Growing your way out of recession

by Henry on November 29, 2010

One of the problems of a small country like Ireland is that the intelligentsia’s level of economic literacy tends to be pretty low. This column by Stephen Collins (the Irish Times’ political correspondent, and an astute judge of electoral politics) is a good example of the problem.

TAOISEACH BRIAN Cowen insisted last night that the debt burden on Ireland under the terms of the EU/International Monetary Fund bailout would not cripple the country as his political opponents are claiming but would instead put it on the road to recovery.
He pointed out that the assumptions underlying the plan mean that, at its height, the burden of debt will be 102 per cent of gross national product, roughly where it was in 1992/1993 when Ireland was on the cusp of the Celtic Tiger period. Cowen recalled that, back in 1985, the debt burden on the shoulders of the Irish taxpayer was considerably worse than it would be under the EU-IMF programme for Ireland announced last night. Of course, his confident predictions are based on the assumption that the programme will work and that the targets set out in it will be met both in relation to the public finances and to the banks. Ultimately, it will all depend on whether the doom merchants are proved right and the European Union lurches into a crisis from which it will never recover or whether normal economic and political conditions are gradually restored.
Back in 1987, few people believed the Bruton/MacSharry budget introduced at one of the lowest points in Irish history would within a few years have led to the Celtic Tiger economy. Good luck as well as courageous political decision-making underpinned that transformation and both elements will be required if the programme is to work as planned.
… Another issue that did not get serious traction in the talks was the simplistic call to “burn the bondholders” for which German chancellor Angela Merkel has to take a lot of responsibility. The European Central Bank was adamantly opposed to the notion as any such move would threaten the financial stability of Europe. It is ironic that the zealots of the US Tea Party movement and many of those on the left in Ireland share a common belief in “burning bondholders” and damn the consequences. The lesson of the Great Depression of the 1930s was that taking that kind of approach leads to widespread bank failures and national economic collapse which, in turn, threatens the democratic foundations on which our society is built.

The problem is that this argument is based on soothing but quite nonsensical assumptions. It takes as a given that Ireland’s growth rate from the mid 1990’s through 2008 or so reflected “normal economic and political conditions.” They didn’t. Ireland was playing catch-up with the developed industrial democracies – and during catch-up, one can hope for very high growth rates thanks to under-utilized resources. Even if the world’s economic system were magically to restabilize overnight, one could not expect to see a return of the conditions under which Ireland was able to eliminate its earlier debt overhang. And anyone with a smattering of understanding of the basics of economic growth would know this.

Unfortunately, the more plausible outcome is the one presented by Kevin O’Rourke in which emigration and fiscal burden lead to a vicious cycle.

In the long run, migration sets a floor to Irish wages. It has been thus ever since the Famine of the 1840s, and I don’t believe that the Irish have become less mobile in the last 20 years. Now, a lot of Irish wages are still high by international standards, but eventually as ‘internal devaluation’ proceeds, and as peoples’ living standards are lowered as a result of tax hikes and cuts to public services, it seems inevitable that the ‘migration constraint’ will start to bind again. … If the left hand side of this equation falls too far below the right hand side, people will leave until equilibrium is re-established. … There are fixed costs to running a state, and the debts we are now being saddled with are not population-dependent. You don’t have to be Paul Krugman to see the potential for some pretty nasty feedback loops here.

Update: More on Collins from Kevin O’Rourke.

{ 104 comments }

1

ajay 11.29.10 at 4:07 pm

I don’t believe that the Irish have become less mobile in the last 20 years.

No doubt true, but where are they going to emigrate to? The last 20 years have seen a lot more competition for emigrant-type jobs in Britain, thanks to EU expansion (not many Polish builders in London in the 1980s), and tighter immigration restrictions in the US, the other main destination of the traditional Irish emigrant. Not to mention that the world economy isn’t doing too well now – it’s not as though there are jobs aplenty elsewhere. O’Rourke’s equation for the stay/leave decision
w(1-t) + b + P = E
is good, but he assumes the right-hand side, representing the “living standard we can expect overseas”, remains constant, and I wonder if it has.

2

Henry 11.29.10 at 4:11 pm

bq. but he assumes the right-hand side, representing the “living standard we can expect overseas”, remains constant, and I wonder if it has.

He doesn’t need to make that assumption. All he needs is living standard overseas > living standard in Ireland. This does not seem like much of a stretch, given the current shittiness and likely increasing shittiness of the Irish economy over time.

3

StevenAttewell 11.29.10 at 4:25 pm

I’d also point out the very ideologically-driven assumption that ruin must follow if creditors are not repaid at face value. Historically speaking, this seems highly dubious – the New Deal banking reforms, both in their emergency and Glass-Steagall phases did not involve a 100% redemption of debts, yet recovery was incredibly robust from 33-37.

The lack of any consideration as to where the growth is going to be coming from when domestic demand is severely restricted and international demand likely to be either stagnant or slowly growing is equally disturbing, because it points to the “assume a pony” style magical thinking at the heart of austerity-ism.

4

Steve LaBonne 11.29.10 at 4:26 pm

They had to destroy the country in order to save it(s credit rating).

5

ciaran 11.29.10 at 4:54 pm

we also had the germans pouring vast amounts of structural funds into our economy at the same time( as fintan o’toole has already pointed out). steve collins is a wised up political commentator but he can really embarass himself when he starts talking economics.

6

ajay 11.29.10 at 4:57 pm

He doesn’t need to make that assumption. All he needs is living standard overseas > living standard in Ireland.

Well, yes, point taken, as long as it’s “living standard for an emigrable worker”. Public spending cuts will hit the poor and retired hardest, and they’ll be less mobile.

7

Daragh McDowell 11.29.10 at 5:22 pm

On Henry’s general point of the economic illiteracy/general stupidity of the Irish political elite – its something I’m glad someone more influential than I is saying, since the world press’s opinion pages seem to be currently filled to the brim with various ideologically-driven prognostications on how we got here/how to get out. As I keep telling my British friends – you don’t understand, the Euro didn’t cause this, tax rates didn’t cause this, our unbelievably feckless and stupid political leadership caused this.

Or as the Daily Star put it.

8

Barry 11.29.10 at 5:24 pm

There are also prospects – if one has enough money to travel, and some friends or relatives in a likely country, and Ireland is seriously f*cked for the next several years, (or a couple of decades), it’d make sense to try the other country.

9

nick s 11.29.10 at 6:16 pm

It’s not really saying anything new to note that there’s a well-worn path for the talented and capable to get out of the country when necessary, and a pretty extensive support network for Irish expats anywhere worth going. When you talk about “emigrant-type jobs” in the context of Ireland, you need to look a lot further up the income ladder than brickies.

10

Paddy Matthews 11.29.10 at 6:50 pm

One of the problems of a small country like Ireland is that the intelligentsia’s level of economic literacy tends to be pretty low. This column by Stephen Collins (the Irish Times’ political correspondent, and an astute judge of electoral politics) is a good example of the problem.

In this instance, I’d have said it’s more ideological fixation than economic illiteracy per se.

