is a need for greater debate on Irish values, society and the economy as we emerge from the current crisis that should include redressing of the balance between a strong economic emphasis and the possible adoption of a more northern European model of society. Mechanisms should be developed to create shared perspectives, encourage collaborative and collective responses at local and national levels, examine how to enable ownership of responses to big issues and involve people and enable them to see the impacts etc. Consideration should be given to the development mechanisms for community engagement as occurs in other countries that have compulsory military or community service to revive social cohesion, as well as to address emerging environmental and security issues.
Sounds like we're turning distinctly Scandinavian. That said, the report itself is a useful summary in one document of a lot of prevailing thinking about a host of issues from demography to energy, from regulation to innovation. It even sets out four interesting scenarios for Ireland's long term future in the appendix - a methodology I have noted before.

It follows the same style and tone of most such 'futures' reports from organisations like Forfás: full of 'musts', 'shoulds' and 'oughts' - mostly re-cycled from many previous studies and commentaries published by Forfás. Mind you, the following passage certainly stood out from the usual, 'neutral' tone (also page 117):
There is a need to understand and encourage the longer-term debate as Ireland moves from a relatively closed and poor society to a wealthier and outward looking society, more open to international trends and with more flexibility in both social and cultural terms. This could be done by encouraging the development of wider aspirations and more inner directed self actualisation values, by debating how to replace traditional organising principles and by discussing alternative options for meeting spiritual needs.
Forfás channeling John O'Donohue it seems!

The fundamental problem for me, however, is the assumption running through the report that the State is capable of foreseeing the future and then steering economic and social developments accordingly. The schema above copied from the report captures this conceit perfectly: the world of business (the economy) is enveloped in the guiding embrace of planning and governance (the state).

I don't think so. William Easterly gets to the heart of matter in a commentary on Pope Benedict's recent encyclical. Easterly notes the predilection of the Pope, politicians and policy makers generally (including Forfás it seems) to fall for the Man in Charge fallacy:
The Pope has fallen for the venerable “Man in Charge” fallacy. There is a “Man in Charge” of the global economy (or, according to the Pope, there should be). So all that we need is to get the right comprehensive set of recommendations to the Man in Charge to fix the global economy.

This a fallacy simply because: there is no Man in Charge of the global economy. There never has been, and there never will be. There is no Man in Charge of any national economy either. This is not about the debate about the role of government vs. markets, this is simply a statement of fact. There are government leaders, to be sure, but they are only one among many different power centers in the political system, society, and in the economy, all with sharply conflicting interests and tools to effect change, and so any individual leader has very limited power to change things. This is true of both authoritarian and democratic systems. You may want one of those leaders to act on a particular problem, which is fine, but you should not think that leader is the Man in Charge.

Easterly then goes on to a make a point about economic development strategies that goes to the heart of the Forfás approach:

The Man in Charge fallacy contaminates much of the discussion in development economics. There is an endless search for the right comprehensive strategy to end global poverty, or to achieve national economic development. Such a search only makes sense if there is a Man in Charge, which there isn’t, who would have the power to implement The Strategy. Once you realize that all power is partial, you seek ways to achieve incremental beneficial changes and you end the unproductive search for the Complete Grand Plan to solve the problem all at once.

So why do we all fall for the Man in Charge fallacy?

We like to anthropomorphize a complex system of multiple power centers, bottom-up social norms, and spontaneous markets, innovators, and entrepreneurs, because it is scary to think of such a complex system with no Man in Charge.

There you have it: the role of the Forfás report is to give the impression that 'someone is in charge' and that 'someone has a plan'. Don't get me wrong: there is some value in this - not least because the Forfás report invites us to raise our gaze above the day-to-day fallout from the economic crisis we are going through. It even provides a sense of hope as it points to a future that is much better than the present. I for one am grateful for any such efforts in these difficult times.

