Friday, December 31, 2010

The Peak Decade

"In or about December, 1910,
human character changed".
Virginia Woolf
It's that time of year: a time for reflection and projection. Most seem content to look ahead to 2011 and pronounce on what they foresee. I propose going further, looking ahead not to 2011 but to the decade now about to commence: 2011-2020. It may be a typically human conceit to imagine that our collective future can be determined in neat slots of years or decades, but such simplicities have their uses. And sometimes a year or a decade really does make a difference.

I believe that the decade ahead will be as momentous for humanity as the equivalent decade was in the twentieth century. Think back to December 1910. Who then foresaw the first World War; the disappearance of four empires (Germany, Austria-Hungary, Russia, Ottoman) and the emergence of the world's first communist society in the Soviet Union? Conflicts that resulted in the death of over ten million young men, most of them only children at the start of that fateful decade. And let's not forget all that happened in Ireland over the course of the same ten years: from Ulster's Covenant against Home Rule, to the Dublin Lockout to the 1916 Rising and on to the War of Independence.

So what can we expect in the decade ahead? It strikes me that we are witnessing the culmination of a number of trends. But by culmination I don't mean a unique configuration. Rather I mean the peak and subsequent decline or reversal of forces hereto thought to be unstoppable or irreversible. It is my contention that the coming decade will be 'the peak decade' as one force after another peaks and declines. It will be the defining decade of the 21st century. And the good news is that if we get through it with a functioning civilisation still intact then a magnificent era of human flourishing awaits us.

But first the not so good news. Here are a few of things I expect to peak in the decade that is about to commence - some more welcome than others - and some undoubtedly earlier in the decade rather than later:

Peak Europe: Claus Leggewie has written about The Seven Circles of European Memory, those seminal, shared experiences that have forged the European project - from war to the Holocaust to immigration. But history hasn't stopped and an 'eighth circle' of memory is now forming, namely the spectacular rise and fall of the euro and the economic schism it has created at the heart of Europe. This is the circle of European memory that will be most remembered in Ireland after the coming decade. As Bridgid Laffan observes about Ireland's situation, our new found dependency on the IMF/ECB will unleash levels of Euroscepticism and outright anti-EU hostility that the Irish elite will struggle to contain let alone channel. The euro may well survive The Peak Decade in a much reduced form, but Ireland's membership may not.

Peak Pensions: this one is already upon us (those of us who work in the private sector anyway). But it's coming to the public sector and soon. Take the extraordinary seizures of pensions now taking place across Europe. Here in Ireland, we have the appalling spectacle of the National Pension Reserve Fund being raided not to improve the wealth generating capacity of the country but rather to boost the balance sheets of our insolvent banks in order to pimp them to potential buyers. Nor is Europe an anomaly: local and state pension funds in the United States are being rapidly depleted, and some have simply run out of money. By the time The Peak Decade is over, expect to see the disappearance of statutory retirement ages for workforces in developed countries, the rapid reduction of state funded pension rates (in nominal and real terms), and a rapid return to widespread poverty in old age. The giant public sector ponzi schemes that have characterised a great deal of pensions provision in developed countries (especially those of public sector employees) will collapse just like their counterparts in the private sector.

Peak Government: this is one where the United States is well ahead of Europe, surprisingly enough. Niall Ferguson has written and spoken eloquently on the matter of imperial failure, driven inevitably by the rising cost of servicing public debts. The United States is the world's largest debtor nation by far, and the US Government is already paying enormous amounts of interest simply to service its debts (equal to 4.5 times what it spent on education last year). But the United States is a harbinger not an outlier. Here in Europe we have learned the wisdom of the adage that 'expecting today’s Western leaders to run fiscal surpluses is like expecting dogs to stockpile sausages'. The euro crisis simply accelerated what was going to happen anyway: a pervasive political Keynesianism, always with the stimulus, never with the surplus. But as debt/GDP ratios explode across Europe over the course of The Peak Decade (exponentially in Ireland's case) the unsustainable nature of spending by Europe's governments will become grimly apparent.

Peak Feminism: this one you may be less familiar with, but it is tied to the previous peak. The first phase of feminism (equity feminism) in the twentieth century - securing for women the rights to vote, own property and to be paid the same rate for the same work - morphed in the second half of the century into a political ideology (gender feminism) intent on securing gains for women to the detriment of men, achieved through the capture of the state (both as an employer but also as a redistributor of income from men - who pay most taxes - to women, who receive most social welfare and pension payments). But as the glass ceiling is increasingly revealed as a chimera, the glass cellar that confines a growing number of men to educational, social and economic failure has become more apparent. Just as the tide of government is turning, so inevitably will the tide of gender feminism. Expect a great deal more attention to the glass cellar over the course of The Peak Decade, with men in developed countries demanding a return to real gender equity.

Peak Tolerance: this is a more dangerous one. The economic cake - in Ireland but in much of the rest of the developed world as well - will not get much bigger over the first half of The Peak Decade, and may even shrink. Much of what seemed like tolerance in Western Europe during the previous decade was the result of a bigger cake making it easier to accommodate more people to share it with. Though I don't buy the Eurabia scenario for Europe (for starters, it isn't what most European Muslims want), there can be little doubt that a continued threat from Islamic extremists, coupled with a failing generation of young Muslim men across Europe, will give rise to a more extreme political landscape.

Peak Peace: this is the most dangerous one. Sure we have had conflicts during the past decade, but The Peak Decade will see something far nastier. Firstly, deep recessions often trigger wars, and some - like Paul Krugman - have argued that war can end recessions, just as World War II ended the Great Depression. More than a few politicians will take that lesson to heart. We have been blessed here in Western Europe with a prolonged peace, but state-on-state violence has been a pervasive force not just throughout Europe's history, but also throughout all recorded history. It may be peace that is anomalous in this regard. The 'war to end all wars' that convulsed our continent during the second decade of the twentieth century is a reminder of war's capacity to surprise even its advocates with its violent speed and destructive power. As China, Russia and the United States jostle for power in their respective 'near abroads', faced as each is by economic, demographic and technological forces for sometimes unwelcome change, then the chances of war, directly or by proxy, will worsen as The Peak Decade proceeds. It's going to be ugly.

Those are the main forces shaping The Peak Decade in my opinion. There will be others, but some - like technology - have already made their impact felt (e.g.: most of the global gains from mobile and internet technologies have already been experienced during the decade now ending). Others, like climate change, will either impact on a much longer timescale than a decade, or will be characterised by even great uncertainty as 'extreme weather' becomes the new 'global warming'.

As for Ireland, we are the canary in the coal mine for some of these trends (Peak Europe, Peak Pensions, Peak Government), but we will spend much of the decade on the sidelines of much bigger, more global forces for change (especially Peak Peace). Not that there are any sidelines any more in our hyper-connected, hyper-dependent worlds. Though Peak Oil might change that.

