Sunday, December 15, 2013


The latest Economic Recovery Index report for December points to a more positive outlook going into 2014. The Index stands at 31.2 - the highest since my company began measuring it in April 2009.

Worth noting, of course, that the index goes from 0 to 100 - so we've a bit of way to go yet...

Thursday, November 28, 2013

Friday, November 22, 2013

Bye American

My travels have taken me to various parts of Europe recently. On practically every trip, at some stage in a lighter moment of conversation, someone will mention the NSA and wonder aloud 'are they listening to us'? It always gets a laugh.

Still, if I was an American selling to Europe, I'd be worried. Bruce Schneier is:
Buy American doesn’t sell well anymore because it means give a copy to the NSA.
Pity they didn't listen to George Washington:
The spirit of encroachment tends to consolidate the powers of all departments in one, and thus to create, whatever the form of government, a real despotism.

Wednesday, November 20, 2013


Belatedly: happy International Men's Day to my fellow minority of the population. IMD is a further sign of progress towards a better, post-feminist relationship between the sexes.

And if you don't believe me, here's a quote from my favourite lesbian feminist, Camille Paglia:
Feminism is dead. The movement is absolutely dead. The women’s movement tried to suppress dissident voices for way too long. There’s no room for dissent. It’s just like Mean Girls. If they had listened to me they could have gotten the ship steered in the right direction. My wing of feminism—the pro-sex wing—was silenced. I was practically lynched for endorsing The Rolling Stones. Susan Faludi is still saying I’m not a feminist. Who made her pope? Feminist ideology is like a new religion for a lot of neurotic women. You can’t talk to them about anything.

Thursday, November 14, 2013


Poor old Minister for Health James Reilly. His latest call to health insurers to not pass on the Government's increased health levy to customers smacks of Obamacare and its many woes.

But there's a solution, he can always take a leaf out of Colorado's advertising campaign for Obamacare - and no, these are not from The Onion:

Apart from signaling another downward spiral in the demise of Western Civilization, the ads also remind us that young people are the useful idiots of community-rated health insurance schemes such as we have in Ireland. Hence the earnest - you might even say, desperate - efforts to sign up young people to Obamacare: like all such Ponzi schemes, it can only keep going if new waves of gullible believers contribute to the scheme.

I wish the Minister the best of luck with his pleading.

Tuesday, November 12, 2013

Blowing Bubbles

Quote of the day from John Hussman:
The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak.
Meanwhile, Constantin sees a tech bubble.

They're both right of course.

Saturday, November 9, 2013

Fooled by Logic

It's a celebrity deathmatch: the philosopher versus the physicist. The former is Nassim Taleb (who has featured on this blog a few times), the latter is new (to me): Didier Sornette. Sornette's work at the Financial Crisis Observatory applies log-periodic power laws (LPPL) to prices, including stock market indicators. Bottom line: Sornette says you can predict 'black swans', Taleb says you can't.

John Hussman has applied LPPL to the S&P 500 and gets this:

Of course, the proof is in the pudding: how good is LPPL at predicting stocks? On September 27th Sornette called a peak in the Tesla stock price (NASDAQ: TSLA) using an LPPL indicator. Sure enough, TSLA peaked on September 30th, and as of yesterday stood at 30% below its peak.

It looks like 2014 is going to start with a different kind of hangover...

Thursday, November 7, 2013

Soft Capital

I was part of a fascinating discussion last night about Ireland's agenda for its ageing population. There were lots of inspiring ideas and examples of how local communities - involving private and public partnerships - are making a real difference to the lives of older people.

But the underlying problem remains. It's the Ponzinomics at the heart of our pension provisions in Ireland (and in the West generally for that matter). The problem is growth - or rather, the lack of it. As I explained last night, in the absence of growth then pay-as-you-go welfare and pension systems, as well as defined benefit pension systems become Ponzi schemes, even if that was never the intention. The first in get the most, the last in get... nothing.

Charles Hugh-Smith has noted the same problem in the United States: not only do we not have enough growth, we don't have enough workers. I thought I'd check the situation in Ireland in terms of the numbers in jobs versus those retired from work. I created the chart below using the CSO's Quarterly National Household Survey data. It's not a pretty picture:

Back in Q1 1998 - when the QNHS started - there were 5.5 workers for every one person retired from work. That numbered soared to 7 workers per retiree in Q1 2007. Fast forward to Q1 2013 and the number is... 4.5 workers per retiree. Lower than the level fifteen years ago. The reason is obvious: the numbers in work have fallen back to their level in 2003, although they've picked up a little in the last quarter. The numbers retired from work, on the other hand, have risen inexorably without little interruption over the same period. And they don't look like falling any time soon.

A return to growth will, other things being equal, create jobs, thereby improving the ratio. Though probably not jobs for the unemployed - their prospects deteriorate as they get older and remain unemployed for longer, according to today's Central Bank analyses.

The solution appears 'simple' enough: raise the retirement age, raise (mandatory) pension contributions, and reduce the value of state pensions. Though politically it's a tad more complicated than that.

Nevertheless, if we have entered an era of low/no growth for the foreseeable future (and today's interest rate cut by the ECB is more-or-less an admission that things won't be getting better any time soon), we will have to rethink how we deal with an ageing population.

As I see it, we need to invest now in the 'soft capital' of networks, communities, societies, clubs, alternative currencies and public/voluntary partnerships that will prove resilient when the Ponzi scheme collapses - as all eventually do. Who knows, though we might be economically poorer in the future, we might also be emotionally, relationally and spiritually richer if we invest in the soft capital now to see us through the demise of financialized capital in the years ahead.

Saturday, November 2, 2013

Eucharistic Summit

The recent Web Summit in Dublin had all the fervor of a Eucharistic Congress about it - a Congress for nerds. Visiting dignitaries and their entourages called on us to hear the good news, to renew our faith and go forth and convert doubters and unbelievers to the one, true religion digital future. Meanwhile, our politicians fell over themselves to share the altar stage with our esteemed visitors.

Okay, tongue out of cheek. As it happens I'm a big fan and user of digital technology, so I suppose that makes me a member of the same congregation - though more of the a la carte persuasion. Elon Musk played the part of the Papal Legate last week, calling on us to open our hearts to the needy engineering students from around the world.

The belief in progress that drives modern society - enabled by technology - is indeed a form of religion. The West's secular faith provides all the necessary requirements of a religion, i.e.: a creed (what we believe); a code (how we should behave); a community of fellow believers (to which we belong 'religare'); and a cult (of practices to reinforce our faith from time-to-time). Our creed is one which believes progress will lead us to a better future. For as Albert Camus once observed: 'the future is last transcendent value for men without God'.

But there are still many unbelievers out there - techno-atheists, you might say. John Michael Greer recently observed that:
The future... is not going to be a linear extrapolation from the present... or a simple rehash of the past. The future is a foreign country, and things are different there. That realization is the specter that haunts contemporary industrial society. For all our civilization’s vaunted openness to change, the only changes most people nowadays are willing to contemplate are those that take us further in the direction we’re already going. We’ve got fast transportation today, so there has to be something even faster tomorrow—that’s basically the justification Elon Musk gave for the Hyperloop, his own venture into antiquated futurism; we’ve got the internet today, so we’ve got to have some kind of uber-internet tomorrow. 

