Monday, August 31, 2009

Bertie's Babies

The news today that Ireland's birth rate (or total period fertility rate, to be precise) is back to a level that means our population won't decline is very welcome indeed. The record number of births reported by the CSO for Q4 2008 is a measure of a healthy society - regardless of the state of the economy.

Of course, these are very much Bertie's Babies. The result - so to speak - of the economic boom presided over by Bertie Ahern, who managed to get out just ahead of the collapse. But as I've noted before (using monthly birth data) there is a strong correlation between consumer confidence and birth trends, so the Q4 2009 results might not be as positive when they are reported next year.

Having babies is (usually - in these days of ubiquitous contraception) a vote of confidence in the future. And as Akerlof and Shiller remind us in their book Animal Spirits:
Confidence is not just the emotional state of an individual. It is a view of other people's confidence, and of other people's perceptions of other people's confidence. It is also a view of the world - a popular model of current events, a public understanding of the mechanism of economic change as informed by the news media and by popular discussions. High confidence tends to be associated with inspirational stories, stories about new business initiatives, tales of others are getting rich.

... Changes in these stories will affect the expectations for personal success in business, for the success of entrepreneurial ventures, and for payoffs to human capital investments.

... Just as diseases spread through contagion, so does confidence, or lack of confidence. Indeed confidence, or the lack thereof, may be as contagious as any disease. Epidemics of confidence or of pessimism may arise mysteriously simply because there was a change in the contagion rate of certain modes of thinking.
And babies are as big an investment in human capital as you can make. Shiller has picked up on this theme again in a recent op ed in the New York Times, when he notes about current talk of 'green shoots' that:
All of this suggests that a social epidemic is supporting renewed confidence. This confidence can keep growing by contagion, as a kind of self-fulfilling prophecy, and we may see the markets and the economy recover further.
Still, there is something inspiring in the CSO's births data. We don't have to revert to being "a kind of mental repository for melancholy, a place upon which we can all apply our fantasies, woes and laments". We can change the story: change it to one in which we get through our present difficulties and see to it that the generation born of the boom grows up wiser than their parents, but also ambitious to make the most of the legacy we bequeath them.

Saturday, August 29, 2009

Between Choices And Consequences

Catholicism in Ireland was the site of an intellectual tragedy, or, perhaps more accurately, an unintellectual tragedy.
Tom Garvin, Preventing the Future
I think of Garvin's brilliant analysis of the demise of the Catholic Church in Ireland whenever I hear some of its current leaders commentating on one development or another. Take Cardinal Brady's recent comments on the Civil Partnership Bill:
During the next Dáil and Seanad term politicians and citizens will debate and be asked to make a fundamental choice about the future of marriage and the family in Ireland. They will be asked to approve legislation and policy which, among other things: will make same-sex partnerships equal in status to marriage, with the same benefits in tax and welfare as married couples – the only difference being the right to adopt children; will give cohabiting same-sex, or opposite sex, partners the same status as marriage, after they have lived together for a short period; will remove ‘marital status’ from key legislation and public documentation and replace it with ‘civil status’, thus directly challenging the Constitutional recognition that marriage is ‘a moral institution possessing inalienable and imprescriptible rights, antecedent and superior to all positive law’ (Article 41.1.1).
The Cardinal is right about the fundamental choices that will be made should the Civil Partnership Bill be passed into law. Where he is wrong, however, is about the consequences. Cardinal Brady worries that "What the government is planning will hugely change people's concept of the family." Well I hate to break it to the Cardinal but people's concept of the family have already changed hugely: and the dire consequences he fears might happen have already happened.

Moreover, the issue of same-sex civic partnerships and ultimately gay marriage is something of a red herring. As I've noted before, as few as 1% of Irish adults are gay, and in countries where gay marriage is legal as few as 2-3% of gays get married. So we're looking at a big heated debated about legislative changes that subsequently might see 3% of 1% of adults (that's about 1,000 gay men and women) opting for a same sex marriage (though I don't doubt every single one of them will feature in wedding pictures section of the Irish Times magazine ;-) So not quite the end of civilisation as we know it ...

But the one aspect of the Civil Partnership Bill that does represents nothing less than a civilisation-destroying act of national suicide are the proposals on cohabitation (see Part 15 from page 55 of the Bill). These have received far less attention in the little debate there has been about the Bill, and yet will have exponentially greater consequences for the future of family life in Ireland. I urge you to read it: there is an entire minefield of society-wrecking ideas, notions and proposals contained in its pages sufficient to keep an army of lawyers, social workers and gardai gainfully employed for generations to come.

The legislation ostensibly sets out to extend most of the property and other protections of marriage (e.g.: to alimony) to cohabiting couples - regardless of the preferences of either cohabiting party. Let's start with the Bill's definition of cohabitation:
170.—(1) For the purposes of this Part, a cohabitant is one of 2 adults (whether of the same or the opposite sex) who live together as a couple in an intimate and committed relationship and who are not related to each other within the prohibited degrees of relationship or married to each other or civil partners of each other.

(2) In determining whether or not 2 adults are cohabitants, the court shall take into account all the circumstances of the relationship and in particular shall have regard to the following:

(a) the duration of the relationship;
(b) the basis on which the couple live together;
(c) the degree of financial dependence of either adult on the other and any agreements in respect of their finances;
(d) the degree and nature of any financial arrangements between the adults including any joint purchase of an estate or interest in land or joint acquisition of personal property;
(e) whether there are one or more dependent children;
(f) whether one of the adults cares for and supports the children of the other; and
(g) the degree to which the adults present themselves toothers as a couple.

(3) For the avoidance of doubt a relationship does not cease to be an intimate relationship for the purpose of this section merely because it is no longer sexual in nature.
There's more:
(5) For the purposes of this Part, a qualified cohabitant means an adult who was in a relationship of cohabitation with another adult and who, immediately before the time that that relationship ended, whether through death or otherwise, was living with the other adult as a couple for a period—

(a) of 2 years or more, in the case where they are the parents of one or more dependent children, and
(b) of 3 years or more, in any other case.
That's the definition bit (and I'm sure you've spotted a few significant 'anniversaries' that will influence the old 'will-I-stay-or-will-I-go' decision the majority of cohabiting couples with children end up making). But the fun really begins when you learn what the legislation empowers the courts to do vis-a-vis cohabiting couples, one of whom has decided he/she would rather not remain a couple. I've highlighted some of the more interesting ones below:
171.—(1) A qualified cohabitant may, subject to any agreement under section 199, apply to the court, on notice to the other cohabitant, for an order under sections 172, 173 and 185 or any of them.