11

P O'Neill 11.29.10 at 6:57 pm

Also worth looking at K O’R on the Collins bit about how burning bank bondholders caused the Great Depression.

12

Henry 11.29.10 at 7:09 pm

I posted an update exactly to this effect more or less about the same time as your comment.

13

ejh 11.29.10 at 7:09 pm

the Euro didn’t cause this, tax rates didn’t cause this, our unbelievably feckless and stupid political leadership caused this.

Translation: we’ll forget about the economic policy which that leadership pursued, or its ideological background, because we liked all that part. So we’ll pretend it’s just about the individuals who were in power.

14

Kevin Donoghue 11.29.10 at 7:23 pm

One of the problems of a small country like Ireland is that the intelligentsia’s level of economic literacy tends to be pretty low.

I have nothing to say in defence of Stephen Collins, but the US is a very large country and the intelligentsia’s level of economic literacy is very low indeed — so much so that people like George Will and Megan McArdle can hang onto their jobs.

15

P O'Neill 11.29.10 at 7:29 pm

Speaking of the American version of this punditry, note that Collins has an Irish version of the Pundit Fallacy, which is that Fine Gael exists to enable Fianna Fail to do, for the good of country, what the pundit wants them to do.

16

Daragh McDowell 11.29.10 at 7:59 pm

Translation: we’ll forget about the economic policy which that leadership pursued, or its ideological background, because we liked all that part. So we’ll pretend it’s just about the individuals who were in power.

The economic ‘policy’ such as it was largely translated to buy off person x, and paper over crack y and sure we’ll be grand, until the whole thing effectively fell apart. Plenty of those evil ‘neo-liberals’ I keep hearing about, as well as the economically more right-wing Fine Gael party were raising alarms about the unsustainability of the tax base FF created, or the need to throttle back on spending, prevent an overheat and put the public coffers on a more sound footing during the good times. They were ignored. And the same goes for a lot of people providing good ideas from the left. It was cute hoorism ne plus ultra, right down to the ‘trust, don’t verify’ bank bailout.

17

piglet 11.29.10 at 8:06 pm

One of the problems of a small country like Ireland is that the intelligentsia’s level of economic literacy tends to be pretty low.

Oh puhlease. As opposed to which bigger country?

18

ejh 11.29.10 at 8:11 pm

raising alarms about the unsustainability of the tax base FF create

And yet just a few postings above, low taxes weren’t a problem.

I do commend those rightwingers though for suggesting that the state “throttle back on spending”. I mean it’s terribly unusual for rightwingers to think that social spending should be cut. They’ll be calling for more labour flexibity next.

Back in reality, of course, the “economic policy such as it was” was lauded by all and sundry among the affluent classes and was held up as a policy for the rest of Europe to emulate and admire. And pretending otherwise is self-seving bullshit from people who were the major beneficiaries of the policy.

19

y81 11.29.10 at 8:20 pm

Hmm, Prof. Farrell sounds like Greg Mankiw, pointing out that the Obama budget projections (vociferously defended by Paul Krugman) assume economic growth like that in 1983 and the immediate aftermath, and that you can’t assume those sort of growth rates in a recovery from a banking crisis.

On the evidence thus far, Mankiw was right and Krugman very wrong, but you won’t read that at Crooked Timber, except in this comment.

20

Daragh McDowell 11.29.10 at 8:30 pm

@ejh

Not that taxes were low, but that revenues were dangerously dependent on a single source, namely property and construction.

21

Patrick O'Brien 11.29.10 at 8:30 pm

“One of the problems of a small country like Ireland is that the intelligentsia’s level of economic literacy tends to be pretty low.”

Ouch. What’s your evidence for this? Things are bad enough for Ireland without this sort of crass stereotyping.

Unfortunately the economic analysis is all beside the point: it’s the politics that are crucial. Speaking as an Irish citizen, and from a safe vantage point (the UK, to which I have recently had to emigrate) the real worry that I have is that the EU/IMF deal has imposed burdens upon Ireland that will shatter the political system.

Ireland has historically been a relatively stable, centrist country. The real risk is that it will now turn in on itself, and that the leftist/nationalist lunatic fringe will start running the asylum, with all sorts of extremely unpleasant consequences inside and outside of Ireland. And there will be little for all of us recent emigrants to go home to.

22

piglet 11.29.10 at 8:41 pm

y81: the belief in GDP growth as the miraculous solution to everything is pretty much shared by everybody left and right except for the small tribe of ecological economists who insist that economic activity is not exempt from the laws of physics. If Mankiw (who usually is firmly in the “we don’t have to care about reality” camp) doubts Obama’s growth projections, he may well be right but I wonder whether he was as critical when Bush justified his tax cuts with grossly optimistic growth projections, thereby creating much of the deficit that Obama inherited from him.

So if “growing our way out of recession” can’t be counted on, what does that mean? The obvious consequence is that cutting spending and taxes will make matters worse because it won’t be offset by private sector growth. You may be right about Krugman being wrong in this instance but you’d be right for the wrong reasons and you are drawing the wrong conclusions.

23

Kevin Donoghue 11.29.10 at 9:25 pm

piglet, before you go taking y81’s word for anything, it’s wise to check the source:

I always thought the unit root thing involved a bit of deliberate obtuseness — it involved pretending that you didn’t know the difference between, say, low GDP growth due to a productivity slowdown like the one that happened from 1973 to 1995, on one side, and low GDP growth due to a severe recession. For one thing is very clear: variables that measure the use of resources, like unemployment or capacity utilization, do NOT have unit roots: when unemployment is high, it tends to fall. And together with Okun’s law, this says that yes, it is right to expect high growth in future if the economy is depressed now.

That, y81 would have you believe, is Paul Krugman vociferously defending the Obama budget projections. Seriously shrill, eh? I remember the post because the usual hacks were outraged: “Krugthug said Mankiw was EVIL!”

24

y81 11.29.10 at 9:52 pm

@22: Huh? Krugman says, “And yes, we can expect fast growth if and when that capacity comes back into use,” i.e., there will be fast growth when we recover from the current recession. On the evidence to date, he was very wrong.

When do you think we will have the “fast growth” necessary to justify the Obama budget projections?

25

Chris Bertram 11.29.10 at 10:16 pm

Driving through Ireland in 2003 and then again in 2008, I was thinking (more the 2nd time) “this is insane, who is going to live in these houses?” I imagine that thousands of people had similar thoughts and then carried on. That’s bubbles for you.

26

Walt 11.29.10 at 10:31 pm

Kevin: Good catch. You even managed to refute y81’s next comment even before he made it.

27

Henry 11.29.10 at 10:32 pm

bq. Ouch. What’s your evidence for this?

On the specific problems of economic illiteracy in the public sector, see the brief discussion in the Avellaneda and Hardiman paper linked above (which builds on a forthcoming piece by Hardiman). More generally, having lived there for twenty-odd years, and kept up since reasonably well with the internal debates, they are conducted at a remarkably low level.

Speaking of economic ignorance, I hate to interrupt y81 from his(?) Krugman bashing, but “normalcy” as used in the Collins article refers to a period of 7-10% annual growth rates. If y81 wants to maintain that this is what Krugman is implying in his comments, or anything like it, I really think that it’s best for everyone concerned that he be left to play happily on his own.