It's December 1910 again. Only different. Fasten your seatbelts, there's a turbulent decade ahead...

Wednesday, December 29, 2010

Flipping the Iceberg

The recent snowfall was a salutary reminder that Irish society has depths of strength and fortitude not obvious from the headlines or from our 'leaders'. On more than a few occasions I found myself trying to negotiate an especially slippy incline or corner in my car, only to find two, three and more people appearing as if from nowhere to give me a push and keep me going. Similarly I would regularly be joined by strangers as we tried to help someone stuck in their own car in a drift of snow.

And so it was for hundreds of thousands of our fellow country men and women: clearing paths, pushing cars and keeping an eye on elderly neighbours. Civil society is alive and well in contemporary Ireland, but it remains hidden like the submerged mass of an iceberg. Alex Tabarrok recently commented on the Iceberg Economy over at Marginal Revolution. He was making the point that - in addition to the visible structures of government and commercial activities - there is a less visible sub-structure of family, community and charitable activities that are vitally important contributors to civil society.

It is only when the iceberg is flipped - such as during record-breaking cold weather - that the invisible becomes visible, and we are reminded of the true depths and strengths of Ireland and the Irish people. Moreover, I expect to see greater visibility for these hidden depths in months and years to come as we learn to apply the ubiquitous tools of social networking and peer-to-peer communications to helping solve one another's problems. Instead of waiting for the local authorities to show up. Check out Snowmageddon Cleanup to see how New Yorkers are responding to their own recent snowfall for a harbinger of our civil future here in Ireland.

Tuesday, December 21, 2010


Up close, or far out: everything has a context (even the Universe). Check it out: Scale of the Universe (ht Cafe Hayek).

Saturday, December 18, 2010

Where The Smart People Go

Warning: this is a self-indulgent post. Okay, more self-indulgent than usual.

Christopher Mims has a fascinating post on the 'reading level' of different web sites and blogs. You can now use Google's Advanced Search option to determine whether the content of a given blog or site has a reading level that is basic, intermediate or advanced. In the Reading Level menu select 'annotate results with reading level' and then enter the url of your preferred site in the 'search within a site or domain' box.

So I did: for some of my favourite sites and blogs. Starting with my own it appears that 76% of my posts have an intermediate reading level:

What about some others? for example has a higher share of basic reading content than my own blog:

The Irish Times is decidedly at the 'intermediate reading' level:

Whilst the excellent Irish Economy blog scores much more heavily than my own in terms of 'advanced reading' content:

And the brainiest Irish blog of them all? Why that's the Geary Behavioural Economics Blog, seriously advanced stuff:

Well done lads!

But the only problem with all of the above is that it's very hard to determine what exactly the different reading levels mean. It's a secret Google algorithm sort of thing. I even tried Googling it and all I got was this.

Meanwhile I think I'll stick to the middle lane.

Friday, December 17, 2010

Measuring Memes

The latest initiative from Google labs - the Books Ngram Viewer - is either another brilliant step forward in understanding the human condition... or another brilliant way to, er, waste a lot of time. You decide.

A team from Harvard have worked with Google on a project they are calling culturomics - a fusion of culture and genomics. An oddly clunky word for a project about words. It seems to me they're mostly studying memes - for which there is already an established term: memetics. Nevertheless, the latest output from the project is brilliant. Their Ngram Viewer enables the user to track the historical usage of 500 billion words from millions of books in different languages. According to the folks in Google:
Since 2004, Google has digitized more than 15 million books worldwide. The datasets we’re making available today to further humanities research are based on a subset of that corpus, weighing in at 500 billion words from 5.2 million books in Chinese, English, French, German, Russian, and Spanish. The datasets contain phrases of up to five words with counts of how often they occurred in each year.
In others words: hours of endless analysis - or distraction, depending on your viewpoint. Here are just a few I looked at. Firstly, look at the word 'Ireland':

1916 was our 'moment in the sun' in terms of the global zeitgeist, though there has been an interesting up-tick in the trend since the late 1990s.

On a more philosophical note, it is interesting to compare the cultural trend in the words 'Freedom' and 'Equality'. First from books in the English language:

Freedom has weighed more heavily in the English speaking world than Equality, though the former seems to have peaked in the 1960s, whilst equality has also been on a downward trend since the late 1990s. But let's not be culturally myopic. The next chart shows the trend for Freedom and Equality in Russian language books:

Spot the fall of the Iron Curtain. And note the collapse in references to both Freedom and Equality over the past decade. A certain disillusionment setting in perhaps?

What stories - and memes - will you discover?

Thursday, December 16, 2010

Tuesday, December 14, 2010

America's Ireland

My company - Amárach Research - has just completed a fascinating study of Irish Americans. We conducted it in partnership with

You can read Irish Central's Niall O'Dowd on the survey findings here.

And these are the main results:

In the Boston vs Berlin debate, I suspect we'll all be feeling closer to the former than to the latter over the next few years...

Saturday, December 11, 2010

Cultural Neoteny

Theodore Dalrymple blames the Catholic Church in Ireland for the recession. Or rather, it's demise:
The Irish are right to think that the crisis is more than economic, that it is existential; but they are wrong to think that it is specifically or mainly Irish. It is, in fact, a crisis of western man who cannot control his appetites, who wants today what only the labour of the future can supply, or supply honestly. Western man is, in effect, a child.

In my own country, for example, there has been a decisive shift in attitude to debt within my lifetime. The British people are now among the most incontinent and childish in the management of their own affairs of any people in the world, which is why they are so deeply indebted for what are, essentially, trifles...

What had effected this change? I suspect that the decline of religion, both as a system of belief and a system of social control, has something to do with it. (Is it really a coincidence that the Irish crisis has struck at precisely the same time as the total evaporation of Catholicism’s influence in Ireland?) I say this as someone without religious belief. But where there is no belief that life has transcendent purpose, that there is in effect more to life than this life itself, it is hardly surprising that people – that is to say, many people - take as their philosophy ‘Apres nous, le deluge.’ The problem is that the deluge may not be apres nous.
It isn't just our attitude to debt that is childish. Our attitude to diet appears equally incontinent. Hence the news that we are the second most obese people in Europe after - you guessed it - the British. What appears to be happening is a form of cultural neoteny. Neoteny is a biological/evolutionary phenomenon, whereby adults of a given species evolve to retain physical features previously only associated with the juveniles of their species. Clive Bromhall wrote a fascinating book a few years back about human neoteny, called The Eternal Child.