(2) If the qualified cohabitant satisfies the court that he or she is financially dependent on the other cohabitant and that the financial dependence arises from the relationship or the ending of the relationship, the court may, if satisfied that it is just and equitable to do so in all the circumstances, make the order concerned.

172.—(1) An order under this section may provide for one or more of the following matters:
(a) the transfer by either of the cohabitants to or for the benefit of the other, of specified property in which the cohabitant has an interest either in possession or reversion;
(b) the settlement to the satisfaction of the court of specified property in which the cohabitant has an interest either in possession or reversion, for the benefit of the other cohabitant or of a dependent child;

173.—(1) The court, on application to it in that behalf by the qualified cohabitant, may, during the lifetime of either of the cohabitants, make one or more of the following orders:
(a) an order that either of the cohabitants make to the other the periodical payments in the amounts, during the period and at the times that may be specified in the order;
(b) an order that either of the cohabitants secure to the other, to the satisfaction of the court, the periodical payments of the amounts, during the period and at the times that may be specified in the order; and
(c) an order that either of the cohabitants make to the other a lump sum payment or lump sum payments of the amount or amounts and at the time or times that may be specified in the order.

173.—(7) The court that makes an order under subsection (1)(a) shall, in the same proceedings, make an attachment of earnings order under section 174 to secure payments under the order if it is satisfied, after taking into consideration any representations on the matter made to it by the qualified cohabitant ordered to make payments under that subsection, that—

(a) the order is desirable to secure payments under an order under subsection (1)(a) and any variations and affirmations of that order, and
(b) the person against whom the attachment of earnings order is made is a person to whom earnings fall to be paid.
So much for the legislation, what about the consequences? That's when it gets interesting. For the legislation on cohabitation amounts to nothing less than a gold-digger's charter. And it's a charter in favour of one gender only (I'll give you a clue: it's the one that has the babies ...) Up until the Bill the only way a woman could claim entitlement to a man's property, assets and earnings upon their relationship ending (other than through death obviously) was to be married to him.

But now any poor sap who has the misfortune to fall in love with a woman and live with her for a few years could find himself obliged to keep her in the style she and her children have become accustomed to even if she decides to terminate the relation. And don't forget it's women who instigate divorces in the vast majority of cases, so there's no reason to assume this won't apply in the case of separating cohabiting couples ('civic dissolution'?). Oh, and in case you didn't spot it in the carefully worded legislation I quoted above, they don't even have to be his children - they just have to be dependent children, regardless of whom the father is.

So hopefully you're beginning to grasp the full import of this remarkable piece of legislation - brought to you by the same enlightened geniuses who brought us de-centralisation and NAMA. To be fair to Cardinal Brady, I don't really expect him to grasp all this. He has a noble commitment, shared by most Christians, to the ideal that raising children is best done by both their biological parents bound together by their marriage vows. As it happens, I also think that this is the best arrangement we have yet discovered, not least because all other experiments with alternatives (from kibbutzim to welfare-state funded single parenthood) have so far failed (on all reasonable measures), and often failed spectacularly.

The question, of course, is why do the drafters of the Civic Partnership Bill want to extend to adults who are cohabiting the same entitlements/protections as couples who are married? The benign interpretation is that it's all about 'equality' - or rather, that it is an attempt to reduce discrimination against fellow citizens simply on account of their marital status. Discrimination is a bad thing you understand, because to discriminate is to pass judgement, and that is the one remaining sin in politically correct secular societies.

Still, why should a woman with dependent children be less entitled to the support of their father because she is not married to the father than if she was married? Of course, it's a loaded question. To answer it properly we need to unbundle an awful lot of assumptions, pressuppostions and feminist ideology before we are even ready to provide an answer.

Firstly, let's start with biology 101: it's women who have babies, not men. And in this day and age, women have babies because they want them, not because they don't have access to contraceptives (or to easily accessible abortion services in the UK). So almost all women who have children with men they are not married to do so of their own free will. Sure the men are willing accomplices most of the time: but in the final analysis they are 'influencers' not 'decision makers'. Moreover, there is no longer even the remotest shame in having children outside of marriage (quaint and all as that already sounds); indeed in some parts of the country it's practically a right of passage for young women.

So here's a more interesting question: why would a woman not want to marry the man she wants to father her children, knowing that divorce is a readily available option should it not work out? Here we enter into a very interesting world - one far removed from the Cardinal's laudable concerns about the state of matrimony. Because we are in the midst of an extraordinary experiment in the Western world right now, nothing less than the fruition of the original feminist revolutionary ideal. Don't take it from me, here's one woman's explanation (she works with women in abusive relationships) as part of a fascinating two part discussion on the theme of Why Has the Female Sex Lost Its Mind?:
For me, I feel that a huge part of the genesis is that women gave away their birthright with the sexual revolution of the 1960s.

Ah, yes, the '60s again. Prior to then, the assumptions were that men supported women and children, were responsible for the family financial welfare, and protected the family unit. Women were responsible for safety and raising of children, refraining from causing uncertainty about parentage, and had constrained expectations about career advancement in that men who supported families were likely to be favored in promotions and pay. After the '60s, and having come into adulthood in the late '50s, I got to see the sexual revolution take place close at hand.

There is no doubt in my mind that the bargain that women struck (women get easy sex, complete control of reproduction, and access to competition [sometimes favoritism] in the workplace) was not by any means worth the price that was accurately forseen even at that time (men are released from responsibility for children, easy-come-easy-go on marriages and intimacy which led to endless financial risks for the woman, and a false expectation that raising wonderful children can be readily sandwiched into a life when the primary attention is on financial support of the family by a single parent).

It is a fact that this is a social experiment which no previous society known to mankind has ever before attempted. It remains to be seen if it is a successful experiment. The demographic meltdown of the populations of all Western countries suggests that it is not a successful model for the relations between the sexes, and looks more and more to be a failure of a social model. This failure is likely to be fatal to our societies.

Yep: we're boldly going where no sane civilisation has gone before. So an alternative assessment of those who drafted the Civil Partnership Bill is that they fancy themselves as social engineers, building heaven on earth one piece of legislation at a time.