Nevertheless, we need to be grown up about the future. I take my cue from Kevin Kelly (yes, I do read others but he is very good!) when he notes that the future - be it our own personal future, that of a technology, or that of the human race as a whole - is subject to three distinct forces:

In addition to the primary drive of preordained development (force #1), and in addition to the escapable influences of technological history (force #2), there is society's collective free will in shaping the technium (force #3). Under the first force of inevitability, the path of technological evolution is steered by both the laws of physics, and by self-organizing biases within its large complex adaptive system. The technium will tend toward certain macro forms, even if you rerun the tape of time. The path of the technium is further constrained by the second force created by the momentum of past decisions, or technological history. At any moment of technological conception what happens next is contingent of what has already happened, and so history constrains our choices forward. These two forces channel the technium along a limited path, and severely restrict our choices. We like to think that "anything is possible next" but in fact anything is not possible in technology.

In contrast to these two, the third force is our free will to make individual choices of use, and collective policy decisions. Compared to all possibilities that we can imagine we have a very narrow range of choices. But compared to 10,000 years ago, or even 1,000 years ago, or even last year, our possibilities are expanding. Although restricted in the cosmic sense, we have more choice than we know what to do with. And via the engine of the technium, these real choices will keep expanding (even though the larger path is preordained).

I like his idea of expanding choices made possible by the accumulating outcomes of choices made by our predecessors. The future will also be the outcome of the many choices freely made by individuals, businesses and communities today and tomorrow - not those of the Man in Charge. For that we should be grateful: that is how we got here in the first place (and Ireland in 2009 is still a much, much better country than it was 10, 50, or 100 years ago). And it will be even better in 2025 because of that freedom.

Saturday, July 11, 2009

From Husbands to Handouts

"What are you looking for in a husband?" Without batting an eye or pausing for thought, [the young Swedish woman] answered: "Three things. One, he must be good in bed. Two, he must be a good father. Three, when we divorce, he mustn’t be bitter." Jonathan Power
Yesterday saw the publication of the first results of the ESRI/TCD study Growing Up in Ireland. As with all such studies it reflects the cultural priorities and prejudices of its time. So, for example, report No. 2: The Families of 9 Year-Olds manages to discuss family life in Ireland without mentioning marriage. Not even once. As David Quinn has rightly observed, there is now an extraordinary cultural prejudice against the institution of marriage among academics and media commentators. Such that it is now airbrushed out of state-funded studies such as Growing Up in Ireland.

The exception, of course, is gay or same-sex marriage: to my mind an utter distraction from the main issue of marriage's future given than only 1.6% of Irish men and 0.4% of Irish women are homosexual according to the Irish Study of Sexual Health and Relationships. Moreover, it is likely that only a minority of Irish gay men or women (though more of the latter) will enter same-sex marriages. Perhaps as few as 2-3% if the experience of gays in Sweden/Netherlands - where same-sex marriages have been legal for some time - is anything to go by. So we are talking about a tiny minority of a tiny minority of the population.

Like I said, a distraction from the main issue. And yes, I am in favour of the recent civil partnership initiative for same-sex couples: so now, can we get back to debating marriage for the 98% of the population who are heterosexual and the vast majority of whom will get married at some stage in their adult lives?

Except, we can't have a debate if we don't have any data - can we? The prevailing orthodoxy appears to be that assessing families in terms of marital status is somehow passing judgement on the 'choices' that individuals and couples have made. And passing judgement is the one, remaining sin in our secular age. Which is a pity really, because the continuing breakdown in parenting practices - driven by the rising incidence of births outside marriage (33% of the total in the most recent CSO data) - is a measure of the problems we now face, see chart below:

I can't help feeling that the fact that half of all births in Cork City and Limerick City are outside marriage just might - might, mind you - be responsible for some of the social, economic and criminal problems we are witnessing there (and elsewhere) on a daily basis? But there I go - passing judgement again, tut tut.

In the United States the incidence of births outside marriage has now risen to 40%. Nor is this just a function of lifestyle choices and shifts in cultural mores about pre-marital sex. It is also a consequence of deeper shifts in terms of economic independence for women and the substitution of state handouts for husbands for many mothers not in paid employment. As Robin Hanson has recently noted, it also means a reversal of the historical arrangement whereby most men had access to regular sex via monogamy, and its replacement with one whereby a minority of alpha males 'monopolise' sexual access.

Roissy in DC takes it further, of course: he thinks America's destiny is to become more like Sweden - one in which most women view relationships with the fathers of their children as a temporary arrangement (not unlike the young woman referred to in the quote at the top of this post). An arrangement only made possible by the continued substitution of the state for husbands in a growing number of families.