But now it appears neoteny has jumped from human evolution to human culture. Hence the childlike inability of a growing number of adults to behave like, well, adults. But I doubt it's all the Catholic Church's fault. The phenomenon of cultural neoteny is too widespread throughout the developed world for that and related explanations to suffice. I suspect rather it is the profound re-engineering of the family, gathering pace over the past fifty years or so, that is a more significant contributor (though again, not the only one). Conservative blogger A Letter to The Times blames the now mandatory participation of mothers in the workforce (along with co-ed education interestingly enough), as she notes that:
Indeed, this notion that women need to be wage slaves in order to be fulfilled and that left without interference, the natural Rousseauan goodness of children were shine through, has led to the breakdown of one of the most fundamental elements of the social contract. The tacit agreement has always been, “I will train my children to be fit associates and spouses for your children, and you shall do the same for me.” Only a tiny fraction of people are currently doing this. And let it be said, those few parents who are trying must contend with literally millions of people who are laboring hard to thwart their efforts.
I'm not as pessimistic about the state of parenting in Ireland as she is about the UK. Or even about the impact of mothers in the workplace - most manage to fit work around their family rather than the other way round. But with the IMF now valuing paid employment for mothers ahead of unpaid parenting, and not just in Ireland, then our adventures in cultural neoteny look set to continue.

Friday, December 10, 2010

Beyond Blarney

Faced with adversity the English would famously display a stiff upper lip.What about the Irish? We used to turn adversity into blarney: World War II was just an 'Emergency' sort of thing. Sure it's bad, but it's not that bad.

But the English lost their stiff upper lip a long time ago (permanently, after the death of Princess Diana) and now the Irish have lost their blarney. Sometimes things really are that bad. As I observed recently, the Irish people's psychological connection with the future has been severed by adversity, and like all wounds it's going to take time to heal.

One measure of the wound comes from my company's latest report on the mood of the nation. The two charts below show the percentage of adults each month who experienced any of the listed feelings 'a lot of the day yesterday'. We've been tracking the answers since April 2009, and in the November 2010 wave the percentage experiencing stress exceeded the percentages experiencing enjoyment or happiness for the first time ever. All other negative emotions - including anger - reached their highest levels since we began measuring them.

The fieldwork for the November wave of research coincided with the IMF visitation, as well as the onset of the bad weather. Perhaps the results are not that surprising come to think of it.

But I wonder if something deeper is happening? After three years of recession, with the prospects for recovery disappearing over the horizon, have we just had our 'Princess Di' moment? And if things are no longer 'grand' then what are the consequences for our future? The danger as I see it is that we may be near (or even beyond) a tipping point in terms of 'contagious pessimism'. Once despair becomes endemic, it can quickly morph into even more harmful patterns of behaviour. Like the mass emigration of our young people even when there are options for (many of) them at home ('sure everyone is leaving').

If we are faced with contagious pessimism then we quickly need a countervailing epidemic of optimism. About which I will have more to say in a future post.

Image credit: Grand Grand Grand Grand

Thursday, December 9, 2010

Mutual Obscured Destruction

Could World War III be fought and won while the rest of us are asleep? It may seem an absurd suggestion, but that's one scenario put forward recently for the end of the American Century by 2025:

It’s 11:59 p.m. on Thanksgiving Thursday in 2025. While cyber-shoppers pound the portals of Best Buy for deep discounts on the latest home electronics from China, U.S. Air Force technicians at the Space Surveillance Telescope (SST) on Maui choke on their coffee as their panoramic screens suddenly blip to black. Thousands of miles away at the U.S. CyberCommand's operations center in Texas, cyberwarriors soon detect malicious binaries that, though fired anonymously, show the distinctive digital fingerprints of China's People's Liberation Army.

The first overt strike is one nobody predicted. Chinese “malware” seizes control of the robotics aboard an unmanned solar-powered U.S. “Vulture” drone as it flies at 70,000 feet over the Tsushima Strait between Korea and Japan. It suddenly fires all the rocket pods beneath its enormous 400-foot wingspan, sending dozens of lethal missiles plunging harmlessly into the Yellow Sea, effectively disarming this formidable weapon.

Determined to fight fire with fire, the White House authorizes a retaliatory strike. Confident that its F-6 “Fractionated, Free-Flying” satellite system is impenetrable, Air Force commanders in California transmit robotic codes to the flotilla of X-37B space drones orbiting 250 miles above the Earth, ordering them to launch their “Triple Terminator” missiles at China's 35 satellites. Zero response. In near panic, the Air Force launches its Falcon Hypersonic Cruise Vehicle into an arc 100 miles above the Pacific Ocean and then, just 20 minutes later, sends the computer codes to fire missiles at seven Chinese satellites in nearby orbits. The launch codes are suddenly inoperative.

As the Chinese virus spreads uncontrollably through the F-6 satellite architecture, while those second-rate U.S. supercomputers fail to crack the malware's devilishly complex code, GPS signals crucial to the navigation of U.S. ships and aircraft worldwide are compromised. Carrier fleets begin steaming in circles in the mid-Pacific. Fighter squadrons are grounded. Reaper drones fly aimlessly toward the horizon, crashing when their fuel is exhausted. Suddenly, the United States loses what the U.S. Air Force has long called “the ultimate high ground”: space. Within hours, the military power that had dominated the globe for nearly a century has been defeated in World War III without a single human casualty.

All very exciting in a Halo 3/Call of Duty sort of way. But the less exciting, though equally dangerous reality of cyberwar in 2010 is getting a lot of attention right now. The latest dispatch from Stratfor has a fascinating piece on China and its double-edged cyber sword. It turns out that:

  • China has 40,000 police dedicated exclusively to monitoring Chinese internet traffic and websites.
  • China's PLA have separate divisions focused on cyberwar: one offensive, the other defensive - they are reckoned to be the best hackers in the world.
  • There are 400 million internet users in China.
  • The Chinese government encourages/indulges nationalist groups of Chinese hackers - 'hacktivists' - to target critics of China and its policies around the world.
There have been low profile 'skirmishes' in the obscure world of cyberwar/espionage recently, including the 'accidental' re-routing of 15% of the world's entire internet traffic through Chinese servers for over 15 minutes last April. And of course the Wikileaks saga has brought home to most governments (especially the United States) just how important net security is from a national security perspective.

Already China is a major internet power - for example, Tencent is much bigger than Facebook - though you likely haven't heard of the former (read more in another excellent analysis from Mary Meeker). But as Stratfor points out, it is a double-edged cyber sword. Turns out that China is the world's largest market for software piracy: 79% of all software sold in China last year was pirated it seems. And there's the other edge: vast tracts of China's economy, government and military are using unlicensed software (it's cheaper after all), with no security patches or updates (since only the licensed ones get those). So what? Here's what: apparently Stuxnet was able to penetrate Iran's nuclear facilities operating software because the Iranians were using unlicensed versions of Siemens software.