But talking about a future very different to the present - rather than just one that's 'bigger/faster/better' - is hard. It doesn't lend itself to reassuring soundbites, never mind sermons. There is something very convincing about the true believer, which is why we like listening to them. Richard Watson explains why:
As for whom or what gets listened to about the future, the answer appears to be that we believe people that look confident and seem to know what they are talking about – and this generally means experts in suits that use the word “Will” a lot and elude to a professional qualification or affiliation. In contrast, we tend to ignore the ideas of independent individuals that look a bit messy, appear unsure of themselves and use really confusing words like “Might” or “Could.”
Most religions benefit from a little bit of 'might' as well as 'will' from time-to-time. Our faith in progress will undoubtedly undergo its own moments of doubt and uncertainty - it already is - though I'm sure we'll enjoy a few more visits to the Eucharistic Summit before we lose it entirely...

Tuesday, October 29, 2013

Northern Composure

Back in the 1980s I worked on a project for BP looking at how to improve customer service across their network of petrol stations throughout the UK. The answer was simple, I explained, just figure out what your staff in Northern Ireland are doing and copy it! Sure enough, their customer satisfaction scores for their petrol stations in Northern Ireland, on every measure, were far ahead of those elsewhere in the UK. They didn't take me up on my suggestion, unfortunately...

My BP story came to mind reading a recent post on Slugger O'Toole about the revelation that six out of the ten happiest places in the UK are, in fact, in Northern Ireland. A revelation that was greeted elsewhere in the UK with the same non-plussed perplexity as that of my BP clients all those years ago. But having just spent a long weekend walking in the Mourne mountains (I took the photo on Sliabh Bearnagh yesterday) I can't say I'm all that surprised at the findings. Though I do admit to a possible bias on the matter...

Most Northerners (i.e.: the ones who don't feature in the news most evenings) are very friendly, helpful, open and genuinely interested in other people. That gets you a long way in the measurement of happiness stakes. Sure, the North still has its many problems (though not as existentially threatening as those facing the South); and history still looms large in terms of its political agenda (though more for the benefit of the politicians than the electorate, I suspect).

While the reaction to the happiness findings about Northern Ireland provoked the usual snark-fest of doubters and detractors (predictably of the 'sectarianism/religion/violence makes you happy' kind-of-thing), it seems most have missed the point. For starters, religion has less-and-less to do with conflict in the North: I doubt that many of the remaining protagonists could explain, for example, why St Patrick is associated with shamrock, let alone the nature of the Trinity (though in fairness, even Aquinas thought it beyond human reason to do so).

Instead, it seems to me that Northern Ireland is enjoying the social legacy of its (sometimes intense) Christian past, with rather more of the 'love thy neighbour' ethos to the fore than before - and more than in the rest of the UK for that matter. The legacy that Northern Ireland enjoys today is because of the social capital built up over generations by the God-fearing, Mass-going and Bible-reading believers of old.

Needless to say, that social capital is now being rapidly depleted - as it is throughout Western Europe - and perhaps the North simply has more to deplete than elsewhere, having arrived a little later at secular modernity. Whether Northern Ireland will continue to top the happiness charts for the UK in future seems to me mostly a function of how quickly its religio-social capital is depleted, assuming that the forces who might add to the capital are in retreat, just as they are south of the border.

Time will tell.

Thursday, October 24, 2013

Slave Mentality

Why is the European Union breaking the promise it made to Ireland in June 2012?

Frederick Douglass understood why:
Find out just what any people will quietly submit to and you have the exact measure of the injustice and wrong which will be imposed on them.
ht Doc Searls

Wednesday, October 23, 2013

Cultivating Culture

I've been reading Anthony Esolen's translation of Dante's Inferno. He's a magnificent writer (Esolen, as well Dante). Much of his writing - and his talks - focuses on culture. Especially it's loss. Here he is recently on the problem with 'pluralism':
No culture is a straitjacket;  but all cultures, like all living things, must be coherent.  We can have a culture like that of the pagan Irish, whose great epic was the tale of a cattle raid;  we can have the British culture of shopkeepers that Napoleon sneered at;  but we cannot have both at once.  We can have a culture that allows men to challenge one another to a duel when they believe their honor has been besmirched;  we can have a culture in which the weakest among us may speak slander without fear of physical reprisal;  but we cannot have both at once.  The call for "pluralism" is a dodge, a way to excuse oneself from having to justify the single counter-cultural thing one wishes to promote.  Many people are "pluralistic" about marriage these days.  Not nearly so many are "pluralistic" about property, or revenge, or war — or education, or even unbridled speech.
Plenty more here. His talk on 'culture, what culture?' is magnificent, by the way: linking Jacobean comedy to our strange, 21st century obsessions.

Sunday, October 20, 2013

A Budget for Sloth

It's been a few days since Budget 2014 was announced, and the newspapers and airwaves have been full of detailed analyses and commentary. But if I had to sum up the Government's budget message in just two words, they would be:

don't bother

Don't bother saving: we'll take nearly half of the (pathetically low) interest you'll earn. Don't bother with a pension: we'll take a piece of your pension contributions every year, while increasing taxes on what you eventually receive. Don't bother providing for your family's health care: we'll make it even more expensive for you by reducing incentives to take out private health insurance, while providing a free medical card for your children even if you can afford to pay for their care yourself. Don't bother going for that promotion, pay rise or bonus, we'll tax you at the sharpest increasing income tax rate in Europe if you are single.

In fairness, it wasn't just Budget 2014 that majored on the 'don't bother' message. All the previous ones did too, along with several of those from the previous government. Sure, we have to balance the books:  borrowing €1 billion a month because we're spending more than we're taxing isn't exactly sustainable, especially when you are one of the most indebted countries in Europe. But a policy of 'don't bother' sure won't do it.

We need to change the incentives for people and businesses to invest, hire, save, provide for themselves and to innovate. There was precious little in the budget that met these criteria. And no, incentives for people who have been unemployed for 15 months (not 14 or 16 mind) to set up their own business - by which stage they have no capital, no network, no motivation and probably no ideas - is a mere fig leaf. Which is probably unfair to fig leaves...

As ever, Irish people in businesses and communities - managers and employees - will get on with the task of surviving and thriving despite the Government, not because of it. One initiative I'm a non-executive director of - Third Space - recently raised €15,000 via the Irish crowdfunding initiative Linked Finance in just a couple of weeks from over 100 private citizens keen to see a successful venture succeed further.

Despite everything, we are blessed in this country that there are still many good people out there who do bother...

Friday, October 18, 2013

Deeply Indebted

After the debt-ceiling debacle in Washington, Golem XIV sees the wood for the trees:
Actually I think the fight over the US debt ceiling is a proxy for who controls the world’s real reserve currency. And that currency is not the dollar. I suggest we would understand events more simply if we recognized that the world’s real reserve currency is debt - pure debt.  We should not be confused by the fact that debt, globally, is denominated in several forms. Much like the dollar comes in bills of ten and twenty,  so the debt currency comes in dollars, euros, Yen and Yuan. But they are not the currency itself they are just the different bills it comes in. 
...I think the real battle going on is between the financial players led by the global banks, assorted funds and Insurers, all of whom are very much addicted to fiat debt-money, and a dwindling cadre of politicians who still think central banks control the currencies and elected officials decide how much debt is enough.
Meanwhile in Ireland, we're on our way to €1 trillion in debt when our unfunded liabilities are included. All hail our new masters...