28

Henry 11.29.10 at 10:32 pm

“linked above” should be “linked in my previous post”

29

John Quiggin 11.29.10 at 10:33 pm

It seems to me that the level of economic illiteracy normal among US pundits is higher (or lower) than that displayed above, which casts doubt on the small country hypothesis. Certainly, Australia (closer to Ireland than the US) assumes a much higher level of literacy, whether or not this entails correct analyses. For example, even the tabloid press refers to the current account deficit in the same way as it might refer to the House of Representatives (we have one too) whereas the NY Times feels the need to gloss it.

On a separate point, y81 WTF? I think it is safe to say that Krugman has never been vociferous in defence of anything done by the Obama Administration. Certainly, he has repeatedly criticised Obama for over-optimism regarding the effects of a stimulus he criticised as inadequate.

30

dsquared 11.29.10 at 10:40 pm

Public spending cuts will hit the poor and retired hardest, and they’ll be less mobile.

there’s a version of the same equation for them; as EU citizens, Irish people can claim income support and other benefits which aren’t part of the National Insurance system in the UK, which would probably be the hard limit on how bad the squeeze can get.

31

y81 11.29.10 at 10:44 pm

27: Krugman was implying that we could expect growth rates similar to those from 1983 to 1986. I said that, pretty clearly, by use of the numerals “1983.” I didn’t use the words “7-10%.” Why do you suggest that I did?

In fact, we cannot expect growth at the 1983-86 rates anytime soon. Do you think we can?

32

stostosto 11.29.10 at 11:07 pm

y81, you may not agree with Krugman’s politics or his style, which admittedly can be grating, but he is invariably right about macroeconomic issues. Corny as it sounds, it’s true. Adopt that as your axiom, and you’ll be on solid ground in making sense of things.

33

stostosto 11.29.10 at 11:15 pm

As to the issue, what are you on about? US growth since the Great Recession officially ended has been barely enough to keep up with labour force growth. Hence persistent unemployment and spare capacity. It’s little more than stating an accounting identity to say that it will require higher growth to reduce unemployment. Nor did Krugman claim that it was anymore than that. Quite the contrary. (Ah, but he used the word “evil”).

34

y81 11.29.10 at 11:17 pm

@32: Like and dislike have nothing to do with. The truth doesn’t care whether you like it; it just is. When are those high growth rates kicking in?

No one here will answer that question, because Krugman said it would be very soon, and no one wants to say that he was wrong.

35

Barry 11.29.10 at 11:18 pm

Chris Bertram 11.29.10 at 10:16 pm

“Driving through Ireland in 2003 and then again in 2008, I was thinking (more the 2nd time) “this is insane, who is going to live in these houses?” I imagine that thousands of people had similar thoughts and then carried on. That’s bubbles for you.”

Duh – Scottish vacationers, seeking better weather :)

36

EWI 11.29.10 at 11:21 pm

@ Ciaran

Well, he is a former PD (as is Madam Editor).

@ Daragh McDowell

Ireland has historically been a relatively stable, centrist country. The real risk is that it will now turn in on itself, and that the leftist/nationalist lunatic fringe […]

Do tell of this “leftist/nationalist lunatic fringe”?

37

stostosto 11.29.10 at 11:32 pm

y81, Krugman has it, Mankiw has it not. To use your own formulation: That’s the truth. It just is. Again, adopt that as your axiom, and you’ll be on solid ground.

Btw, where did Krugman say that we will have high growth soon? He has done nothing but complain, constantly, that there is no immediate end in sight to the slump unless a fiscal expansion can be arranged. And then complain again, constantly, that it can’t be arranged given present political conditions.

38

Kevin Donoghue 11.29.10 at 11:45 pm

stostosto, Krugman said “we can expect fast growth if and when that capacity comes back into use” which y81 translates as “very soon.” But our host has issued a DNFTT notice, so.

39

ciaran 11.29.10 at 11:48 pm

Well, he is a former PD (as is Madam Editor).

interesting, i did not know this. it all makes sense now!(“,)

40

ciaran 11.29.10 at 11:52 pm

i agree i think there isnt much chance of the shinners benefiting all that much. maybe you’ill get right wing populism but i find it hard to imagine the extreme left prospering. we’re(alas!) a conservative country.

41

Salient 11.29.10 at 11:56 pm

Btw, where did Krugman say that we will have high growth soon?

y81 is exploiting ambiguity in the extracted decontextualized Krugman quote “…it is right to expect high growth in the future if the economy is depressed now” and is inserting a ‘very soon’ in there for good luck. One notes that faux-y81 is in agreement with faux-Krugman about this rapid growth: in y81’s own words, “…it would be very soon, and no one wants to say that…”

42

James Conran 11.30.10 at 12:28 am

Via Michael Taft, what the IMF was saying in 2006:

“The Irish financial sector has continued to perform well since its participation in the Financial Sector Assessment Program in 2000. Financial soundness and market indicators are generally very strong. The outlook for the financial system is positive. . . . Stress tests confirm… that the major financial institutions have adequate capital buffers to cover a range of shocks.

Good progress has been achieved in strengthening the regulatory and supervisory framework, in line with the recommendations of the 2000 FSAP. The strategy of creating a unified approach to risk with common elements across different sectors where appropriate, but differentiated where necessary, is being put into practice well.”

More from Michael here, including the European Commission’s declarations as to the rude health of our public finances back in 2006 and 2007:

http://notesonthefront.typepad.com/politicaleconomy/2010/11/always-helps-to-get-help-from-our-friends.html

43

Tim Worstall 11.30.10 at 12:36 am

“xcept for the small tribe of ecological economists who insist that economic activity is not exempt from the laws of physics.”

Given that an increase in economic activity is defined as an increase in the value added (No, it absolutely is not limited to simply the production of more stuff, nor to the resources used in the creation of that value) why would the laws of physics be something that economic activity or growth would find to be a defining limit?

Sure, we can’t just assume anti-gravity or perpetual motion machines: in that sense we are bound by the laws of physics. But the number of atoms of this or that available for us to manipulate just isn’t the hard constraint that ecological economics seems to assume that it is. What we’re trying (however imperfectly) to measure is the value that human beings put upon what is created. At the extreme, and yes I know this sounds odd, if we all decided to value what is already produced more highly then that is economic growth. Or more conventionally, if we changed what we produced from those limited resources from what we do now to something, anything, that we valued more highly, then that is economic growth too.

Even Herman Daly gets this (his distinction between qualitative and quantitative growth) so it always rather surprises me when some don’t.

44

Daragh McDowell 11.30.10 at 1:02 am

EWI

Was I being asked to comment on the quote from the article, or were you just calling me a former PD and therefore not worth taking seriously?

45

James Conran 11.30.10 at 1:54 am

He was referring to Stephen Collins, Daragh, not you. Don’t know if he was ever actually a member. But certainly his politics have always been fairly obviously of a FG-PDish hue.