All of these issues are, naturally, outside of the mainstream discourse on family life in Ireland. One that doesn't even like to use the word 'marriage' in state-funded studies of contemporary family life.

Instead we are left with the demographic car crash now under way thanks to the unwillingness and inability of political, religious and cultural leaders (and not just in Ireland) to speak forcefully and convincingly in defence of heterosexual marriage as the best arrangement for raising our nation's children.

And thus ends Western Civilisation ...

Friday, July 10, 2009

Take the Test

I'm a sucker for science news and views, and for online tests. So I was delighted to take part in the Pew Research Center's Science Knowledge Quiz. You answer 12 science-related questions and they give you your score. I got 12 out of 12 (I'm not bragging - it's not that difficult, trust me!)

What is worrying is that 90% of the US population in a nationwide survey didn't get all 12 questions right. Admittedly I have a few things going for me that make it more likely I'll be in the top 10%: I'm male, middle-aged and college educated (according to Pew's own demographic breakdown of correct responses).

The Pew quiz is part of a larger study of US citizen attitudes towards science - which are re-assuringly positive (though soldiers then teachers score higher in terms of 'contributing a lot to the wellbeing of our society', with scientists coming in third). Oh, and business executives score lowest of all professions surveyed - oops ...

With Ireland intent on becoming a smart economy I wonder how well a similar sample of Irish citizens would perform? Still it's nice to know that aul ones like me can continue to play our part. So go ahead, take the test.

Wednesday, July 8, 2009

Birth of The Recession

Literally? Does the trend in births indicate (albeit at a lag) the outlook for the economy? Brendan Walsh thinks so as he has shown a strong 3-quarters lag between the numbers unemployed and the number of births. That's using quarterly data. But what about other factors such as consumer confidence: given that the decision to have or not have children can be based on a mental image of the future?

I recently got hold of data for the monthly number of births in the National Maternity and Rotunda Hospitals here in Dublin. Kindly supplied by their respective information departments. The chart shows the trend in the combined total number of births since January 2007 (lefthand axis), overlaid with a three month moving-average of the percentage change (year-on-year) in birth numbers.

The first thing you notice is the seasonal pattern - see the separate analysis of this pattern here by my own company. Also it is evident that there has been a levelling out in birth numbers, clearly shown by the sharp decline in the growth rate. The rate of increase peaked in December 2007, though the actual number of births peaked in July 2008. From the summer of last year, the rate has fallen sharply - even turning negative. Though there is some evidence of a recent recovery (though the growth rate is still in low single digit percentages).

Given that Ireland's recession started early last year, could we attribute any of the recent fall in births to the recession? One, albeit simplistic exercise is to look at the correlation between the ESRI consumer confidence index and the rate of change in births. What I have found is that there is a significant correlation of 0.46 between current confidence and current birth trends; and a correlation of 0.51 if we use consumer confidence lagged nine months.

This doesn't make life any easier for those running and planning maternity services of course. If birth numbers are seemingly influenced by psychological/economic factors then forecasting future demand for maternity services (say 2-3 years out - after that demographic factors are probably more important) becomes an exercise in economic forecasting. Another reason why we might want to tread carefully with mooted changes to child benefit lest we risk futuricide.

At the end of the day, the invisible hand of population control will hold sway, but we don't need to increase the opportunity cost of becoming a parent any further surely?

Tuesday, July 7, 2009

Indexing Recovery

One thing we can be certain about in relation to the current recession is that it will be the most measured, analysed and studied recession ever. A veritable cornucopia of economics Phds for generations to come!

And to add to the data stream, my own company has just developed an Economic Recovery Index that uses the opinions of 1,000 adults answering an online survey every month to try and guage where we are on the economic cycle (recession-trough-recovery etc).

We've been running it since April. The chart shows the shift in the percentages of the sample selecting each of five potential statements about the current economic situation. Like a number of other measures recently it suggests that people think things are 'getting bad more slowly' than recovering per se. Nevertheless there has been an across-the-board improvement in sentiments about the economy across all demographic groups between April and June. That said, older adults (over 50) tend to be more optimistic than the average, as do women more than men.

