Leaders tinker at margins while waiting for recovery

Here's a piece that ran in Saturday's Irish Times.

LET US define power as the sustained execution of intended outcomes. What you want to get done, gets done, more often than not. How much of this type of power does the Government have?

Rulers can physically coerce their citizens through force of law; they can change the incentives citizens might face to alter their behaviour; or they can try to change the minds of their citizens through propaganda, spin, and PR. The Government can change the law marginally with the appearance of being proactive, for example, by increasing pressure on criminals, reducing your civil liberties, or introducing idiocies like blasphemy into the canon.

The Government can use the budget to change the incentives you face daily in your decisions to work, consume, and save, by changing the taxes and benefits you receive through social welfare.

Finally, the Government can try, through sustained spin and PR, to change your opinion. The Government really only needs to do this in a concerted way when it faces either a crucial vote, or the likelihood of largescale social unrest.

What are the Government’s intended outcomes for the rest of 2009? Broadly, the Government needs to begin to return the State’s finances to something approaching solvency; it needs to pass the Lisbon Treaty; it needs to appear to be proactive while waiting (and praying) for the international economy to recover to initiate export-led growth, and to give our unemployed citizens places to emigrate to (which will help stop the haemorrhaging of the public finances).

Now, how likely is it that the Government will achieve any of its intended outcomes?

First, political expediency dictates that the Government is likely to refuse to implement many of the McCarthy Reports’s more radical suggestions, leaving the decision at budget time between some combination of increased taxes and increased borrowing, rather than really deep cuts in public expenditure. Repeated electoral immolation is not a prospect Irish politicians delight in.

The implementation of Nama (the vehicle by which our banks’ balance sheets will be restored) is a wild card, which could go either way for the Government, and we won’t see any real action on Nama in any case until 2010.

Second, only a sustained PR barrage from now until October can help to turn Lisbon the Government’s way. The Government must turn the Irish people’s fear of an uncertain economic future to their advantage by blending that fear with the hope membership in good stead of a stronger EU might give them.

Third, the Government has no power whatsoever on the recovery of the international economy.

Given the current Government’s extant constraints, one is left with the rather unfavourable impression of a powerless ruler, tinkering at the margins – trimming here, paring there – and all the while playing a waiting game, hoping for a growth dividend from the international economy.

Economics of EU Integration Lecture 11

This is the last lecture of the course. We'll look at Ireland in the EU, and do a recap of the course. 

 

Most Irish people drive past the blue signs along new roads up and down the country, indicating that "This project was co-financed by the EU".  Since joining in 1973, the difference between what Ireland paid in and what the EU paid out is about €55 billion euros.

EU funding has gone into into every aspect of Irish life: building the economy; improving transport and communication networks; increasing trade; creating employment; promoting cultural diversity, peace and understanding; cleaning up the environment; restoring tourism amenities; sustaining a country life and protecting human rights.

Thanks to Ireland's economic success we no longer qualify for the same volume of EU funding as in the past. For the funding period 2007-2013, Ireland will receive Structural Funds of €750.72 million : €375.36 million from the European Regional Development Fund (ERDF) and €375.36 million from the European Social Fund (ESF).

 

This lecture examines Ireland's changing position within Europe since 1973 to 2008, against the backdrop of everything we have learned in lectures to date. We'll also talk about...

...The Exam

 

For the exam, read the assigned readings, listen to the lectures again, make sure to have a go at the sample exam, the past exam, redo your problem sets, and spend some time working on breadth and depth of coverage of the course, because I'll be examining both.

Other than that, good luck, and thanks.

 

The Dossing times accuses McWilliams of Abuse of Statistics

You and All Your Misperceptions

While I wouldn't go as far as Simon from The Dossing Times in accusing David McWilliams of coming to "plain silly" conclusions which represent an "abuse of statistics", I do think Simon has a much simpler (and less time and data intensive) method of discovering why the increase looked so big than mine: McWilliams just compared January 2008 with August 2008, and saw a huge increase. But there are seasonal effects here, as Simon correctly points out when you look year to year, which make this increase look more than regular.

So it's more of a slight gaffe than a deliberate abuse of statistics, and McWilliams should know better, but he has shown us (or at least to me) data source when looking back at Irish emigration patterns. A more sophisticated analysis might be in order here. Anyone interested in helping?

McWilliams incorrect on the Return to 1980's levels of Emigration

Irish economists are reaching for any evidence of an economic meltdown with which to terrorize the public. Commentator David McWilliams, echoing Prof. Kelly (see my previous post), gets medieval on the return of 1980's style emigration. He references GAA transfer figures as representing

a huge increase in young men moving from Irish clubs all around the country to clubs in London and New York.

The idea behind the piece is very good, using a Freakonomics-style capturing of economic choices (in this case, whether to stay in Ireland or go somewhere else looking for work) through an unusual data set.

(If anyone wants to work with me on it, there is an important story to be told using this data, and it goes back many years, so get in touch if you like working with this type of stuff. I've obtained the data back to 2000.)

David is to be congratulated for looking under this particular rock for signs of our imminent economic disaster, because even though I don't think he found much, the fact that this data exists at all is interesting enough to warrant a head nod of gratitude.

I do have some problems with his interpretation of the data. I didn't believe his story, so I went and got the transfer data myself. They come from two GAA pages, here and here.

The data is monthly, and shows player movement from club to club. Some of the clubs are in London, and the UK more generally, the US, Australasia, and 'Europe'. When you take the numbers leaving for foreign soil and divide them by the numbers of people actually moving in a given month, and compare the years 2007 and 2008, you get this picture below. Click on the charts to get the data I used to construct the figures.

relative.jpg

Each bar represents a relative group in group ratio, so in January 2007, a figure of 0.09 means only 9% of the people moving moved abroad. We see a big increase in movement over the summer months, with July 2008 being a big (but not huge) increase.

Then when you look at the absolute numbers moving, the story changes again, as the figure below shows:

abs_foreign.jpg

Now the way to read the figure is to just count up the numbers moving anywhere, not just abroad. It's a straight summation. And do the numbers moving go up? They do not. They go down. Way down. So not an increase, but a decrease in movement over time from 2007 to 2008.

Here is the same figure as the one above, but this time just for people traveling abroad.

absn1.jpg

Again, the way to read the figure is just to add up the columns, so 101 people transfered to a club outside Ireland in April 2007. The only huge increase is in May 2007, well before the subprime crisis hit in August 2007, and not repeated through the economic doldrums we are in now.

Even looking at the raw numbers---total foreign departures in 2007 to August (to make the data ranges the same in both years) are 723 out of 2062 people transferring, so a ratio of 35%. In 2008, total foreign departures to August are 588 out of 1346, a ratio of 0.44, but still a decrease in the absolute amounts of people moving abroad to date.

So based on this simple exercise, I'd have to say David's conclusions are incorrect about rising levels of Emigration. The data just don't tell that story so clearly.