46

Chris 11.30.10 at 3:32 am

Krugman says, “And yes, we can expect fast growth if and when that capacity comes back into use,” i.e., there will be fast growth when we recover from the current recession. On the evidence to date, he was very wrong.

To date, we haven’t recovered from the current recession. (Which, in fact, is exactly what Krugman predicted as the consequence of the sorts of policies that are currently in effect — 50 Herbert Hoovers, etc.) There are certain technical definitions of “recession” under which the recession is “over” — but not capacity utilization, the one explicitly invoked by Krugman in the sentence you’ve quoted. You can’t change definitions on him and then claim *he’s* wrong.

*If and when* we do return to full capacity utilization *in the future*, if there still isn’t rapid growth, then you can come back and call Krugman’s prediction refuted — assuming he doesn’t beat you to the punch with a retraction and reanalysis of what he got wrong with his own earlier position.

47

dsquared 11.30.10 at 7:24 am

I would hate to think what might happen if the leftist lunatic fringe took power in Ireland. They might nationalise the banks!

Seriously, the sensible centrist Very Serious People Of Ireland might want to take seriously the proposition that when you’ve screwed something up this badly, it tends to have an effect on the potential audience for your views on what to do next.

48

Phil 11.30.10 at 9:24 am

D^2^ – I made a similar point here, although subsequent comments suggest the actual event wasn’t calculated to capitalise on the mood.

49

Patrick O'Brien 11.30.10 at 9:56 am

Dsquared – you seem to have commented a couple of times on my response above the ‘leftist lunatic fringe’, which you have misattributed to Daragh McDowell. I’m not party political and have no party affiliations (PD or otherwise). I even voted for Joe Higgins at the last Dail election, on the basis that he would at that point have been a useful thorn in the government’s side.

I have no love for the current government and fervently wished they’d exited about two years ago before they’d had the chance to guarantee banks and negotiate/capitulate to this disaster of a ‘bail-out’. I suspect you’d agree with me on that. We might even agree on nationalising the banks (although I think we’ve passed the point where that would have helped anyone; the goal at this stage has to be to denationalise them [or their debts, at least] as fast as possible).

But (and here we may disagree) my worry would be that the extreme left/nationalist groupings that suddenly seem to be making a lot of noise in Ireland now will win a lot of seats by promising stuff they can’t possibly hope to deliver (because Ireland has no money, and can’t in the current climate borrow any more, and there aren’t enough rich people to pay the higher taxes these groups propose as a solution) and will instead resort to destabilising political stunts like trying to take Ireland out of the euro and/or the EU and/or adopting a more aggressive posture on Northern Ireland, Britain and immigrants.

50

ejh 11.30.10 at 10:36 am

destabilising political stunts like trying to take Ireland out of the euro

Destabilising what?

F9or pity’s sake. What do you expect people to do? Just sit there and take it? What do you think will be the outcome if you do? If you can’t grasp it, I’ll tell you. It’ll be that the people who lose out, as a result, become attracted to aggressive rhetoric as regards the North, Britain and immigrants. That’s what happens during economic disasters.

And by the way, who are these people “promising stuff they can’t possibly hope to deliver”? Is that the left, or is that the parties who reckon that if you throw lots of working people out of jobs and but the living standards of many others, this will magically mean the deficit is reduced according to schedule? Who are the bullshitters here?

51

Daragh McDowell 11.30.10 at 10:46 am

BTW If we’re talking about hypothetical extreme left/extreme nationalist groupings appearing that’s already happened. The various Trotskyist groups are now fighting the next election as the United Left Alliance, and we recently saw the launch of somethingcalled the ‘National Alliance’ (until they realised that was perhaps too obvious and changed the name to ‘National Forum.’)

52

Patrick O'Brien 11.30.10 at 10:49 am

Ejh, I’m not completely disagreeing with you – I have no problem with Labour getting in and I don’t think it would be a complete disaster if the Socialist Workers Party increased their representation a bit. Nor do I agree with the current policy – just because I don’t like the radical leftwing solution doesn’t mean I’m happy with the status quo. Almost every single one of my family and friends work in public sector jobs. I don’t want them to lose huge chunks of their pay and pensions, or to lose their jobs altogether. There’s a fairly big space between those two positions and this doesn’t have to be such a polarised discussion.

Perhaps I should have been more explicit. I’m talking about extreme left/nationalist (think the pathetic scenes – broadcast all over the world – of a dozen SF activists trying to break into the Dail, Shell to Sea protests, commemorations at republican graves, etc). Unfortunately, what I see at the moment is that the extreme nationalists and the radical left seem to be intertwined at the moment, and to be fair to the radical left perhaps there’s nothing they can do about it.

And to those who would disagree with this portrayal do you really believe that SF wouldn’t have gone into coalition with FF after the last election. Remember all those sympathetic noises from Gerry Adams c. 2007? They’ll sell you anything.

53

ejh 11.30.10 at 10:50 am

Well, tough. You might have to climb down frrom your unearned perch of great intellectual superiority and explain to people why they should vote for the same free market enthusiasts who have fucked them over on behalf of people like yourself.

54

ejh 11.30.10 at 10:52 am

(That last#53 to the great Daragh McDowell, by the way.)

55

ejh 11.30.10 at 10:55 am

Unfortunately, what I see at the moment is that the extreme nationalists and the radical left seem to be intertwined at the moment, and to be fair to the radical left perhaps there’s nothing they can do about it.

Well, how are they intertwined, other than both thinking that the Euro might be a problem and perhaps both thinking that ordinary people shouldn’t have to pay the price of astronomical debts incurred by a private bank?

What does intertwined actually mean here?

56

Patrick O'Brien 11.30.10 at 11:01 am

Well they all seem to go to the same events for a start. And it was an SF fringe that appeared to cause violence at the USI protest a few weeks ago.

As I was trying to say, I don’t think you have to be a radical leftist to feel outraged about the situation with the banks, and I think most people of all political hues will now admit that the euro has in the cold light of day proven to be a bit of a disaster for Ireland. But that doesn’t mean that it would make sense to try to get out of it at this stage; that would probably be worse.

57

ejh 11.30.10 at 11:08 am

Well they all seem to go to the same events for a start

Really?

Aren’t you just playing the SF card here?

But that doesn’t mean that it would make sense to try to get out of it at this stage; that would probably be worse.

Worse for who? And when the fuck-the-proles strategy doesn’t work, what will it be time to do then?

58

ejh 11.30.10 at 11:09 am

To make myself even more clear, you really have to have a better strategy than saying “carry on everybody” and waving garlic and crucifixes at SF and anybody who goes near them.

59

Patrick O'Brien 11.30.10 at 11:19 am

Worse for everyone. Everyone needs food, shelter, etc.

And yes, I do think SF are toxic; I have no problem admitting that. And I think that allowing your organisation to be hijacked by them – whatever your political hue – is a bad thing.

60

ejh 11.30.10 at 11:25 am

Well, then keep on doing that then. But people are going to stop listening, aren’t they? Because “look, bogeymen!” isn’t much of a message in the present circumstances.

You’re not in charge any more. That’s the point. You’re not the sensible people who get to decide the bounds of proper political discourse. That’s over.