Missing from all of this is the voice of men. No surprise there: it's rare that you'll see a man given airtime by our media to make the case for marriage, unless he's gay of course. But media portrayals of heterosexual men as knuckle-dragging, beer-bellied, x-box players to the contrary, men have actually twigged what's going on. And they're having none of it - hence the rise of Game and the entire PUA sub-culture as one tactical response. Here's Kay Hymowitz's take on what's going on with men:
It would be easy enough to write off the dating Darwinists as simple renegades against female empowerment. Easy, but misleading. Menaissance men think that women’s equality has brought real benefits, though they might not agree with women about what those benefits are. “We can have sex with as many women as we want and not have to worry about making any of them pregnant,” one of my more upbeat respondents, an SYM named Curtis, writes. “Men are having more freedom and fun than ever before in all of history as a result of this, because if there’s one thing every single man can agree upon, it’s that having sex with as many women as possible is a great thing.”
Men (who are mostly betas) are responding to a culturally-mandated extinction of the Alpha Male by adopting some of his tactics. We are witnessing something akin to a gender war, with constant escalations in its intensity, usually via legislation such as that now proposed, and men's reactions to it (as they are explicitly or implicitly the targets of the legislation). And I mean target in the crosshairs sense.

All of this is tragic, doubly so because it is also avoidable. The reality is that most young men want to get married and to be fathers. But increasingly the social, cultural and legislative changes that are being put in place remove absolutely any incentive for them to do so. It cannot be overstated as to how dangerous this is. As F. Roger Devlin observes in a series of extraodinary essays:
The discovery of fatherhood was a watershed event in human history greater than the discovery of the wheel, fire, or agriculture. Civilization is very largely a matter of high-investment parenting, and that requires heavy and continuing paternal involvement. Such involvement rests upon a fundamental anthropological fact: viz., men will gladly work, fight, and sacrifice for children provided they feel sure of their own paternity. No shotgun marriages, no governmental child-support enforcement agencies, not even much in the way of exhortation is necessary for that to occur. The human male finds satisfaction in fatherhood.
But instead of recognising this and doing everything possible to ensure that young men and women go on to provide the same civilizational continuity that our parents and ancestors did before us, our legislators are trapped in a lose-lose game of political correctness. Those protesters waving placards with the slogan 'Marriage is Gay' should enjoy the joke while it lasts. Because a generation is growing up for whom 'marriage' is increasingly synonymous with 'gay' - or even polygamy. But not with the ideal behaviour of young heterosexual couples who want to have children. And the problem is that no amount of legislation can put a culture or civilisation back together again once it has fallen apart.

So where to next? We can anticipate some of the actions and reactions arising from crass, mis-guided legislation for the foreseeable future. Still, there is enough social capital by way of the still prevalent ambition of most young women and men to get married. And I don't buy into the whole she-conomy/men are redundant nonsense. Nor can we/should we go back to some idealised, 1950s arrangement of gender roles. The question is - what can we go forward to? I'm not sure myself (I'm genuinely uncertain myself and still trying to figure/map it out), but I am sure that equating cohabitation with marriage isn't 'progress', if that word is to retain any positive meaning. Perhaps our politicians will come up with an answer when the Civic Partnership Bill comes up for debate before the Dáil soon.

har har har har har har har har har har har ...

Friday, August 28, 2009

That Friday Feeling

I've mentioned my interest in emotional mapping before. So I enjoyed this article in the New York Times on the subject of Mining the Web for Feelings, Not Facts. It points to the potential for using the web to track 'the mood of the nation' in real time.

Hence the image: a screen grab I took from one of the sites mentioned in the NYT piece: tweetfeel. I just typed in the word 'Ireland' and it tells me that tweets mentioning Ireland in a positive way are currently running at more than two to one times greater than negative tweets!

Of course, maybe it's just because it's Friday ...

Rising Slowly

My company's latest Economic Recovery Index for August points to a modest improvement in Irish consumer sentiment from July, mostly reversing a severe weakening from the previous month. All-in-all it points to consumers who are less pessimistic but not a lot more optimistic about the outlook for the economy.

Though it's nice to see that the majority of us continue to experience 'enjoyment' and 'happiness' a lot regardless of the state of the nation!

You can download the pdf here - or just click on the slide view below:

Thursday, August 27, 2009

There but for the letter 'c' ...

Chatting with some folk yesterday we were semi-congratulating ourselves that at least we didn't go down the economic road pioneered by Iceland after all. But maybe our self-congratulations are premature? That's certainly the message I took away from a piece on Iceland in today's FT by Robert Wade which notes that things are about to turn more painful for Iceland:

First, the freeze on mortgage repayments is due to end in November. The fifth of mortgages that are in yen or Swiss francs face a doubling of payments. Krona mortgages also face big increases in payments because they are tied to the consumer price index, which has shot up with the krona’s collapse. House prices are down 20 to 30 per cent, leaving many with houses worth only half the mortgage. The government asked the nationalised banks to show leniency, but repossessions will probably jump after mortgage payments are unfrozen.

Second, government spending, sustained so far by heavy borrowing, is due to be cut 20 to 30 per cent later this year, affecting health, education, social security and infrastructure. A wide range of taxes will be raised to try to eliminate the budget deficit by 2013.

... Third, the capital controls that have protected against capital flight are to be eased as part of the process of financial reintegration; but at the cost of high interest rates, currently 12 per cent, which choke investment.
Nasty: but at least we don't have to take the IMF medicine here in Ireland. However it was this line in the article that caught my attention:
If the government accepts British and Dutch terms, Iceland’s taxpayers will take on an Icesave debt equal to half the country’s 2008 GDP.
At least we dodged that bullet, right? And that's when it struck me: NAMA is our Icesave. Still, we can always learn to laugh at our difficulties like the Icelanders:

Q. What do an Icelandic bank and Icelandic streaker have in common?

A. They both have frozen assets.

Wednesday, August 26, 2009

The Economics of Denial

I guess it shows how punch drunk we are from economic shocks that Ulster Bank can blithely forecast a 45% fall in house prices from their peak - as they did in their Irish Economy Commentary last week - and most people shrug in acceptance. Not even their forecast of just 10,000 house completions next year (down from 90,000 only three years ago - see chart) caused much of a stir.

But not everyone is so accepting and indifferent. Those selling their homes right now are probably more than a little concerned about housing and house price trends. Partly the concern is that of negative equity - a worry I have considered to be overblown in the past. Others are perhaps less sanguine than me about the extent of negative equity - Ronan Lyons for one, as well as Liam Delaney.