We are not seeing economic optimism translate into greater consumer activity yet - only 16% of adults in June agree 'I am more relaxed about spending money than I was a few months ago', unchanged since April. But a slight majority (53%) agree that 'now is a good time for young people to buy their first home' (also unchanged since April as it happens).

It's early days - I'll keep you posted if anything interesting happens in future waves.

Monday, July 6, 2009

Should We Envy Albania?

You know things are bad (as in, off the scale horrendous) when a new study compares Ireland less favourably to Albania. But before you go buy your one way ticket to the people's paradise of Tirana, it might be worth drilling into the numbers a little more first.

The study - The Happy Planet Index - is from the New Economics Foundation. They have created a composite index (the HPI) that is derived from measures of life satisfaction, life expectancy and a measure of a country's ecological footprint. The HPI is then derived from a combination of these three variables. The higher satisfaction/expectancy the better - and the lower the ecological footprint the better.

As with all such indices - derived from data not originally gathered for the purpose of generating any particular index - you do tend to get some strange anomalies. Like Costa Rica topping the list (and there isn't a single European country in the top 20), and Albania scoring much better than Ireland (along with Eygpt, Saudi Arabia, Cuba and a few other surprise 'winners').

Somebody once said about the United Nations' Human Development Index that it is a measure of how 'Scandinavian' your country is. In other words, what gets measured gets compared. Still, it is reassuring to see Sweden coming out ahead of Ireland on the HPI ranking (even if it ranks a lowly 53rd in the world!) given how the natural order of things is to always compare us unfavourably with Scandinavia ... ;-)

A lot of the messages that NEF take from their HPI ranking are harmless enough. Their Manifesto for a Happier Planet on page 48 of their report identifies the role of alleviating poverty and improving the environment in terms of making people happier. Though their nostrums about 'the evils of consumerism' might date somewhat as the recession bites.

But I would suggestion one possible improvement to their index: add in net migration statistics for each country - immigrants minus emigrants. Those with negative scores (more emigrants than immigrants) would presumably be countries that are not such great places to live? I'm guessing that Cuba might not retain its position at number seven in the world, for example.

Mind you - Ireland might not do too well on that measure either come to think of it. I wonder will Ryanair be opening a route to Tirana any time soon?

Sunday, July 5, 2009

Praise Where Praise Is Due

Having recently cast aspersions on Dublin City Council's bike rental initiative, let me also give praise where praise is due. I have recently signed up to the Council's mobile Parking Tag service, operated by Payzone. You first register your mobile phone number, car registration and credit card details. Then they send you a small barcode sticker for your windscreen and thereafter, whenever you park in the city centre, you simply send a short text to Parking Tag that includes the zone you are in (colour coded) and the number of minutes you want to stay. No need to feed the meter ever again.

This is a godsend to me since I never have enough coins for the meter (especially on days when I have two or more meetings in different parts of the city centre). And it also means I don't have to use the awful MPark service anymore, which is being phased out at the end of this month anyway (awful because the meters were out of order at least 50% of the time in my experience).

I've already used the service several times and it works flawlessly. Whenever you text your parking details to Parking Tag you get a text message reply noting when your time is up. They even send you a text 10 minutes before your time is up just as a reminder. This is one of those technology-driven advances that really does make life a lot easier and a great deal less stressful.

I'm with Kevin Kelly - the smartest commentator on big picture technological trends on the planet - when he observes that:
In our ceaseless collective generation of new technologies, we technology boosters can invent more appropriate tools for minimalism, even though they are not doing that for us. Nonetheless, the Amish and minimites have something important to teach us about selecting what we embrace. I don't want a lot of devices that add maintenance chores to my life without adding real benefits. I do want to be slow to embrace technology that I can back out of. I don't want stuff that closes off options to others (like weapons). And I do want the minimum because I've learned that I have limited time or attention.

I think I can put it this way: What we are seeking is the minimum amount of technology that will generate the maximum number of options for all.

Parking Tag is just that: an ideal combination of technological simplicity, efficiency and liberty. Well done.

Wednesday, July 1, 2009

Scéal Eile

I've been meaning to write about the subject of 'stories' or 'narrative' for some time. I think one of the fundamental challenges we face in Ireland right now is that of shaping a shared, compelling narrative or story about our nation's future and the path to it.

