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 politics.ie):

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 TrendWatching.com 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

Hurler-on-the-ditch-onomics

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.

Friday, November 5, 2010

Shiny and Bright

We project all sorts of ideas onto the future. But since it doesn't exist, except in our imaginations, the future is like a Rorschach Test revealing more about our thoughts and emotions in the present. Curiously though, the further ahead people look in time then the more confident they are in the present about the future. Robin Hanson calls it 'far thinking'.

But dwelling too much on the future, especially the long term, can be unhealthy. It deteriorates into daydreaming, and becomes a barrier to action. Then again, so can dwelling too much on the present or the near term. Such a focus becomes distracting, and a barrier to focus. We need both - especially in business.

Right now the short term looms large in Ireland. Today's bond markets, next month's budget, next year's spending cuts and tax increases. It's all very important. But it's all very limited. Worse, the difficulties we confront in the short term cloud the opportunities that are available in the medium to long term. And there are real opportunities. Take today's report from the UK's Foresight Horizon Scanning Centre on Technology and Innovation Futures: UK Growth Opportunities for the 2020s. Not only is it an inspirational guide to where Irish businesses should focus in relation to growth opportunities in the UK, it is even backed up by a highly detailed Technology Annex regarding 55 specific future technologies and innovations.

The only viable solution to the mess our politicians and bankers have created here in Ireland is to pursue opportunities for growth that will enable us to undo the damage and renew our economy and society. And we don't even have to discover the opportunities for ourselves: our next door neighbours have provided a very handy guide to get us started. The future is shiny and bright, we need to let it break through the clouds now gathered overhead.

Thursday, November 4, 2010

The Politics of Projection

What lessons, if any, are there for Ireland in the recent US election results? The big lesson for me is that we too easily exaggerate the ability of one man (or woman) to bring about change. As I observed on the day Obama was elected:
I think part of the great narrative fallacy that drives the United States is the idea that one individual as President can bring about extraordinary, positive change. We've been told the story so often by Hollywood (wasn't Morgan Freeman the first black President?) that many of us believe it. But it isn't true.
Two years later and I think everyone understands how fallacious their expectations were about Obama's presidency. He's just one politician - not superman. Of course, political leaders provide a focus for our fears and hopes. We subconsciously project our feelings about the future onto leaders (in business as well as politics). The 'best' leaders don't stand for anything but rather for everything. In the minds of their admirers, of course. How else to explain the success of Eamon Gilmore?

But old habits die hard, and the next Obama has already been spotted. He's like the character Matt Santos in the West Wing, a charismatic Hispanic-American, good looking, young and articulate. There's only one difference, he's Republican. I'm talking about Marco Rubio - take whatever odds you can get from Paddy Power, and bet on him being on the Republican ticket for presidency in 2012. Just listen to his acceptance speech, inspiring and eloquent in equal measure:



But don't forget he is just one politician.

Wednesday, November 3, 2010

Business Can't Wait

I was at the IBEC Now, Back to Business Conference today. It's rare that I come away inspired by a conference but this was inspiring. The line up of speakers, quality of speeches and good interaction with the audience facilitated by Mark Little all made for a confidence-boosting experience.

The intention behind the conference was to make a point: it is businesses that create jobs and wealth, and now they need to be allowed to get on with the task. To much media attention (obsession even) is with politicians and their machinations. Sure it might make for high(ish) drama, but I think we're all getting a bit tired of it. Who cares what Jim McDaid does?

But is also incumbent on business to show leadership and to do what business does best, i.e.: evaluating the uncertainties clouding the future and aligning resources to meet anticipated future needs. It is easy - nor especially newsworthy - but it's what matters most to the Irish people. Whether the know it or not.

Read more about IBEC's analyses supporting the conference here. And enjoy this - I bet you'll learn something you didn't know:

Tuesday, November 2, 2010

Taxed Enough Already

Will Ireland soon have it's own TEA party? Probably not in the short term, but possibly by the time Budget 2012 rolls around later next year. This thought struck me in light of the findings of a report published by my company: The Taxpayers' Perspective. The report is based on a survey last month of Irish adults about their views on taxation and the Government's budget challenges.

The main findings are that:
  • Irish employees pay an average of 26% of their wages or salaries in taxes and other deductions, and would on average be willing to see this rise to 29%.
  • However, almost half (49%) of all employees feel that their deductions are ‘too high’ already, and only one worker in fifty thinks that their deductions are too low.
  • Just over half (53%) of all adults (including employees and those not in employment) feel that they pay more than their fair share of taxes right now.
  • Over six in ten (63%) feel that people on low incomes should not have to pay income tax.
  • Only one in four thinks that we have a fair tax system in Ireland.
  • Only one in ten trusts the Government to spend taxpayers’ money wisely.
  • However, one in three adults thinks that the Government should introduce a property tax to fund local authorities.
Irish taxpayers appear to be a little 'conflicted' right now. On the one hand they feel that they are taxed enough already (as in 'tea'), and they think the government does not use taxpayers' money wisely, but they think that taxes should be increased to fund the looming budget. Sure, some of it will come from their own taxes (including income tax), but I suspect they may have in mind "other peoples' taxes".

So will the next twelve months (or four years for that matter) see the emergence of an Irish tea party? On the present evidence I don't think so. But there will undoubtedly be a growing constituency for a political party that looks out for the interests of taxpayers. Today's reluctant consensus on the need to raise taxes is unlikely to long survive the reality of continually rising taxes in the years ahead.

The Taxpayers' Perspective November 2010
View more presentations from Amárach Research.

Postscript: oops! labels on slide 34 were inadvertently transposed - that'll teach me to do this at 6.00am in the morning! Makes more sense in the corrected version.

Monday, November 1, 2010

Tomorrow's News

Here's a forecast you won't read in any Irish newspaper: Irish newspapers will be extinct by 2027. Okay, like all such projections/extrapolations/conjectures it does need to be taken with a large pinch or two of salt. The forecast is from an interesting assessment of the extinction timeline for newspapers worldwide by Ross Dawson.

The detail is in the assumptions, of course, and Ross has sensibly included a combination of global/technological and national/demographic forces to derive his outlook for each country. As ever, it's hard to distinguish the short term from the long term - the recent decline in newspaper readership in Ireland appears to be as much a function of the recession as of any longer term trends.

That said, he wisely does not define 'extinction' as the complete cessation of newspaper production per se - but rather its evolution into something very different to the traditional definition of a newspaper. Dinosaurs becoming birds sort-of-thing. Personally I am more optimistic (at least for Ireland), in that I think by 2027 Irish newspapers and Irish newspaper readers will continue to drive a market similar to today's - though undoubtedly smaller (digital circulation will be bigger than paper circulation). People don't read newspapers for the news, rather they read them for entertainment and analysis (from sport to politics).

The amazing thing is not that there will still be newspapers in 2027, it's that there are any newspapers in 2010, saturated as we are in a rich mediascape of radio, television, web and mobile content. Mind you, with UK newspapers approaching the extinction horizon by 2019 it will be interesting to see how those UK-owned titles that have succeeded in Ireland will continue to cope with the increasingly divergent fortunes of the two markets...
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