Of course, a key question is just how much are houses worth right now, especially those actually on the market? Sellers will likely have a higher price in mind than buyers: up 10% and even more in the US, for example. What's interesting, however, is that when you bought your house has a big bearing on what you think it's worth when you subsequently come to sell it, even many years later - as identified in a fascinating study by the Levy Economics Institute:
Our results show that homeowners, on average, overestimate the value of their properties by between 5% and 10%. We also find that the overestimation is mostly related to capital gains, while owners tend to accurately translate the original price that they paid for the house into the home’s current market value. There is, however, considerable variation depending on when they bought their homes. This points to the persistence of the economic fundamentals surrounding the time that individuals decide to purchase a home at a given price, which ends up reflecting in the self-assessed valuation of that property close to the time of the sale.

While most individuals overestimate the value of their properties, individuals who bought during more difficult economic times tend to be more accurate and, in some cases, even underestimate the value of their houses. We find a strong correlation between accuracy and the economic conditions (measured by the prevalent interest rate, the growth of household income, and the growth of median housing prices) at the time of the purchase of the property. Those who bought during tougher economic times are, on average, more accurate in their assessments.
The Levy paper authors even think this might explain why so many have ended up in negative equity:
Our results provide some explanations for the difficult situation currently faced by a growing number of homeowners. The pattern that we document is consistent with the buildup of unrealistically optimistic expectations regarding the rate of home price appreciation among individuals who bought in good economic times or times of loose credit. In turn, these individuals take on risky financial commitments that make them more dependent on price appreciation to build equity in order to accommodate an adverse event, such as an increase in interest rates.
Right now those 'unrealistically optimistic expectations' might related to the rate of house price depreciation of course ...

This does suggest that if you are a home buyer then you might want to just focus your attentions on those houses that have been owner-occupied for some time - ideally since the economically depressed 1980s. And if you can't find a reasonable seller you can always just follow the New American Dream and simply rent. If the Ulster Bank forecasts are correct then prices may well be even lower this time next year.

Tuesday, August 25, 2009

The He-cession and the She-conomy

I've noted before that there seems to be a distinct gender bias in our current recession, but now I'm not so sure. Maybe it's just a matter of timing: men got hit by the recession first (see chart), but now it's the women's turn (as indicated by average weekly net changes to the live register these past few months).

One plausible explanation for this could be that traditionally male employment sectors (e.g.: construction and finance) got hit first by the Great Recession, but now the wider economy is feeling the impact as are more female employment sectors (e.g.: retail, services and some public sector categories).

Still, the expected trajectory of the global recession is expected to be a 'he-cession' when it's all over, resulting in The Death of Macho:
The great shift of power from males to females is likely to be dramatically accelerated by the economic crisis, as more people realize that the aggressive, risk-seeking behavior that has enabled men to entrench their power—the cult of macho—has now proven destructive and unsustainable in a globalized world.

Indeed, it’s now fair to say that the most enduring legacy of the Great Recession will not be the death of Wall Street. It will not be the death of finance. And it will not be the death of capitalism. These ideas and institutions will live on. What will not survive is macho. And the choice men will have to make, whether to accept or fight this new fact of history, will have seismic effects for all of humanity—women as well as men.

What will this post-macho world be like? Some talk about the emergence of a 'she-conomy': a new economic order in which women make up the majority of the workforce and are increasingly the main breadwinners as married/co-habiting men lose their jobs. But others are not so sure (nor am I): as the always insightful blogger Whiskey notes about the New Girl Order:

Much of the new girl order is discretionary spending, on things such as fashion and cosmetics than can be stretched out, or used up. Belmont Club has links to various economic predictions of either inflation on a massive scale, debt repudiation, or perhaps both. Regardless, states like California, can no longer afford to simply keep government employment up, particularly when the stimulus money runs out in 2010. The the female-friendly employment in Health, Education, and Welfare, will be hit along with the far more sensitive resource extraction, construction, transportation, and manufacturing sectors that generated most of the layoffs, ala the Mancession. Government employment does not generate its own income stream, and depends on the larger economy for tax receipts. The current economic picture does not look good.

As governments the world over struggle to get budgets back into balance post the recession, it may be women who lag behind men as we move into recovery because sectors such as technology and energy (still predominantly male) will lead a return to economic growth.

Even if the she-conomy is more a figment of some commentators' imaginations, there is one aspect of the gender impact of the recession that is more real, namely in developing countries. Traditionally economic development has seen women and men move from agricultural employment to employment in factories and construction. But the worldwide recession has had a devastating impact on both categories of employment - especially for women working in factories supplying markets such as the United States.

It looks like being an 'equal opportunity' recession after all.

Monday, August 24, 2009

Saved By the Middle Class

Maybe not in Ireland, but certainly in the developing world - at least according to a new paper (pdf) by DB Research (whence the chart). Talking about Emerging Asia's Middle Class might seem a tad heroic in the midst of a global economic meltdown, but Deutsche Bank's economists make a compelling case:
There are two reasons for Asia’s better prospects. One: faster population growth in South Asia means that these countries’ middle classes are growing more quickly. Two: although the population in East Asia is growing more slowly than in other regions, its annual per capita income growth is much higher (almost twice that in Sub-Saharan Africa) so it will still increase its share of global income in that time frame. The burgeoning of Asia’s middle class makes it an important consumer market, an engine of economic growth in the region, and an important global political force.
They even think that Asia's emerging middle class will eventually take over the consumer-spending-as-global-economic-engine mantle from the United States in due course. Though not any time soon.

A similar theme emerges in a recent guide to China's MegaTrends: trend number 3 is the rise of China's middle class. By 2050 the average Chinese citizen is projected to have the same standard of living as an Eastern European. The future (still) belongs to the Middle Class, even as large swathes of Ireland's middle class experiences upward then downward social mobility in a single generation.

Still, there'll be a big demand for English-speaking, well-educated nannies for all those middle-class children in Asia I guess ...

Friday, August 21, 2009

My Favourite Socialists

Econtalk has taken a summertime break from its usually technical/economics focused subject matter to host an interview with Christopher Hitchens about his book on George Orwell: by far my favourite (dead) socialist. I was inspired to read much of Orwell's work firstly by 1984, and then by Bernard Crick's magnificent biography.