Wednesday, October 9, 2013

Hard Numbers

The OECD's new report on Adult Skills around the world makes for fascinating reading. For example, Tyler Cowen notes for the UK that:
England is the only country in the developed world where the generation approaching retirement is more literate and numerate than the youngest adults...
That doesn't bode well.

Another one caught my attention - the ubiquitous gap between men and women around the world when it comes to numeracy skills. Notes the OECD:

On average across countries, the mean score on the numeracy scale is higher for men than for women by about 13 score points – for all surveyed countries (Figure 3.4 [N]). The difference is statistically significant in all but two countries, Poland and the Slovak Republic. The largest differences are found in Germany (17 points), the Netherlands (17 points) and Flanders (Belgium) (16 points).

Obviously it's all a plot by the patriarchy and shouldn't be confused with, you know, actual real differences between the sexes. On the other hand, when it comes to literacy skills the picture is less stark:

Proficiency differences in literacy are more mixed and rather small. On average across countries, there is a 2 score-point difference in favour of men. In ten countries, men have higher mean scores on the literacy scale than women, with the largest differences observed in Korea, the Netherlands, Germany and Flanders (Belgium) (5- to 6-point difference). But in over half of the countries surveyed there is no statistically significant difference between men and women on the literacy scale. In Poland, however, women have higher mean scores than men (6-point difference).
It's a fascinating report, and at 466 pages it'll pay to revisit it from time to time.

Tuesday, October 8, 2013

Ephemeral Recovery

"Thus post-Roman cities in Europe’s most recent round of dark ages could salvage stone from  temples, forums, and coliseums to raise walls against barbarian raiders, just as survivors of the collapse of industrial society will likely thank whatever deities they happen to worship that we dug so much metal out of the belly of the earth and piled it up on the surface in easily accessible ruins."

The photos are from Sandyford Industrial Estate, which I passed through last week. The quote is from the always quotable Archdruid Report. I was struck by the volume of empty, near-derelict buildings (or unfinished ones in the case of surrounding tower blocks), in the midst of south county Dublin - one of the more affluent ends of the country.

A lot of the empty buildings struck me as worth little more than their site value due to their age and condition.  Prospective owners might be better bulldozing them, salvaging what they can (though hopefully not to raise walls against barbarians). It might also mean that the reported increase in empty business properties is exaggerated,  since the figures include properties that may not be fit for occupation...

Sandyford tells us a lot about the shape of the recovery to come. It'll be a mix of shiny and successful alongside drab and failing, with the latter reminding the former that success is not guaranteed, and certainly not permanent. As the Roman slave whispered to every triumphant general: hominem te esse memento... memento mori!

As one of Europe's more financially stretched economies, it's going to be a while before we will be sending in the bulldozers, never-mind building BER A1-grade accomodation on the newly leveled sites. The bigger issue is whether there'll be enough growth to justify doing anything with the sites. Walker Smith has penned a series of challenging articles on The New World of Less - more here and here. His concern is how businesses will create the wealth and jobs to generate recovery. Or rather, won't create, depending on how you view the future. He's not the only one concerned.

In America, the recovery appears to be bypassing the under 30s population.  We urgently need to avoid the same scenario in Ireland if economic recovery is going to mean more than work for bulldozers.

Wednesday, September 25, 2013

Did the Spreadsheet Kill Capitalism?

Clay Christensen seems to think so, or if it hasn't killed capitalism then it might have accidentally hastened its demise. His recent talk at the RSA on The Capitalist's Dilemma is magnificent. All the more so since he disarmingly mentions at the beginning of his talk that he suffered a stroke just a few years ago and had to learn how to speak again with the help of his wife and therapist. The fact that he then proceeds to deliver an enthralling, fascinating and deeply original talk on why innovation isn't working any more is testimony indeed to his recovery.

Christensen has written extensively about innovation before, and delineates three types of innovation:
Empowering innovations create jobs, because they require more and more people who can build, distribute, sell and service these products. Empowering investments also use capital — to expand capacity and to finance receivables and inventory. 
The second type are “sustaining” innovations. These replace old products with new models. For example, the Toyota Prius hybrid is a marvelous product. But it’s not as if every time Toyota sells a Prius, the same customer also buys a Camry. There is a zero-sum aspect to sustaining innovations: They replace yesterday’s products with today’s products and create few jobs. They keep our economy vibrant — and, in dollars, they account for the most innovation. But they have a neutral effect on economic activity and on capital. 
The third type are “efficiency” innovations. These reduce the cost of making and distributing existing products and services. Examples are minimills in steel and Geico in online insurance underwriting. Taken together in an industry, such innovations almost always reduce the net number of jobs, because they streamline processes. 
But here's the crucial thing:
Efficiency innovations also emancipate capital. Without them, much of an economy’s capital is held captive on balance sheets, with no way to redeploy it as fuel for new, empowering innovations. For example, Toyota’s just-in-time production system is an efficiency innovation, letting manufacturers operate with much less capital invested in inventory.
The problem as Christensen sees it is that the financialisation of the global economy (with 'money making money' taking over from 'money making stuff') has replaced the virtuous cycle of empowering-sustaining-efficiency innovations with a straight line of efficiency-efficiency-efficiency innovations that throw off more capital to boost corporate balance sheets, while eroding the employment creating capacity of the economy. It's what happens when spreadsheets take over and the job of management simply becomes one of managing numbers and ratios, not real flesh and blood businesses that create wealth and jobs. Hence balance sheets have never been healthier, the share of profits has never been higher, and the capacity for job creation has never been weaker...

Christensen's really intriguing insight is that the old capitalist assumption that capital is scare (hence the need for spreadsheets to manage its allocation) is simply not true any more, but businesses, investors and even governments act as if it still is. In fact, we live in a world awash in a glut of capital - QE, fiat currencies and all that - and yet small businesses can't get loans from banks because the payback period for real, empowering innovations is too long and too uncertain for spreadsheet obsessed financial analysts.

The problem for Ireland is that our 'innovation agenda' is focused on sustaining/efficiency innovations which have a net negative impact on employment, other things being equal. And we are well and truly in the grip of the spreadsheets, in both the private and the public sectors.

But there may be a bigger problem. Christensen assumes there are more empowering innovations out there. And maybe he's right - 3D printing is certainly one to watch. But what if he's wrong? Robert Gordon thinks we're past the peak of really impactful innovation, And John Kay has recently been channelling Peter Thiel: “We wanted flying cars, and they gave us 140 characters.”

The message to Irish entrepreneurs? First kill the spreadsheets...

Saturday, September 21, 2013

We Are All Ossis Now

I took this photo yesterday in Potsdamer Platz. It's part of a memorial to the Berlin Wall at the site of the original East/West division. The graffiti caught my eye, and it struck me that we are all 'Ossis' now, the nickname given to former occupants of East Berlin and East Germany. Only the wall locking us in is one made of debt rather than concrete.