Worse for everyone. Everyone needs food, shelter, etc.

Oh do me a favour. You think everybody’s at risk of going without? Really. “Everyone” indeed.

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Patrick O'Brien 11.30.10 at 11:27 am

I’ve never been in charge.

62

Kevin Donoghue 11.30.10 at 12:10 pm

… destabilising political stunts like trying to take Ireland out of the euro ….

If I was running the Central Bank I wouldn’t be for taking Ireland out of the eurozone next weekend, but I would sure as hell want to have a contingency plan for doing so if things get any worse. It really wouldn’t be that difficult. Shut the banks for a week and pass legislation redenominating all their accounts in New Punts. Change the notes in the ATMs and carry on. Sure, there would be litigation for decades to come but suing a government in its own courts is a mug’s game; you may win a few but the deck is stacked against you.

It’s drastic and morally questionable, but when the chips are down it’s better than trying to sell your workforce into debt servitude.

63

P O'Neill 11.30.10 at 12:20 pm

#49 I have no love for the current government and fervently wished they’d exited about two years ago before they’d had the chance to guarantee banks and negotiate/capitulate to this disaster of a ‘bail-out’.

That’s a strange timeline for wanting FF out. Up to them having completely blown the boom but just as the nasty decisions had to be made. Yes they botched the nasty decisions too but you seem to be implying that FF 1997-2007 was OK. Indeed, if Cowen hadn’t applied his standard approach to all tasks to the 2007 election — believing (correctly in the case of that election) that all anything needs is a few days effort near the end — it would have been the 1980s cycle all over again, where FF caused the mess, put the opposition in power to attempt to sort it out, and then rides the 1st wave of recovery back to more decades in power.

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Daragh McDowell 11.30.10 at 12:44 pm

Well, tough. You might have to climb down frrom your unearned perch of great intellectual superiority and explain to people why they should vote for the same free market enthusiasts who have fucked them over on behalf of people like yourself.

Well how can I resist that invitation to debate… Think I’ll pass though.

65

Henry 11.30.10 at 1:32 pm

ejh – calm down please. Now.

66

CMK 11.30.10 at 1:38 pm

Collins’ piece was stupid. Evidence, for the umpteenth time, that Irish print journos, and pol-cors in particular, still don’t seem to have realized that the internet changes everything and that, consequently, they have to put a lot more effort into what they write if they want to appear to have any grasp of recent events. And they don’t appear to be prepared to make that effort. It’s also evidence of the solipism and lack of self-awareness that defines Irish journalists. Collins evidently doesn’t realize that people like O’Rourke and Henry, and plenty of others, are out there and can take his arguements to pieces in short order.

The lifelessness and laziness of the IT’s coverage of the crisis to date completely undermines any lingering pretentions it might have to be ‘the paper of record’. Paralleling the economic crisis in Ireland is a profound media crisis which is as intractable as the former and will likely have as ugly an end.

It’s becoming comical following debates between Irish journos on radio and TV where all concerned bemoan the politicians and the stupidity of the people for electing them. Yet none of these same journos appear to think that the middle men and women – i.e. them – might have contributed to the crisis in any way.

Save for the usual suspects – Vincent Browne, Fintan O’Toole, Justine McCarthy – vanishingly few Irish journos appear to be willing to give any consideration of the impact the cuts and bailout will have on our society. The strengthening media consensus appears to be that it will all turn out for the best in the end, once we’ve all taken our share of ‘pain’.

67

ejh 11.30.10 at 1:40 pm

Re: corruption, this always comes up whenever there’s a free-market disaster. The simple reason is that there’s always plenty of corruption and cronyism about in a boom, but because there’s a boom, nobody wants to say much about it, everybody’s making their wedge, who cares. Then there’s a crash and all the free-market enthusasists cry that it isn’t the free market that caused the problem, not low taxes, dear me no – it was the corruption! Which, as I say, is always there for all to see and blame.

I tell this story often, but it suits. A dozen years ago, when I found myself working in the library of a university which included a business school, there was this slew of books all lauding as an example for Europe the South Korean economic model, which was defined as consisting of free markets and flexible labour. This was a bit odd, since there had just been an enormous crash in South Korea. But, of course, the books had been commissioned and written before that happened, and nobody could possibly have anticpated a crash when the free market was working so well.

Anyway, there was a pause of a few months and then a new flood of South Korea books arrived for the business school. All of which recommended that Europe adopt an economic model based on free markets and flexible labour – and avoid at all costs the South Korean model, defined as consisting of cronyism and corruption.

68

BrendanH 11.30.10 at 2:55 pm

Re the IT’s coverage (and cronyism and corruption) here’s a piece exposing more of the disturbing underbelly of the IFSC.

69

piglet 11.30.10 at 3:37 pm

“It’s little more than stating an accounting identity to say that it will require higher growth to reduce unemployment.”

If it is an “accounting identity”, then please explain how you can have a jobless recovery.

70

nick s 11.30.10 at 3:51 pm

Save for the usual suspects – Vincent Browne, Fintan O’Toole, Justine McCarthy – vanishingly few Irish journos appear to be willing to give any consideration of the impact the cuts and bailout will have on our society

They all got their mortgages from Michael Fingleton.

71

Henry 11.30.10 at 4:21 pm

John Quiggin – meant to respond on this yesterday. I think there are two particular problems to smallness (and Ireland is an order of magnitude smaller than Australia). One is that everyone in the Irish elite really _does_ know everyone else, leading to a fairly stifling intellectual atmosphere, which I was quite happy to escape when I left the country. The other is the sorry state of print journalism, where there are only a couple of mass circulation newspapers. Tony O’Reilly (or as he prefers to be called, to the point of sending nasty letters where he is not so dubbed, ‘Sir Anthony O’Reilly’) serves as a kind of tinpot Murdoch – his newspapers combine a crude right wing populism with a specific deference to O’Reilly’s other business interests. The Irish Times, which is not owned by O’Reilly, and is in theory the ‘quality’ newspaper. However, its intellectual bench is very thin, with vaguely liberal positions on social mores, and quite right wing positions on economics of the ‘best keep this away from the people, because god knows what they would do’ variety. Hence economic debate in Ireland is largely a debate between populist and non-populist versions of the right. Fintan O’Toole is an honorable exception – but he is not an economist.

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piglet 11.30.10 at 4:53 pm

Tim Worstall:

Given that an increase in economic activity is defined as an increase in the value added (No, it absolutely is not limited to simply the production of more stuff, nor to the resources used in the creation of that value) why would the laws of physics be something that economic activity or growth would find to be a defining limit?

You must assume that there are economic activities that do not involve the manipulation of physical matter. I have never heard of any. That is what mainstream economists don’t get: economic processes are physical processes and the laws of physics do apply. As ridiculous as it sounds when you put it that way, many economists (and TW) refuse to acknowledge that fact.