Hitchens reminds us of the bravery of 'ordinary men' like Orwell in his literary attacks on, first, Imperialism, then Fascism and finally Stalinism. He got shot in the throat for the second of these: fighting in the Spanish Civil War. He was a quintessentially decent Englishman, who also believed in decency for all mankind.

There are few who have followed in his footsteps - though on recent performance I might nominate John Pilger as my favourite (living) socialist. Certainly for his recent, exoriating attack on President Obama. Watch the video yourself (though if you're still basking in the afterglow of Obama's election and that fairytale feeling that all is now well with the world then you may just want to pass on this one):

Thursday, August 20, 2009

One Renaissance Was Enough

I recently listened to a fascinating and inspiring interview with Ayaan Hirsi Ali over at Point of Inquiry. She describes her own personal journey from a strict Muslim upbringing in Somalia to her life today in the West (including police protection because of her outspoken criticisms of the treatment of women in many Muslim countries).

In the course of the interview she is asked why there wasn't a Muslim equivalent to the Renaissance which lead to the emergence of a secular state in the Christian West. Ali sets out some of the most common explanations, e.g.: Sharia law never allowed for a separation of Church and State the way such a separation existed from the conversion of the Roman Empire onwards in the West. So there was no 'gap' in which a secular, scientific 'revolution' could take place in the Islamic world (nor is there one yet in those Islamic countries run effectively as feudal fiefdoms).

It's a debatable point of course (debatable, that is, if you have the good fortune to live in a country where airing such views doesn't earn you a visit from the Mutaween). Indeed, Islam may not have had its Renaissance but it came close enough thanks to the role Muslim philosophers played in preserving, translating and ultimately re-introducing Greek philosophy to the Christian world via Spain.

But what struck me listening to Ali was that it doesn't matter - we've already had the Renaissance - and the world has been changed forever because of it; and not just the formally Christian parts. Indeed, it is right to think of Christianity as one of the six pillars of Western Civilisation. So whether Islam eventually has its own Renaissance is, for all practical purposes, irrelevant. Though this is not dismiss the need for reform in many Muslim countries, not least an end to their grotesque misogyny (for example: female circumcision) - which Ali herself suffered and discusses in the interview.

Nor is it to ignore the fact that Muslim extremists - many of them educated in sciences developed in the West - have used the same knowledge and technologies to attack the West. But their attacks are, relatively speaking, trivial: they do not and cannot threaten the survival of Western Civilisation (or even a single country for that matter) in the way that, say, the Soviet Union of old might have.

The real threat, of course, is from how the West responds to the 'threat' of extremist Muslims. In particular, as Christopher Caldwell and others have argued, the great post-war European project of integration quickly mutated from European universalism to European provincialism once significant immigration (especially from Islamic parts of the world such as Turkey, Pakistan and North Africa) got under way:
Europeans who considered churches houses of stupidity, sexism, and superstition didn’t know enough about mosques or ashrams to form a judgment, and left them unmolested. They abolished the old and much-mocked nationalistic school lessons about the virtues of nos ancêtres les gaulois, but absorbed the new lessons about the virtues of other cultures, and the justice and nobility of exotic political causes, with a childish credulity. Immigrants could indulge certain comforting prejudices and myths that natives would be disciplined, chastised, ostracised, or jailed for indulging. Effectively, diversity meant taking old hierarchies and inverting them.
Yet I feel there's a sense of 'that was then, this is now' about much of the debate about Europe and its alleged Islamic future. Maybe it's to do with the worldwide economic downturn, and maybe even with the legacy of Iraq and Afghanistan, especially in those countries with troops serving there. But I find the idea of an 'Islamic threat' to the West to be increasingly ridiculous. The grim economic, social and political problems now facing many Muslim countries (especially Arab countries) certainly does not bode well for the Middle East (nor for the millions of men and women there who wish for and could build a better future for themselves and for their children if they had some of the same options we take for granted in the West).

Indeed, it increasingly looks like Europe's future will be distinctly Christian - though we're talking a special kind of secular Christianity, as noted by Philip Jenkins:
The result has been a rediscovery of the continent’s Christian roots, even among those who have long disregarded it, and a renewed sense of European cultural Christianity. Jürgen Habermas, a veteran leftist German philosopher stunned his admirers not long ago by proclaiming, “Christianity, and nothing else, is the ultimate foundation of liberty, conscience, human rights, and democracy, the benchmarks of Western civilization. To this day, we have no other options [than Christianity]. We continue to nourish ourselves from this source. Everything else is postmodern chatter.” Europe may be confronting the dilemmas of a truly multifaith society, but with Christianity poised for a comeback, it is hardly on the verge of becoming an Islamic colony.
Europe is in better shape than its chattering classes sometimes realise: even our birth rates are steadily rising (pdf) - surely a good sign for the future?

Luckily for us - and for Ayaan Hirsi Ali and other brave women and men like her - the Renaissance only needed to happen once. And it did, in the Christian West. Ali, you, me and billions of others have benefited from that fortunate historical event, and continue to do so. And so eventually will all our fellow human beings living under the gaze of the Mutaween - please God, Allah, Buddha or the Big Bang, whichever you prefer.

Wednesday, August 19, 2009

21st Century Monasteries

I was on the island of Inchagoill on Lough Corrib at the weekend. I was visiting the sites of 5th and 12th century churches that were once part of a monastic teaching network that at its peak in the Middle Ages saw - according to our guide - some 3,000 students from around Europe studying at Cong in Mayo. Another reminder that we have a long history of providing world class education in this country.

But that world of education has long gone, and the current one may be about to undergo a similar fate. I'm beginning to think that universities are a bit like newspapers: wonderful institutions whose time may, alas, have gone. Or at least, institutions coincidently on the threshold of their greatest transformation since their foundations way back in the distant past.

I was looking recently at the extraordinary resources available as part of the MIT Open Courseware initiative. It is undoubtedly a harbinger of a 21st Century University radically different to what we have known in the past. Don Tapscott has this to say about the impending demise of the university (ht Geary Behavioural Economics blog):

"Graduate education," he began, "is the Detroit of higher learning. Most graduate programs in American universities produce a product for which there is no market (candidates for teaching positions that do not exist) and develop skills for which there is diminishing demand (research in subfields within subfields and publication in journals read by no one other than a few like-minded colleagues), all at a rapidly rising cost (sometimes well over $100,000 in student loans)."