The (over)reaction to the Fed's on-again-off-again QE taper in the past week tells us that the bubble of all bubbles is upon us. Total public and private debt is now 30 percent higher as a share of GDP in the advanced economies than it was prior to Lehman Brother's collapsing. Guy Haselmann has looked ahead to what will happen when the debt wall falls (funny video at the end, btw):

Once tapering actually occurs, the discount re-adjustment equation will rise away from zero, making stock and bond valuations less attractive. Prices will ultimately have to be supported by their fundamental values, so a large price adjustment process will almost certainly occur. More importantly, a volatile over-shoot in equity and fixed income markets is likely, because investors will shift current positions from one of accepting the Fed’s ‘easy candy’ toward pricing in the Fed’s new final destination.
Doesn't sound like quite the same cause for celebration as the fall of Berlin's Wall in November 1989.

Thursday, September 12, 2013

Lehman Bothers

I've an article in today's Irish Times on the changes in Irish sentiment since the collapse of Lehman Brothers five years ago.

Unedited version below:

Resilience is like a battery. In the good times it gets ‘charged’ as we store up the resources, habits and relations that will see us through the bad times. It’s the ability to bounce back from disturbance and to cope with adversity. Today, after five years of bad times, it would seem our resilience battery sorely needs recharging.

Nevertheless, on some measures we Irish are still a resilient lot. At the end of 2008 - just months after the collapse of Lehman Brothers - my company asked a representative sample of 1,500 adults whether they had experienced any of a range of emotions or feelings ‘the previous day’. Five years ago, the top two emotions or feelings experienced by the majority of Irish people were ‘happiness’ and ‘enjoyment’. Fast forward five years to a new survey and the top two emotions are... happiness and enjoyment! Negative emotions are there too of course - stress and worry, for example - though for a minority of people. While the emotions experienced least are fear and anger.

I think this signals a number of things, not just psychological resilience but also a curious, Irish combination of ‘public anguish and private contentment’. In the same surveys the vast majority of people tell us how very worried they are about the economy and its prospects. But at the level of their families, friends and colleagues they’re getting by. This might also explain the remarkable quiescence of the Irish in contrast to other parts of Europe experiencing their own recessions.

One indicator of depletion is the trend in consumer spending. Total expenditure is down nearly 20% since its peak in late 2007. In some retail categories, such as pubs, spending is down to levels last seen in the mid-1990s. Irish consumers have voted with their purses and wallets to buy from cheaper suppliers and retailers - or not to buy at all - in order to make their limited resources go further. At the peak, our research was showing that consumers still considered convenience more important than price when buying groceries. But in 2008, price overtook convenience as the number one consideration, and it has remained that way since. In the past five years we have gone from a nation for whom shopping around looked ‘cheap’ to one for whom it now looks ‘clever’.

Our priorities have changed in other ways as well. In 2008 just 6 in 10 adults used the internet - today 8 in 10 are online. In 2008, fewer than 10% had a smartphone (the iPhone had only been launched in 2007) - today nearly 6 in 10 have smartphones. We’ll spend nearly €4 billion online this year - up from less than €1 billion five years ago.

A more cautious approach to spending also means we are still able to save, despite higher taxes and lower incomes. This year, Irish consumers will save nearly 6% of their after tax income, quite close to the 7% we saved in 2008, and well up from the 1% we put away in 2007.  As a result, the value of Irish private household deposits in Irish banks has risen from €79 billion in September 2008 to €86 billion in June 2013.

However, such general economic statistics hide the fact that the recession has not been evenly distributed. Our research has identified a number of segments in the population who are relatively insulated from the worst of the recession. Though it’s fair to say their share of the total population has declined in recent year. Here are a few indicators:

- five years ago, a large majority - 61% - of Irish adults felt that the recession was affecting other people more than them: that’s down to 43% today

- five years ago, nearly half - 48% - felt financially comfortable enough to make it through the recession: that’s down to 38% today

- five years ago, a large majority - 60% - were optimistic in spite of the economic situation: today the optimists are a minority - 44% - of all adults

- today, three in ten Irish adults have nothing left at the end of the month before their next wage or salary payment is due, while 55% don’t save regularly

- over a third - 35% - have recently borrowed money from friends or family to make ends meet

- only 21% of adults could cope easily with a €50 reduction in their disposable income due to tax increases and/or higher bills

Still, about two in five adults are having ‘a good recession’. Who are they? In our research they tend to be people with fewer debts than average (the youngest and the oldest age groups), as well as those who still have ‘options’ thanks to fewer commitments (e.g.: renting, smaller families etc) or more resources than average (e.g.: a higher savings capacity, two incomes etc).

As for the rest, one of the biggest issues is debt. Over the past five years we have learned the hard lesson that debt is a fact, wealth is an opinion. Not surprisingly, the main financial priority for the vast majority of people in recent years has been paying off their debts as quickly as possible. Our research shows that 30% of people with mortgages reckon they are now in negative equity (i.e.: the value of their home is worth less than what they owe on it). This jumps to 55% of home owners in their thirties. Furthermore, a quarter of all mortgage holders have missed one or more mortgage payment in the recent past.

Five years on and many Irish consumers are running out of road. Their resilience battery is flat. Yes, there are a few signs of improvement: in parts of Dublin, for example, or in some sectors of the economy such as IT and dairy farming. But it’s patchy at best, and woefully inadequate at worst. Irish consumers spent €94 billion in 2008; this year they’ll struggle to spend €83 billion. It’ll be a long time before we see a return to the spending levels of just five years ago.

The good news is that the younger generation that has come of age during Ireland’s recession doesn’t intend to let it get in their way. The vast majority of 18-30 year olds we surveyed recently intend to buy their own house by the time they’re 35; the majority expect to be married by the time they’re 30; and almost all expect to be a parent by 35 as well. We need our youth to be optimists.

The Irish are looking for new ways of dealing with recession, and new resources to restore their capacity to cope and persevere. In another survey we asked “who is making your life easier at the moment, and who is making life harder”? For the vast majority of Irish people, family, friends and colleagues at work are their biggest source of support nowadays. Even services like Facebook and technologies like smartphones are deemed to be making life easier in 2013. As for who is making life harder, utilities, banks and politicians rank the least supportive.

Five years after Lehman, people are finding new sources of resilience - new ways of recharging the battery - in our moribund economy. And that is a good thing. For it means that no matter what happens to our economy over the next five years, we won’t let the demands of the present starve the needs of the future. Not only will be able to bounce back, but our resilient spirit will enable us to bounce forward with hope and purpose.

Friday, September 6, 2013

Shooting the Elephant

One of the advantages of being a small, unimportant country like Ireland is that we don't have to make silly threats about invading other countries. Anyway, nobody would take us seriously even if we did. America's misfortune is that it has to see through its threats, otherwise nobody would take it seriously either.