But the really scary thing - as illustrated in the scenario at the top - is that in cyber warfare, as in nuclear warfare, there is a real, strategic incentive to 'get your retaliation in first'. The first mover advantage can make you the last mover as well.

Bet that took your mind off the IMF and senior bondholders for a while. Sleep tight.

Tuesday, December 7, 2010

A Future We Can Believe In

Work as if you lived in the early days of a better nation.
Alasdair Gray
The Irish people's psychological connection with the future has been severed. Sure, the demise of the Celtic Tiger and its get-rich-quick promises was abrupt and precipitous. But that bereavement was waked and buried long ago. And yes, it has been a tough three years of recession, cut backs and uncertainty. But we've experienced worst (some of us several times). No, something else has happened and I'm not sure that there's a precedent in our recent history.

We no longer have a shared narrative about our future as a nation - one that we tell one another about our lives, our communities and our country. In recent generations that binding narrative was about Europe. About our place in an evolving Union of peoples who shared a common desire to build a peaceful and prosperous Europe, as well as a desire to embrace other peoples willing to share the same ambitions.

But the European Project is dead. The shameful and shaming deal foisted on Ireland by the ECB/EU/IMF has killed the Irish romance with Europe. Sure it was a self-serving romance at times, but our enthusiasm for the euro and for most other manifestations of 'Europeaness' (from kilos to kilometres) suggested something more than calculated self-interest. We are a small country that has, in recent generations, embraced the fullest role possible for Ireland in the world. Europe was our chance for exaltation among the nations.

Worse, the very deal itself, with its offer-you-can't-refuse options, now locks Ireland into a programme for failure. By burdening the Irish taxpayer with the liabilities of the ECB and the bondholders in Irish banks then there is no, credible path to sustainable recovery for a country with even Ireland's productive capacity. Without that burden we could have regained the path - making the necessary adjustments to the size of the state along the way. But now the day of reckoning - be it default or debt forgiveness - has been postponed but not cancelled.

In a way, today's Budget 2011 is simply a distraction. The country is in receivership and the ECB appointed receiver is allowing the existing management team to continue trading so long as they expedite the repayment of all secured loans.

It doesn't have to be this way. Ireland is a sovereign nation (still) - not a company subject to the whim of court-appointed receivers. We need to look beyond an accountant's book-keeping exercise in the form of a four year 'recovery plan' and instead map out our nation's path to destiny. Put simply, there is only one duty that befalls each generation - to bequeath a better country than the one we inherited.

Dieter Helm has been writing about a new way of determining the programme of the state, of the nation and the people who comprise it. Here's what he says in a new essay:
The twentieth century has left us with states which have grown so much that they now account for around half the total economies of Europe. This growth has been in response to a combination of democratic preferences for ever greater transfers, and to the irresponsibility of Keynesians in respect of fiscal policy. Over time a greater and greater mortgage has been written on the future – on the mistaken Keynesian assumption that the long run would take care of itself, because economic growth - measured by GDP - would make future generations much better off than current ones. Borrowing from the future to boost current consumption is only desirable if sustainable growth is assumed to be high enough – after accounting for the state of the assets being transferred to the future.

The growth of the state has, since the beginning of the twentieth century, indirectly added significantly to that mortgage. ...Current consumption is not sustainable – or put another way – savings and investments are too low.

The task in reconsidering the economic borders of the state is to design the intergenerational bargain in a way which maintains sustainable consumption through time. A significant part of this bargain is to ensure that the physical and social infrastructure inherited by the next generation is at least as good as the one the current generation inherited. (my emphasis added)
There is next-to-nothing in today's Budget that signals any awareness of our obligations to the next generation. Yes, we have an obligation not to burden the next generation with intolerable debts (especially debts incurred to fuel conspicuous consumption and mal-investments). So paying down our debts (public and private) is economically necessary and morally imperative. But - instead of judiciously selecting those expenditures that will deliver on our bargain with the next generation - we get cuts to child benefit but not to pensions, and the protection of middle class university access whilst support for the educationally disadvantaged is slashed.

So what is to be done? We need to create a future we can believe in. We need leaders - political and non-political - to set out a compelling vision for our country in 2020 (I've put forward a few suggestions myself before) that delivers on our commitment to the next generation. And if that means replacing two year bonds held by senior bondholders with shiny new, low interest 50 year bonds with a balloon payment at the end for good behaviour, then so be it.

We need to heal our psychological connection with the future. And the best balm is that provided by story: especially one that paints a compelling picture of how these dark days can become the early days of a better nation. And our children and grandchildren will wonder at the amazing things we achieved in the face of such adversity.

What future will you bequeath?

Sunday, December 5, 2010

Hearts & Wallets

One thing is becoming clear as the next General Election approaches: the Irish have their hearts on the Left, but their wallets are on the Right. How else to explain the findings - in multiple polls - that the Irish electorate favour Labour's Eamon Gilmore among political leaders but want Fine Gael's proposed policy mix to address the budget deficit, i.e.: mostly spending cuts with just a few tax increases? And no, it's not just the 'Inda' factor. The Irish want a high minimum wage, generous state pensions for the elderly and a commitment to our overseas aid objectives. But we also want to tear up the Croke Park agreement, cut the wages of civil servants and get rid of all the quangos. In a nutshell: high spending, low taxes. A winning formula to be sure (it got Fianna Fail re-elected several times, come to think of it).

But now that the country is in receivership (at the behest of the ECB: Ireland's primary debenture holder), we can no longer get what we want - only what we can afford. And there's a large gap between the two, as the chart from True Economics makes clear. Tragically it has taken the advent of national receivership to bring about changes - including the dismantling of anti-competitive practices in the sheltered sectors of the economy (by Q3 2011 according to the memorandum signed by our negotiators) - that we should have been capable of delivering ourselves. Nevertheless, these changes will be welcomed, even if it is galling to have to report like parolees to the authorities every quarter on our progress towards rehabilitation.

Irish hearts will harden in the months and years ahead, especially as our wallets and purses feel emptier. But we will retain our innate compassion and capacity to support one another in our families, communities and voluntary organisations. Even if we are less empathetic towards our shrinking State.

The party that champions a credible combination of policies that appeal to Irish hearts and wallets will be the biggest winner at the next General Election. And the one after that.

Friday, December 3, 2010

Wait and See

It's just a thought: rather than sign the IMF/ECB/EU deal why not wait and see? After all, we kept being told we had sufficient funding until the middle of next year for day-to-day public expenditure purposes before the IMF came along with their take-it-or-take-it offer.

Irish ten year bond yields are falling (Spain's are down to 4.86% - source: Bloomberg), so why sign up to an ultimately unaffordable deal costing 5.83%?