Worse, as Tapscott notes, there is something antediluvian about the university learning experience:

The old-style lecture, with the professor standing at the podium in front of a large group of students, is still a fixture of university life on many campuses. It's a model that is teacher-focused, one-way, one-size-fits-all and the student is isolated in the learning process. Yet the students, who have grown up in an interactive digital world, learn differently. Schooled on Google and Wikipedia, they want to inquire, not rely on the professor for a detailed roadmap. They want an animated conversation, not a lecture. They want an interactive education, not a broadcast one that might have been perfectly fine for the Industrial Age, or even for boomers.

The MIT initiative goes some way towards re-engineering the model of pedagogy for a 21st century audience. But it isn't just about the more efficient disemination of content. The thing that those of us who have been to university most remember is not the lecture notes but the discussions with teachers and fellow students. Again, Tapscott puts his finger on it:

An evaluation study of 350 Cornell students found that those who were asked "deep questions" (that elicit higher-order thinking) with frequent peer discussion scored noticeably higher on their math exams than students who were not asked deep questions or who had little to no chance for peer discussion. Dr. Terrell explains: "It's when the students talk about what they think is going on and why, that's where the biggest learning occurs for them…. You can hear people sort of saying, 'Oh I see, I get it.' … And then they're explaining to somebody else … and there's an authentic understanding of what's going on. So much better than what would happen if I, as the teacher person, explain it. There's something that happens with this peer instruction."

Which brings us back to the continuing (and necessary) debate in Ireland about third level education and the efficacy of second level education in producing sufficient numbers of students with appropriate levels of mathematical abilities etc. Too often it seems that third level education is simply an extension of the second level experience but with bigger class/lecture hall sizes. Prof Tom Collins is quoted in today's Irish Times as condemning our existing educational system for failing to induce a 'love of learning' among students. Part of the reason, he believes, why we are underachieving on certain educational attainment measures compared to other countries.

Universities around the world are now engaged in a 'race to the top' as institutions like MIT effectively 'level up' the quality of educational content. Therefore the real point of educational differentiation (and superior performance) will come not from content but from the learning experience itself. Something we've had a lot of practice at over the centuries. Monasteries for the 21st century - there's an interesting thought.

Monday, August 17, 2009

Rise of the Neo-Prohibitionists

What do you think is "the most acute social problem in Ireland at this juncture"? Unemployment perhaps, or access to adequate health care, or maybe homelessness? No - if you are Dr Michael Loftus then the most acute social problem facing the country is the fact that the young people drink too much. That's according to his piece in today's Irish Times demanding that the powers-that-be "stand up to the drinks industry".

Really? I've a suggestion for Dr Loftus - there's no need to stand: the drinks industry in Ireland is on its knees reeling from one blow after another. The volume of sales in Irish bars - according to my own calculations using historical CSO data and the latest July volumes indexed to 1995=100 - peaked in 2001 and haven't just fallen back since, they've even fallen back to levels last seen in the early 1990s (allowing for slight chances to the NACE code classification of bar sales).

If this is the result of a rampant, uncontrolled, self-regulating Irish drinks industry - as Dr Loftus would have it - then let's face it: they're doing a crap job. In reality, these trends have little to do with the manipulations of the drinks industry. Rather it's down to demographics (the number of beer-swilling 18-24s peaked around 2001); economics (the relative price of booze in the off-licence is an awful lot lower than in pubs); and legislation (drink driving laws has had a sobering effect; and the smoking ban didn't help either).

Still, Dr Loftus insists that, as a former county coroner and practising GP, "I have known too many families bereaved by drink-driving, too many victims of alcohol-related violence, too many alcoholics and the families of alcoholics whose lives have been devastated by this most destructive and freely available drug." I don't doubt it: people with drink problems tend to see a lot more of their GPs than those who don't. Just as I have a relative who was once in the drug squad and every time he passed someone standing on a street corner he immediately assumed they we're dealing. Now I don't doubt one or two were indeed 'known to the Gardai', but I think most of them were just waiting to cross the road ...

The problem with the approach of Dr Loftus and other neo-prohibitionists like him is that they don't care for the majority of alcohol drinkers who actually benefit from alcohol consumption. Instead they would control and deny access to alcohol to the majority of Irish citizens (and its legitimate promotion by those supplying alcoholic beverages) in order to tackle the problems of a tiny minority of alcohol drinkers.

An even bigger problem for the neo-prohibitionists is that they 'protest too much'. The problem of alcohol abuse in Ireland is a rapidly declining problem - as I've noted before in relation to the SLAN survey of health and lifestyles. Most of their cost-benefit analyses of alcohol consumption tend to leave out the benefits, and to assume that all the costs are social costs borne by the health and welfare services and ultimately by the taxpayer.

Such was the claim of the recent BERL report in New Zealand, which was rightly criticised for its one-sided 'cost-only' analysis of the consequences of alcohol consumption. The usual implication of such reports is that the goverment should raise taxes on alcohol: indifferent to the fact that such policies end up punishing the vast majority of drinkers who enjoy considerable benefits from light to moderate consumption. Ironically, by doing so, responsible drinkers will cut back on alcohol consumption thereby reducing the benefits of same, and end up in the long run demanding more of the health services than would otherwise have been the case!

Moreover, those like Dr Loftus who would prevent alcoholic drink companies from sponsoring sports events etc simply assume that the considerable amounts of money that such sponsorships provide to sporting bodies such as the GAA and IRFU will magically appear from elsewhere. I don't think so - not in the current economic climate anyway. But if they succeed then expect even more demands on the taxpayer as Ireland's sporting bodies struggle to meet the costs of providing national, regional and local resources to children, youths and adult participants.

Which will leave us with yet another 'unforeseen consequence': less sporting activities for young people and a worsening of the already serious problem of childhood (and adult) obesity in this country. Now there's an acute social problem in the making ... unforeseen of course.

Thursday, August 13, 2009

Yesterday is Tomorrow

Today's CSO releases on July's consumer prices and June's retail sales were a double-blow for those hoping for green shoots in the late summer light. Ireland continues to have the severest deflation in the EU (a harmonised index decline of -2.2% year-on-year, and accelerating consumer price deflation overall); whilst the volume of retail sales fell by nearly 10% in the year to June.