What you can do to some extent is minimize the physical impact per dollar value. This is what Daly calls throughput efficiency (throughput is “entropic physical flow of matter-energy from nature’s sources, through the human economy, and back to nature’s sinks”). Daly agrees, and I agree, that it can be improved but not without limit. Furthermore, empirical observation doesn’t support the notion that substantial increases in throughput efficiency are under way even if they might be hypothetically possible. Empirically observed economic growth has always involved an increase in stuff (cars, appliances, buildings). If you know of a counterexample, let us know. You will probably respond that throughput efficiency has improved somewhat (if you measure it as value added per unit of energy for example). However it hasn’t been enough to offset growth. Moreover, much of the apparent improvement is a result of a shift of manufacturing from developed to developing countries. On a global basis, growth is almost exclusively dirty growth. It doesn’t have to be that way – I am convinced we could maintain developed country living standards and substantially improve that of developing countries while using substantially less resources if we were serious about efficiency. However that’s not what we are doing, and even if we were doing it we would reach efficiency limits due to the law of entropy.

Worstall:

At the extreme, and yes I know this sounds odd, if we all decided to value what is already produced more highly then that is economic growth. Or more conventionally, if we changed what we produced from those limited resources from what we do now to something, anything, that we valued more highly, then that is economic growth too.

You are calling for a decoupling of economic growth from throughput. I guess you are alluding to what has been called “immaterial economy”, “knowledge economy”, “intangible economy”, or “weightless economy”. Does that make sense?
Consider the following thought experiment. Assume that the economy is composed of two sectors, a “material” one that makes physical stuff, and an “immaterial” one that creates “pure value”, i. e. it does not require any throughput. At time 0, let both sectors create 1 unit of value. The material sector requires 1 unit of throughput, the other none. Now assume that the economy is growing at 3.5% p.a. and that throughput cannot be increased, i. e. the material sector is prevented from growing. After a hundred years, our model economy would have to produce 1 unit of “stuff” and 63 units of “pure value”. That means we’d spend only 1.5% of our money on material stuff – think cars, appliances – 98.5% on immaterial things “that we valued more highly”. Like what? Music downloads? Video games? Piano lessons? Massages? Even if these activities did not cause any pollution or resource use, which of course they do, the amount that we can possibly consume is limited by our time. Once you have downloaded 10 lifetimes of music, how much more are you willing to spend? And while we can create value at little cost to the environment by giving each other highly valued massages (an example of Daly’s qualitative growth), there’s only so many massages that you can receive or give in a lifetime.

Of course we don’t know what products might be developed in future that our grandchildren might value and be willing to spend money on. I cannot prove that a scenario such as the model economy above is impossible but you can decide how plausible it is. And if you want to argue that human economic activity is the only thing in the universe capable of growing without limits, not constrained by the laws of thermodynamics, then the burden of proof is on you to show how it can be done. Hand-waving won’t do.

Even Herman Daly gets this (his distinction between qualitative and quantitative growth) so it always rather surprises me when some don’t.

What Daly is saying is this: materially saturated societies such us ours should stop growing quantitatively. They can still grow qualitatively – improve their well-being – by improving their existing capital stock which after all constantly needs to be renewed and replaced and by spending more time enjoying life. I don’t think that this is what people (Krugman, Mankiw, Worstall, etc.) have in mind when they talk about the “need” for economic growth. The paradox is that the US is materially saturated. There is enough for everybody. Poverty and unemployment can and should be solved by better distributing what we already have, not by making more stuff that we don’t need (1). Unfortunately that is politically impossible. But it is impossible in part because we keep the growth fantasy alive.

(1) I’m not denying the need for infrastructure investment in clean energy and efficient transportation. But these should be done on their own merits, not for the sake of growth. One of the big failures of the Obama stimulus was to violate that principle.

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Daragh McDowell 11.30.10 at 5:52 pm

Henry @ 71 Tony O’Reilly’s control over the Indo has been degraded significantly this year as Denis O’Brien started something of a slow-motion hostile takeover. The latter in conjunction with Michael Lowry is also rather amusingly suing one of the Indo’s reporter’s Sam Smyth over his reporting of the Moriarty tribunal (Smyth personally that is, not the paper his writing appeared in!)

And there’s been a slight opening up in the media cracks – the Sunday Business Post is a good, FT-Lite kind of publication and the Cork Examiner is now the Irish Examiner. But your basic description of the Irish media landscape remains sound – in fact if anything the Indo has gotten worse over the past few years. I called them up to pitch an article a few weeks back and was rebuffed on the grounds that the topic was insufficiently parochial (their words.)

74

Stuart 11.30.10 at 6:20 pm

He doesn’t need to make that assumption. All he needs is living standard overseas > living standard in Ireland. This does not seem like much of a stretch, given the current shittiness and likely increasing shittiness of the Irish economy over time.

Of course if you also expand that to living standard in Ireland > living standards in most of Eastern Europe, as Irish natives move abroad to Canada, Australia and the like, they are in turn replaced and therefore the tax burden doesn’t end up being concentrated on an ever smaller group of taxpayers.

75

Min 11.30.10 at 7:14 pm

Steve Attewell: “I’d also point out the very ideologically-driven assumption that ruin must follow if creditors are not repaid at face value.”

Err, what ideology is that? Conservatives I know are in favor of the Freedom to Fail, and that includes creditors.

76

Min 11.30.10 at 7:18 pm

“One of the problems of a small country like Ireland is that the intelligentsia’s level of economic literacy tends to be pretty low.”

piglet: “Oh puhlease. As opposed to which bigger country?”

China. :)

77

Min 11.30.10 at 7:21 pm

y81: “Hmm, Prof. Farrell sounds like Greg Mankiw, pointing out that the Obama budget projections (vociferously defended by Paul Krugman) assume economic growth like that in 1983 and the immediate aftermath, and that you can’t assume those sort of growth rates in a recovery from a banking crisis.

“On the evidence thus far, Mankiw was right and Krugman very wrong, but you won’t read that at Crooked Timber, except in this comment.”

I second that. :)

78

Min 11.30.10 at 7:25 pm

y81: “When do you think we will have the “fast growth” necessary to justify the Obama budget projections?”

We won’t get fast growth until the debt/deficit hawks are voted out of Congress. (Since we just voted a lot of them in, that will take a while. :()

79

Min 11.30.10 at 7:27 pm

Chris Bertram: “Driving through Ireland in 2003 and then again in 2008, I was thinking (more the 2nd time) “this is insane, who is going to live in these houses?”

We have a lot of homeless people in the U. S. :)

80

Henry 11.30.10 at 7:33 pm

Min – large numbers of intellectually vacuous comments with attached emoticons are not greatly appreciated around here. If you have arguments to make, make them.

81

StevenAttewell 11.30.10 at 7:39 pm

Min – the ideology of property rights, the ideology of the bond markets. Neoliberalism more generally. Conservatives weren’t that vocal about their disapproval of the financial bailouts until after the fact, not that they turned down any financial corporate contributions.

82

John Quiggin 11.30.10 at 8:22 pm

Piglet, if you measure by physical quantities, and focus on the information sector, your 63:1 ratio in 100 years is a gross underestimate. Thirty years ago, my connection to the internet was (IIRC) an 8k modem. As an intensive user, I guess I managed to transfer a few megabytes every month. Now I complain because my family can’t stay inside a 25GB/month limit. That’s a factor of well over 1000 in thirty years. Even in the past five years, it’s obvious that the volume of info services has grown dramatically. Over the same period, vehicle-miles driven in the US have been flat, despite a growing population
http://cr4re.com/charts/charts.html?Retail#category=Retail&chart=VehicleMilesSept2010.jpg

83

Min 11.30.10 at 8:24 pm

Steven Attewell: “Min – the ideology of property rights, the ideology of the bond markets.”