As David Betz explains, America is in the same situation as recalled by George Orwell in his essay Shooting an Elephant - damned if they do, damned if they don't:
My personal favourite, however, has long been his short essay ‘Shooting an Elephant’, which is an account of an incident in his time as an imperial policeman in Burma in the 1930s. I always ask my insurgency class to read it–not that Orwell mentions ‘counterinsurgency’ directly but it tells us much about that subject. As Orwell puts it, ‘One day something happened which in a roundabout way was enlightening. It was a tiny incident in itself, but it gave me a better glimpse than I had had before of the real nature of imperialism—the real motives for which despotic governments act.’
Orwell's short essay is at the end of David's post - do read the whole thing.

Syria is the white man's burden all over again, only the Syrian 'elephant' has friends. A whole herd of them, in fact.

ht: Zero Hedge

Saturday, August 31, 2013

Secular Mystic

In our secular age we still need priests and mystics. 'Experts' play the former role, poets the latter. Great poets, like great artists, give us food for the soul, turning plain words and paint into moments of delight and insight that go beyond mere understanding. Maurice Merleau-Ponty once observed that art doesn't just make us see, it makes us see through to a reality previously hidden in plain sight.

Seamus Heaney was a great artist and poet. Better still he was one of our own, speaking to us in the colonised language of Irish-English that still resonates uniquely with Irish souls. He was our secular mystic.

From Poor Women in a City Church:

Old dough-faced women with black shawls
Drawn down tight kneel in the stalls.
Cold yellow candle-tongues, blue flame
Mince and caper as whispered calls
Take wing up to the Holy Name.

A great soul has departed this world.

Image cred.: National Gallery

Thursday, August 8, 2013

The Short Run is Too Short

Kevin O'Rourke on Europe's latest (self-)torture instrument:
So where the eurozone needs to go in the long run, we argue, is towards a genuine banking union; a eurozone-wide safe bond to break the sovereign-bank doom loop; a central bank that is more flexible and willing to act as a true lender of last resort against such bonds and other assets as necessary; and a fiscal union at least sufficient to support the above. But the short-run problems facing countries in the periphery of Europe are now so great that politicians may never get a chance to solve these long-run problems because the eurozone may well have collapsed in the meantime. The history of the gold standard tells us that an asymmetric adjustment process involving internal devaluation in debtor countries, with no corresponding inflation in the core, is unlikely to be economically or politically sustainable.
The EU's motto is 'united in diversity' - so it looks like we'll be following diverse economic paths for some time to come...

Sunday, August 4, 2013

Lunar Lament

"...the lunar landers scattered across the face of the Moon stare back blindly at a nation that no longer has a manned space program at all and, despite fitful outbursts of rhetoric from politicians and the idle rich, almost certainly will never have one again."                       The Archdruid Report
But don't worry, the Chinese might send a man to the moon in 2025, a mere 56 years after the first man walked there...

Saturday, August 3, 2013

Faith in the Future

I had the great honour of speaking at the MacGill Summer School yesterday. And the even greater pleasure of meeting Joe Mulholland, the man responsible for this remarkable event.

Below is the text of my talk at the final session on Looking to the Future: What Is Happening to Us? Where are We Going?

Faith in the Future
Gerard O’Neill
33rd MacGill Summer School August 2013

A Crisis of Faith

I work in the market research business, so I get the opportunity to talk to people all around Ireland about their lives, their hopes and their fears. As I see it, in August 2013, the Irish people have lost their faith. To be clear, I am not referring to religious faith – though I’ll come back to that – rather to the loss of a more secular faith, that of faith in the future.

However, I don’t think we are unique in that regard. Across most of Europe, the European project has ground to a halt. The post-war faith that inspired the formation of open, democratic societies and economies has dissipated in the face of economic stagnation, the loss of a generation to youth unemployment, and the seemingly insurmountable problems of debt and deficits.
But it isn’t just about economics. It never is. Our secular crisis of faith goes much deeper; to issues of identity, values and purpose. The crisis will not be resolved by mere political and administrative fiat - it’s too big for that.

As I see it, restoring the Irish people’s faith in the future requires us to see the challenges ahead in terms of what I call the ‘3 Rs’, namely: resilience, recovery and renewal. We have to get through the crisis - hence the need for resilience that draws on the insights from psychology that Maureen Gaffney has explored. But we also need a sense of where we are going, hence the need to map out a path to recovery. Finally, we must recognise that a crisis is an opportunity not to be wasted, and that now is the time to renew our economy, society, culture and politics in order to create the Republic that our forefathers dreamed off.

Trapped in the Present

We are asked this year to look to 2016 as we answer the question ‘how stands the Republic?’. It is a call to draw on our past as inspiration about our future. That isn’t just a noble ambition, it is a necessary one. For one reason for our loss of faith in the future is that we are no longer connected to the past.
In Europe, as in Ireland, one unforeseen consequence of the project of secular, liberal modernity - with its emphasis on freedom, equality and reason above all other values (and there are other values) - is that we are ‘trapped in the present’. Our culture increasingly disdains our ancestors (they were very politically incorrect you know) and religious belief has become a matter of personal taste rather than shared experience.

Unfortunately this means that we are losing the ability to draw meaningful inspiration from the past just at a time when we need it most. A people without a shared sense of what connects their past to their present to their future is no longer a people but merely a collection of consumers, employees and voters at the whim of whatever the current elite in government, business and the media considers to be important.

In marked contrast, those who signed the 1916 Proclamation were not trapped in the present. They did not disdain their ancestors nor was religion merely a private affair:

In the name of God and of the dead generations from which she receives here old tradition of nationhood, Ireland, through us, summons her children to her flag and strikes for her freedom.

Like I said, our ancestors were a terribly un-PC lot!

Yet, if we are to find effective solutions to the challenges we now face, we will need once again to forge that same sense of purpose, drawing on the same breadth of values, in order to succeed. I believe we can if we strike the right balance between resilience, recovery and renewal.


What do I mean by resilience? Resilience is generally defined as the ability to bounce back from disturbance and to cope with adversity.  Another important facet of resilience is that doesn’t let the demands of the present starve the needs of the future.

On most measures we Irish are a resilient lot. My company has been surveying a 1,000 different people every month since April 2009, asking them whether they experienced any of a range of emotions or feelings ‘the previous day’. Remarkably, despite all we’ve been through these past four years and more, the top two emotions or feelings experience by the majority of people right up to the present day have been happiness and enjoyment!  More negative emotions are there too of course - such as stress and worry, but usually for a minority of people on any given day. While the emotions experienced least by people have been fear and anger.

I think this signals a number of things, not just psychological resilience but also a curious combination of what I call ‘public anguish and private contentment’. In the same surveys the vast majority of people tell us how very worried they are about the economy and its prospects. But at the level of their families, friends and colleagues they’re getting by.

Of course, getting by is a temporary arrangement. To some extent we are not so much trapped in the present as ‘hiding in the present’. Thinking about the past fills us with regret, while thinking about the future fills us with despair.

The problem is: our current situation can’t continue and our capacity for resilience - for bouncing back - will soon diminish unless we find a path to recovery, one that will let us bounce forward with hope and purpose.


