Spot the Myths

Myth-making is a delicate art. You need a grain of truth, of course. You need a ready and willing vessel of myth transmission, and you need sustained spin to make the myth become part of the conventional wisdom. Readers should understand the term `conventional wisdom’ is meant in the pejorative sense, as the man who popularized the term, economist JK Galbraith, intended.
The recent Honohan and Regling reports have blown apart the myth that Ireland’s banking crisis was of international origin. We grew it right here at home folks, in the old-fashioned way. Crises like Ireland’s have been happening for at least 800 years. Let the myth die that we need to look abroad for our problems’ origins.
The next myth which is beginning to ferment is that no-one saw this coming. Not so. Look at any report by the National Competitiveness council for 2001, 2002, 2003, 2004, or 2005--they all say the same thing, and in ever-more alarmist language: Ireland is losing competitiveness. Look at the ESRI’s quarterly reports, or their recovery scenarios again, the same messages are there. I probably don’t need to remind you of the writings of people like Alan Ahearne and Morgan Kelly in the nation’s newspapers.
What’s the myth after that? Here I’m going to take a guess. It will have to be a myth that helps the incumbent political party stay in power, it will be a myth that is grounded in reality, and it will be a myth that will need to be dispelled, immediately, by those with facts and access to an internet connection. The myth will be of mass moral hazard. Nothing needs to be done, because it will change the populace’s relationship with debt, and alter their behaviour as a result. Debt-forgiveness for households is not on the cards, nor will it be for some time, as I’ve argued elsewhere. Yet, because debt, like most balance sheet phenomena, is PR and Spin-resistant, it will become a major issue in the next few years. Those with facts at hand should take strenuous efforts in dispelling this dangerous myth.

12 Replies to “Spot the Myths”

  1. Good to have you back.

    I guess debt, like economics professors, will always come back to haunt us 🙂

    1. Of course not Fergus, we each live on a sea of myths. The dangerous ones are to a large extent the ones driven by or adopted by governments, simply because of the size and importance of governments in modern societies.

  2. I just laugh at all this nonsense about "no-one saw this coming". Weren't the SSIA's brought out in 2001 to try and cool down an economy that was clearly overheating???? I worked in financial services from 2000-2008 ( from age 18 ) and even without a degree or masters or Phd it was so clear that the massive availability of credit and appreciation of every conceivable asset/commodity would come to a head at some point in time. I'm looking forward to the next "myth". Maybe global warming has made my coffee so expensive....

  3. Hi Niall,

    I'd be very interested in what you think the next myth might be-could it be something like globalisation?

  4. Then there was the myth that no one had any money until August....when the best selling car turned out to be a BMW 5 series.
    I wonder can one construct a socio-economic map of Ireland based on the preference for certain car types in certain DEDs?

Comments are closed.