Maybe we should, em, borrow from Spain?

In The Long Run

Sometimes, in the face of extreme uncertainty, it is important to step back in order to see the bigger, longer term picture. And it helps if you have the resources of the BBC at your disposal. This is both brilliant and inspiring:

ht Cafe Hayek

Wednesday, December 1, 2010

Global Cooling

I know the weather's bad, but this is ridiculous:


Deflate the Debt

Where's Bono when you need him? The man who railed against the bondage of immoral and unjust debts has been strangely silent about Ireland's own descent into debt bondage. Let's face it, we're going to need Bono and few more besides to make the case for debt forgiveness for Ireland. Unless we want to form a new category of 'formally developed' countries.

The scale of the task is immense. The table - from VoxEU today - shows Ireland to be an outlier once again. The Liability/GDP column is the authors' calculation of the potential losses arising from a banking shock in each country. Only in Ireland is the ratio bigger than that for national debt to GDP.

It is fairly clear: we have to deflate our debt, and our options are limited. Michael Pettis provides a useful summary:
Similarly any country whose debt levels are too high, so that it faces financial distress costs that will force a slowdown in growth and an unsustainable rise in debt, will have to improve it’s relative ability to repay. In that case there are also roughly three ways it can do so:
  • It can regain control of monetary policy by abandoning the euro in favor of a local currency, and then inflate the debt away.
  • It can default or threaten to default on the debt, and receive significant debt forgiveness.
  • It can regain fiscal credibility by raising consumption or value-added taxes, by raising income taxes, probably on businesses since it will be hard to raise income taxes on households, or by cutting expenditures sharply, probably social welfare expenses.
There is I guess a fourth way – the country can “grow out” of its debt burden – but although we will hear this fourth way invoked a lot, I think we can safely ignore it. High debt levels themselves prevent growth by encouraging disinvestment and altering the incentives for investors and creditors in ways that punish growth...
The ongoing collapse of borrowing by businesses and consumers clearly indicates that growth-preventing, debt-fuelled disinvestment is well under way in Ireland. It looks like we'll need all the help we can get to deflate the debt. Even from rock stars.

Sure I can see it now: the 'Deflate the Debt' gig in Phoenix Park. The greatest line up of Irish and international musical talent ever. It would even be something to look forward to next summer as we freeze our way through the winter.

So over to Bono (and Bob).

Sunday, November 28, 2010

The Shame Game

One of my favourite conservative commentators - Theodore Dalrymple - explains the absence of riots in Ireland thus:
Of course the politicians and their cronyism are to blame for the situation, but the population voted for them, not in spite of the bubble they created but because of it. An awareness of this has, to the honor of the nation, limited the vehemence of the scapegoating.

The second reason for the relative calm that prevails in the midst of existential crisis is an awareness that the Irish are not the sole authors of their downfall. As the late and much-lamented Mobutu Sese Seko once remarked, it takes two to be corrupt; and likewise it takes two (at least) to make improvident loans. There is no foolish borrower without a foolish lender. If I were a Marxist, I might call the relationship between them dialectical.

The shame of what has happened is more widely distributed than we sometimes realise. Just who were the 'foolish lenders', to use Dalrymple's phrase? Deutsche Bank research* has just published a handy guide entitled Monitoring cross-border exposure: A primer on how to exploit the BIS banking statistics. Although the data is only up to Q2 2010 (and we know an awful lot has happened since), the findings are nevertheless fascinating (and in some instances quite surprising). For example, French banks are the most exposed to Irish government debt:

Another surprise - it is Danish and Belgian banks that are proportionately the most exposed to Ireland:

Even before the most recent crisis there were desperate attempts by foreign lenders to reduce their exposure - in the year to Q2 2010 British banks reduced their exposure by nearly 30%:

But the bottom line hasn't changed - it is German and British banks that are the most exposed to Ireland, to the tune of well over €125 billion each:

There's still plenty of shame to go around.

*The DB Research papers are usually excellent, by the way. I recommend their free subscription service.

Saturday, November 27, 2010

Let Capitalism Work

Notes Mike Whitney:
Ireland is being asked to cut to social services, slash wages, renegotiate contracts, and dismantle the welfare state so that undercapitalized banks in France and Germany can get their pound of flesh. But, why? They're the ones who bought the bonds. No one put a gun to their head. They knew they could lose money if Irish banks went south. That's the risk they took. "You pays your money, and you takes your chances." Right? That's how capitalism works.
Even the Financial Times today observes that Ireland has to choose between the solvency of its government or that of its banks (ht Irish Economy blog).

Unfortunately the issues at stake are not just about economics - or capitalism for that matter. A lot of it has to do with politics and the disgusting spectacle of those who would cling to power (even as they become increasingly powerless) rather than let the Irish people exercise what remaining sovereignty they have to elect a government they can believe in.

I speculated recently that the recession might at least inspire a new era of creativity. The image below might be more agitprop than art, but it gets the message across all right (ht

Friday, November 26, 2010

New World Disorder

Something for the weekend.

Exhibit A, Max Keiser on the collapse of the EU and the rise of the 4th Reich (and you thought it couldn't get any worse?):

Exhibit B, Nigel Farage - English Eurosceptic MEP - batting for Ireland (Jesus wept, it's come to this). Have we a single Irish MEP with the balls to challenge our new overlords in this manner? It's magnificent stuff, and do watch the whole speech, as he starts batting for us after the 1:35 mark:

I wonder what the IMF think of it all? Perhaps we'll know before the weekend is over...

Thursday, November 25, 2010

Equally Poor

A year ago, commenting on the CSO's Survey on Income and Living Conditions (SILC) 2008 report and looking ahead to SILC 2009, I predicted that:
We've had deepening deflation since the start of this year, coupled with falling nominal wages and salaries for many. So don't be surprised to see less 'poverty', a lot more equality and an even narrower income differential between the employed and unemployed (and also between the employed and the retired: a ratio of 77% in the case of the latter in 2008).
Well, here we are a year later and the SILC 2009 report has been published. And the main findings are that:

Inequality has declined further in Ireland:

The poverty rate has declined further:

The income differential did not narrow further for the unemployed, but it did for pensioners (now at 82% of those in employment on an equivalent basis):

So there you are: less inequality, less poverty and narrower income differentials for pensioners. All thanks to the recession. But that's what happens when you insist on defining poverty in relative terms: for when the 'relatives' lose their jobs (and their wealth) then we all move a little closer to the Left's dream of equality. Equal poverty, that is.

Something tells me that we'll be moving at an even faster pace over the next few years...