I am a director of a small business, with between 40 and 80 employees on our payroll in any given month depending on how busy we are. But don’t worry, I’m not here to whine about rates, taxes, and banks - I have plenty of opportunities to do that elsewhere! Still, sometimes a business perspective can be useful. After all, Thomas J. Clarke (a fellow Dungannon man like myself) ran his own business. Though I don’t for a moment consider myself to be in the same league as Clarke, a man who could teach us all about the true meaning of resilience.

Nevertheless, I get to talk to lots of other business people throughout Ireland, either as clients or as customers of my clients. I can tell you that right now there is no recovery underway in Ireland’s domestic economy. If anything, things are getting worse.

I won’t go into why there is no recovery - they have been well examined this week already. The more important question is what kind of recovery is feasible in the years ahead?

Here again, an historic perspective is essential (something most economists lack as they are more trapped in the present than most other professions unfortunately). Nor do I mean the historic perspective of business cycles - they are too narrow in scope. Instead I prefer the historic perspective that extends over generations and even centuries, as explored by writers like Neil Howe in The Fourth Turning, or Oswald Spengler in The Decline of the West. Both writers (and others like them) identify patterns and processes in history that drive economic, social and political change right up to the present day.

There isn’t time to go into their perspectives here, but suffice it to say that Ireland’s recovery won’t entail a return to the good old days of the Celtic Tiger any time soon. Though I suspect you knew that already. Nor will recovery take the form of Irish exports piggy-backing on a buoyant European resurgence mixed with a dash of Asian convergence. Again, I doubt you’ll be surprised to hear that.
The problems that we face in the developed world - financialisation of the global economy, the debt bubble, the coming collapse of the welfare state and a demographic winter to name but a few - simply cannot be resolved by a return to economic growth alone. More and more people are beginning to realise that too.

Recovery will only get under way when we start to believe in the future again. For behind every economic crisis is a crisis of belief. However I am not talking about the confidence fairy. Sure, consumer and business confidence matters. I’ve seen how it correlates with all manner of markets and trends. Rather, I am talking about the core values that motivate us as individuals, in our families and communities, and as citizens of a true Republic.

For unless we reconnect with the values that our forefathers lived and breathed - and even died for - then we will continue to flounder in a stagnating economy and fragmented society, depleting further our already diminished capacity for resilience. In other words, we must seize this moment to unlock a process of renewal in full confidence that we will create a Republic we can all exult in.


If a group of people had gathered here 100 years ago in 1913 who could have foreseen a war that would result in the loss over 10 million lives (including over 30,000 Irish lives), the dissapearance of four empires that had existed for centuries, and the creation of the first communist state? Never mind the 1916 Rising and War of Independence - all before the decade was out?

A lot can happen in just seven years. A lot could happen over the next seven years. Maybe even as dramatically as a century ago, though hopefully without the horror of war.

So to answer the question posed by this session - ‘where are we going?’ - let me suggest a couple of ideas in the brief time available for your consideration as potential keys to unlock recovery and renew our faith in future.

There are a number of practical things we can do that might sound odd but I believe will open up opportunities that are currently closed to us. The first thing we need to do is to make money. And I mean that literally. We need to encourage the creation of new currencies in parallel to the euro. We should even consider reintroducing a Punt Nua alongside the euro as a form of alternative currency that can be used for transactions soley within the domestic economy, even included in social welfare payments. The success of M-Pesa in Kenya points to the potential for mobile and other technologies to facilitate new payment systems that co-exist outside the monoculture of the euro. Think of it as an insurance policy in the event of the euro’s demise (a lot can happen in seven years remember).

But recovery and renewal isn’t just about money and the economy. The future is a mental construct (since it only exists in our heads) which means that the future is emotional. Restoring faith in the future means changing what we believe as well as what we do. The men and women of 1916 knew what they believed:

We place the cause of the Irish Republic under the protection of the Most High God, Whose blessing we invoke upon our arms...

The Proclamation gets quoted a lot in political debates - and here at the MacGill Summer School - but some bits get quoted more than others funny enough: ‘cherishing all the children of the nation equally’ and so on. But the obvious Christian ethos of the rebels gets left out and ignored. Even Connolly made his confession and received the last rites before his execution. It’s that un-PC ancestor problem again.

Yet if we are to forge a shared sense of purpose, identity and hope then religion will have to play a part in renewal, just as it has for all previous generations throughout most of recorded history.

There’s another important anniversary coming up in the next seven years: the 500th anniversary of the Reformation, initiated by Martin Luther nailing his 95 theses to the church door in Wittenburg in October 1517. And remember - the Reformation was provoked by a European economic crisis caused by the transfer of excessive resources (in the form of papal indulgences) from industrious Germans to feckless Italians!

Europe - and Ireland - needs a second reformation (though hopefully without the War of the Peasants), one which reconnects its people - and especially its elite - with the Christian values that inspired our ancestors to face hardship and overcome adversity just as we do and will in the years ahead.

August Destiny

To conclude, we must use 2016 as a springboard to renewal in our economy and society, and in our nation. 2016 will come and go and then what? We are entering a period of extraordinary change and challenges in Ireland and in the developed world. Right now we are in the eye of the hurricane - so don’t take the temporary calm for granted. Through a focus on resilience, recovery and renewal we can restore our faith in the future:

In this supreme hour the Irish nation must, by its valour and discipline and by the readiness of its children to sacrifice themselves for the common good, prove itself worthy of the august destiny to which it is called.

Thank you for your attention.

Sunday, July 28, 2013

Donegal Reflections

I've never known the sea so calm around Donegal.

I took this photo of the harbour in Dunfanaghy this morning with my S4:

Just before the rain came...

Friday, July 19, 2013

Modernity's Mythology

Another gem from John Michael Greer:

Progress, as the word literally means, is continued forward motion in one direction. To believers in the civil religion of progress, that’s the shape of history:  whatever it is that matters—moral improvement, technological prowess, economic expansion, or what have you—marches invincibly onward over time, and any setbacks in the present will inevitably be overcome in the future, just as equivalent setbacks in the past were overcome by later generations.  To join the marching legions of progress, according to the myth, is to enlist on the side of history’s winners and to help the inevitable victory come about just that little bit sooner, just as to oppose progress is to fight valiantly in a misguided cause and lose. 
That’s the myth that guides contemporary industrial society, just as the myth of Jupiter clobbering the Titans and imposing the rule of law on a fractious cosmos was the myth that guided Roman society. In the broadest sense, whether any given change is “progressive” or “regressive” has to be settled by good old-fashioned politics, since changes don’t arrive with these labels branded on their backsides. Once a group of people have committed themselves to the claim that a change they’re trying to bring about is progressive, though, they’re trapped; no matter what happens, the only action the myth allows them to consider is that of slogging gamely onwards under the conviction that the obstacles will inevitably give way if they just keep at it.

Sunday, July 14, 2013

The Economics of Sunshine

It's not often you see this in Ireland:

I was so surprised by the weather forecast on RTE the other evening that I hit the pause button and took a photograph. One for the grandchildren perhaps...

Funny enough, it seems that there is a causal relationship between the sun and the economy. And not just for ice cream sales. According to John Hampson there is a historic association between solar cycles and financial/economic cycles. The influence of the 11-year solar cycle (measured in sunspots) on the Earth's geomagnetism drives patterns of change in commodities, stocks and other economic indicators on a fairly predictable basis going back to the 19th century (since data hasn't been available for much longer).