Well, if you own a bond, that’s what you own, including the attendant risks. You have no property right to anything else.

Sure, creditors may be greedy. But greed is not ideology.

84

Min 11.30.10 at 8:52 pm

Henry: “Min – large numbers of intellectually vacuous comments with attached emoticons are not greatly appreciated around here. If you have arguments to make, make them.”

Thank you, Henry. :) I have lurked here for a long time, but have rarely made comments before, and do not expect to comment regularly. Today’s flurry is unusual.

IMX, emoticons help reduce misunderstandings online, as FTF cues are unavailable. I used to disdain them, but now I use them liberally. :)

As for making arguments, I do not pretend to learning that I do not have. However, I believe that one of my intellectual strengths is to offer different perspectives, to come in from left field, if you will, to the extent that I sometimes appear to argue with myself. ;) If my remarks seem vacuous to you, then I have been too brief. :(

85

StevenAttewell 11.30.10 at 8:53 pm

Except that creditors don’t say “I’m greedy, give me more money,” they say “I have a right to my property” and so on.

86

piglet 11.30.10 at 9:54 pm

“Piglet, if you measure by physical quantities, and focus on the information sector, your 63:1 ratio in 100 years is a gross underestimate. Thirty years ago, my connection to the internet was (IIRC) an 8k modem. As an intensive user, I guess I managed to transfer a few megabytes every month.” (JQ)

So how many thousand $ are you spending on your internet connection?

Internet speed might qualify as an example of qualitative growth. To my argument is orthogonal. For the economy to grow exclusively on “virtual” activities such as internet traffic (which is not of course truly “virtual” but close enough for the sake of argument), you’d have to see internet traffic making up an increasing share of the economy to a point where it crowds out the material sectors. Again, in my thought experiment, after 100 years you’d have to spend 98.5% of your income on the internet etc. and only 1.5% on your car, appliances, food, clothing, construction etc. Do you observe anything in the real world that makes that outcome appear plausible?

“Over the same period, vehicle-miles driven in the US have been flat, despite a growing population” (JQ)

I addressed the topic of improved throughput efficiency already:

You will probably respond that throughput efficiency has improved somewhat (if you measure it as value added per unit of energy for example). However it hasn’t been enough to offset growth. Moreover, much of the apparent improvement is a result of a shift of manufacturing from developed to developing countries. On a global basis, growth is almost exclusively dirty growth. (piglet)

A few years of US vehicle miles not increasing, especially during a recession, doesn’t invalidate anything I said above. US total energy consumption has in fact declined recently, which is good news. But it required the worst recession in 70 years to make that happen.

87

piglet 11.30.10 at 9:56 pm

[Need to say that again]
Internet speed might qualify as an example of qualitative growth. To my argument *that example* is orthogonal.

88

piglet 11.30.10 at 10:31 pm

A study of throughput efficiency with real world data:

Are Services Better for Climate Change? Sangwon Suh
Environ. Sci. Technol., 2006, 40 (21), 6555-6560; DOI: 10.1021/es0609351

Embodied greenhouse gas (GHG) emissions and their structure of inducement by the supply-chain networks of 480 goods and services in the United States are analyzed for 44 GHGs. Producing a dollar of a product or service generates an average of 0.36 kg of CO2 equivalent GHGs onsite, increasing to 0.83 kg when supply-chain-induced emissions are taken into account. Services produce less
than 5% of total U.S. GHG emissions directly, and their direct GHG emission intensities per dollar output are much less (0.04 kg CO2 equiv/$) than those of physical products, even when supply-chain-induced emissions are included (0.47
kg CO2 equiv/$). When both supply-chain effects and the volume of household expenditures are taken into account, however, household consumption of services excluding electric utilities and transportation services proves to be responsible for 37.6% of total industrial GHG emissions in the United States, almost twice the amount due to household consumption of electric utility and transportation services.

The author’s conclusion:
It is certainly true that a shift to a more service-oriented economy will reduce the GHG emission intensity per unit GDP and is desirable … What is often neglected is that services are deeply anchored to manufacturing outputs, and growth in services sector also lifts, by necessity, manufacturing outputs. In 2004, a dollar of consumption on seemingly material-free services, which exclude utility and transportation services, requires about a quarter worth of outputs from manufacturing, utility, and transportation services sectors in the United States (27). In fact, for over four decades, U.S. production of manufactured goods has generally followed an upward trend in absolute term, although its relative share in GDP has been gradually surpassed by services.

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piglet 11.30.10 at 10:32 pm

A study of throughput efficiency with real world data:

Are Services Better for Climate Change? Sangwon Suh
Environ. Sci. Technol., 2006, 40 (21), 6555-6560; DOI: 10.1021/es0609351

Embodied greenhouse gas (GHG) emissions and their structure of inducement by the supply-chain networks of 480 goods and services in the United States are analyzed for 44 GHGs. Producing a dollar of a product or service generates an average of 0.36 kg of CO2 equivalent GHGs onsite, increasing to 0.83 kg when supply-chain-induced emissions are taken into account. Services produce less than 5% of total U.S. GHG emissions directly, and their direct GHG emission intensities per dollar output are much less (0.04 kg CO2 equiv/$) than those of physical products, even when supply-chain-induced emissions are included (0.47
kg CO2 equiv/$). When both supply-chain effects and the volume of household expenditures are taken into account, however, household consumption of services excluding electric utilities and transportation services proves to be responsible for 37.6% of total industrial GHG emissions in the United States, almost twice the amount due to household consumption of electric utility and transportation services.

The author’s conclusion:

It is certainly true that a shift to a more service-oriented economy will reduce the GHG emission intensity per unit GDP and is desirable … What is often neglected is that services are deeply anchored to manufacturing outputs, and growth in services sector also lifts, by necessity, manufacturing outputs. In 2004, a dollar of consumption on seemingly material-free services, which exclude utility and transportation services, requires about a quarter worth of outputs from manufacturing, utility, and transportation services sectors in the United States (27). In fact, for over four decades, U.S. production of manufactured goods has generally followed an upward trend in absolute term, although its relative share in GDP has been gradually surpassed by services.

90

EWI 11.30.10 at 10:52 pm

@ Daragh McDowell

My very great apologies. I have no idea whether you’re a former PD or not (though your reply seems to confirm) but I had misquoted something that Patrick O’Brien had actually said.