Wednesday, November 24, 2010

Running Out of Cliff

Neither defeat nor misfortune diminishes the appetite for life. Only betrayal extinguishes it.
Don Colacho's Aphorisms #2,270
The map is not the territory, and the forecast is not the future. The Government's four year plan published this afternoon is just one take on what the next few years might mean for Ireland. But the plan's real purpose is to signal to international and domestic audiences that the Government is in control of the situation (sort of) and taking the necessary steps to ensure it remains that way. If it succeeds in doing so, even for a few months, then it will have served some useful purpose. But it is no more a guide to the next four to five years than the leaves in a teacup, though the latter might taste less bitter.

I don't doubt the difficulties faced by the Government, its advisors and everyone else involved on the Irish side of the unfolding debacle. There are few options, and none of them are painless nor guaranteed to succeed. The Government tried to bluff the markets back in September 2008 with its blanket guarantee, and now unfortunately that bluff has been call. Not even the European Union can put the blanket back.

Right now it feels like we are running out of cliff and economic gravity is exerting its pull. But the real tragedy in all of this is the total loss of trust between the Government and the governed. Now, whatever happens, there is a pervasive foreboding that the Irish nation is being betrayed. If not by knaves then by fools.

But life goes on: customers need to be served, and employees need to be occupied. Plans also need to be made, not plans pretending to know the future, but real plans that explore the future and the opportunities it will bring. That's what properly free markets (and countries) do best.

So we must retain our appetite for life and for freedom and for success, however defined. But right now I am a micro-optimist even if increasingly a macro-pessimist. The latter probably explains why I couldn't get this song out of my head today:

Tuesday, November 23, 2010

Scheisse Happens

Can Ireland afford to bail out Germany's banks? And Britain's for that matter? According to Wolfgang Münchau in today's FT, the two largest creditors to Ireland are the UK and Germany - owed $149 billion and $139 billion respectively. The extent to which the Irish bailout is as much a bailout of German and British banks is becoming clearer by the day. It's bad enough to ask the Irish taxpayer to pick up the bill for rogue Irish banks - but rogue German banks?

We are now suffering the consequences of a giant 'vendor finance' scheme facilitated by the euro. The huge trade surpluses generated by Germany in the past decade (one benefit of a 'weak' euro rather than a 'strong' deutschmark) were recycled by German bank via loans to the eurozone's peripheral economies - who then bought German exports via a consumer spending boom and housing bubbles.

Lisa O'Carroll reports in today's Guardian, for example, that the German bank Hypo Real Estate has the largest exposure to Irish sovereign debt (some of it, no doubt, incurred in efforts to bail out Irish banks). Also, the blogger Golem XIV gives a blow-by-blow account of how German banks - trying to escape their domestic regulatory restraints - used Ireland during the boom to take bigger financial risks than would have been legal back in Germany .

Needless to say, not all eurozone economies reacted with the same unrestrained gusto of a teenager with their first credit card to the cheap debt made available by the vendors. Our own banks (and non-regulators, with our politicians cheering from the sideline) did their very best to max out the euro credit card, and then some. But that is the sorry pass we have reached. The urgency of the IMF/ECB/EU efforts these past few weeks to do a deal in Ireland has been driven by the very precarious situation faced by the larger European lenders exposed to Ireland. The Irish taxpayers comes last on the list at this particular 'creditors meeting'.

Today's editorial in the FT calls for Ireland's creditors (including senior bond holders) to take a haircut - demanding, not for the first time, that Ireland and Europe must face down its reckless creditors, for otherwise it will happen again. Our creditors may have a gun to our head: but we have a gun pointing at theirs too.

Sunday, November 21, 2010

The Legal-Industrial Complex

The behaviour of any bureaucratic organization can best be understood by assuming that it is controlled by a secret cabal of its enemies.
Robert Conquest's Third Law of Politics
Ireland's bankers and politicians - as well as the occasional foreigner - have been painted as the primary actors in our unfolding tragedy. But what about the lawyers? P O'Neill asks this crucial question in a recent post over at A Fistful of Euros:
...the Irish political system is strangely deferential when a legal argument is deployed. All that’s necessary is some muttering about a measure being potentially prejudicial, or better still, posing constitutional problems, and a form of helplessness takes over. This explains a lot.

...So here we are. Other countries in economic distress might be entitled to worry whether having loaded up on Ph.D. economists in positions of power was such a good idea. For Ireland, the question is where all the lawyering has gotten us. Somehow the country never rose in importance as the client compared to the party.
But Ireland may be an exception to Conquest's third law - as it is to so many other frameworks of political analysis. For our governing cabal isn't acting in secret: it's hiding in plain sight. Their behaviour is there for all to see...

Saturday, November 20, 2010

A Question of Sovereignty

Different people have asked me about recent events and how the 1916 rebels would have perceived our sorry state. The short answer is: nobody knows. The long answer is: the world is very different to the one in which they struck for freedom, and we (still) enjoy vastly greater freedom in very many respects than they could ever have dreamed of. Though there is no doubt their successors, in terms of the current government, are not worthy of the name.

The sovereignty question is also over-simplistic. A home owner with a mortgage may have their name on the title deeds to their home, but the mortgage lender holds the deeds until the mortgage is paid. Since the first Irish bond was sold to the first foreign buyer our sovereignty has been 'compromised' since at least part of the taxes raised in Ireland have gone to pay the bondholders. But so what? North Korea is the only truly 'sovereign' state in the world: but I don't see it inspiring others to follow. Fintan O'Toole suggests that:
A simple rule of thumb for a sovereign state is that it – and it alone – makes its own decisions about taxation and spending. For the foreseeable future, Irish governments will not pass this test.
This is, of course, absurd. Alongside decisions about taxation and spending is the obvious matter of borrowing. No government in the world - not Germany, the UK or the United States - can make decisions about taxation and spending without any regard to the perceptions and reactions of others. Especially those they hope will buy their bonds. In today's global economy, every country's sovereignty is compromised.

But none of this is to detract from the enormous damage done to our economy, our society and our reputation by the appalling decisions of the present government and its predecessors. Our 'leaders' have been mugged by reality. Once they bound the financial viability of the state to financial insolvency of our banks then our choices, freedom and options for the future were fatally compromised. Our sovereignty wasn't taken from us, it was given away one bad decision at a time. The shame is on those who - through their actions and inaction - have brought this sorry state about.

But our sovereignty will be restored one repayment at a time. Much like the home owner who eventually repays his mortgage and finally receives the title deeds to his property. There is more involved than debt repayments of course. The 1916 rebels understood the importance of leadership, vision, sacrifice and hope: and we should be inspired by their example to move purposefully towards a better future that restores the freedoms lost by their unworthy successors.