That said, the onset of deflation is simply reversing previous inflation across most consumer spending categories, returning prices to levels seen 1, 2 or more years ago. The folks at the CSO kindly sent me detailed historical data for the CPI Detailed Sub-Indices (mid-December 2006 base) and some of the trends are quite amazing.

The overall CPI index is now back to where it was in March 2007 (having peaked in September 2008), but other sub-indices have seen sharper - much sharper - contractions, including:
  • Breakfast Cereals: back to the price levels of December 2005
  • Pork: back to November 1989
  • Poultry: back to October 1992
  • Fruit: back to September 2002
  • Potatoes: back to May 1998
  • Coffee: back to July 1997
  • Clothing and footwear: lowest price levels ever - half the price levels of November 1989 (earliest data for historical data indexed to December 2006)
  • Housing, water, electricity, gas etc: back to June 2006
  • Private rents: back to November 2000
  • Refuse collection: back to July 1995
  • Furniture and furnishings: back to June 1994
  • Household appliances: back to May 1991
  • New and second hand cars: back to July 2002
  • Bicycles: back to September 1997
  • Information processing equipment (PCs etc): lowest ever - index of 54.8 in July 2009 versus 423.3 (on the same basis) in November 1989
These are just a few examples. Not all indices and sub-indices have fallen of course. Practically every government product or service (car tax, driving licence, tv licence) has moved - and continues to move - inexorably in one direction i.e.: up. Services generally continue to maintain their price levels (especially health and insurance/financial related).

But overall, deflation has certainly meant that consumer spending power is now going a lot further. Only problem is consumers are not spending - witness the retail sales data. Right now it isn't value for money or incomes that are holding consumers back (even allowing for unemployment and rising income taxes), rather it is fear. Fear that the money they have available to spend today may not be there tomorrow.

The question is: at what point do the 'bargains' on sale become so persuasive that consumers start spending again? Or will that only happen when inflation sets in (as it inevitably will given trends in prices of sugar, coffee and wheat) and people fear missing out on the bargains?

Wednesday, August 12, 2009

Let Them Serve Cake

There you go: another 57,500 certified young people. I congratulate them all. Now what? IBEC is fretting that the numbers of students taking higher level maths and subjects with higher maths requirements are lower than before. But does it really matter?

A recent US study projecting the fastest growing occupations to 2016 (see chart) suggests that some of the biggest increase in labour demand will be for care aides, makeup artists and 'substance abuse and behavioural disorder counselors'. Not a lot of higher maths requirements there ...

But even these jobs may be endangered (and not just because of the recession). Gregory Clark is fretting not about the recession but something else:
No, the economic problems of the future will not be about growth but about something more nettlesome: the ineluctable increase in the number of people with no marketable skills, and technology's role not as the antidote to social conflict, but as its instigator. The battle will be over how to get the economy's winners to pay for an increasingly costly poor.
The robots replace the low skilled workers in Clark's scenario. Nor does he think that education will solve this problem:
Others see education as a way out of this dystopia. The root problem is, after all, the widening of the income gap between the skilled and the unskilled. Can expanded education give the poorest the tools to resist the march of the machines? I'm skeptical. Already, much of the supposed improvement in high school and college graduation rates has come by asking less of graduates. We can certainly arrange to have everyone "graduate" from high school, but whether they will have the skills needed to make it is doubtful.
He's not the only one fretting about 'grade inflation' - or about a legacy of ruin which will see too many school leavers go on to university as part of dubious targets rather than acquire more useful skills. But maybe we fret too much? Maybe a future of 'redundancy' is something to be welcome, given that much the same forces has given us the immensely richer and more materially equal world that we have today? Will Wilkinson thinks so:
If robots can crowd out all low-skilled workers, there is no reason they cannot also crowd out all high-skilled workers. Would this be bad? Growth would proceed so rapidly that the returns to even small amounts of capital should be outrageously high. The gap will be between those with income from capital gains and those with none. To prevent this, some version of Clark’s recommendation might be desirable. I’d recommend Charles Murray’s scheme for replacing the United States’ social insurance apparatus with basic income grants and mandatory retirement and medical savings accounts. In a world of doubling-every-fifteen-minutes Hansonian robot growth, the portion of GDP necessary to fund universal grants sufficient to ensure a modestly lavish level of consumption would be so trifling that no one would even notice. For now, we should try to hasten the arrival of this post-human economy, in which case we should try to optimize incentives to innovation and growth.
He's right of course: the key is the productive potential of innovation. But innovation does not mean a fixation with post-doctorate researchers in universities. As Richard Tol points out:
Although innovation in the old economy is not spectacular, the old economy is much larger than the new economy. Renewing the old economy, therefore, contributes more to economic growth.
So those who bring some innovative zest to the role of care aide, makeup artist or 'counselor' might well do more to grow the economy and improve productivity than any amount of higher maths inspired pure research.

Not that any of this will be of much consolation to those whose results today leave them with fewer CAO options than they had hoped for. But life opens up other options too - be open to that.

Monday, August 10, 2009

An Islamic Future?

A last holiday reminiscence from France: and a thought about Europe's future. I recently took my daughter and a friend to the local water theme park - lots of slides and slaloms. Great fun for the young and young at heart (though definitely not for those with a weak heart!)

As always you get a great cross-section of holiday makers at such places, mostly French in this case (as they generally like to holiday in their own country a lot like the Spanish and Italians). Among the French were a number of Muslims - identified by those family groups whose women were wearing hajibs. This seemed somewhat incongruous (and that bit more noticeable) given that most everyone else was in swimwear and it was also very hot (34c) and very wet ...

It was another cultural reminder of France's Muslim population, and that country's ongoing debate about the relationship between the state and religion in schools etc. If anything it's a debate that is increasingly Europe-wide in its relevance and intensity. In just the past week there has been a flurry of media coverage about various projections claiming that France/Britain/Europe (select your country/region) will be Muslim by 2030/2040/2050.

Here's the Daily Telegraph on the demographic time bomb transforming Europe:
The numbers are startling. Only 3.2 per cent of Spain's population was foreign-born in 1998. In 2007 it was 13.4 per cent. Europe's Muslim population has more than doubled in the past 30 years and will have doubled again by 2015. In Brussels, the top seven baby boys' names recently were Mohamed, Adam, Rayan, Ayoub, Mehdi, Amine and Hamza.