BTW If we’re talking about hypothetical extreme left/extreme nationalist groupings appearing that’s already happened. The various Trotskyist groups are now fighting the next election as the United Left Alliance,

I’ll admit that I’m not much of an expert on the various permutations of the left, but I think to pigeon-hole the various individuals and groups combining to form the ULA is quite unfair. And apart from Éirigí, I don’t think any can be considered particularly “nationalist”, let alone “extreme” – the SP and SWP are offshoots of UK parties, for example. And the Irish Labour Party is about as ‘left’ as US Democrats, so ‘extreme’ left for an umbrella party which is embracing former Greens, Labour and FF doesn’t fit either.

and we recently saw the launch of somethingcalled the ‘National Alliance’ (until they realised that was perhaps too obvious and changed the name to ‘National Forum.’)

This news calls for what Interwebs cognoscenti refer to as a “lmao”:

http://cedarlounge.wordpress.com/2010/11/20/the-national-alliance/#comment-84066

They’re not ‘fascist’, though, no matter what their unfortunate allusions (unless you’re willing to label the Tories and the US GOP – their inspiration – as same).

91

Daragh McDowell 11.30.10 at 11:10 pm

I did have the distinction of joining the PDs just after the 2007 General Election, which should tell you a lot about me and the political causes that I tend to be drawn to. Also if you read my name aloud, you might also gain further insight into my decision making processon that particular choice.

I’d happily label elements of the US GOP as crypto-fascist, but I have no idea about the National Alliance/Forum/Insert Next Noun here. All I know is they seem to be broadly in a school of economic liberal-fundamentalism (I tend to think markets are, on balance, a good thing but need to be kept in check on certain issues) combined with Catholic inspired social policy which gives me the heebie-jeebies.

92

y81 11.30.10 at 11:15 pm

@80: Man, I think Prof. Farrell should count his blessings. He could be afflicted with Matako Chan or Bart DePalma. He’d be begging for some emoticons.

93

john c. halasz 12.01.10 at 2:07 am

94

Min 12.01.10 at 2:43 pm

Steven Attewell: “Except that creditors don’t say “I’m greedy, give me more money,” they say “I have a right to my property” and so on.”

Well, since they are laying claim to what is not theirs, IMO you point out the lie. You do not dignify it by saying that it is ideological. :)

95

EWI 12.01.10 at 3:27 pm

@ Daragh McDowell

Also if you read my name aloud, you might also gain further insight into my decision making process on that particular choice.

Well, the CT Farrells are, what, your cousins? So one doesn’t like to assume based on family ties.

96

EWI 12.01.10 at 3:34 pm

@ Daragh

All I know is they seem to be broadly in a school of economic liberal-fundamentalism (I tend to think markets are, on balance, a good thing but need to be kept in check on certain issues) combined with Catholic inspired social policy which gives me the heebie-jeebies.

That’s Coleman and Quinn’s particular tastes accounted for, but I’ve been engaging with McGuirk and his buddies online for about half a decade now (some of whom interned for various US Republican congresscritters in their student days, one even ending up in CATO for a summer working on the Social Security privatisation scam). Bushies/Reaganauts/Thatcherites to a man (and woman), and great admirers of one Augusto Pinochet.

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StevenAttewell 12.01.10 at 3:46 pm

Min – that seems facetious to me. Disagreements over the nature of property rights can’t be resolved just by saying – you’re actually being greedy, neener neener – you actually have to argue the issue.

Or are you saying that disputes, for example, between unions and management over the correct distribution of profits can be settled by saying that “since the CEO owns company stock and would profit from less money going to wages and more going to dividends” and ending the discussion there?

98

piglet 12.01.10 at 4:02 pm

jch 93:

Found a nice discussion of Jevons paradox at your link at http://www.monthlyreview.org/101101foster-clark-york.php

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Daragh McDowell 12.01.10 at 5:23 pm

EWI – I’ve got McGuirk on my Twitter feed right now. Nice guy generally, but his politics are indeed loopy.

The problem is that as the economic intellectual centre has rapidly crumbled in Ireland (i.e. save the banks, cut the budget and for god’s sake leave the senior bondholders alone) the economic hard-left and hard-right are gaining traction as they’re the only ones willing to say the obvious – there’s no way we can shovel this much shit and its time for a default. Now I have as much time for Sinn Fein’s neo-Brezhnevism as I do for the eat the poor economics of Libertas and the Iona institute. But given that everyone else is basically arguing that we must submit to indentured servitude or something REALLY bad will happen, I wouldn’t necessarily be agin sending a transfer or two their way.

100

EWI 12.01.10 at 7:47 pm

@ Daragh

I’ve got McGuirk on my Twitter feed right now. Nice guy generally, but his politics are indeed loopy.

Not to mention that he still hasn’t outgrown student politics yet.

Sinn Fein’s neo-Brezhnevism

I’d never cast a vote for Sinn Féin, but I don’t regard them as ‘left’ in any meaningful way these days, as the ongoing resignations of SF officials in the South testifies (Adams was apparently a dinner guest of Bill Clinton and various rich southerners at a very swanky Dublin restaurant recently).

101

Daragh McDowell 12.01.10 at 8:52 pm

Not to mention that he still hasn’t outgrown student politics yet.

Very few do in the land of student politics writ large.

As for the Sinners, I don’t know what your conception of ‘left-wing’ is so I guess its difficult to get a comparative mental map going. Adams is more of a figure-head anyway, and the centre-of-power has shifted (in SF South anyway) to Caoimghain O’Caolaighn and the like.

102

Min 12.01.10 at 10:24 pm

Steven Attewell: “Min – that seems facetious to me. Disagreements over the nature of property rights can’t be resolved just by saying – you’re actually being greedy, neener neener – you actually have to argue the issue.”

I see no dispute over the nature of property rights here. The property rights of bond holders are well established. If bond holders, or their political apologists, argue that the bond holders have additional property rights, that is false on its face. (That may not stop them from making the claim, of course.)

103

piglet 12.02.10 at 12:25 am

Another comment at stostosto 33:

“It’s little more than stating an accounting identity to say that it will require higher growth to reduce unemployment.”

A quote from Krugman (11-28) sums it up:

“America’s recovery has been disappointing, especially in terms of jobs — but at least we’ve seen some growth, with real G.D.P. more or less back to its pre-crisis peak”

Why is it good news that US GDP is back up its pre-crisis level when unemployment doesn’t improve? It isn’t. It is just a deeply ingrained bias to think of economic growth as something to celebrate in itself. Krugman is supposed to be the good guy but he’s still fundamentally wrong and fundamentally unwilling to let his superstitious beliefs about GDP be corrected by empirical reality and that is precisely why we are so screwed. It’s not just the Tea Party that chooses insanity over reality.

104

EWI 12.02.10 at 9:57 pm

As for the Sinners, I don’t know what your conception of ‘left-wing’ is

I see their (working-class) councillors in Dublin peeling off claiming that the party is no different in “left/right” terms to the others, and I see the idiotic Mary Lou being promoted as their standard-bearer in the South, and I see a state of affairs where Adams is at dinners in exclusive restaurants with very rich Southern businessmen and the sky hasn’t fallen in. So, no, I don’t consider them to be “left” (and let’s not get started on the Troubles).

Adams is more of a figure-head anyway, and the centre-of-power has shifted (in SF South anyway) to Caoimghain O’Caolaighn and the like.

I doubt that this view would survive contact with Adams winning a seat in the Dáil in two or three months’ time, but we’ll see.

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