It might sound more like astrology than astronomy, but the data shows that stock markets rise strongly on average in the period between the solar minimum and the solar maximum (referring to the number of sunspots as an indication of the solar cycle). The same data shows that recessions then follow the solar maximum...

Unfortunately, despite the good weather we're enjoying right now, we've just reached the solar maximum as part of the latest solar cycle. Odder still, solar maximum 24 (the one now ending) has been the weakest in 100 years, and nobody knows why. It might explain the rather flaccid nature of America's economic recovery since 2008 come to think of it.

The last time there was such a weak solar maximum we had the Maunder Minimum which coincided with the Little Ice Age.

Hmmm, I think I'll have a cold beer after that...

Wednesday, July 10, 2013

Chicken Little Scenarios

Reading the ESRI's three scenarios for 2013-2020, I did find myself wondering where's the 'positive scenario'? Even their 'Recovery Scenario' suggests that maybe only half the sky will fall.

Ho hum. It could be worse. Watching Gráinne Seoige's contribution to RTE's Great Irish Journeys - which explored one man's contemporary observations of the Famine in Ireland - I was struck by the 'normality' of life for so many people in the late 1840s. Newspapers were being printed and read, pigs were being bred and exported, and hotels were serving excellent meals to tired travellers. Meanwhile, up the road, thousands were starving...

Eric A makes a similar point over at Zero Hedge about the year without a summer:
In 1815, Mount Tambora in Indonesia exploded with earth-shaking force. It was the largest eruption in 1,300 years, with an explosion audible in Sumatra 2,000km away. Volcanic ash filled the skies, blotting out the sun, and snow fell in Albany in June. River ice flowed in Pennsylvania in July. Frost fell every month of the year in areas of Canada, the US, and Europe. The entire crop was lost before the bitter and endless winter of 1817 where deep-harbor New York recorded temperatures of -26 F (-32 C). Prices rose suddenly through the western world and food riots broke out. This is as close as the modern world has ever come to a nuclear holocaust and nuclear winter. 
Never heard of it? That’s odd. You would think the largest explosion and climate event in 1,300 years would have more effect on daily life. And that’s my point. The world doesn’t end. Nor does it change very quickly or without going through a long series of steps.
Maybe that's why - in the middle of Ireland's Great Recession - we're still among the happiest people in Europe. The sky might fall but the sun still shines (as it is right now, so I'm off out of here...)

Saturday, July 6, 2013

Little Pink Book

Even some on the Left are worried about the tone of the same sex marriage debate - it's all starting to smack of the Cultural Revolution:
Reasonable people can disagree on the substantive question of whether marriage law should include gay and lesbian couples. But our Cultural Revolutionaries don’t see any reasonable opponents. Instead of recognising that this is a complicated and relatively new issue, with various constituencies having legitimate concerns and the public essentially divided, the gay marriage campaigners tell us it is all very simple – either you jump on the train of history, or you’re a bigot.
I might just order a copy of The Little Red Book on Amazon, just in case...

Friday, July 5, 2013

America the Protestant

Spot the pattern (via Lew Rockwell):

Some Independence Day thoughts from Charles Hugh-Smith:
I submit that the next American Revolution circa 2021-23 will not repeat or even echo these past transitions. What seems likely to me is the entire project of centralization that characterized the era 1941-2013 will slip into irrelevance as centralization increasingly yields diminishing returns. 
...If we sought to summarize the profound transformation ahead in one sentence, it would be this: wages are no longer an adequate model for distributing the surplus generated by the economy.
But behind every economic crisis is a crisis of belief. Or in America's case, the end of American Protestantism. According to Stanley Hauerwas, in a superbly insightful essay:
America is a synthesis of evangelical Protestantism, republican political ideology and commonsense moral reasoning. Americans were able to synthesize these antithetical traditions by making their faith in God indistinguishable from their loyalty to a country that insured them that they had the right to choose which god they would or would not believe in.
But the consensus American story is changing:
America is the exemplification of what I call the project of modernity. That project is the attempt to produce a people who believe that they should have no story except the story that they choose when they had no story. That is what Americans mean by "freedom." The institutions that constitute the disciplinary forms of that project are liberal democracy and capitalism.
Declining consensus creates pressure for conformity:
So an allegedly democratic society that styles itself as one made up of people of strong conviction in fact becomes the most conformist of social orders, because of the necessity to avoid conflicts that cannot be resolved.
The lowest common denominator comes into view:
If I am right about the story that shapes the American self-understanding, I think we are in a position to better understand why after 11 September 2001 the self-proclaimed "most powerful nation in the world" runs on fear. It does so because the fear of death is necessary to insure a level of cooperation between people who otherwise share nothing in common. That is, they share nothing in common other than the presumption that death is to be avoided at all costs.
The problem with 'all costs' is that it eventually becomes too costly:
America is a culture of death because Americans cannot conceive of how life is possible in the face of death. Freedom names the attempt to live as though we will not die. Lives lived as though death is only a theoretical possibility, moreover, can only be sustained by a wealth otherwise unimaginable. But America is an extraordinarily wealthy society determined to remain so even if it requires our domination of the rest of the world. We are told that others hate us because they despise our freedoms, but it may be that others sense that what Americans call freedom is bought at the expense of the lives of others.
And so a crisis of belief becomes an economic crisis...

Monday, July 1, 2013

Dissent is Information

Might explain Ireland's banking disaster better than most:
Eliminate or marginalize dissent and you've deprived the system of critical information. Lacking a wealth of information, the system becomes a monoculture in which the leadership is free to pursue confirmation bias, focusing on whatever feedback confirms its policy mandates. 
A system that suppresses dissent is fault-intolerant, ignorant and fragile. Any event that does not respond to centralized, rationalized policy creates unintended consequences that throws the centralized mechanism into disarray. Lacking dissent and redundancy, the system piles on one haphazard, politically expedient "fix" after another, further destabilizing the system.
Though in Ireland's case, our elite still seems happier suppressing dissent than listening to it.

ht Charles Hugh-Smith

Sunday, June 30, 2013

This Time Isn't Different

Chris Martenson recently interviewed Neil Howe, co-author of The Fourth Turning. Howe explains his (Talcott Parson's inspired) model of social change, driven by recurring cycles across generations. He discusses why America has entered the The Fourth Turning (again), and what it means (from crisis to war to regeneracy). America's last Fourth Turning, in case you're curious, included the Wall St Crash, Great Depression, and climaxed in World War II. So hold on tight and don't worry, it'll all by over by 2029...

I find cyclical models of history fascinating, even if most historians dismiss them. One of the greatest theoretician of history's cycles was Oswald Spengler. John Michael Greer (my favourite blogging druid) has recently written a series of fascinating posts about Spengler and the implications of the civilization model first described in Spengler's book, written one hundred years ago, The Decline of the West.