Image credit: BOM

Wednesday, November 17, 2010

Germany Should Leave The Euro

Yes I know, it's a bit counter-intuitive. But I think Simon Heffer has it right:
The best solution for Europe would break the dream altogether: for Germany, the strength of whose economy distorts the value of the euro, to leave the eurozone and re-establish the Deutschmark. This would drive down the value of the euro precipitately, but would make things easier for the ailing economies within it. The Germans would lose nothing: in fact, quite the reverse, as they would have a currency whose strength would be undiluted by unregenerate profligates and spendthrifts in Ireland and in Club Med, and could go around buying up the world with their enormous economic strength. Meanwhile, everyone else could regroup. Any country that felt insulted by this (as I suspect France might) could ask instead to join the Deutschmark zone, if it was mad enough.
It's the best idea that I've come across so far in the current crisis. And here's the best image (ht zero hedge):

Tuesday, November 16, 2010

Our Young Future

I was speaking at the Waterford Institute of Technology yesterday at an event organised with the AIB Centre for Finance and Business Research. The theme was Business in Ireland - Building for Success. Sean Gallagher - of Smart Homes and Dragon's Den fame - gave an inspirational talk about the role of entrepreneurs in creating Ireland's future.

But the really inspiring thing was the audience of young students from WIT. They asked some great questions and seemed genuinely ambitious to succeed, despite the economic circumstances they have inherited. We would all be better off spending more time talking to our young people - who will secure our future - than listening to old commentators who have nothing to say but 'I told you so'.

Monday, November 15, 2010

Growthsizing the Economy

So where do we go from here? Yes, things are bad and will likely get worse in the next few months. Then what? What's the plan for Ireland beyond a four-year long book-keeping exercise to placate the bond markets?

I have a suggestion: let's aim to have the highest standard of living in Europe by 2020. Call it 1 by 20. Pick your measure: GDP/GNP per capita, UN HDI, whatever. Sure, we're going other way right now. But that's the point: unless we set ourselves the task of seizing a better future for our country then we will default into failure.

And let's not leave it to the politicians. Take a leaf out of New Zealand's approach to these things. They have a 2025 Taskforce whose aim is to advise the NZ government and others on the how best to achieve an agreed goal of matching Australia's GDP per capita by 2025. Their second report - Focusing on Growth - is a brilliant tour-de-force of the latest thinking on the nature of economic growth, the importance of productivity and innovation, and the role of government in same. I cannot recommend it highly enough. It's like something Forfás would write if they didn't have to please everyone in the worst tradition of social partnership mediocrity.

What is especially clear from the 2025 Taskforce report is the critical task of balancing the private and public sectors in order to deliver sustainable growth. It is less about ideology and more about rightsizing government to ensure that the private sector does what it does best, i.e.: generating employment and wealth that provides the taxes for services that taxpayers wish the government to provide. Nevertheless, it isn't about rightsizing - or downsizing - but what I prefer to call 'growthsizing' the economy: making sure we have the optimum alignment of policies for education, employment, and investment (from technology to funding) that will sustain growth into the future. And the tax system that goes with it.

We have to have a higher ambition than simply placating the bond markets. A recent article in The Economist made the following point about growth:
If the rich world really wants to go for growth, it must get away from its narrow focus on public debt and embark on a broader economic overhaul. Instead of promising to halve their budget deficits by 2013, for instance, big rich economies could decide to raise their retirement ages or free up their professional services. Fiscal consolidation would not be ignored: it would just not be the only priority.
Right now, unfortunately, the 'narrow focus' is all that seems to dominate the debate in Ireland. But we need to raise our sights. The OECD calls it Going for Growth - and the roadmap is fairly clear but not easy to follow, as noted by the 2025 Taskforce. The key is productivity - and the current banking strife in Ireland is an 'Emanuelian' moment to turn a crisis into an opportunity, as also noted in the Economist:
Sweden offers a more encouraging lesson. In the aftermath of its banking bust in the early 1990s it not only cleaned up its banks quickly but also embarked on a radical programme of microeconomic deregulation. The government reformed its tax and pension systems and freed up whole swaths of the economy, from aviation, telecommunications and electricity to banking and retailing. Thanks to these reforms, Swedish productivity growth, which had averaged 1.2% a year from 1980 to 1990, accelerated to a remarkable 2.2% a year from 1991 to 1998 and 2.5% from 1999 to 2005, according to the McKinsey Global Institute.
What's more, technology-induced productivity increases may be about to tip even developed economies like Ireland into an age of substantially higher rates than heretofore.

Yes we have to navigate the extraordinary challenges that await us in the months ahead. From Budget 2011 to the European Financial Stability Fund to a General Election to a new government - and not necessarily in that order. But we need to look beyond the current crisis to the potential for our country to come out of it wiser and more focused on the potential to create a better future for the Irish people than that offered by the fatalism that now besets us.

1 by 20. We can do it. We must do it.

Friday, November 12, 2010

Maestro Ludovico

Ludovico Einaudi treated the audience at the National Concert Hall last night to a master class performance. All were captured by his transcendental music, including yours truly.

He played a beautiful combination of his more recent compositions as well as his 'greatest hits'. Including one of my favourites, Nuvole Bianche:

Grazie Ludovico.

Wednesday, November 10, 2010

What have the Koreans ever done for us?

I ask because we are at a dangerous stage in the project of globalisation, with the threat of currency wars leading to trade wars. And there is much to lose. The chart is from a study of global innovation: it seems South Koreans file more patents per dollar spent on research than any other country in the world. By a long shot. I find that very reassuring: it is no longer up to the West to provide all the innovations that improve economic productivity and our quality of life.

Unfortunately the appetite for international trade that drives such innovation is waning. Here in Ireland we are still more pro-trade than the rest of the EU (49% of Irish people feel they benefit from it versus 44% of all Europeans), as shown in the next chart from a new Eurobarometer report:

But we are well down the European rankings in terms of being pro-trade, and the worrying thing is that the 'anti-trade' constituency in Europe is nearly as large as the pro-trade one. A return to a policy of 'ourselves alone' will bring the current age of global innovation to a grinding halt, as well as economic growth and improving standards of living for the world's poorest along with it. We should know here in Ireland: we ran that experiment before and it didn't have a pretty ending.

The good news is that we can look forward here in Ireland to a new generation of innovative products and services that will improve our lives immensely. You can get a taste of the future from the excellent guide to over fifty consumer innovations from the BRIC economies and others (though not Korea for some reason). Sure, a lot of it is stuff we've already got from other sources. Many of the innovations are simply variations on a theme to appeal to local tastes. But give it time: these are early days and those patents will eventually make a real impact.

Take the example of the Chilean entrepreneur Fernando Fischmann, profiled in a fascinating episode of GlobalBiz. Using his training as a scientist he has built a company - Crystal Lagoon - that uses patented technologies to clean water in pools and man made lagoons with just 2% of the traditional energy inputs. He already has contracts generating $600 million in royalties from his patent...

