Does Marc Coleman know what the Fiscal Council DOES? Seems not….

Normally I don’t really worry too much about what right wing polmecists say but when its both full of errors and given a national platform then I think we all need to be concerned. The latest opinion piece by Marc Coleman (ex central banker, ex department of finance official, ex economic editor of the Irish times that bastion of iconoclastic outsiderdom) in the Sunday Independent is a classic. Its worth deconstructing (and indeed would have been worth proofreading for grammar and lexicon..)

Marc’s argument, in so far as it goes, is one that is reasonable to have : for whom and how is the state run. But there are some egregious errors in it and some massive errors or misconceptions of how things operate.

here are some of the howlers in the piece…

Meanwhile our President Michael D Higgins, and Dr Mary Corcoran of NUI Maynooth have been busy telling us how important “public intellectuals” are becoming in Irish life. The two are linked. Irish economic policy thinking is so strongly dominated by the “public intellectual” — “publicly funded intellectual” to be more accurate — mindset that it is time to ask of those driving economic policy: are they acting in their own interest, or in ours?

I’m not sure what constitutes a public intellectual. Nobody is really, but one definition is three levels which range from talking about your area to others to being symbolic of a genre. Luminaries like Edward Said and Emerson have struggled with the concept. People who influence the public economic debate in Ireland range from Marc himself through his radio show and his column, to myself, to Michael O’Leary, to Danny McCoy and IBEC and so on. We are lucky enough to live in a vibrant democratic free society and have a plethora of voices to listen to or not.

In theory, elections produce majorities and governments implement economic policy according to their wishes.

No, in practice elections produce governments. Marc to his credit ran for election and his failure showed that there is not a sufficient constituency for his views. Across the state in 2011 we were confronted by a range of options and we voted for the people we did.

In reality the persistence of the Croke Park deal in the face of massive public opposition suggests a different system: the Taoiseach, Michael Noonan, Brendan Howlin and Eamon Gilmore — who make up the EMC — are all former public servants or trade union officials. Likewise most Cabinet members and the vast majority of “public intellectual” economists.

Well by definition all cabinet members are public servants. And the last IPSOS MRBI poll showed a whopping overwhelming 22% in favor of the scrapping of the Croke Park Deal.

Checks and balances to the system would actually be a good thing. But the only one that exists, the Senate, is contemporaneously elected by a limited franchise and is more a lapdog than a watchdog. It may soon also be a dead dog. As far as the EMC goes, a body composed of four Cabinet ministers and serviced by officials poses no threat to Cabinet whatsoever.

A subcommittee of the cabinet cannot by definition be other than subservient to the cabinet. Its worrying that an ex department of finance official would be so unaware of the basis of cabinet government. One wonders in the context of the last sentence what the alternative is to having officials service the EMC…is Marc proposing that IBEC and ICTU take alternate weeks to provide support to this? Or is it that he suggests that some beneficent multibillionaire second people from his media empire, purely pro bono of course?

No, the issues raised by the EMC are rather different. For a Government so concerned about the lack of women in politics and determined to push through gender quotas, the complacency over the chronic under-representation of another majority of voters is bizarre: despite making up 83 per cent of the workforce, the EMC’s make up — three former public servants and a former trade union official — denies any representation to private sector workers.

 

See Election 2011. We could have elected a Dail with zero teachers and public servants. We chose not to. We could even have elected Marc to the senate and we choose not to. This proposal veers close to the idea of technocratic government, whereby instead of democracy (boo, hiss) we get the great and the good to come back from their idills in warm climes to run the state. If we wanted private sector workers in the oireachtas we would have elected them.

 

 Instead, it replicates a bias toward big government thinking already evident in the NESC, the ESRI and a constellation of left-wing quangos funded by Government, all pushing an agenda of higher taxes and State dominance of our economy and lives. And where chronically we need balance in this debate — someone to row in on the side of the taxpayer — philanthropists like Chuck Feeney are doing the opposite by funding yet more left-of-centre economic think tanks such as Tasc and Public Policy. When the property tax bill comes through your letterbox next year, you can thank Chuck and his highly paid friends in academia for designing it and lobbying for it. The vast array of forces lined up against the taxpayer and in defence of the interests of public administration is not just awe inspiring; it challenges the very notion of democracy. “You can have it any colour you want, so long as it’s red” — or “fifty shades of red” — seems to be the mantra.

The notion of Chuck Feeney, who has made his billions on the most capitalistic way known to man, that of in effect operating outside the state tax control, as a lefty is odd. And of course, Marc has the opportunity if that is the case, to gain the ear of another billionaire to fund alternative ways forward. Its odd to see a fully trained economist railing against the broadening of the tax base but I guess that Marc’s analysis is that every other OECD country is in the grip of dastardly leftwing public servants pushing this agenda. Even the USA and Australia, those commie bastions…

To say Government is now a conspiracy against the private-sector taxpayer might be pushing it too far. But the idea that the EMC is going to see the economy through anything but a left-of-centre public sector lens is unrealistic.