... residents of Muslim faith will account for more than 20 per cent of the EU population by 2050 but already do so in a number of cities. Whites will be in a minority in Birmingham by 2026 ... Another forecast holds that Muslims could outnumber non-Muslims in France and perhaps in all of western Europe by mid-century. Austria was 90 per cent Catholic in the 20th century but Islam could be the majority religion among Austrians aged under 15 by 2050 ...
A YouTube video on Muslim Demographics - viewed over 10 million times - presents even more extreme forecasts about Europe's Islamic future. But of course demographic forecasts, especially in relation to religious affiliation, are notoriously prone to massive error. And as a recent, politely British hatchet job on the same video by the folks at the BBC's More or Less radio programme makes clear: if you start with the wrong numbers your forecasts are going to be even less accurate than if you use the right ones.

Coincidently I am reading Don Cupitt's magnificent book The Meaning of the West: An Apologia for Secular Christianity. Cupitt, like myself, is something of a post-Christian, pro-Christian. His book ingeniously explains how our modern, Western, secular society is in fact the inevitable outcome - destiny even - of Christianity. If you like a rich mixture of philosophy, theology and history combined then this is the book for you (and a lighter read than perhaps I have made it sound!)

He also writes eloquently about the challenge of Islam and its 'confrontation' with the West. In his view Islam will have to be confronted with the same critical thinking that transformed fully-fledged Christianity into today's liberal democratic, free-market Western society. But he does not think that 'conflict' with Islam will engender another 'crusade'. Though it is interesting, nevertheless, that the YouTube video I mentioned earlier appears to have been produced by a US-based evangelical Christian organisation ...

But I am leery of any arguments based on 'demographic destiny'. I grew up a Catholic in Northern Ireland where we were assured that our higher fertility rate relative to Protestants would make a United Ireland inevitable! Destiny had other things in mind it seems. And so it is with most of the more fantastical - malicious even - forecasts for an Islamic Europe. I don't buy them: and I expect that Muslims in Europe will become more 'European' long before Europe becomes 'Muslim'.

Saturday, August 8, 2009

The Beach Never Lies

It's risky extrapolating from a sample of beach goers on the Cote d'Azur (selection bias and all that) but there do seem to be far fewer obese people in France than in Ireland (and certainly fewer than in the United States where I was on holiday last year). The French appear to be winning the battle against obesity, especially among French children.

This is encouraging - obesity might not be our destiny after all. Though the search for explanations for the surge in obesity has ranged from genetics to fructose corn syrup to viruses. But the most obvious one in France is that most people walk more than in the United States or in Ireland for that matter. High density, apartment-dwelling , urban populations spend more time on their feet than in their cars.

There is one other reason to expect the trend in obesity to be halted and even reversed: rising oil prices. If we are heading for another oil shock, then the good news, from a new US study, is that for every long-term $1 increase in gas prices, the national obesity rate drops by 10 percent.

I guess more of us will be walking to the beach in that scenario.



Link

Wednesday, August 5, 2009

The French Figure Out the Price Mechanism

I do admire the French. Sure they're a bit dirigiste and statist for my liking: but at least they understand the workings of the price mechanism, unlike our own glorious leaders. I'm in France this week, enjoying the weather and especially enjoying the cut in vat on restaurant meals introduced at the start of July. And we're not talking about tweaking the tax system here, we're talking about a ballsy cut from 19.6% to 5.5%. As a result, sales in restaurants have taken off.

So you make something cheaper and people buy more of it ... amazing. Or at least it must be to the folks in the Department of Finance who had the ingenious idea of increasing vat, but for some reason vat revenues actually fell ... go figure.

Maybe that's why the IMF expects France to have a 'good recession' - or at least one far less severe than our own. Suddenly 'dirigiste' and 'statist' doesn't seem so bad, or is that the sun getting to me ...?

Sunday, August 2, 2009

In the Long Run, We're All Broke

When Keynes coined his famous quip "in the long run, we're all dead", he was probably thinking of Gompertz Law, eloquently described thus:
Your probability of dying during a given year doubles every 8 years. For me, a 25-year-old American, the probability of dying during the next year is a fairly miniscule 0.03% — about 1 in 3,000. When I’m 33 it will be about 1 in 1,500, when I’m 42 it will be about 1 in 750, and so on. By the time I reach age 100 (and I do plan on it) the probability of living to 101 will only be about 50%. This is seriously fast growth — my mortality rate is increasing exponentially with age.
Our government hopes to defy the economic equivalent of Gompertz Law with NAMA's focus on long term economic value. Indeed, the definition of long term economic value is described in Section 58 of the NAMA Legislation Draft Paper as follows:
a reference to the long-term economic value of the property comprised in the security for a credit facility that is a bank asset is a reference to the value that the property can reasonably be expected to attain in a stable financial system when current crisis conditions are ameliorated and in which a future price or yield of the asset is consistent with reasonable expectations having regard to the long-term historical average.
'Reasonable expectations' - all very reasonable. But what are reasonable expectations right now about the long term global economic outlook, let alone Ireland's? As a recent US Census Bureau report points out, some time in the next 10 years the global number of over-65s will be greater than the number of under-5s for the first time in human history. America is already beginning to fret about a leaner boomer economy as the boomer generation retires in ever greater numbers, curbing their spending and drawing down their savings (what little they have). Some even speculate that the shock of the recent economic crisis, combined with demographics, may well herald a new 'post-consumerist' America: with inevitably lower economic growth rates.

Closer to home there are some who worry that our largest trading partner - the UK - may be in for a generation-long period of economic stagnation due to:

● The fact that the economy will take a few years to recover in national income terms.
● The “reconstruction” that households need to undertake to their balance sheets due to the high level of consumption.
● The higher level of saving that the next generation will probably undertake (certainly relative to recent levels of zero).
● The growth in government spending and regulation that will lower trend growth rate.
● The servicing of the huge level of government debt.
● A welfare and tax system that (relatively speaking) penalises those who save and, more generally, make proper provision for their children - something that will continue to lead to high levels of workless households with children.
● The ageing of the population (which will really begin to bite when the other things are sorted out - if they are sorted out) and all that implies for state pensions, public sector pensions and state spending on health.

So it would be brave indeed to assume that the long-term economic value of any Irish asset, property or bank for that matter is higher than its market value right now. Don't get me wrong: I'm all for painting positive pictures of the future - belief in progress, after all, is a healthy antidote to the existential threat of death. I would just like the government to take long run gambles that even Keynes or Gompertz would have thought stood a chance of success.

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