This is where it gets interesting. Because one of the biggest problems facing us is the energy cliff as current oil production sources run out. The latest WEO forecast paints an alarming picture - including this chart:

It will be innovators and entrepreneurs like Fernando Fischmann - and his counterparts in China, Brazil, India and Korea - that will help close the gap. We are in a race to the top - and it's a relay race. I don't doubt that the Koreans - and others - will do a great deal for us here in Ireland in the years and decades to come.

Tuesday, November 9, 2010

Send In The Philosophers

Perhaps it's time to retire the economists and send in the philosophers? Imagine there was a broadcast ban on economists for a month and only philosophers were allowed onto the nation's airwaves and op eds? It's worth a try...

These and other unprofound thoughts were prompted by the results of a fascinating survey of philosophers (ht Bryan Caplan). You can read the results at philpapers, which includes the questionnaire (an innovative survey exercise in itself, though definitely aimed at practising philosophers - I'd have liked a guide to the questionnaire explaining what the questions mean!)

There's a very handy table listing the highest correlations from the findings (what beliefs are correlated strongly with others). And like economists, they are prone to using zombies quite a lot to make, em, 'philosophical' points.

Monday, November 8, 2010


Morgan Kelly gave us the shock jock treatment today. There's nothing like a dose of pessimism porn on a dark, damp Monday morning in November to get the nation's hearts pumping hard. Or at least the hearts of those one in ten adults who actually read the Irish Times.

I'm rather fond of well-written polemics myself, especially those that assail the orthodoxies of the day. But there's the funny thing: pessimism porn is the orthodoxy of the day. Daily we are assailed by a doom loop of "it's all over, we're all going to die" by the nation's media, academics, NGOs, trade unions and political parties. Hell, even the Government's handlers don't even bother trying to put a positive spin on things any more... And another funny thing, four years ago the orthodoxy was a relentless boom loop, and poor old Morgan was like Don Quixote tilting at windmills. Well guess what, now he owns the windmill.

But it wasn't so much the content of Morgan's rant that I found annoying so much as the stance. It was a classic example of that ancient Irish tradition of 'the hurler on the ditch': with the 'expert' on the sidelines shouting advice at the players without actually getting involved in the rough and tumble himself. He doesn't have any skin in the game, to use the equivalent American idiom. His penultimate paragraph gives it away:
You have read enough articles by economists by now to know that it is customary at this stage for me to propose, in 30 words or fewer, a simple policy that will solve all our problems. Unfortunately, this is where I have to hold up my hands and confess that I have no solutions, simple or otherwise.
So perhaps a little self-flagellation is in order? Now I'm not going to say that Morgan is being unpatriotic or that the Irish Times has been irresponsible in publishing his piece or that it's all very well for him in his tenured ivory tower yada yada. It's too easy to exaggerate the impact of such things (nine out of ten adults don't read the Irish Times and all that). And like I said, I do enjoy a good polemic myself from time-to-time.

But his polemic bugged me. Partly it was the supercilious introduction with the faux 'breaking news' story from Our Lady of the Eurozone Hospital, but mostly it was the silly - and I mean embarrassingly silly - attempt at a Gerald Celente style forecast of impending social unrest, neo-fascism and Mad Max redux. Or should that be Mad Mick? Though I do enjoy Gerald, I must admit. Here's Morgan:
As ordinary people start to realise that this thing is not only happening, it is happening to them, we can see anxiety giving way to the first upwellings of an inchoate rage and despair that will transform Irish politics along the lines of the Tea Party in America. Within five years, both Civil War parties are likely to have been brushed aside by a hard right, anti-Europe, anti-Traveller party that, inconceivable as it now seems, will leave us nostalgic for the, usually, harmless buffoonery of Biffo, Inda, and their chums.
Of course, the awkward fact that there are absolutely no harbingers of this happening should not be allowed to get in the way of an unhappy ending.

Here's the thing: nothing about the future is definite. Not the weather, not the bond markets, not next year's budget deficit, not GDP growth, nor any other macro-economic variable. The past is more definite - here I agree with Morgan that the bailout of the bondholders by the taxpayers was, and is, an outrage. But you can emphasize the negative (the glass is half empty and the rest of the glass is going to waste), or you can challenge his assumptions about the future (and that's all they are) - as John McHale has done - and reach a different conclusion.

Though it may not get your heart pumping quite so fast.

Sunday, November 7, 2010

Time's Arrow

Seemingly Zeno was right. Robert Lanza explains:
At each moment we're at the edge of a paradox described by the Greek philosopher Zeno. Because an object can't occupy two places simultaneously, he contended that an arrow is only at one place during any given instant of its flight. To be in one place, however, is to be at rest. The arrow must therefore be at rest at every instant of its flight. Thus, motion is impossible. But is this really a paradox? Or rather, is it proof that time (motion) isn't a feature of the outer, spatial world, but rather a conception of thought?
It turns out that time is a mental construct, not a physical 'reality', something intuited by earlier peoples, including our Celtic forefathers and their circular concept of time. Lanza again:
As I see it, immortality doesn't mean perpetual (linear) existence in time but resides outside of time altogether. Life is a journey that transcends our classical way of thinking. Experiment after experiment continues to suggest that we create time, not the other way around. Without consciousness, space and time are nothing.
Hmm. Does this mean we can go back to Government Buildings and the 29th September 2008 and make a different decision? Now there's a thought. Or is it?

Saturday, November 6, 2010

Emphasize the Negative

Imagine Ireland experienced a severe recession - the unemployment rate tripled, GNP shrank by 20%, and emigration stalked the land - what do you think would happen to the crime rate? Most likely you would imagine the exact opposite of what has actually happened here in recent years. For according to the CSO, Ireland's crime rate has fallen steeply - from 12% of households experiencing any crime in 2003 to just 9% in 2010.

It's a trend that flies in the face of the 'apocalypse now' school of commentary. And a reminder that we are still a comparatively wealthy country. But not just economically. According to this week's United Nation's Human Development Index we rank number 5 in the world (using a combination of social, economic and educational measures). The World Bank announced this week that Ireland is number 9 in the world in terms of Ease of Doing Business. Similarly the recent Legatum Prosperity Index ranked Ireland number 11 in the world on a series of prosperity measures.

The realities on the ground are that Ireland is a country with the resources and strengths to get through our present, politician-induced crisis. We see it everyday in our families, communities and workplaces. We will get through the crisis, despite the ineptness of our country's leadership, and despite the banshee chorus of gloom-and-doomsters and their 'end times' fantasies which seek only to emphasize the negative.
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