Yes, Enda and Michael are well known as reds under the bed. Why one has to only look at their record to see this….

The group that is supposed to act as a check and balance is the Irish Fiscal Advisory Council (IFAC). Established to heed Dr Garret FitzGerald’s call for a council of advisers, the first mistake with IFAC was to follow one of the good doctor’s more dangerous fetishes. His fetish for PhD economists. He saw the lack of PhD economists in government as a cause of policy failure. He was wrong. The problem wasn’t the lack of PhD economists, but the lack of good economists full stop. The economists on IFAC are all of them good ones. But they are all also from the “usual suspects” background of permanent and pensionable highly paid public employ. Given that some of them benefit from how the Croke Park deal protects academic pay and pensions — currently the highest in Europe — it is extremely important that IFAC is seen to question the affordability of the Croke Park deal going forward.

Now this is very odd and shows how disconnected Marc is from the economic reality of Ireland. First, the IFAC was not a fetish of Dr F, whose desire was to see a heightened and strengthened economic competence in the core civil service. I guess that is fetishistic but it seems to me to be rather sensible. The IFAC was in fact appointed as a consequence of divers EU and latterly troika requirements.

IFAC consists of an ex IMF person; an OECD official; a US professor and two Irish professors. Its hard to see these as the evil ones identified by  Marc. Finally, a read of any of the reports or even “obiter dicta” by members would show that they are deeply aware of the state of the public finances. Believe it or not, not everything is a cause or a consequence of a public pay deal…

And there’s another problem with IFAC. Some PhDs are essential in economic policy. But so are practical economists, forecasters and analysts. The dominance of the former over the latter is one reason why IFAC made a spectacular error of €4bn in measuring our national debt, a grievous error for a body charged with so weighty a responsibility. It has also failed to scrutinise the recent stimulus package and has said nothing about the cost to the university pension fund deficits — up to €2bn-worth — being charged to the taxpayer. We might fairly ask, if university PhDs are so smart, how did they run up — or allow others to run up — massive deficits in their own pensions (€300m for TCD alone)?

There are two economists employed by IFAC neither with a PhD (both however with significant private/financial sector experience).  IFAC has no role in measuring the national debt so how it can make such an error is beyond me. Maybe Marc is confusing the IFAC with the department of finance, which is pretty much a PhD free zone (correlation is not causation).

We might also ask how we can take Michael D Higgins’s advice seriously in trusting “public intellectuals” in IFAC, ESRI and NESC when they have pointedly failed to address the issue of the public sector pension liability, the Croke Park deal and the huge academic pension deficit. Colm McCarthy is, of course, an honourable exception here (there are some others).

 

Yes, nobody (Karl Whelan, myself, Morgan Kelly, Stephen Kinsella and others apart have addressed any of these. Ever. Anywhere. Ever. Really.

 

The Department of Public Expenditure and Reform has, to be fair, recently recruited a batch of new economists. And the head of that department was selected from outside it. But without a radical change in the make-up of economic policy design, it will be extremely difficult for new economists coming in at the bottom to avoid being ground down by byzantine hierarchy and dysfunctional cultures. And grossly unfair remuneration practices: that highly qualified staff are entering the civil service on much lower pay grades and scales and fewer pension entitlements than less qualified incumbents is totally at odds with the new, reformed public service we want to create.

Robert Watt was the head of the unit that in effect became the DPER. He spent some time outside the Civil Service in Indecon consulting and returned, with a more rounded understanding of public and private sector one imagines. He’s a good solid economic thinker and not a man who tolerates fools easily. Its also strange that someone who reviles the Croke Park Agreement would also revile its core longterm element: to restructure the pay and pension issue of the civil service and the larger public sector.

No, the EMC is not the problem. It — and the public sector dominance of policy thinking it represents — is merely a logical outcome of what we now have: a new economic apartheid with all-powerful insiders from the world of public administration and academia and disenfranchised outsiders from the private sector and front line of the public sector.

 

I know Marc is old enough to remember what apartheid was and was not. To blithely throw in that term here is to cheapen his argument and to demean the struggle against same. “all powerful” is a wonderful term but in Ireland at the present it refers to the IMF and Troika minders, not to any academic or administrator. Im sure the world would be a better place if I were all powerful, but alas the world is not so ordered.  And there are places in the world where people are in reality disenfranchised. Since the end of the 19th century there has been a widespread franchise – bleating that there is disenfranchisement serves nobody well.

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