Spengler outlined a wider-sweeping story of human history, and the repeated cycle of Pre-Culture, Culture and Civilization that he observed right up to the start of the 20th century. He sees Civilization as the phase in which things start to get worse rather than better due to insurmountable internal as well as external pressures. Spengler was not exactly optimistic about the trajectory for Western Civilization - this time isn't different - and he expected democracy to give way to what he called Caesarism (i.e.: dictatorship) as the problems of holding everything together became too much for politicians to handle. Of course, he didn't expect it to happen overnight (he reckoned it could be a two hundred year process before we got to total despotism). Then again, he was projecting forward from a century ago...

Indeed, Greer himself posits a process by which our technology-obsessed civilization might fail in the form of a catabolic collapse. Following on from Spengler he does not expect everything to fall apart overnight. Instead, he anticipates a period of downward, step-change adjustments in living standards, played out possibly over decades, with accompanying changes to political, social and economic structures along the way. But he definitely expects Spengler to trump Howe this time round. Alternative explanations might include peak innovation - but either way, Western Civilization won't be getting a pass on the fate of previous civilizations just because we have science and they didn't.

What does all this mean for Ireland? Given how integrated we are into the wider world economy, then inevitably our fate is tied up with the rest of the West. Appropriately enough, Spengler ended Volume 2 of The Decline of the West, quoting Seneca:

Ducunt Fata volentem, nolentem trahunt.
Which translates as:
The Fates lead the willing one, the unwilling one they drag.

Ireland won't so much have a ring-side seat as a stool in the corner of the ring.

Saturday, June 22, 2013

Freedom's Greatest Enemy

I had the great pleasure of meeting Os Guinness recently. In his writings and talks he reminds me of a C  K Chesterton or a C S Lewis. Hence this quote of the day:
The greatest enemy of freedom is freedom. Freedom requires an order, or a framework, and the only appropriate framework for freedom is self-restraint, and yet self-restraint is precisely what freedom undermines when it flourishes.
More here. And here.

Friday, June 14, 2013

Gone Galt

The latest business lending data indicates a turn for the worse. The chart shows the annual rate of growth in personal lending for business purposes - what the Central Bank calls Finance for Investment, defined as:
... lending to private individuals for purposes such as debt consolidation, education, etc. Lending to individuals, on a personal basis, for investment in a trade, business or profession, including lending to purchase a trade or profession, to acquire a share in a partnership, or to finance investment in long-term risk capital ventures. Lending to active partners to invest in their partnership. Lending to directors/employees to acquire shares in, or otherwise finance, their company. Lending to individuals for third-level or other specific educational expenses.
It's a bit of a mixture, but it's a handy indicator of the extent to which individuals are willing to have some 'skin in the game', and related therefore to entrepreneurial/start-up behaviour. The bad news is that the rate of decline in Finance for Investment jumped from -11% in Q4 2012 to -22% in Q1 2013.

However, this is separate to direct lending to businesses, also published by the Central Bank. The chart overlays business lending (excluding financial intermediation and property sectors). Not surprisingly, it's in negative territory too (though the decline isn't accelerating):

There are many explanations for the trend - ranging from the banks aren't lending to people are prioritising debt repayments. But I think there's something more profound going on. I think people in business (or those thinking about getting into business) are making a rational decision to... do nothing.

With a daily news stream of former millionaires being chased around the world for the personal guarantees they gave at the height of the boom, a lot of wannabe millionaires are having second thoughts. Business is personal for most SMEs - the founders and directors are personally liable for most of their debts. And so, therefore, are their families. Add to the risk of failure the very high bar required to succeed - when nominal interest rates on many business loans are running at 4-5 times nominal growth in the domestic economy - and you can see why doing nothing might be the most financially prudent course to take. In such a climate, entrepreneurship may be more a sign of desperation than ambition.

Just as we have the Paradox of Thrift, we are now experiencing the Paradox of Prudence. With more and more businesses deciding not to invest, hire or expand then the macro-economic consequences in terms of employment, incomes and growth are plain for all to see.

Unfortunately, I don't see either paradox being resolved any time soon.

Tuesday, June 11, 2013

Second Half of the Board

A recent edition of Global Business featured Peter Day interviewing MIT's Erik Brynjolfsson and Andrew McAfee about their book Race Against the Machine. In the interview they refer to an old Persian story about an Emperor who wished to thank an old man for inventing the game of chess. The old man humbly asked for a grain of rice for the first square on the board, then two for the second, four for the third, doubling thereafter on each square until all 64 were filled. The Emperor gladly agreed (figuring he had the better part of the bargain), until they got to the second half of the board. Then he, his empire and the planet ran out of rice (the final square required 18,446,744,073,709,551,615 grains of rice - a pile the size of Mount Everest).

It's a story about exponential growth and unforeseen consequences. According to Brynjolfsson and McAfee we're now on the second half of the technology board (thanks to Moore's Law and the doubling of computing power every two years or so). Despite concerns on the part of Robert Gordon and others that the West is 'post growth', there are those who think we have a few more squares to fill as technology squeezes more productivity out of the system.

I think they're both right. The collaboration economy will certainly increase productivity (after all, working for free is very 'productive' from an employer and even a customer perspective); but it won't deliver growth thanks to The Great Decoupling.

Unfortunately we still have an economy, political system and labour market that's still operating like we're on the first half of the board. They say the Emperor got very angry as the rice piled up and he realised he had been outwitted. The old man and his head parted company shortly afterwards. The second half of the board has that effect, it seems.

Monday, June 10, 2013

The Military-Digital Complex

It's bad when even retired spooks think things are going too far:
"It’s capacity-driven. We have this enormous capacity to collect and sort data. We do this because we can, and because it’s the one area where the government can really overmatch its terrorist adversaries. What now seems extraordinary is soon accepted as normal, and becomes the baseline for the future. Over a period of time, this baseline shifts, and these new intrusions accumulate and reinforce one another—and that fundamentally changes things. In the past, at the end of the emergency, the balance has shifted back and a lot of those powers were ended. But we’re in a situation now that doesn’t have a finite ending. If there isn’t an end, then these powers accumulate and accumulate and accumulate. This is a fundamental difference. What we put in place becomes a permanent part of the landscape." Brian Jenkins
A recent report from the UK's Defence Academy (part of the Ministry of Defence) on The Global Cyber Game - which came out before the recent debacle - provides a brilliant analysis of what's going on (they do ask permission to install cookies on your computer, by the way :-). They explore the bigger picture of our new, post-Westphalian age of international diplomacy and declining national sovereignty, using the analogy of a cyber power board game to explore trends and scenarios. The chart below shows the board, and the various areas of co-operation and conflict now playing out:

The Military-Digital Complex (my play on Eisenhower's Military-Industrial Complex) represents that interface between commercial co-operation/competition and plain old coercion/co-option.  Their scenarios for how things evolve from here are sobering. We've been living through the 'free lunch' phase of the digital economy, and are now in the 'rising alarm' phase (in case you hadn't noticed):

After that, things will get better... or they will get worse. How much better (and how very much worse) is set out in the MOD's report.

I'm inclined to see things getting worse. And not because I'm a techo-luddite (far from it), but mainly because I've been reading Oswald Spengler's remarkably prescient Decline of the West. Written precisely one hundred years ago.

A bigger topic, for another post.

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