We once had a story but we lost it. Watching RTE's broadcast about Lemass last night, it struck me that the story we once told ourselves had an outline something like this:
We are the young Europeans, with an ancient history behind us and an exciting future ahead of us. And our time has come to take our place in the modern world; to reap the benefits of modernity and to bequeath a much better country to our children and grandchildren.
I don't think that that's the story we tell ourselves now. Optimism, modernity and even the future have become tarnished by cynicism and despair brought on by the hyperbolic boom-bust we are now experiencing. But it will pass. And a new story will emerge/converge around new realities and possibilities.

What that story might be is something I want to come back to it in a future post, but in the meantime I want to share with you some quotes from a delightful book I have just read (and re-read) called The Healing Power of Stories by Daniel Taylor. It's out of print, but Amazon's brilliant used book service will source it for you if you are interested.

Here's a flavour of Taylor's wisdom - firstly on why stories are so compelling:
We are drawn to narratives because we experience our own lives as a narrative, as story.

... The human brain is so constructed that it actually processes experiences in narrative form. It seeks to integrate separate actions, actors (characters), sequence, cause and effect (the primary link between actors and actions) into a meaningful whole.

... Seeing our lives as stories, rather than as an unrelated series of random events, increases the possibility for having in our lives what we find in the best stories: significant, purposeful action. We all want very much for it to have mattered that we were here.

... Understanding my life in this way gives me better reasons than I otherwise have to live life with optimism and courage.
And here he is on why stories matter (for individuals, groups and nations):
The inability to imagine a variety of future stories for ourselves in which our lives are rich and meaningful diminishes on the everyday level the actual possibilities for our lives.

... Stories multiply our possibilities.

... This power of the imagination links the past and present to the future, and gives us the possibility not only to know things, but to create whole new realities.

... Story understands that if we do not know something emotionally we do not know it completely.

... Story is a vessel for carrying meaning. ... Detach meaning from story and both die.

... A genuine story will not leave us alone. It insists, sometimes in the most impolite terms, on changing us. Not necessarily cataclysmic, life-redirecting change, but change notheless.
Here he is on what stories do to us:
A good story is one that makes you good, or at least better. I mean this in the widest sense. Good stories don't simply make you a nicer or more ethical person - though some can; they draw out of you more of what makes you a feeling, giving, thinking, creating, laughing, curious human being.

... For all our individualism, we seem to have a fear and loathing of true freedom. Growing from the deterministic seeds embedded in Darwin, Marx, and Freud, and egged on by the radical scepticism of postmodernism in the humanities, the view has spread that we are powerless to shape the character of our lives.

... Stories tell us otherwise. They insist on the link between character and plot.

... What is a character? A character is a bundle of values in action.

... Everything that happens in a story has the potential for revealing and forming character. The essence of plot is characters choosing. Like it or not, story tells us we are free and therefore responsible. We may be failures but we are not robots.

... Characters in stories much choose, and are responsible for the consequences of their choices. With choosing comes significance.

... Every choice a character makes is a vote against the chaos of infinite possibilities. In a random world everything is possible but nothing significant is likely. ... Story transforms the useless freedom of chaos into the invaluable freedom of responsibility, and it does so by insisting on the significance of choices.

... By truly choosing, a character both limits freedom and gives it value. Each choice limits subsequent possibilities in a way that increases the likelihood of significance. ... Each choice in the middle [of the story] reduces the possible endings, but without those choices the end would have no meaning.
And why stories are our only true guides to the future, and not statistics or forecasts:
Stories engage both the heart and the head and move people to action. Statistics elicit counterstatistics and move people to argue. Stories demand a response (that is, responsibility); statistics encourage a rebuttal.
The power of an imagined end, and it literally can only be imagined, lies in its ability to influence present choices.
I hope these few lines extracted from the book (and there were many, many more I could have chosen) give you a sense of why I think stories are so important. The stories we tell ourselves about our future as a nation - and the choices they 'make' us make - will do more to shape the country we will become in five, ten or even fifty years time than anything else we do. As Sean Lemass proved.

Like I said, I'll come back to this topic again (and probably again) in future posts.
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